Role Of Financial Accounting In Decision Making Process

 

While it might sound exhausting or obscure, Financial Accounting or Bookkeeping playing a key role that permits organizations to monitor all their monetary exchanges. It is the cycle where organizations record and report the bits of financial information that go all through their business activities that permit both organization managers and outside investors and analysts to comprehend the organization's wellbeing and settle on informed choices.

Guidelines and Best Practices

 

There are a series of bookkeeping rules that organizations should stick to in their Financial Accounting. Most traded on open market organizations in the United States follow the proper accounting rules (GAAP), a typical arrangement of principles and best practices that bookkeepers follow when they do the math and complete monetary statements.

Organizations outside the U.S. for the most part adhere to other worldwide principles that change by area and nation. In any case, paying little mind to which set of guidelines is followed. there are three fundamental zones where Financial Accounting assists with dynamic:

 

1.      It gives investors a benchmark of examination for—and the correlation between—the financial health of securities-issuing enterprises.

 

2.      It assists creditors to assess with evaluating the dissolvability, liquidity, and financial soundness of organizations.

 

3.      Alongside its cousin, managerial accounting, it assists organizations with settling on choices about how to dispense scant assets.

 

Investing Decisions

 

Fundamental Analysis relies vigorously upon the Accounting data that is recorded on an organization's fiscal reports, including the balance sheets , income statements, and cash flow statements. Every one of the budget summaries for traded on open market organizations are made and answered by the monetary accounting norms set out by the Financial Accounting Standard Board (FASB) and submitted to the Securities and Exchange Commission.

 

Investors and investigators utilize the data from financial statements to settle on choices about the valuation and reliability of an organization, permitting them to set value targets and decide whether a stock's cost is genuinely esteemed or not. Without the data gave by financial accounting, investors would have less understanding about the chronicled, current, and forthcoming monetary strength of stock and bond backers. The prerequisites set out by the FASB make consistency in the circumstance and style of monetary records, which implies speculators are less inclined to be liable to bookkeeping data that has been separated dependent on an association's current condition.

 

 

 

 

Loaning Decisions

 

Financial Accounting by Accountants in Ireland is likewise a key for loan bosses, from banks to bondholders. Since financial statements outline each one of its resources just as the short-and long haul obligation, banks improve the feeling of an organization's creditworthiness. 

 

Various normal accounting ratios lenders depend on, for example, the debt-to-equity ratio (D/E) and times interest earned ratio are gotten totally from an organization's budget reports. In any event, for exclusive organizations that don't follow the necessities of the FASB, no loaning foundation expects the risk of enormous business credit without basic data gave by monetary bookkeeping procedures.

 

At last, a loan specialist truly needs to realize exactly how much danger is included when lending company money, which can be dictated by auditing the organization's financial accounting. When this degree of danger is resolved, the bank will likewise have the option to plot precisely the amount to loan and at what interest rates through the cycle of Underwriting the loan.

 

Corporate Governance

 

Reliable Accounting like Accountancy services in Ireland serves a reasonable capacity for outside investors and moneylenders as well as for the inside functions of the organizations themselves. 

 

The most evident advantage for organizations to allude to their financial accounting is to meet the lawful and administrative commitments delineated for (public) firms. Organizations should be straightforward and straightforward about their monetary exercises and the data reported should be precise and routinely refreshed.

Beyond the administrative and consistence obstacles financial accounting also assists organizations with streamlining their everyday tasks and distinguish the sorts of undertakings that could give development openings later on. financial accounting assists managers with making spending plans, comprehend public insight, track proficiency, investigate product performance, and grow short-and long term techniques, among a few different choices helped by accounting figures.

 

The Bottom Line

 

financial accounting is a route for organizations to monitor their activities, yet in addition to giving a depiction of their monetary wellbeing. By giving information through an assortment of explanations including the financial statements and balance sheets, an organization can give investors and moneylenders more influence in their dynamic.

 

KEY TAKEAWAYS

 

Financial Accounting includes recording, summing up, and reporting the surge of exchanges and financial action coming about because of business tasks throughout some period.

Administered by a standard arrangement of practices, Financial Accounting's final result is a bunch of true organization budget reports including the balance sheet and income statement.

 

These budget reports are then utilized by organization directors, Contractors, financial specialists, analysts, banks, and different partners to settle on educated choices.

 

Contractors: 10 Important Tax Saving Tips

 If you are an independent contractor operating in Ireland, you’ll need to declare your income to the Revenue Commissioners and pay tax through the self-assessment tax system.

