Who created accounting principles? Who sets and revises accounting standards? What if you don’t follow all the rules, do you go to jail? Is there an accounting police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works:

Mainly, it’s all voluntary and it works pretty well. First, double-entry accounting originated in Italy in the 1400’s, so its been around awhile. Accounting principles have evolved over the years just as have accounting standards. The reason why the system works is that the business community could not function if there was not commonality and consistency in financial statement reporting. It would be chaos, much like if there were no driving rules of the road.

Therefore, in the United States, a body of experts known as the Financial Accounting Standards Board (FASB pronounced Fasbee) was established in 1973, which superseded another board called the Accounting Principles Board (APB). The FASB members go through a lengthy process of analyzing and reviewing problems in the accounting field that are brought to them. After much thought, they will make a pronouncement as to what they think the new or revised way of approaching the treatment of an accounting issue should be.

They are a non-governmental organization that has private financing. A big supporter of FASB is the American Institute of Certified Public Accountants (AICPA). Many Certified Public Accountants (CPAs) belong to this prestigious organization and are obligated to abide by its guidelines and principles of behavior. Other countries no doubt have similar organizations that require high levels of accounting professional conduct.

FASB established an accounting code called “Generally Accepted Accounting Principles” or (GAAP). The assumption is that if a business financial statement is prepared according to GAAP, then the user of that financial statement could rely on or trust the information more readily than if not prepared according to GAAP. Those businesses that deviate from GAAP, and many smaller businesses do, cannot say that their statements are prepared under GAAP; in fact, they should inform the reader that they are not. However, let the buyer beware.

One governmental body that has a policing function is the Securities Exchange Commission (SEC). It is primarily concerned with public companies because their job is to protect investors from unscrupulous acts. Recently, the SEC has gotten into the act of establishing accounting standards. It has its hands full today.

Since most businesses use their financial statements to prepare their required income tax returns, the Internal Revenue Service (IRS) may audit those tax returns and review the financial statements upon which the tax returns are based. Not following the rules can get you in trouble with this governmental body.

You can see that in many ways compliance to the principles and standards is a mixture of voluntary and regulatory behavior. Currently, there is an effort underway to set international accounting standards due to the inexorable globalization process. This is a massive undertaking that will take years, but it is obviously necessary and inevitable.

1. Find a strategic business partner. Look for ones that have the same objective. You can trade leads, share marketing info, sell package deals, etc.

2. Brand your name and business. You can easily do this by just writing articles and submitting them to e-zines or web sites for republishing.

3. Start an auction on your web site. The type of auction could be related to the theme of your site. You'll draw traffic from auctioneers and bidders.

4. Remember to take a little time out of your day or week to brainstorm. New ideas are usually the difference between success and failure.

5. Model other successful business or people. I'm not saying out right copy them, but practice some of the same habits that have made them succeed.

6. Take risks to improve your business. Sometimes businesses don't want to advertise unless it's free, sometimes you have to spend money to get results.

7. Include emotional words in your advertisements. Use ones like love, security, relief, freedom, happy,
satisfaction, fun, etc.

8. Ask people online to review your web site. You can use the comments you get to improve your web site or you may turn the reviewer into a customer.

9. Out source part of your workload. You'll save on most employee costs. You could out source your secretarial work, accounting, marketing, etc.

10. Combine a product and service together in a package deal. It could increase your sales. If you're selling a book, offer an hour of consulting with it.

To get approval for your small business loan application, you must be able to meet the lending criteria set down. Some organisations are more risk averse than others, and will therefore have more stringent criteria.

To vastly increase your chances of a successful funding application, you will need to present the following information:

1. The reason for the loan. The lender will be looking for something that fits within the normal range and expertise of your business. The amount may cover a number of items, so you will need to cover each.

2. The amount required, and the repayment term of the small business loan you want. (e.g. $10,000 term 5 years, payable quarterly).

3. Details of how you will repay the amount borrowed. For example, “From the increase in profits of reduced running costs of the Whizzbang Go4It”

4. Details of security you will be able to offer to the lender. This will act as reassurance for the lender. If you’re not prepared to put up some aspect of security, then why should they?

5. You will need to include your business plan which will serve to answer essential questions relating to management capabilities, information about the market you operate in. What kind of business you are in etc.

