Accounting News and Notes

Atlanta Christian CPA: Keeping Your Business Financials Current and Correct 

Frequently as a CPA we are asked to help critique the internal accounting and bookkeeping of a company’s internal financial statements. The below is a sample of such a critique when a client is not needing a Compiled Set of Financial Statements but solely guidance on their internal record keeping: 

Below are Critiques to your July 2010 Internal Books 

Please be reminded that as June is now closed that you will not make any adjustments in June 2010 and prior. In that way we will be sure not to post any adjustments to prior periods which would both change our historical financials and may necessitate the filing of an amended corporate income tax return.

Please be sure to always adjust the salaries and payroll tax accounts to equal the year to date wages report by employee. To fix March please Debit Salaries and credit Salaries – Payroll Taxes for $2,000. Please be sure after you post this entry that the two Salary accounts equals the payroll report.

 Please do the Deposit to Sales Reconciliation listing the detail of the deposits per the bank statement (like the example I provided), while being sure that the total deposited equals the total deposits per the bank statement. 

As part of closing every month you will want to review the accounts to see if there are any amounts that look much higher/lower than in prior periods. In so doing I had the below observations. In the future after you review the accounts that look like they need additional research you will want to evaluate the detailed general ledger to gain the detail of amounts coded there. Please be reminded that purchases of assets that the business buys over a $1,000 per item should be coded to Fixed Assets on the Balance Sheet to the Correct Fixed Asset Account.  

Legal and Professional Fees Looked High: Please review the $2,000. expense in this account and advise as to what it was for so we might consider re-classifying. Should the $1,000. Software be a fixed asset. Please review/advise.

Phone, Utilities & Condo Dues Looks High: If the $2,000 is for a new phone system it should be re-classified to Fixed Assets on the Balance Sheet. Please review the $1,000 to see if it is a fixed asset and should be re-classified. 

Office Supplies Looked High: There were several charges to the account that looked like they perhaps should be coded to advertising. Please review/advise. 

Repairs & Maintenance Looked High: Please review the items over $1,000 and see if they should be coded to Fixed Assets. 

If you need any help in determining what is a fixed assets vs. repairs & maintenance please give me a call and I will be happy to go over. 

Tax law does now allow a tax deduction for Political Contributions. You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. Accordingly please re-class the $1000 in Charitable Contributions to Shareholder Distributions. 

You had many numerous pages of Journal Entries with most all of the items being to record checks individually. Per our discussions you are going to record all of the checks via the A/P system you should have only approximately two pages of Journal Entries. Please advise as to when you will begin recording all checks via the A/P system in Quickbooks.  

Hopefully we will not ever have to record checks by Journal Entry in the system, but if you ever do please do not do one journal entry per check but record all checks written off of a certain account in a single Journal Entry. 

As you are working through these items please do not hesitate to contact me to go over them.

 John Dillard, CPA of His CPA, PC (An Atlanta Christian CPA firm) 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304   http://www.hiscpa.com/    http://www.john-dillard.com/ To retain John Dillard CPA (An Atlanta Christian Speaker/Author) for your business group or church congregation, you can contact him today at 770.814.9304 

Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it! 

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisitions/Sales, Forensic Accounting, Business Valuations and Bookkeeping.

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas.

Award Winning Duluth/Gwinnett/Atlanta CPA Advises Atlanta Business Owners on Understanding Nuances of Cash vs. Accrual Financial Statements

Using a computerized accounting package which has a balance sheet and profit and loss capability is a great start to being able to track your business transactions accurately and efficiently. Generally speaking for many small businesses QuickBooks is good system and often has much more capability than you will ever need. However this program is not a universal fit for everyone and you should take care to carefully evaluate your needs to ensure that you select a system which will work for you long term. Special consideration, for example, should be given if you need a POS/Point of Sale System, detailed inventory costing/tracking/and valuation, or if your business will require a multiple user system.

Being an expert at running your business does not make you one at the responsibility of accounting for your business. By applying our decades of experience we are well suited to guide you to track the financial and operational affairs of your business. Understanding the differences in the usability of financial statements prepared on a cash versus and accrual basis will do much to help your Atlanta Business have up to date and useful financial information. Below is a sample inquiry we might receive from a client regarding their internal financial statements/tax returns, that were prepared on a cash basis.

