Month: January 2014

QuickBooks in Construction Accounting – Transfer Work in Process to Cost of Goods Sold

QuickBooks does not have a seamless subrountine to transfer costs from construction in process control accout to the profit in loss statement’s cost of construction section. Therefore, the accountant has to export data to a spreadsheet and then sum the respective functional costs of materials, subcontractors, labor, land etc. and then make a general journal entry to complete the transfer. This article explains this process in detail.

Alcohol Costs – Monitor Closely

Alcohol Costs

In the restaurant business, alcohol is the single best margin generator.   If you are going to have a profit, this is where the money is made.  As an owner, you need to understand the value of alcohol sales and the associated costs.  This aspect of operations not only generates high contribution margins, it covers its share of costs and ultimately adds to the bottom line. 

Partnership Agreements – Terminology

Partnership Agreements

Each of us has our own built in dictionary for terms we hear in our business lives.  I find it fascinating that the standard business term ‘Equity’ is interpreted differently within the business world.  I often interpret the term using the Internal Revenue Service definition because my background is in taxation.  Lawyers use this term to mean ownership and not necessarily financial driven.  Bankers convert this term to capital and the associated relationships to debt.

Common Stock – Definition

Common Stock

A document indicating ownership in a corporation is often referred to as common stock.  It identifies an equity position in a business. The document or certificate is commonly referred to as a security and provides certain rights to the holder (owner).  These rights include voting and residual value upon liquidation of the company.

Capital Expenditures – IRS Definition

Capital Expenditures

The Internal Revenue Service uses a complex definition to identify capital expenditures (assets).  A capital expenditure is not deductible as an expense in the tax year purchased; the taxpayer or entity must use depreciation, amortization or depletion to obtain deductible value on the entity’s return.

Tip Income – Employer Responsibilities

Tip Income

The Internal Revenue Service is acutely aware of the volume of tip income generated in the United States.  Therefore they are shifting the compliance aspect of this income onto employers.  This is a direct result of our government’s need for more revenues including Social Security and Medicare taxes.

Quick Ratio – Definition, Explanation and Proper Use

Quick Ratio

The quick ratio is a formula used in business to identify the ability of a business to pay its current liabilities.  It is also known as the ‘Acid Test’ formula (ratio).  In the large markets this formula is one of the financial industry ratios used to value the stock of a corporation.  In the arena of the small business, you should only use this ratio as a means to gauge ability to pay your bills right now.

Partnership Agreements – An Introduction

Partnership Agreements

There is a tremendous amount of information to convey to fully understand partnership agreements.  This is the first in a series of articles related to partnership agreements.  Throughout this series I will explain the various sections and issues a small business owner faces in creating a sound and fair agreement with a single or multiple partners.

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