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Who Establishes a 401(k)?
Employers make the decision to establish a 40(k), but it has to be good enough for employees to want to participate. An employer is responsible for establishing a 401(k) and for overseeing it as the sponsor and fiduciary. A self-employed individual can also establish an Individual 401(k), which has the same contribution limits and requires none of the testing or auditing of a regular plan. Other options for work-site retirement plans are SIMPLE IRAs, SEP IRAs, and various kinds of profit-sharing and deferred compensation arrangements. Continue reading...
What Is Accounting?
Accounting is a critical function that forms the foundation of financial management for any business. It involves recording, summarizing, and interpreting financial transactions to provide valuable insights into an organization's financial health, performance, and operational efficiency. This information is crucial for informed decision-making, compliance with regulations, and strategic planning. Continue reading...
What Encompasses Reconciliation in Accounting: Its Definition, Purposes, and Types?
Reconciliation is a cornerstone of the accounting world, ensuring accuracy and alignment between different sets of financial records. This comprehensive examination of account reconciliation delves into its definition, purposes, and various types, providing a thorough understanding of its significance in both personal and business realms. Continue reading...
What Is a Virtual Assistant?
In an ever-evolving business landscape, the role of a traditional office assistant has transformed. Enter the virtual assistant, a versatile and indispensable player in the world of remote work and digital entrepreneurship. In this article, we'll explore what a virtual assistant is, what they do, and the opportunities they offer in today's interconnected, digital age. Continue reading...
What is Accrual Accounting?
Accrual accounting is the counterpart to cash accounting, and the accrual method puts expenses and revenues on the books as soon as they are contractually agreed-upon. Accrual accounting is required by GAAP conventions for all publicly traded companies who have over $5 million in annual revenues. This method is the counterpart to cash accounting, which may be more useful to smaller businesses. In accrual accounting, the expenses and revenues which are agreed upon are written onto the business’s ledger at the current time, regardless of when payment will actually settle on the transaction. When a sale is made or service is performed, the revenue from the activity is documented, even if no cash is received in the current period. Continue reading...
What are My 401(k) Investment Options?
401(k)s can offer many options for investment, but they generally only offer 15 or fewer in each plan. Investment options in your 401(k) are completely determined by the agreement between your employer and the custodian. Therefore, you’re limited to the investment instruments selected for you. The majority of 401(k) plans will offer fewer than 15 investment options, which are generally part of prepackaged 401(k) products from major broker-dealers or mutual fund companies. Large companies will frequently also offer stock of their company within the 401(k) plan architecture. Continue reading...
What is an Accounting Standard?
Accounting standards are the practices which make financial information uniform and normalized between various businesses and accounting firms. Accounting standards constitute what is known as GAAP: Generally Accepted Accounting Principles. These may apply to how revenue is recognized, how assets are classified, acceptable methods of depreciating assets, and so on. Some of these are based on IRS opinions and the jurisprudence of the law, some are just industry best-practices that are widely used. Continue reading...
How Does a 401(k) Work?
You may know that a 401(k) allows you to make payroll-deducted contributions to a retirement account before taxes are taken out, but how does it work? Employees can either become participants in a 401(k) by voluntary enrollment or by automatic enrollment with the ability to opt-out. Contributions go in before taxes are taken out, and this can reduce an individual’s taxable income or even income bracket for the year. Continue reading...
What are Accounting Methods?
Accounting Methods are the overarching style of accounting and bookkeeping which determine the practices, procedures, systems, and controls which should be put in place. There are two main methods of accounting that businesses and individuals can use to approach their accounting, and these are known as cash basis and accrual basis. The IRS expects businesses to choose early one which method they will use, and it can be difficult to change accounting styles later on. Continue reading...
What is the Accounting Cycle?
The Accounting Cycle includes all of the documentation that is collected and all of the controls and systems in place to ensure accurate accounting. The Accounting Cycle begins with the point of sale, with documentation for the transaction (invoice or receipt) and the internal expenses and inventory. There are conventions, controls and systems in place to account for and control the flow of information in a company at each stage of the process to ensure that accounts are as accurate as possible. The Accounting Cycle may refer to the length of time between trial balances, such as monthly, quarterly, or annually. Continue reading...
What are Accounting Records?
Accounting records are the supporting documents that verify the history of transactions, audits, and reports. Accounting documents are sometimes required to be kept on file for a certain number of years. They may be paper or electronic records. Records may include point-of-sale documents such as receipts and invoices, as well as inventory delivery and audit records, and the results of internal and third-party audits from various periods. Continue reading...
What Is a Certified Public Accountant?
When it comes to financial matters, especially in the complex world of accounting and taxation, trust and expertise are paramount. This is where the Certified Public Accountant (CPA) designation steps into the spotlight, signifying a level of dedication, knowledge, and skill that sets accounting professionals apart. Continue reading...