A Resurgence of Outsourcing

The word “outsourcing”, in some instances, has a bad connotation, but for many it means being able to compete with other companies worldwide. The most basic method of outsourcing is using an external service provider to perform functions that the company does not want to perform itself. There are many ways that this can be done and not all of them mean sending business overseas.

There are two different types of outsourcing: onshore and offshore. When Company A has Company B, which is in their same country, complete the service, which is onshore outsourcing. Offshore outsourcing has two types, nearshoring and farshoring. For any company that is outsourcing to a company that is geographically close to them, but not in their country, they are nearshoring. Farshoring would be using a company that is not geographically close to them.

A company of any size can outsource. There are two sides to outsourcing—a service provider and a service buyer. To help companies find other companies for outsourcing the International Association of Outsourcing Professionals (IAOP) generates a list of the best services providers.

There is not an ideal way of outsourcing for any company. By looking at all the possibilities, finding the right solution for their company is possible, but first we need to know why a company outsources. The main reason is to reduce operating cost, but other reasons include assess to new skills or technology, and to make global operations more effective.

Companies that choose to outsource services are typically outsourcing IT, human resources, finance and accounting, procurements and facilities management. The biggest of those services outsources is IT. Many times the company providing the IT services has technologies that midsize to smaller companies do not have the money to invest in, and it make more economical sense to outsource it to a company that has the technology already.

Outsourcing in some aspect will continue into the future. There have been predictions that offshoring will continue to increase. With the increase of unemployment, many companies are looking at different cities in the US for outsourcing, but with wages still cheaper in other countries, outsourcing will be here to stay.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Combating Fraud

In every business, the reality is that fraud can happen. According to the Association of Certified Fraud Examiner’s authoritative annual Report to the Nations, estimates that 5 percent of business revenue worldwide, or approximately $3.5 trillion, is stolen through fraud each year. With the magnitude of fraud, business owners need to be aware of how to help prevent fraud.

It is hard to prevent fraud, because fraud happens when an opportunity presents itself and a person is willing or can justify the actions. Funds can be siphoned off for decades before someone realizes what happened.

When looking for fraud, it is important to know that not all audits or compilation will be looking for fraud. It is not a protection against fraud. The best way to detect fraud is from inside the company through internal controls. By completing an audit of your internal controls, a company can find their weakness and put in place monitoring systems that will discourage fraud. One way some companies have found that have been effective is a hotline for reporting dodgy dealings. Almost 40% of fraud cases are find this way, and training and hotlines do not cost much to establish.

The face of fraud is also changing making it difficult to know where the vulnerabilities come from within the company. The fast pace of the technology can also create issues that could lead to fraud. Here are some technology rules that can help curtail fraud:

• Remind employees that they are at work and should not be using the computer for personal purposes
• Use stronger passwords that are less easily guessed
• Make sure that firewalls are installed for all computers, when using the internet
• Treat phones and tablets like a computer, make sure the virus protection is updated
• Keep track of where your technology goes and who is using it.
• When using the cloud, know what protection and assistance you can except in the event of fraud or legal action.

Overall, the most effective way to combat fraud is to make it clear that it is unacceptable and is not tolerated. Do not blindly trust any employee, set out clearly the expectations and rules of the organization, and remember that the attitude starts from the top down. Set the example for employees and they will rise to the standards.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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How to Reduce Internal Fraud

In all businesses, having effective internal controls is very valuable. How do you know that your practices are effective? What can you as a business owner do to deter fraud in your business? Having effective internal controls will help your business keep up with the fast pace of the changing business practices. The following questions can help companies examine their internal controls to help prevent fraud.

Which businesses need to protect themselves against fraud?

No company, big or small, is immune to fraud. All the companies that have experienced fraud have one thing in common: they did not think that they were susceptible to fraud.

Businesses, especially smaller businesses, require employees to perform multiple tasks are at a greater risk of internal fraud. Businesses that cannot separate “conflicting tasks” increase the chance of fraud. When these tasks are separated, perpetrators are required to work together to steal from the company, which is harder to do then a single person doing all the tasks.

In larger business with more staff, tasks are separate, but perpetrators will still look for loopholes in the system. When owners are lax with monitoring, and given the opportunity weaknesses are exploited.

What Condition Motivates Internal Fraud?

When a perpetrator meets poorly designed and monitored internal controls, fraud happens. Companies should work to design proper controls, and be attentive in monitoring their effectiveness. The controls should be adapted to changing practices in the business, and not be ignored when the business becomes too busy to implement them. Owners need to be aware of internal controls and make them propriety to deter employees who might commit fraud.

How Can Companies Prevent Internal Fraud?