However, a combination of effective planning and ensuring you avail of all applicable tax reliefs can impact your tax bill. You need to assess your tax saving opportunities in order to maximise your tax credits and increase saving. Ask yourself – what taxes can my business claim?

While we at Icon Accounting are always on hand to help you with your accounting needs, below are some of the most effective tax saving tips that could help reduce your tax liability.

Claim for ‘Allowable Deductions’

Contractors are entitled to claim legitimate business costs as expenses, which can be offset against income. Any expenses are deducted from your profits, so the higher your expenses, the lower your taxable profits. There are many common contractor or freelancer expenses you may be able to claim for, such as: phone bills, motor expenses, insurance costs and materials.

Avoid Penalties

Avoid penalties for the late submission of your tax return. As an independent contractor, tax must be paid on or before the annual tax deadline, based on the income you earned in the previous year. If you don’t pay your tax bill on time, you could be liable for a penalty, which can rise if your payment continues to be late.

        – When is the income tax return deadline 2020?

          The income tax return (AKA Form 11) deadline for 2019’s income is the 31st of October 2020. If you file and

          pay your taxes online, the deadline is Thursday 12th of November 2020.

        – When is the companies office return deadline 2020?

          Depending on ARD Date (initial €100 plus €3 per each day for late submissions).

          Also late accounts require an Audit – Increasing Professional fees.

        – When is VAT returns deadline?

          VAT returns are due 23rd of Month following period end (Bi monthly, Quarterly, 6 monthly or annually)

Claim Medical Expenses

If you pay medical expenses that are not covered by the State or by your medical insurance provider, you can still claim tax relief on those expenses. You will receive tax relief for health expenses at the standard rate of 20%.

Maximise Tax Credits

There may be various tax credits that apply to you, so be sure to review and apply for them where appropriate.

You may be able to:

        – Transfer any unused tax credits from your spouse across to you or apply for joint assessed tax.

        – Ensure you are getting the SPCCC tax credit if you are a single parent.

Claim Assets

Assets including a car, computers, office furniture or any plant and machinery that are required in the course of running your business – can be claimed over a period of 8 years.

Apply for Earned Income Credit

As a self-employed person, you can claim the Earned Income Tax Credit of €1,350 or 20% of your qualifying earned income, whichever is the lower. Be aware, however, that Earned Income Tax Credit can only be applied to trading income and is not available against investment or rental income.

Add Family Members to the Payroll

Wages paid for work done by family members is an expense of the business and its tax deductibility must be considered like any other expense. A family member can be employed for administration or record keeping. This is not considered technical work – if they are being employed for technical work, they should have the skills, qualifications and experience necessary to carry out that work and to justify the rate of pay.

Use the ‘Small Benefit Scheme’

The Small Benefit Scheme allows employers to provide a tax-exempt benefit to Irish employees of up to €500 per employee, per year. This is a totally tax-free gift but must be awarded in the form of a benefits voucher and cannot be paid in cash.

Expense Travel and Subsistence

Travel is an allowable expense when the journey is necessarily incurred in the performance of the duties of the office or employment. Examples of allowable travel are travel to continued professional development courses, travel from place of work to clients’ premises, travel for meetings etc.

Subsistence allowances can be utilised on the same basis – i.e. If the time spent away from the normal place of work is over a certain number of hours/days then specific subsistence rates apply.

Pay into a Pension

Pensions are one of the most tax efficient investments you can make. Any premiums paid by a self-employed person are allowed for tax relief for up to 40%.

Pay into an Income Protection Policy

Like pensions, income protection policies are very tax efficient.  Income protection policy payments allow self-employed persons to claim tax relief for up to 40%.  Income protection is also commonly known as Permanent Health Insurance.

Beware of Professional Services Surcharge

You might think that you can leave the profits in your company and only pay 12.5% corporation tax, rather than taking the money out as salary at up to 52%.

However, this surcharge counters this method of tax avoidance by imposing a surcharge of 15 per cent on 50 per cent of the company’s undistributed professional and service income.

When you eventually liquidate the company you will pay an additional 33% (at current tax rates) – Your effective rate being 46%. You need to consider which is better for you – to have the cash personally now or leave the cash in the company for a number of years saving 6% (at current tax rates).

Get Professional Support

Enlisting the help of a tax specialist, such as Icon Accounting will make sure that you are not only maximising your tax opportunities but by keeping track of the various expenses or tax reliefs that you can claim. We will calculate your income tax accurately, so you don’t run the risk of over- or under-paying and will file the tax return on your behalf and on-time.

