The Field Of Accounting
The field of accounting can be described as 1,000 miles wide and 1,000 miles deep. There are so many individual areas one can focus on, and each area can further be broken down into its own specialty a business can build itself around.
An accountant can choose to work as a tax accountant or a financial accountant, either way, there is generally some crossover between the two.
I work both as a tax and financial accountant. I also work with businesses that are facing IRS collection and audit issues.
No matter what area of accounting I am engaged in, everything starts with a client’s set of books. If the books aren’t right, nothing else can be right.
With several years in the business, I have worked on clients whose books could make the ghouls come out to play all year and not just on Halloween.
This Is Sooooooo Scary
The one disaster that comes to mind is a prospect that came to me because he was looking for an investor and decided it was time to have his books looked at by a professional. He was a little concerned and wanted to make sure his books were in good order. After our consultation, I requested a copy of his Quickbooks file, so I could see if he needed further assistance. All I could say was “WOW.”
The prospect was a 100% shareholder-employee of an S corporation. He decided to save money by doing his company’s bookkeeping himself. He said why pay someone all that money to simply input his income and expenses into a software system when he could do it himself, after all, according to him, the software will correct any mistakes he makes.
Well, needless to say, in addition to recording operating income as revenue, he also recorded a bank loan and money he personally invested in the business as revenue. If that is not enough, he recorded his personal credit cards, mortgage payments, and student loans as business expenses. He had no concept of double entry bookkeeping and therefore, his balance sheet was way out of balance.
The type of business he owned had no need for a cost of goods sold (COGS) account, but there was an active COGS account on his profit and loss statement with no corresponding inventory account on the balance sheet. Fixed assets on the balance sheet were recorded at cost, which is correct, but all that “correctness” was ruined when I discovered accumulated depreciation somehow found its way onto the profit and loss statement rather than the balance sheet where it belonged.
Finally, auto expense. The car he used for business purposes was titled in his name. As such, any direct expense pertaining to the vehicle should not be recorded on the company’s books. He deducted his entire personal car note (principal and interest), auto insurance, mileage (standard deduction) and actual expenses.
Prior to meeting this prospect, I had worked with and corrected dodgy financials, but this one took the cake.
Please let the professionals help you fly right. That’s all Folks. 🙂