6. 3 Years financial statements. You will need to present quality financial information from your accounting software, preferably signed off by your accountant or tax advisor.

7. Latest Set of Management accounts. Again produced from your accounting software.

8. Accounts receivables (debtors) and payables (creditors) ageing reports.

9. Principals financial statements. – Particularly required if some form of security is necessary.

If you are a new company, the emphasis is going to be on your business plan , and the security (also called collateral) you or your business can provide against the loan.

You must take the time to practice presenting your case to the bank or lender to iron out any glitches. Practice on your colleagues and family (you never know, they might be so impressed, they'll invest or lend!). It may help to role play the lender and come up with as many pointy questions as possible. The more time you take the better your chances will be. (But remember, don’t fall into the analysis paralysis trap!)

Good luck!

When starting a business, you have to determine the method you are going to use for accounting and paying taxes. The two choices are the cash method and the accrual method.

Cash Method

If you are looking for simplicity, the cash method is probably your best accounting choice. Generally, income and deductions can be claimed when payment is actually received or made. This is best shown with an example.

I open a small business and have to order business cards and stationary. I receive the products and pay the invoice on November 18, 2005. Under the cash method, I can deduct the cost on my 2005 tax return.

Some businesses are restricted from using the cash method. C corporations may only use the cash method if they have less than $5 million in gross revenues for a particular year. Professional Service Corporations can use the cash method without limit, while farming corporations can due so if gross revenues are less than $25 million. Tax shelters are prohibited from using the cash method.

Accrual Method

The Accrual Method of accounting is a bit more complex. Under this method, the focus in on the date the expense is incurred, not paid. Although this may seem a small difference, it can play havoc with your books and piece of mind.

Using our previous example, assume I order business cards and stationary on the December 18, 2005. I receive the products on December 30th, but don’t pay the invoice until January 20, 2006. When can the expense be claimed? It depends on when economic performance occurred.

Generally, economic performance occurs when goods or services are provided to you. In the above example, economic performance would arguably occur when the business cards and stationary were delivered with the invoice on December 30th. Thus, I would be able to deduct the expense for the 2005 tax year.

In Closing
As you can see, the cash method is the easier of the two accounting methods. To determine the best method for your business, speak with a tax professional.

1. Make your articles available on your site.

You'll have an easy way to get more sales by showing your visitors that your are an expert on the topic your visitors are interested in.

2. Use lots of white space. Keep your sentences and paragraphs short and to the point.

3. Write for your target audience.

You'll have a better chance of attracting people to your site that are interested in purchasing your products.

4. Use numbered lists.

Your numbered lists will help you to effectively share your tips with your readers while making your article easy to read.

Use your numbered lists to share points on your article's topic, list your directions when writing a how to article, or to deliver the content of your article if you wanted to write a list article.

You can also use numbered lists to share resources related to what you talk about in your article along with your descriptions of those resources.

5. Use the active voice.

With the active voice the subject does the action while with the passive voice the subject receives the action expressed by the verb.

For instance:

Active voice: The dog bit the mailman. Passive voice: The mailman was bitten by the dog.

Use the active voice to keep your sentences from being awkward or confusing and to liven up your article.

6. Make your writing more personal by using the word "you" a lot within your article.

A simple way to accomplish this is to write your article to one person.

You'll naturally use the word "you" a lot within your article, and your readers will feel like you're talking directly to them.

7. Don't be afraid to share your personality with your readers.

You could inject a little bit of humor into your article, or share an opinion, story or anecdote that relates to the topic of your article.

8. Offer a subscription to your e-zine or a freebie in your resource box.

Writing articles will help you to get your site promoted on relevant sites and e-zines at no cost to you.

Maximize the profit you get from writing your articles by giving your readers a subscription to your e-zine, or a freebie that they'll find valuable enough to go back to again and again.

9. Once you've written your article, wait a couple of days, and then reread your article.

You might be able to add new points that you might have missed before, add more detail to information you covered in your article, or reword parts of your article that are unclear.

10. Use current topics whether online or in the "real world" to get ideas for your articles.

Your articles will be cutting edge and newsworthy, and will have an excellent chance of being published by e-zine publishers and webmasters.