Stay tuned for new updates and we will back with all new features again shortly. Icon Accounting the best Accountancy services in Dublin.

6 Budgeting Tips for Contractors and Freelancers

 

If you’re organised, you have the potential to earn more and the freedom to work on your own terms.  It can come with some challenges however - the most prevalent being that consistent work is not always guaranteed. Here we share some easy budgeting tips that can help your cash flow.

1) Project your earnings and price your rate

If you already have a contract secured for the next six months to a year it is easier to work out what you’ll make versus bills, savings and living expenses. However, if you’re between roles or will be working on shorter contracts throughout the year, a good strategy is to assess what you must earn in order to live comfortably and then price out what you need to earn in the year to get there. It doesn’t have to be over a 12-month period, but whatever amount of time you feel makes sense.

Remember, as a contractor you choose what to charge for your own services, so you should consider both what you need to be earning versus what compensation you deserve for your skills. This will help you budget effectively by knowing what your gross income will be and will give you a baseline for setting your rates in the future.

2) Save and put it out of your mind

Whether you’re saving for a rainy day or for a new home, following the rule of putting 10-20% of your take home pay away as savings can help you reach your saving goals if you can manage it.

However - even if you are able to put money away every week or month, it can be easy to dip back into your savings whether it’s in a savings account or under your mattress.

As a contractor, putting money away is especially important when work is not guaranteed. Saving for a sick day or when you are in between contracts will ensure you are secure.

3) Look at apps and tools to help you budget and save money

Whether you have your own limited company or work through an umbrella company, accounting software is one of the best ways to manage your finances as a contractor, so be sure to make full use of this tool available to you. Your contractor accountant would have provided you with a client portal for you to track your incoming funds and how much you need to keep aside for taxes (for limited company directors).

4) Know what you’re spending

Knowing where your money goes is key to budgeting - so, if you don’t already, track your spending. This can be done in so many ways: a spreadsheet, a notebook, or an app. Try to come up with an average figure of your spending to make sure that you are spending less than you earn.

Try to come up with an average figure of your spending - on items such as travel, eating out, shopping, education, household goods, etc.

5) Separate your personal and business bank accounts 

It is crucial to have two bank accounts. One account is for business income and expenses, the other is for personal transactions. Having all financial transactions in one place is extremely useful when it comes to paying taxes and claiming expenses.

6) Get professional advice

Finally, just because you are an independent contractor does not mean you have to go it alone. Benefit from the power of professionals and the power of community.

These budgeting tips can help you be more aware of your expenditure and ensure you have enough to cover times when you are in between contracts, off sick or on holiday. Different budgeting tactics work for different individuals and you should choose a method that will work best for you. You should also discuss tax planning with your accountant who can help you maximise your take home pay.

Contact us if you have any questions on contractor accounting and accounting services.

Breaking into a Bank doesn't require a Drill or Sledgehammer Anymore

 “A Ukrainian computer “genius” masterminded a plot to steal more than €1 billion by hacking into banks and ordering cash machines to spew out notes.  Named only as Denis K, the man who was arrested on March 6th, is said to have devised malware used by a gang to attack financial institutions in more than 40 countries”

The Covid-19 era has given criminals ample opportunity to ply their trade, here are a sample of some common scams.

The criminals behind these bogus schemes view everyone as potentially easy prey and everyone should be on guard.

- Phishing

Potential fake emails or websites looking to steal personal information. Criminal Investigation has seen a tremendous increase in phishing schemes utilising emails, letters, texts, and links. These phishing schemes are using keywords such as “coronavirus,” “COVID-19” and “Stimulus” in various ways.

These schemes are blasted to large numbers of people to get personal identifying information or financial account information, including account numbers and passwords. Most of these new schemes are actively playing on the fear and unknown of the virus and the stimulus payments.

Do not click on links claiming to be from the Revenue and be very wary of emails and websites as they may be nothing more than scams to steal personal information. As a reminder, the IRS will never initiate contact with taxpayers via email about a tax bill, refund or Economic Impact Payments.

- Fake Charities

Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-intentioned people trying to help in times of need. Fake charity scams generally rise during disaster times like these.

Fraudulent schemes normally start with unsolicited contact by telephone, text, social media, e-mail, or in-person using a variety of tactics. Bogus websites use names similar to legitimate charities to trick people to send money or provide personal financial information.

