Magazine for the professional limousine, charter and tour industry.
Issue link: http://lctmag.epubxp.com/i/765069
34 LIMOUSINE, CHARTER & TOUR JANUARY 2017 WWW.LCTMAG.COM MONEY: OPERATIONS Getting Your Numbers Right No matter your fleet size, you'll need to find the right accounting and financial planning solutions, whether in-house or outsourced. By Anne Daniells, LCT contributing writer W hile every business needs accounting to produce ac- curate financial statements, not every business needs to do it the same way. With the endless variety of account- ing systems, the tradeoffs of insourcing vs. outsourcing, and the complexities in- volved in taxes, it is no wonder why so many operators struggle with these dif- ficult decisions. Many operators know their industry, but few know how to read complex fi- nancial statements or optimize tax posi- tions. Therefore, it is vital to accomplish the requirements of accounting in the best way. Many of the most important questions are inter-related. Perfect individual an- swers are not easy to come by. Still, the questions and concerns remain: • Why is accounting important? • Should I outsource my accounting, or should I hire an accounting department? • Does the same resource provide ac- counting and tax services? • Is my business big enough to justify creating budgets and forecasts? • What does a CFO do and how does it differ from these other responsibilities? Vital For Operations Whether you are a startup one-car op- eration, a medium-sized family busi- ness, or a large corporation, you should measure your financial performance. After all, these are for-profit businesses, not charities or hobbies, so how you profit (or do not) is one of the most critical factors to measure. Accounting is a common, scientific language that uses set standards, processes, and rules to transform a company's performance into readable and understandable data. The rules of accounting are generally consistent across nearly all industries. Following those rules allows a business to understand what is going right ver- sus wrong, and what to do about it. It provides the score and report card for the business. It is critical you do that work correctly. For that reason, most accountants look to Generally Accepted Accounting Princi- ples (GAAP) as the standard for business- es to follow. These rules are captured in volumes of documents, and updated regularly, which is why you should stay abreast of them. They are also difficult to understand, decipher, and apply to your business situation. Still, several overrid- ing important elements should answer the other questions raised. One of the most important elements of GAAP is the separation of duties — that is, no one person should perform all the accounting duties. Rather, they should be divided so different participants conduct various aspects of the accounting pro- cess. By dividing workloads, we avoid conflicts of interest. Another important aspect is the notion of matching — that is, revenues should be accounted for in the period earned; expenses follow the same rule. This is the notion of accrual accounting, a high- er level of accounting than many book- keepers can provide. With experienced accountants, improved accounting meth- PHOTO: PIXABAY.COM