To help reduce the chances for fraud, companies must take a “top down” approach. Modeling and exhibiting the greatest degree of integrity set the tone for the company. Owners that do not uphold any level of integrity with aspects of the company cannot expect their employees to do so either.

When assessing controls, companies should identify areas with the biggest risk. Implement controls to shore up vulnerabilities uncovered in the assessment. Have a certified CPA audit financial records and procedures to determine where weaknesses are in the company. If the CPA specializes in fraud, this is especially helpful in determining what controls should be implemented to prevent fraud. Controls should be monitored and review regularly to truly reduce the likelihood of fraud.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Subtracting Holiday Bonuses From Company Accounts

As the holiday season comes around, businesses are providing year-end bonuses or holiday benefits to employees as an additional reward for hard work. The problem that many small businesses and companies face is accounting for the additional expense. Recognizing the appropriate accounting method is the key to providing bonuses and benefits during the holiday season.

Cash Bonus Accounting

The process of accounting for a cash bonus is relatively simple. Business owners or the appropriate department within a company must determine the bonus amount for each employee and record the bonus in a similar method as regular income.

Payroll departments or an outsourced service are informed of the bonus and make appropriate calculations for withheld amounts. The paycheck is then given to the employee through direct deposit or a check, depending on the normal method of payment.

The company accounting books will reflect the bonuses provided to employees as a company expense along with regular paychecks. Since the process of providing a cash bonus is similar to a regular paycheck, accounting for the special pay is not a complicated process.

Non-Cash Bonus Accounting

Although a cash reward or bonus is commonly provided to employees, a non-cash bonus is another option for business owners. Non-cash bonuses include the expenses of a company party, holiday hams given to employees or similar gifts that come from the company during the holiday season. Accounting for a non-cash bonus is a little more challenging because it is not subject to the same tax laws.

The appropriate way to add non-cash bonuses during the holiday season is through “de minimis” on IRS tax forms. It is included in the costs and expenses of a company, but employees are not taxed for the gift.

Any non-cash bonuses provided to employees are accounted as a company expense or liability. As a result, the business will pay less in taxes due to the increased expense from the holiday bonus.

Although the non-cash bonus is added as an expense to the company, employers need to use caution when providing de minimis bonuses. The IRS has limitations on the number and amount of rewards employers can offer. A large number of non-cash bonuses might result in paying more in taxes.

The holiday season is a time to offer bonuses and special perks to employees. The bonus is a motivation to continue working hard and is not difficult to add to company accounts. Bonuses for the holiday season are added to the company books as an expense, but the taxation requirements will vary based on the type of holiday benefit offered to employees.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Defined Benefit Pension Plans

EmployeesSo what is a defined pension plan?

A defined pension plan is an employer commitment to pay its employee a specific benefit for life beginning at retirement. Typically, this monthly or quarterly check will continue until that person dies. Depending on the plan, other options that may be available, such as the survivor option, which allows a spouse to receive payment, or a lump sum payment.

What does this mean to you?

To determine how much an employer contributes, the most being $195,000, to an employee’s benefit plan the employer calculates the cost of future risks by taking into account the employee’s life expectancy, normal retirement age, possible changes to interest rates, annual retirement benefit amount, and potential employee turnover. Other factors that affect benefits are age, earnings, and years of service. This allows the employer to ensure that when the employee retires that there will be enough money to pay for the benefit promised.

When will an employee receive benefits?

That is what every worker wants to know. All vested (a specific number of years the employee has worked or contributed to the plan) employees will begin receiving benefits no later than 60 days after the end of the plan year if they have been on the plan for 10 years or they leave their employer. A retired employee that reaches the age of 65 or the specified age of retirement will also receive payments.

There are always some stipulations with any retirement plan. Some of them are:

  • Unless you have under $5000 vested, you cannot be forced to receive your benefits before you normal retirement age.
  • If you leave the company before retirement, your benefits are frozen and held in a trust until the age of retirement.

This all seems like a complicated system, and it can be, but just remember that a defined benefit plan represent an employer’s obligations to active and retired employees. It is your promise of retirement and the benefits that you will receive.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Global Opportunities: Small Businesses Make the Leap

Crowley Halloran Conference RoomIn today’s business environment, the more ways a company can share their product, the better for the company. Markets all over the world hold potential for small business, but what does it take to get into the foreign markets? Can small business take advantage of the global opportunities? The answer is yes. The global economy has never had more opportunities for small business, and with a strong global financial strategy, small businesses are competing in foreign markets.

To succeed globally, small businesses need to create a global financial strategy. Small businesses will face common issues and a few roadblocks in the global market, but having a well-defined plan can make the difference between being successful and failing in the new market

Some questions to consider when creating your plan are:

  • What performance indicators need measured for both financial and operation purposes?
  • How will accounts receivable and payable be set up and managed?
  • Is there enough support for multiple locations and countries?
  • How will the company keep control over the global financial process?
  • How are local tax regulations and requirements managed for each foreign location?
  • How are different currencies handled in foreign locations?