Be particularly wary of charities with names like nationally known organizations.

- Threatening Impersonator Phone Calls

Revenue Official impersonation scams come in many forms such as receiving threatening phone calls from a criminal claiming to be with Revenue where the scammer attempts to instil fear and urgency in the potential victim. These types of phone scams or “vishing” (voice phishing) pose a major threat. Scam phone calls, including those threatening arrest if the victim doesn't pay a bogus tax bill.

The fact is, Revenue will never threaten a taxpayer or surprise him or her with a demand for immediate payment. Nor will it threaten, ask for financial information over the phone, or call about an unexpected refund or Economic Impact Payment. Taxpayers should contact the real Revenue or consult a tax and accounting professional if they are worried there is a tax problem.

- Social Media Scams

Social media enables anyone to share information with anyone else on the Internet. Scammers use that information as ammunition for a wide variety of scams. As such, taxpayers need to protect themselves against social media scams, which frequently use events like COVID-19 to try tricking people. These methods of trickery include emails where scammers impersonate someone's family, friends, or co-workers.

Social media scams have also led to tax-related identity theft. The basic element of social media scams is convincing a potential victim that he or she is dealing with a person close to them that they trust via email, text or social media messaging.

Using personal information, a scammer may email a potential victim and include a link to something of interest to the recipient which contains malware intended to commit more crimes. Scammers also infiltrate their victim's emails and cell phones to go after their friends and family with fake emails that appear to be real and text messages soliciting, for example, small donations to fake charities that are appealing to the victims.

- Senior Citizen Fraud

Seniors are more likely to be targeted and victimized by scammers than other segments of society and fraud. Financial abuse of seniors is a problem among personal and professional relationships but seems to be less of a problem when the service provider knows that a trusted friend or family member is keeping an eye out and taking an interest in the senior's affairs.

- Invoice Redirect Fraud

A finance team employee received an email from one of their creditors notifying them of a new account number for payment.

Invoice redirection fraud occurs when a business receives a fraudulent email claiming to be from an existing supplier, advising of new bank details for payment. They might not necessarily request a specific payment at the time of the notification, but the next legitimate payment will be made to the fraudsters account.

Fraudsters will even go as far as to changing the telephone number of the invoice, so to verify any change, please speak with a known team member of the supplier.

- Ransomware

Ransomware is malware targeting human and technical weaknesses to infect a potential victim's computer, network, or server and is a rapidly growing cybercrime. It doesn't just affect individuals either. Recently, Garmin was the victim of a ransomware attack and asked to pay $10 million in “ransom” to restore its systems.

Malware is a form of invasive software that is often frequently inadvertently downloaded by the user. Once downloaded, it tracks keystrokes and other computer activity. Once infected, ransomware looks for and locks critical or sensitive data with its encryption. In some cases, entire computer networks can be adversely impacted.

Victims generally aren't aware of the attack until they try to access their data, or they receive a ransom request in the form of a pop-up window. These criminals don't want to be traced so they frequently use anonymous messaging platforms and demand payment in virtual currency such as Bitcoin.

Cybercriminals might use a phishing email to trick a potential victim into opening a link or attachment containing the ransomware. These may include email solicitations to support a fake COVID-19 charity. Cybercriminals also look for system vulnerabilities where human error is not needed to deliver their malware.

Take Action

Speed is the Key element in dealing with any scam, if you think you have been a victim of fraud, contact your bank, IT provider and then the Garda National Cyber Crime Bureau (GNCCB).

 

https://www.wired.co.uk/article/carbanak-gang-malware-arrest-cybercrime-bank-robbery-statistics

Accountancy services in Dublin - With over a decade of experience, we work hand in hand with Recruitment Agencies throughout Ireland and the UK to provide a seamless experience for Limited Company Contractors. Our mission is to provide the best Accountancy services in dublin, Ireland & most efficient contractor support through a professional and friendly service.

Why Contractors Earn More - Icon Accounting

For over a decade, independent professionals have played a hugely important role in driving economic performance. 

Highly skilled independent professionals earn more than twice the earnings of equivalent employees according to Andrew Burke, Dean of Trinity Business School.

In the comprehensive study completed by Andrew Burke, he examines the role of an independent professional and the growth of the project-based economy.

Below, I examine why contractors earn more than the traditional PAYE worker.

Higher Rate of Pay

As an independent professional, you are typically only paid for the days and hours that you physically work, your daily rate of pay is reflected as a result of this to account for holidays and bank holidays.