Hi John: We are trying to secure a mortgage loan against our  building.  It’s more or less approved, but the loan officer wants to clear up a few things in case he is asked by his supervisor. 

Basically he is looking at our 2008 and 2009 tax returns.  He said we started 2009 with negative retained earnings and ended at negative $45K. His question is “what happened”?  Any help? 

Below is my response: 

Your tax returns are prepared on a cash basis, which means they reflect only the changes in the company’s cash balances and therefore does not reflect any open billings or accounts receivable. 

To give any kind of initial answer I would have to defer to the cash based tax returns themselves. If we want to give a more meaningful answer for those years we would need to compile financial statements for the last two years on an accrual basis. To do this I would need the open Accounts Receivable and Accounts Payable at the end of the last three tax years for the already prepared cash based tax returns. 

Though many business owners will spend substantive time evaluating their cash balance, this alone fails to contemplate other information available that might dramatically impact important operational and strategic issues. Consideration to long-term issues would include evaluation of the business’s current results versus its annual forecast, and a careful review of future sales and profit forecasts. It is also important to evaluate cash balances considering anticipated dates of collection of receivables, payment of ordinary debt, accounts payable, fixed asset purchases, and leases as all of these issues have substantive impact on what your future cash balances will be. The best way to ready yourself for successful evaluation of your financial statements is therefore to prepare your statements on an accrual, rather than on a cash basis. 

In light of this information, you are better able to make wise decisions that take into consideration future issues and your ability to satisfactorily balance the varying ebbs and flows that affect not only your present but future ongoing operations and the very viability of your business. Failure to consider each and all of these issues will result in a perpetual array of poor cash decisions, as they are not grounded in fact. Though running a business is indeed an art, it is based upon one’s ability to perceive and properly process and evaluate the facts available that are tantamount to ones success and an accrual statement is your best bet to have the required information to compile needed useful information for Atlanta Business Owners & Entrepreneurs. 

And this is only some of the information available on our web site. You also have at our blog a host of other varied and timely tax and business management issues you can use. 

John Dillard, CPA of His CPA, PC (An Atlanta Christian CPA firm) 1940 Woods River Lane, Duluth, GA 30097  Phone 770-814-9304   http://www.hiscpa.com/    http://www.john-dillard.com/ To retain John Dillard CPA (An Atlanta Christian Speaker/Author) for your business group or church congregation, you can contact him today at 770.814.9304 

Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!  

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisitions/Sales, Forensic Accounting, Business Valuations and Bookkeeping.

Straight Talk: When there is not enough in your paycheck for your mortgage – what should you do?

Sell, Loan Modification, Short Sale or Foreclosure.

If you are dealing with financial distress and the inability to keep your mortgage payments up to date my advice is to quickly educate yourself on your options and decide the best course of action for your family. Don’t wait! If you do nothing, the choice is taken out of your hands. You can end up with a foreclosure from your lending institution that negativity impacts your credit and the ability to buy another house for a minimum of 2 years.

Your options are:

1) Sell the house outright for at least what you owe your current lender and you come out whole. The marked benefit is having no negative impact on your credit history. Unfortunately, if you purchased within the last 2-3 years with minimal to nothing down; or if you put minimal down and obtained an interest only loan you could find it difficult for your home to appraise and complete a sale in the current declining value environment. If that is the case, you have the following three options: Loan modification, short sale or foreclosure.

2) Apply for a loan modification from your existing lender. While this process can be tedious you can have favorable results, stay in your home and have time to get back on your feet. Unfortunately each lender has their own process and follows their own timeline so you need to play by their rules, complete all paperwork in a timely manner and give them the documentation they request so they can render a decision. Then follow up, follow up follow up!

3) Short sale: simply stated you can sell your home and request that the lender of your current mortgage accept less than the total amount due. This is done as soon as a contract/offer is submitted to you. If you have both a first and second mortgage; you must obtain approval from both lenders and this process is even more challenging. The lender does not have to accept a short sale which means – no sale! They will weigh the options of your equity position and estimated marketing time and costs to see if the short sale benefits their bottom line versus taking the house back through foreclosure proceedings and selling it themselves. Short sales usually take much longer than typical resale closings, i.e. 2-4 months but the benefit is you will not have a foreclosure on your credit standing for 7 years and you can move on without any baggage to your next housing opportunity.