Being able to answer these questions and any other unique question regarding your company is the best way to start.

Some strategies that help in making a successful transition are setting up multi-entity accounting, understanding foreign tax laws and codes, managing multiple foreign currencies, and having local human resources. Businesses with multi-entity accounting have consolidated their business processes. By consolidating business processes, the company will eliminate duplicate work, create a standard workflow, and be able to support the demands of a more complex business model. Hiring a local accounting firm to help with all the local tax codes and regulations would be extremely useful when breaking into the global market. They will be able to navigate your business through the different regulations, and be able to keep up with the different currency fluctuations. They can also be part of your management team that will take care of the day-to-day running of the business.

Ventures into a new market are exciting new opportunities for small businesses. With a proper plan and a good management team, anyone, even a small business, can take advantage of the global business opportunities.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Tips for picking a CPA

Mike Crowley | Crowley Halloran CPA

Michael W. Crowley, CPA - Principal

One of the most critical decisions anyone can make is picking a good-quality, reliable accountant. There are several things to keep in mind when a business owner chooses an accounting firm. Many accountants are excellent, but are they going to meet your business needs?

There are a few basic tips to keep in mind, as a business owner, when choosing a CPA firm:

Certification: The CPA should meet all the states requirements and passed the required exam. It is important that an accountant has met all the requirements and even continues their education to stay certified. It is the best way to know that they are current in all the new procedures and tax laws.

Experience: Make sure the accountant or CPA firm is experienced in the business field that your business specializes in. It is important that they know what the unique business needs are and how to handle any problems that may arise. They should have worked with that business industry before or something very similar.

Size: While the larger, more popular CPA firms may be ok, do not over look the smaller firms. The larger firms can probably take care of all the business needs and more, but the smaller firms will offer a more personalized approach. Many of the larger firms will contract out the smaller firms to work on small accounts anyway, so why not start with the local, smaller firm and go from there. Just make sure they meet the requirements that your business needs.

Get a Referral: One of the most important factors to finding a good, reliable CPA is to get a referral. Ask your friends, family, co-workers and other business owners to see who they would recommend. The best reference usually comes from word of mouth.

Once all the references have been compiled, do some research on the CPA firm and then ask to meet them and conduct an interview. Ask questions and find the right fit for you. Remember your CPA is to be one of your most trusted advisors, so make sure they are the right fit for you and your business.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Want an Efficient Business? Consider Outsourcing

Small business owners have so much to try to balance to make their businesses successful. They have to do everything, from hiring employees to taking out the trash at the end of the day. Part of what makes a small business enterprise so challenging is the overwhelming nature of getting things started. Often, outsourcing certain tasks, such as your accounting and payroll, can free up some of your time to focus on marketing your company and serving your customers.

Freeing Time for More Important Endeavors

Outsourcing provides small business enterprises with several benefits. The first is the most obvious, and that is the time freedom that it gives. When you, as the owner of your business, are not spending your time on tasks that someone else can do, you have more time to focus on actually growing and marketing your business.

Improving Efficiency

Outsourcing improves efficiency. By outsourcing, you will not have to learn skills you do not have, but rather can let someone who has these skills handle the tasks for you. This makes your business run more efficiently, because you will not have a learning curve to deal with.

Saving Money

While it may not seem like paying someone to do something for your business would help you save money, it actually can. When you outsource, you do not have to pay an individual to come to your business, get trained, use an office and receive benefits. Instead, you can pay just for the services you need, and that cost is almost always much less than you would pay to hire a staff member to do the job.

Utilizing Experts

Finally, outsourcing allows you to tap into the knowledge of experts. For instance, if you outsource your accounting, you will have a fully trained accountant to help manage your books and payroll needs. Instead of relying on someone who might have good “business sense,” but not necessarily accounting training, you will have someone with all of the training necessary to do the job well. This allows your small business enterprise to act like a big firm filled with highly trained professionals, all while staying within your smaller operating budget.

Frankly, outsourcing some aspects of your business, especially those that are better handled by a trained professional, simply makes sense. As you are looking for ways to improve efficiency and compete with larger companies, consider finding ways to outsource tasks for your business.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Struggling to Find Your Way

The world of small businesses can be a daunting place at times. You started your small business because you wanted to do what you loved, be your own boss, or to serve the community you live in. Your small business has grown, you have hired more people to work for you, and now, you not only have to worry about you, but the people who are working for you. One day you realize you are spending all your time doing payroll, taxes, and other paper work when all you want to do is run your business and take care of your clients. [Read more…]

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