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We provide comprehensive accounting services, including bookkeeping, payroll, sales tax, cash flow projection, and financial statements. Let us handle your accounting needs so you can focus on growing your business.


Accurate financial record-keeping is essential for businesses to comply with tax regulations, and proper bookkeeping is the key to achieving this. However, in addition to meeting legal obligations, good bookkeeping also provides several practical benefits that can help a business succeed. Here are some reasons why maintaining good bookkeeping is crucial for the success of a business:

  • Budgeting: When income and expenses are recorded, it is easier to review your financial resources and estimate cash flow.
  • Organization: Proper bookkeeping serves as a valuable resource for various stakeholders such as the IRS, investors, accountants, and lenders who have a vested interest in your financial records. By maintaining well-organized records, you can easily locate and provide necessary information when required, simplify the tax filing process, and increase the likelihood of obtaining funding. In short, good bookkeeping not only benefits your business but also makes it easier for others to interact with your financial information.
  • Analysis: Maintaining proper bookkeeping enables your company to produce financial statements, which serve as a powerful tool for tracking cash flow and analyzing the strengths and weaknesses of your business. These statements provide valuable insights into your company's financial performance, allowing you to make informed decisions and take appropriate actions to enhance your business's profitability. In short, bookkeeping is critical for generating financial statements that can help you evaluate the financial health of your company and make strategic decisions.
  • Planning: Financial statements can also indicate initiatives that have or haven’t worked, which can help business owners and shareholders plan for the future.


Main Costs of Payroll Accounting

Payroll costs represent the expenses incurred by an employer in fulfilling its obligations to employees. These expenses cover the compensation paid to employees for their direct labor, as well as mandatory benefits required by legal regulations. Together, these components form the accrued expense of keeping an employee on the payroll. In accordance with accounting principles, all accrued expenses must adhere to the matching principle, which dictates that expenses should match the period in which related revenues are reported, regardless of the payment date. For instance, if an employee is hired in December but paid in January, the labor expenses must be recognized in December.

It's worth noting that compensation for employee labor is not always recognized as an expense. In cases where employee labor is utilized in manufacturing a product or asset, the compensation, including provisions, should be recorded as a cost of producing the product or asset and recognized as an expense when the inventory is sold through the cost of sales.

Performance Obligations under Payroll Accounting

Performance obligations refer to the withholdings or deductions made from employees' wages, which are not paid directly to employees but rather to government institutions or private companies at a later date. The most common withholdings in accordance with US laws are:

  • Federal withholdings: Retentions for federal income taxes
  • State withholdings: Retentions for state income taxes
  • FICA payable: Retentions for Social Security and Medicare
  • State disability: State disability taxes
  • Employee health insurance: Retentions for health insurance coverage
  • 401K: Retentions for retirement savings.

Other withholdings include:

  • Court-ordered withholdings: Deductions from salary ordered by the court for specific purposes.
  • Union dues.

Calculations in Payroll Accounting

Once a company has set up its employee hiring process and gathered all relevant employee information, it needs to follow these steps:

  • Calculate direct and indirect labor compensation: At the end of each month, add up the costs of direct compensation such as salaries and overtime, which form the basis for most withholdings and provisions. Then, sum up indirect compensation concepts like commissions and bonuses (checking federal and state requirements to see if they should be included in the calculation for withholdings or deductions)
  • Calculate withholdings and deductions: After determining the basis for each withholding or deduction in the previous step, calculate employees' taxes and wage deductions as per the applicable requirements
  • Calculate provisions: Provisions are accrued expenses that generate liabilities to be paid in the future. Expenses resulting from legal requirements, such as holidays and vacations, are recognized as provisions in the period they are incurred, even if paid in subsequent months. They are the result of the contractual relationship with the employee.

Record entries in the books

Generate payments: After calculating and recording accounting entries, companies need to generate payments to employees, government entities (related to withholdings), and other entities. This process may often be outsourced to third parties such as Ceridian

Calculate posterior adjustments to provisions: Due to the nature of provisions, which are based on estimates, it is important to recalculate and adjust provisions if necessary

Sales Tax: 

Cash Flow Projection:

Why is cash flow projection important?

A business relies on cash flow to function, and negative cash flow, in the long run, can cause various issues for a business. Although most businesses encounter cash flow problems at some point, planning ahead can make managing negative cash flow easier. Cash flow projections can aid in this planning process.

Business owners often mistakenly assess their business's health by focusing on assets, intellectual property, and other factors that are important for attracting investors or selling the business but are not useful in predicting future performance. These factors are also not considered in cash flow calculations.

Cash flow projections offer four benefits in measuring future performance:

1. Gain a better understanding of your business finances
Small business owners often struggle with maintaining a positive cash balance due to unexpected expenses and bills. Understanding where your money is going and identifying consistent causes of negative cash flow is crucial for long-term business growth. Conducting a cash flow analysis and projection helps you predict future cash inflow and outflow, allowing you to make informed decisions on where to invest or save your money.

2. Make confident business decisions
Insufficient cash flow can lead to poor business decisions, according to a QuickBooks survey. Cash flow projections provide actual data on how your business is performing, which helps you make informed decisions on when to invest in new opportunities or put money aside. If the coming month looks positive, there may be no need to postpone investments even if you are currently experiencing negative cash flow.

3. Build trust and credibility
Investors, lenders, and other stakeholders need to know that your business is financially stable. Cash flow statements and forecasts provide insight into your business's current and future financial health, which can help you secure a business loan, attract investors, win new business contracts, or make your company more attractive to potential buyers.