4) Foreclosures: When the lender holding you loan takes action to foreclose upon your property, you are given legal notification and after due process, you can and likely will be evicted from your home. In the state of Georgia, foreclosure can occur as early as 30 days after your first delinquency. While this is not typical, it is legally possible. It is beneficial for the lender to find a way to keep the homeowners in the property, not incur legal and real estate expense of upkeep and marketing. However, after a certain time frame, usually 2-5 months, action will be taken.

ACT NOW. Your best defense is to investigate which of these opportunities to pursue before the decision is taken out of your hands. When you know you will have a shortfall in making your mortgage payment start the process immediately, not 2-3 months into a delinquency. Lenders usually do not accept partial payments; therefore making less than the required mortgage payment is still considered a delinquency. Knowledge is powerful. Make the most of your alternatives despite the difficult choices. Having a plan keeps you and your family on track for adjusting to the decisions that must be made in these troubling financial times.

Your CPA and Mortgage Planner can help negotiate through these tough times by arming you with key information. As a 30 year veteran of the mortgage industry, my goal is to assist my clients through all the cycles of their life by managing their best mortgage solutions. I am available to assist with any questions or strategies to help you and your families navigate the current market conditions.

To learn more contact Ms. Sandra Hill of Georgia Residential Licensee #12149 at Trellis Financial Services, Inc. via phone at (770) 814-0552 or by the Internet at sandyhill@trellisfinancial.com

Gwinnett CPA Firm on Being Ever Diligent…While Collecting Unpaid Invoices

The Apostle Paul Commands us to be ever diligent as Satan is always seeking for those he might devour. It is by our readiness and putting on the very armor of Christ that we are able to do God’s bidding. When we are addressing collection issues, it is easy to fall into righteous indignation as others fail to live up to their end of the bargain, after we have strived to be Christ-like in the services that we have provided. It at these times, when the devil as the opportunity to gain a foothold and to encourage us to judge others, and to sin in our anger.

Staying Aware. God commands that we are to submit to the Authority of others, even if it hurts. This means that whatever a judge or court rules that we are to submit to the laws of our government, elected officials and authority figures. However, it is prudent to remember that Jesus Christ himself humbled himself in the court of Pontius Pilate submitting to the court’s ruling and ultimately His crucifixion. Though Jesus knew the truth and could have over-thrown the court and its decision at any time, He chose to be submissive and suffered as a result, a gruesome death on a cross. However, He realized, as well we should, that the courts of the earth, though they are to be obeyed, are not the courts of the Heavens. “I care very little if I am judged by you or by any human court; indeed, I do not even judge myself.”  1 Corinthians 4:3

Offering Forgiveness. Though there will be many who will fail you, as Believers we are exhorted to go not only the extra mile to assist others, but to sincerely offer forgiveness, when doing so. We are commanded by scripture to forgive as many as seventy times seven (for you non-math people that is 490 times) in a single day. Luckily no one has yet sinned against me 490 times in a day, my responsibility as a Christian is to always offer the path of forgiveness and peace.

Staying Out of Debt. Staying out of debt, substantially limiting both the amount of debt you acquire and its repayment period are Godly tenants of the Christian-life. All of the precepts in this series we have discussed have included the a Believer’s responsibilities to handling collection issues. Whereas staying out of debt and paying it off ASAP is your best bet to a quieter and more joyful life, for it is far easier to serve God when you are debt-free and not heavily laden with undue concerns and worries. “Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.” Romans 13:8

To read more about John Dillard CPA and his CPA practice, business consulting and IRS representation visit http://www.hiscpa.com/ (All Rights Reserved)

To read about his books A Voice of One, Overcoming Life’s 9/11’s and Charleston Dawn and his speaking ministry visit http://www.john-dillard.com/

Helping Clients with Corporate & Personal Income Taxes, Incorporation Advice, Tax Planning, Virtual CFO, Financing, Business Plans, Back Taxes, Offer in Compromise, Tax Advocacy, Business Acquisitions & Sales, Business Plans, and IRS Representation.

Serving Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond

Following Christian Precepts…While Collecting Unpaid Invoices

God guides us, throughout the Bible, to be good stewards of our time, money and resources. To this end, there are many variables to be explored when making collection efforts that I have detailed below of situations and circumstances where we tried to go the extra mile in being a Christian and a Believer on both collection issues and difficult economic times. These principles will do much to guide and direct you as you handle the collections of your business.

