Watford Accountants on General and Administrative Expenses

accounting expensesGeneral and administrative expenses form part of any company’s financial statements but what are they really and what comprises them? Let’s all get to know with the help of our friendly team of Watford accountants.

Per definition, general and administrative expenses pertain to day to day costs of a business that are associated to back-end operations or to those that are indirectly related to the profit generating aspect of the business. They are likewise necessary to maintain daily operations and administer the business’ daily activities. For most cases, these are those outside of production, sales and marketing.

There are many expenses that fall under its umbrella. Let’s tackle a few of these below.

  • Office Rent or Lease

Space used for divisions like Human Resource and Finance among others are included here. These are paid on a monthly basis at a fixed fee. In the event that you own the building where these offices are, rent expenses are not anymore part of this list.

  • Office Furniture and Fixture Depreciation

Furniture and fixture in your office depreciate too just like the structure and will entail costs. They have to be accounted for to better exhibit their real time values as time goes by.

  • Water, Electricity and Utility Bills

Outside of manufacturing and production, utilities are also used in the offices for a bunch of purposes from sanitation to running computers and many more.

  • Accounting Expenses

You will also have to spend for the accounting aspect of your business and they fall under the general and administrative expenses regardless if you hire in-house employees or outsource the service from a firm.

  • Insurance Expenses

This is the cost of insurance (e.g. fire) that has been incurred, has expired, or has been used up during the current fiscal period. The total amount is amortized over the years where it is considered to be useful and beneficial.

  • Office Supplies and Inventory

The office uses certain supplies like inkjet cartridges, bond papers, folders, pens, coffee, creamer, staple wires, photocopying ink and the like. These fall under the office supplies expense in the general and administrative costs category. Such are expenses outright instead of amortized or depreciated as their benefits are immediately used up instead of spread out in several fiscal periods.

  • Legal Services

All legal costs are part of the general and administrative expenses category too says Watford accountants. Examples of this include advisory services and contract among others.

Taxation Tips from Accountancy Firms in Watford

accountancy firmsBy definition, taxation refers to the act of levying taxes by an appointed authority. Taxes come in many forms and are levied on individuals, organizations and businesses to be used to run the government, the country, a state or a municipality. The subject is not only complicated to begin with considering all of the legalities and rules surrounding it but also sensitive in such a way that mistakes can ripple into monetary penalties and legal consequences. It’s only apt that you take caution when dealing with it. To help us, accountancy firms in Watford have the following taxation tips for us to peruse and learn from.

Tip # 1: Track all of your transactions. – Income can be taxed. Owning a property will also make you liable just like buying goods and services among other things. This makes it crucial for any business entity to maintain a complete record of all transactions. Doing so will make it easier for you to compute and determine your tax obligations.

Tip # 2: Find an adequate and qualified professional. – Truth be told, not everyone is versed with this subject which brings us to the conclusion that you must put it upon yourself to find someone who is. Either you outsource the service or hire an internal employee for your company. If you’re an individual, you can still do so and hire a personal tax accountant instead.

Tip # 3: Be knowledgeable. – Even if you already have an expert to guide you and do all the work, it will still be beneficial if you get yourself acquainted too. Read up and research so that the process becomes easier and understandable to you. Also be aware that different countries, cities and towns are governed by varying legislations so there can be differences in taxation rules and procedures.

Tip # 4: Schedule everything up. – You cannot dillydally your way around taxes. You have to be able to file it completely, accurately and timely with the right set of documents otherwise you will be subjected to penalties for the delay. This could be pretty expensive so scheduling all your obligations shall cut back the risks.

Tip # 5: Don’t forget about your credits. – Accountancy firms in Watford, like Charterwells.co.uk, say that many individuals and businesses forget about tax credits. These are amounts that are allowed under the law to reduce either the tax liability or the taxable income. But to be able to take advantage of these, certain requirements must first be complied and the party seeking for them must instigate its acknowledgement.

Basic Accounting Concepts for Entrepreneurs from Accountants Watford

watford chartered accountantsIt is very important for entrepreneurs to be in the know when it comes to the financial aspect of their business. This is true even if you are not primarily responsible for your books and have professionals hired to take care of accounting. As owner, knowledge is crucial to ensuring that you understand the date being held and that you will not be confused about it, have it misinterpreted or worse have any employee take advantage with fraud. So what are the basics then? The best accountants Watford have rounded up the following for us.

ACCOUNTING PERIOD – This refers to the period or span of time with which the books are prepared. It runs for a length of twelve months and can be further divided into two types. The annual period is one which begins on any date as long as it completes the twelve month cycle. The fiscal year on the other hand starts on January 1st and ends on the 31st of December. There is no rule as to which period must be taken. Companies are given the liberty to choose among the two.

CONSERVATISM – Otherwise known as prudence, it is a policy that anticipates losses but not gains or in other words it requires companies to err on the side of understating assets and income and overstating losses instead of the other way around. This is done in the guise of uncertainty or doubt.

GOING CONCERN – This assumptions states that an entity provides will continue doing business for the foreseeable future long enough to carry out its mission, vision, goals, commitments and liabilities without any plan of liquidation. This is based on the fact that no company aims to invest with the end goal of losing and closing down.

MATERIALITY – An amount is material only if its addition or omission causes enough variance to significantly change a judgment or decision.

ACCRUAL METHOD – This principle necessitates that revenue is recognized when earned and expenses recorded when incurred regardless of whether or not actual cash has been received. Most companies follow this standard as it better reflects the entity’s financial position.

CASH METHOD – Quite the opposite, this recognizes revenues and expenses only when physical cash has been released or received. Although still present, the cash method is very seldom used today.

COST PRINCIPLE – This mandates that all assets and liabilities are to be recorded in the books with an amount equivalent to their acquisition costs and not their current market value.

Be sure to remember the above principles given by the friendly team of the best accountants Watford. Check out www.charterwells.co.uk.