Wednesday, December 8, 2010

What is a Limited Company?


Accounts, Bookkeeping and Payroll can be a burden to small business. This new series of accountant blogs from Nottingham Accounting Solutions aims at making Accounts, Bookkeeping and Payroll a little clearer.

What is a Limited Company?

Most businesses start out small, owned by one person or by a partnership. The most common type of business when there are multiple owners is a Limited Company.
The law sees a Limited Company as real, live person. Like an adult, a Limited Company is treated as a distinct and independent individual who has rights and responsibilities.
A Limited Company 's "birth certificate" is the legal form that is filed with the Secretary of State and Companies House. It must have a legal name, just like a person.
A Limited Company is separate from its owners. It's responsible for its own debts. The bank can't come after the shareholders if a Limited Company goes bankrupt- except under certain circumstances.
A Limited Company issues ownership share to persons who invest money in the business. These shares are documented and the Company has to keep a register, or list, of how many shares everyone owns. Owners of a Company are called shareholders because they own shares issued by the company. One share of stock is one unit of ownership and how much one share is worth depends on the total number of shares that the business issues. The more shares a business issues, the smaller the percentage of total owners' equity each share represents.
Nottingham Accounting Solutions Ltd offer accounts, bookkeeping and payroll services in the Nottingham , Mansfield and Sutton in Ashfield area as well as Sage sales, set-up and 1 - to - 1 training on Sage accounts and Sage payroll. So why not take a look at Accountant in Nottingham Mansfield and Sutton in Ashfield to see our website.

Saturday, December 4, 2010

What is financial window dressing?


Accounts, Bookkeeping and Payroll can be a burden to small business. This new series of accountant blogs from Nottingham Accounting Solutions aims at making Accounts, Bookkeeping and Payroll a little clearer.

What is financial window dressing?

Financial managers can do certain things to increase or decrease net income that's recorded in the year. This is called profit smoothing, income smoothing or just plain old window dressing. This isn't the same as fraud, or cooking the books.
Most profit smoothing involves pushing some amount of revenue and/or expenses into other years than they would normally be recorded. A common technique for profit smoothing is to delay normal maintenance and repairs. This is referred to as deferred maintenance. Many routine and recurring maintenance costs required for cars, trucks, machines, equipment and buildings can be delayed, or deferred until later.
A business that spends a significant amount of money for employee training and development may delay these programs until the next year so the expense in the current year is lower. A company can cut back on its current year's outlays for market research and product development.
A business can ease up on its rules regarding when slow-paying customers are written off to expense as bad debts or uncollectible accounts receivable. The business can put off recording some of its bad debts expense until the next reporting year. A fixed asset that is not being actively used may have very little current or future value to a business. Instead of writing off the un-depreciated cost of the impaired asset as a loss in the current year, the business might delay the write-off until the next year.
You can see how manipulating the timing of certain expenses can make an impact on net income. This isn't illegal although companies can go too far in massaging the numbers so that its financial statements are misleading. For the most part though, profit smoothing isn't much more than robbing Peter to pay Paul. Accountants refer to these as compensatory effects. The effects next year offset and cancel out the effects in the current year. Less expense this year is balanced by more expense the next year.
Nottingham Accounting Solutions Ltd offer accounts, bookkeeping and payroll services in the Nottingham, Sutton in Ashfield and Mansfield area as well as Sage sales, set-up and 1 - to - 1 training on Sage accounts and Sage payroll. So why not take a look at Accountant in Nottingham, Mansfield and Sutton in Ashfield website.