-Being Willing to Sit Down With an Arbitrator, a fellow Believer, or their clergy. Just as Jesus deals with us directly through the prompting of the Holy Spirit so are we to be willing to deal directly with others to ensure that open and honest communication, at least on your part, is always maintained. If a debtor is unwilling to resolve the matter in any amicable sensible fashion, then offer to meet with an arbitrator or a fellow Believer or their clergy. Your goal in these conversations should not be to be right, but only just and fair. I have often been willing to walk away from/reduce billings in an effort to keep peace and to live in peace. I always suggest being willing to meet with their pastor in an effort to not have a biased mediator as well as to make others more comfortable. “If your brother sins against you, go and show him his fault, just between the two of you. If he listens to you, you have won your brother over.” Matthew 18:15

-Be Patient. Perhaps there is no greater virtue than patient. Imagine what would happen if God was not patient with us. Though our payment terms and contract specify that checks for all billed monies are due to be paid upon receipt of the invoice, we have frequently granted payment terms over months and even years. Just recently we were involved in a case, where we waited over three years to pursue more stringent collection efforts. Seeking not to judge, lest we be judged, should be of critical moral and strategic importance when pursuing all collection efforts.

-Walk Miles and Miles in Others Shoes. It is only when we really try, and not just do it half-heartedly, that we can begin to help and see others more clearly. One of the cases we were involved in was a client to whom we granted, in advance, the longest payment terms my firm had ever agreed to. I did this to help him out of a very difficult and trying economic time that they were suffering through. To this end, the client returned by favor by:

-Not honoring their initial commitment.

-Not honoring their three plus commitments to mail checks and funds.

-We failed to receive a promised money order, two promised overnight packages, and a separate package that enclosed three checks, to be applied against their balances.

Regardless of their failures, just recently I approached them and sought to see if there were other issues going on in their life or perhaps Spiritual Warfare they are in the middle of that perhaps I might help with or pray for. God does not allow me to judge my Brothers and Sisters in Christ but does require that we constantly to look to the good in others and indeed to consider others better than ourselves.

To read more about John Dillard CPA and his CPA practice, business consulting and IRS representation visit http://www.hiscpa.com/ (All Rights Reserved)

To read about his books A Voice of One, Overcoming Life’s 9/11’s and Charleston Dawn and his speaking ministry visit http://www.john-dillard.com/

Helping Clients with Corporate & Personal Income Taxes, Incorporation Advice, Tax Planning, Virtual CFO, Financing, Business Plans, Back Taxes, Offer in Compromise, Tax Advocacy, Business Acquisitions & Sales, Business Plans, and IRS Representation.

Serving Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond

Knowing the Credit Score of Your Georgia Business

Checking your business credit worthiness is not for the meek of heart and can be done without ever leaving the office, calling your bank or logging on to the Internet.  All you need to do is to print out your internal financials and utilize a few basic mathematical calculations and you are well on your way. 

Entrepreneurs often feel they need outside professional advisors and CPA’s, which frequently they do for many of the more complex tax and management issues they face.  However, there are a few key internal management statistics each and every owner should be well apprised of and able to put their hands on at a moments notice.  Ownership of these statistics will set you well ahead of your peers and give you key operating information which when used properly will grant you a competitive edge in the marketplace. 

These statistics are for those who are familiar with most of the basic tenets of a balance sheet and profit and loss.  If you are not, these principles and guidance are easily learned.  As you review these calculations/ratios, stop and apply them and see how your business compares.

A/R (Accounts Receivable) Turnover

This ratio calculates how often your account receivables turn over/are paid by your clients.  Generally, you would want your A/R to turn over approximately twelve times a year, which would mean your average monthly billings are paid within thirty days.  This is calculated by dividing annual sales by A/R equals your turnover ratio.  For example:

     Annual Sales          or         $720*   = A Turnover
Accounts Receivables                $60        Ratio of 12

*Monthly sales of $60K times twelve months

Care should be taken in reviewing/relying upon this calculation to also evaluate the aging of your receivables and to review in detail all substantive account balances over thirty days for any potential collection issues/corrective action required.

Days in Receivable (A/R)

This calculation reveals to its user as to how long receivables are unpaid/what the billing to payment cycle is.  A lower calculation result will signify that receivables are being collected sooner than later.  As with any business, “cash is king” as you cannot be fiscally responsible without cash in the bank.  Days in receivables are calculated by dividing your A/R by your last months/average monthly sales.