4. Plan for the unexpected
While cash flow projections cannot predict unforeseen events, they can help you prepare for them. Identifying when your business is most cash flow positive is an ideal time to put aside extra savings in an emergency fund. This can provide a cushion in case of unexpected expenses or dips in cash flow, preventing negative cash flow from derailing your business growth.

Unpaid invoices are a common problem for businesses, but with regular cash flow projections, you can anticipate when outstanding payments are likely to stack up. By identifying potential issues ahead of time, you can take proactive measures to prevent negative cash flow, such as offering early payment incentives or increasing communication with clients. Automated tools can help generate accurate cash flow forecasts without the need for manual calculations or spreadsheets.

To understand cash flow projections, it's important to first understand what cash flow is. Cash flow refers to the movement of money in and out of your business, and healthy cash flow is crucial for business success. By creating a cash flow projection, you can estimate the money you expect to flow in and out of your business, including income and expenses, over a specified period of time. This allows you to predict cash shortages and surpluses, estimate the effects of business changes, and demonstrate your ability to repay loans to lenders.

While cash flow projections can be a valuable tool for managing cash flow, they may not be suitable for every business and can be time-consuming and costly if done incorrectly. It's important to remember that cash flow predictions are not always perfect, but they can help you make informed decisions about your business and identify areas for improvement. Overall, cash flow projections provide a clearer picture of your business's financial health and can help guide your decision-making for the future.

Financial Statement:

Overview of the Three Financial Statements

1. Income statement
The income statement is typically the first place investors and analysts look when evaluating a business's financial performance. It presents the business's revenues and expenses for a specific period, starting with sales revenue at the top. From there, it deducts the cost of goods sold (COGS) to determine gross profit. Other operating expenses and income are then factored in to arrive at the bottom line, which represents the business's net income

Key features:

  • Displays revenues and expenses for a period
  • Based on accounting principles such as matching and accruals
  • Used to assess the profitability

2. Balance sheet
The balance sheet provides a snapshot of a company's financial position at a specific point in time. It lists the company's assets, liabilities, and shareholders' equity, with assets equaling liabilities plus equity. The asset section begins with cash and equivalents, which should match the balance found at the end of the cash flow statement. The ending balance of each major account is displayed from period to period. Net income from the income statement flows into the balance sheet as a change in retained earnings (adjusted for dividend payments).

Key features:

  • Shows the financial position of a business
  • Expressed as a “snapshot” or financial picture of the company at a specified point in time (i.e., as of December 31, 2017)
  • Has three sections: assets, liabilities, and shareholders' equity
  • Assets = Liabilities + Shareholders Equity

3. Cash flow statement
The cash flow statement takes net income and adjusts it for any non-cash expenses. It then calculates cash inflows and outflows using changes in the balance sheet, displaying the change in cash for the period as well as the beginning and ending cash balances. It is divided into three sections: cash from operations, cash used in investing, and cash from financing.

Key features:

  • Shows the increases and decreases in cash
  • Expressed over a period of time (i.e., 1 year, 1 quarter, year-to-date, etc.)
  • Undoes accrual accounting principles to show pure cash movements
  • Has three sections: cash from operations, cash used in investing, and cash from financing
  • Shows the net change in the cash balance from the start to the end of the period How Are 

These 3 Core Statements Used in Financial Modeling?

As previously discussed, the three financial statements are interconnected, and financial models utilize the correlations between the information in these statements, as well as historical data trends across periods, to predict future performance. While the process of preparing and presenting this information can be intricate, typically the following steps are followed when constructing a financial model.

  • Line items for each of the core statements are created. It provides the overall format and skeleton that the financial model will follow
  • Historical numbers are placed in each of the line items
  • At this point, the creator of the model will often check to make sure that each of the core statements reconciles with the data in the other. For example, the ending balance of cash calculated in the cash flow statement must equal the cash account in the balance sheet
  • An assumptions section is prepared within the sheet to analyze the trend in each line item of the core statements between periods
  • Assumptions from existing historical data are then used to create forecasted assumptions for the same line items
  • The forecasted section of each core statement will use the forecasted assumptions to populate values for each line item. Since the analyst or user has analyzed past trends in creating the forecasted assumptions, the populated values should follow historical trends 
  • Supporting schedules are used to calculate more complex line items. For example, the debt schedule is used to calculate interest expense and the balance of debt items. The depreciation and amortization schedule is used to calculate depreciation expense and the balance of long-term fixed assets. These values will flow into the three main statements
Low Value + High Risk


  • No formal analytic structure
  • No analyitcs management / occurs in silos
  • Employees’ analytic capabilities vary
  • KPIs undefined: based on ad hoc & chaotic metrics
  • Employees’ Low or mixed confidence in reports capabilities vary
  • Employees’ Low or mixed confidence in reports capabilities vary
  • Lack data-driven decisions
Low Value + High Risk


  • No formal integrated enterprise reporting
  • Analytics management is departmentalized
  • Employees’ analytic capabilities Employee’s analytic competences vary
  • KPIs focus on the past: asking what happened last week/month/year
Medium Value + Medium Risk


  • No formal integrated enterprise reporting
  • KPIs focus on present metrics/real-time: asking what is happening today and why
  • Defined key metrics shown within dashboards and scorecards
  • Employee analytics competencies vary
  • Analytics management is departmentalized
High Value + Low Risk


  • Integrated enterprise analytics
  • Analytics management and processes exist
  • KPIs focus on future outcomes: measures leading indicators that provide prescriptive changes (e.g. how does changing x, y and z impact outcomes?)
  • Leveraging internal and external data
High Value + Low Risk


  • Integrate enterprise analytics (including advanced analytics)
  • Strong analytics management and processes
  • KPIs focus on predictionsL provide strong confidence levels for taking business actions
  • Data science is operationalised
  • Machine learning and AI analysis are used to project KPIs

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