Trust accounts are established to hold the funds of another entity or an individual on the behalf of that entity. The person who manages the trust account is called trustee.  For creating a trust account one should consult a lawyer or financial adviser to get right information according to their specific situation.

Reasons To Set Up Trust Accounts

A grantor realizes that beneficiary of the trust is not able to deal with the treasuries independently. A simple example is that parents set up such trust for their child which deposit money for the financial security of the children until they reach a certain age limit. In the case of death of one or both parent, the children will have access to their funds secured in the trust account.

Some types of trust give you a tax advantage. For e.g. the trustee relinquishes the right to the funds then he can avail a tax break. But one must consult a tax professional before taking any such step as the specification of the tax law can get very complicated in relation to trust accounts. It is also necessary to ensure that their tax professional has an experience of dealing with trusts accounts represented on tax filings. (more…)

“Yo man just got my paycheck. Let’s go out tonight!”

Employees have an emotional attachment with their paychecks. After all, their paycheck is literally the fruit of their labors. As result, negligence and error in the payroll are inexcusable and bring many disappointments.  The department in most businesses that handles payroll is HR.

In the past 20 years, the Human Resources functions revolved around the administrative tasks. But now in this digital era, the HR departments are now more strategic, integrated and diverse. One of them is integrating their application through payroll systems.

HR payroll system has a progressive influence on the companies as their HR departments are now functioning more effectively.

What is HR Payroll?

Payroll is a method by which employers pay their employee the salary of their job. Payroll involves many aspects such as withholding taxes, record keeping compliance and accurate and timely delivery of paychecks. It is usually managed by the accounting or HR department of the company. (more…)

Financial reports are the periodic reports of information on financial statements of a company, including its financial position and performance, for the use of management or an external party. The four primary financial reports in business are the balance sheet, income statement, cash flow statement, and statement of shareholders’ equity.

The Purpose of Financial Reports

Financial reports have two primary purposes:

They assist management in effective decision making regarding the objectives of the company and its overall strategies. The information provided by the reports can help the management to determine the strengths and weakness along with the financial health of the company.

They deliver important information about the financial condition and undertakings of the company to its investors along with its shareholders, consumers, analysts and government regulators. (more…)

“The balance sheet is a snapshot of the company financial standing at an instant in time”

Do you know what are the Parts of a Balance Sheet? The Balance Sheet can be broadly broken into two sections, namely “Assets” and “Liabilities”.  Assets are what a business uses to operate its business, while its liabilities and equity are two sources that support these assets.

The first step in understanding a transaction is to recognize whether the transaction is in relation to revenue or expense or is capital in nature. Only transactions of capital nature are reflected in Balance Sheet. For Example, any advances received from the third party will be shown on the assets side of the Balance Sheet and not as an income in the income statement, as it is capital receipt in nature.

Parts of a Balance Sheet –  Categories

Fixed Assets:

These include tangible assets like buildings, machinery, furniture, or intangible assets like Patents, Trademarks, and Goodwill. It shows all the assets that are present with the business to provide with long-term benefits and are not expected to liquefy before a year. (more…)

The term bookkeeping is comprised of the two words ‘Book’ and ‘Keeping’ where ‘Book’ means the collection and retention of financial activities and ‘Keeping’ is their maintenance. In this sense, bookkeeping is a process of collection, retention and maintenance of the financial activities of a company. In course of time it has been developed as a discipline.

Bookkeeping provides the information from which accounts are prepared. It is a distinct process that occurs within the broader scope of accounting. It ensures that records of the individual financial transactions are correct, up-to-date and comprehensive. Accuracy is therefore vital to the process. (more…)