       Open A/R Balance              or $90K = 1.5×30 days/month =  45 days in
Last Month/Avg. Monthly Sales       $60K                                  in receivables

Days in A/R is one calculation you will want to be as low as possible and care should be taken to evaluate it in light of:

• Your industry, its norms and trends
• The credit terms you extend to your clients
• Present economic conditions locally, nationally and internationally

Inventory Turnover

If you are more aware of how efficiently/quickly your inventory is turning/selling you will be better apt to ensure that you do not either overstock or run out of your faster moving items.  This calculation can be applied to the total inventory, a particular class or segment of your business and even to individual items to discern the nuances of your inventories and sales ability.  Also, this process can be used to weed out less profitable/marketable lines/items of inventory.  Calculation of your inventory turnover is done by dividing your annual cost of goods sold/purchases by your present inventory, illustrated by the below:

    Annual Purchases          or      $480K       =  Inventory Turnover of
Present Inventory at Cost             $40K          12 times annually

Days in Inventory

A keen knowledge and awareness of how much inventory you have on hand and its marketability is one of the primary indicators of future success/profitability.  This indicator will reveal to you if your inventory levels are too high or too low.  Your industry and suppliers will dictate much of your desired levels so you will want to be sure to gain an adequate understanding of your particular nuances.  However, a general rule of thumb would be to have approximately forty-five days in inventory.  This can be determined by dividing your total inventory by your past months/average monthly sales at costs and then by multiplying it against the number of days in a month, for example:

            Inventory                  or        $80K  x 30 days in a month =
Months of Purchases at Cost               $40K     60 days in inventory

Current Ratio

The current ratio is calculated by taking the total of all of your total current assets and dividing it by the sum of your total current liabilities.  For a typical rule of thumb it is suggested that this ratio should be two or better, as this indicator will foretell your firm’s ability to meet its current obligations as they become due.  To illustrate how to calculate this ratio:

 Current Assets         or         $400K          =       2.0 Current Ratio
Current Liabilities                   $200K

In conjunction with this calculation it would be prudent to also perform the earlier stated ratios/turnovers as they will assist in determining the integrity and soundness of the accounts receivable and inventory balances included in the current assets and liabilities totals.

Acid Ratio

The acid test ratio is a key-determining factor in helping to evaluate a firm’s ability to meet its immediate cash needs.  This calculation is preformed by taking all of your quick assets (cash balances plus all items which can quickly be converted to cash) and dividing it by the firms total liabilities, illustrated by the below:

  Quick Assets                 or         $300K        =   1.5 Acid Ratio
Current Liabilities                         $200K

The acid ratio will most always be less than the current ratio and it reveals a firm’s ability to meet its immediate cash needs. We work with clients each and every day in meaningful and insightful ways to look beyond the numbers to provide significantly meaningful management information.

To read more about John Dillard CPA and his CPA practice, business consulting and IRS representation visit http://www.hiscpa.com/ (All Rights Reserved)  

To read about his books A Voice of One, Overcoming Life’s 9/11’s and Charleston Dawn and his speaking ministry visit http://www.john-dillard.com/

Atlanta CPA on Lending Sources/Business Incubators…Resources for Metro Atlanta’s Entrepreneurs

To find out what the SBA (Small Business Administration) is doing in your area of town, you can get a full listing of closed loans be month at http://www.ajc.com/business/content/business/smallbusiness/index.html This list is sorted by county, loan date, amount, bank/lender, name of borrower, address, and its NAICS/tax code for easy reference. Here you will be able to get at a glance a complete listing of SBA loans and activity in your area and throughout the state.