It is worth noting that contractors are paid in lieu of the value they bring to an organisation, they are not overpaid. Independent professionals require very little overheads if any, often require no training and always hit the ground running.

Contractor’s bet on themselves, and there is a certain element of risk to navigate through.

We always advise that if you are contemplating making a switch in your career to contracting, calculate your target rate of pay as an independent professional first - include a premium of 20% on top of your current salary, in line with the industry standard.

You can use our Online Calculator to calculate your recommended rate of pay, or get in touch directly – we’ll be happy to do the calculations on your behalf, we’ll even provide sample payslips.

Tax Efficiency

You are not limited to paying Class S PRSI contributions if you decide to go contracting, however, those that do set-up under a Director Umbrella solution or a PLC, benefit from a reduced PRSI contribution of 4%. This is a substantial saving when compared to the PAYE solution which includes contributions to Class A PRSI (11.05%).

There are numerous other avenues that you should be taking advantage of if you are contracting long term, including but not limited to, making contributions to an executive pension.

As a Director of an Umbrella company or your own PLC, you can claim full tax relief on these pension contributions, making it an extremely efficient way of retaining more of that higher rate of pay!

Expenses

Contractors have the ability to claim business expenses. There is tax relief applied to these allowable expenses which gives the independent professional another opportunity to maximise their income.

The most common expenses include general equipment that may be required for your role, relocation expenses, training and up-skilling costs and mobile and internet costs. You can check our YouTube channel for more details around claiming expenses.

If you are a client of Icon Accounting, your dedicated Account Manager will proactively ensure that you are expensing any business costs that are allowable.

The Role of a Contractor

The rise of the independent professionals in Ireland has been evident since the last economic downturn in 2008. The primary reason for the rise in popularity is the mitigation of risk for the hiring company while accessing a specific skill set that is required. Contractors are experts in their field, constantly evolving and learning new skills but as mentioned previously, require little if any training or management and are focused on completed a project from the day they first engage.

According to Andrew Burke, contractors play a pivotal role in economic growth and create more employment opportunities within an organisation.

As a result of the uncertainty looming in the global economy, more and more businesses from more industries than ever before are now examining the advantages and options of hiring independent professionals, which means demand for independent professionals is set to surge.

When times get tough economically, contractors excel, picking up new skills and knowledge along the way as organisations adjust and adapt to their environment.

Shoudl you have any questions on what it takes to start contracting, consider reading our blog piece for First Time Contractors or get in touch directly – info@iconaccounting.ie or 01-8077106. 

Icon accounting is one of the top Accountancy firms in Ireland & Accountants in Ireland visit now!

Should I set up a Drizzle Day Fund?

We are in unusual times, especially as we can’t really spend very much. Businesses are losing millions daily as we eat, drink and stay at home wearing our old clothes!

While some are fortunate to retain a steady income, perhaps it’s an opportunity to assess our spending and debts.  As a client recently put it to me, “the coronavirus has opened my eyes to the €100 or more a week I was spending on Chicken Fillet rolls and Coffee”!!

So, let’s have a quick look at what we can review now that were on lockdown.

- Build your own drizzle-day fund

Double down on saving if you are in a position to. It’s likely this situation will never happen again in our lifetimes and we may need a pot to work off in 6 months’ time.

- Review our debts.

Make sure that the debt is actually what you owe and that the amount is correct. If you dispute a debt, first contact the bank directly to resolve your questions.

Perhaps now it the time to clear that old credit card bill!

- Plan. Plan. Plan.

Create a spending plan that allows you to reduce your debts. Itemise your necessary expenses (such as housing and healthcare) and optional expenses.  Stick to the plan.

- Pay down and consolidate your debts

Withdrawing savings from low-interest accounts to settle high-rate loans or credit card debt usually makes sense.

- Loan Repayment Holiday

Seek a repayment holidays on Loans, Banks and Lending institutions are in a position to offer 3-month repayment breaks at the moment, and it could be a useful way of keeping cash in reserve.

- Tax Refund

Are you due a tax refund for 2019? Get your 2019 tax return competed early and get your refund to your bank.

Author -

John Bell

Icon Accounting is the leading and fastest-growing provider of one-stop-shop accountancy and compliance services for independent professional contractors in Ireland. Our mission is to provide the most efficient contractor support through a professional and friendly service. top accounting firms in ireland, Accountants in Ireland, Accountancy firms in Ireland For more information visit www.iconaccounting.ie/about