For business’s who do not fit a traditional banking relationship or that of an SBA lender you can see a list of Atlanta Venture Capitalist (VC) . The listing can be viewed at http://www.ajc.com/business/content/business/extra/vc.html and includes the name of each VC, the year their business was established, their address, lending focus, total capital, preferred lending range, and list of sample funds/incubated companies. Although a VC will typically request a large amount of equity ownership many business opportunities are well suited to this type of lending. Having personally experienced the Atlanta Venture Capital Marketplace firsthand, I have learned that pursuing a VC will most likely prove the most expensive of all Financing Options potentially available to a business owner. For those we are not quite ready to purse Venture Capital money, asset based lenders are often a viable financial alternative. For more information visit http://www.hiscpa.com/blog/2009/04/23/asset-based-lending-finding-alternative-sources-of-funding-your-atlanta-business/

For business’s who are not yet quite ready to go to market their business Incubators who will work alongside and with business owners to help develop their ideas and to mature their business plan. For a listing of Atlanta Incubators please visit http://www.ajc.com/business/content/business/extra/incubators.html Including in this listing you will find the Incubators full name, address, phone, officers/partners, their industry focus, samples of prior clients, their size in terms of square footage, and the average length of past incubations (i.e., the time a business is served by the Incubator).

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

Atlanta CPA Advises on Atlanta Venture Capital Sources

Finding and Sourcing Financing Sources for your Metro Atlanta Business

For the newer business owner with a great idea who needs money venture capitalist (a VC) or an angel investor are often great places to start. These types of investors will often require you to give away a percentage of the company’s stock and therefore its long-term profits as opposed to a bank that will solely charge interest. Though a VC or angel investor will be therefore substantially more expensive in terms of financial outgo over the years, they are often the only valid option for an entrepreneur with a unique idea, niche, product, or service.

There are several options when combing the marketplace looking for potential investors who might have an interest in investing in your company. Web sites such as www.thefunded.com are good places to start. There you can search for potential financing options by geographic area, size of the loan needed, and type. On this site you can also obtain ratings of funds for which you might be considering, which appear to be from the prospective borrowers themselves. Seeking any substantive form of capital, whether from traditional or VC sources will necessitate one having a sound and well thought out business plan or model that will tell a story motivating a potential investor to engage. Also www.startuplounge.com and www.tagonline.org will prove useful to a potential entrepreneur in seeking financing for their venture. Working closely with your CPA and attorney and allowing for a reasonable budget to negotiate a deal, often in the tens of thousands and above, will be critical components of the process along with that business plan which will virtually sell itself.

Having personally experienced the Atlanta Venture Capital Marketplace firsthand, I have learned that pursuing a VC will most likely prove the most expensive of all Financing Options potentially available to a business owner. For those we are not quite ready to purse Venture Capital money, asset based lenders are often a viable financial alternative. For more information visit our blog at http://www.hiscpa.com/blog/2009/04/23/asset-based-lending-finding-alternative-sources-of-funding-your-atlanta-business/

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

Atlanta CPA Teaches the Loan Application Process and Atlanta Loan Procurement

Author/Speaker John Dillard CPA teaches Atlanta business owners and entrepreneurs how to both apply for a loan and loan procurement

Getting Your Banker to Say Yes to Financing Needs…Getting Financing For Your Business includes getting to your banker information they will need to properly evaluate your business credit/repayment ability and whether or not to extend financing to your business. Getting these items to your banker in one well-organized and documented marketing package will do much to assist the banker/lender in both feeling comfortable with extending financing to you and your business as well as properly evaluating your business. By putting together a good “package” for the banker you have the ability to put “your best foot forward” thereby allowing your story to be told.

If you have a good business, good cash flow and good opportunities for the future, ensuring that your loan package for your banker will do much to help ensure prompt completion of your loan request. A well-organized loan package will include:

-Last two years corporate and personal income tax returns

-An interim/year-to-date financial statement

-A sound and logical business plan

-Business promotional brochures

-A narrative cover letter detailing the needs and use for loan monies

-Any other substantive corroborating financial, operational, industry, demographic and economic information

The goal of all of the information will to that it will essential tell a story and that the loan request will be viewed by the banker/lending source as a natural progression and logical decision for both the company and the bank. Keeping in mind that banks only make money when you pay back the loan in full along with interest will do much to ensure that your business plan and strategy for the use of the money are well-thought out and organized. Essentially a bank or traditional lending source is looking to extend credit only when they believe you and they both believe they will be repaid.

Recently we helped one of our clients with an introduction to a smaller but well capitalized bank in placing with them a total credit of $200,000, in spite of the recent bad economic news. I have learned over the years while practicing as an Atlanta CPA that frequently working with small banks offers much more flexibility than larger banking institutions. Accordingly this particular $200,000 line was place with what would be deemed a predominantly local/regional bank.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!” What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31 Why are these verses here? Learn how His CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html