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Bookkeeping is the process of collecting and organizing data on all of your business’s financial transactions. Every expense, payment, as well as any profit is accounted for. This includes sale invoices, payroll ledgers, accounts receivable, assets, and liabilities. Bookkeeping is essentially your business’s cash flow management. It shows how well the company is performing and which areas need attention. Documenting all cash flow in detail gives you a complete overview of your financial activities and your business’s financial state. This overview of the types of bookkeeping will touch upon the difference between single-entry and double-entry bookkeeping, what methods of bookkeeping exist, and how important regular recording of financial transactions is for running a successful company. Basic Bookkeeping Transactions Incoming and outgoing finances are the two main types of business transactions under your bookkeeping.  Incoming finances are your income/revenue, which is all the money earned, sales, and profits. In turn, they become assets, which are all the existing property owned by your business. Any preexisting cash and property are also included.   Outgoing finances are the company’s liabilities - mandatory payments, taxes, and loan installments - and expenses: money used to pay for services, employee salaries, and operational costs.  After these two main bookkeeping categories, we have equity or the difference between the company’s assets and liabilities. How Does Bookkeeping Differ from Accounting? Bookkeeping needs to be done first, before the accountant can analyze the company’s books. It is an essential part of any business finance management. Accounting is the later process where all collected and complete financial data - the trial balance - is analyzed. Accounting includes drawing financial statements based on which timely business decisions can be made. Accountants are also responsible for financial advice and tax returns. Methods of Bookkeeping and How They Work Let's take a look at the specifics of the single-entry and double-entry method. Single-Entry The single-entry method records individual transactions as they happen. Once a sale or payment is received, or an expense is made, it’s documented as a stand-alone entry, plus its minimal details. This bookkeeping method is best suited for smaller businesses. It’s also adequate for operations where there’s little to no physical sales or inventory involved, i.e., digital transactions, services, and those with little or no physical goods to exchange.  Single-entry systems offer multiple advantages: They are simple and therefore save you time and money. Besides, they usually don’t require additional staff or training.  Of course, there are some downsides as well. These include possible loopholes that can be exploited to cover up mistakes and fraudulent transactions, especially if no software or app is used and everything is manual. Furthermore, there is no fast way to check for balances, liabilities, and on-time payments, which can result in penalties and late payments. Also, arithmetic errors in the account totals are relatively common. Using these simple bookkeeping systems for small businesses is a feasible solution, but it most likely won’t be enough for complex operations, where ready financial snapshots are often necessary to help make informed and timely decisions. Double-Entry Double-entry systems are more complex since every transaction is entered twice: in the left-hand account under Debit and in the right-hand account under Credit. Double-entry bookkeeping is used for larger and more complex business operations, and it works like an error-detection tool since the sum of debits must always equal the sum of credits. If it doesn’t, it points to an error. Using the double-entry system makes it easier to monitor all activities and ensure all your books are balanced. The rough total of your capital gap is easily determined.  However, it’s a time-consuming and costly process, and utmost accuracy is needed when making entries. It usually requires extra training, staff, and software for it to be fast and effective. Also, due to the complexity of the system, finding where the error is and correcting it can be challenging.  Compared to the single-entry bookkeeping system, double-entry is a more thorough, time-consuming approach to bookkeeping. Most smaller businesses don’t have time, resources, and extra people to work on detailed bookkeeping. But the results help companies cover everything being exchanged. It also provides instant access to all data.  These are the two basic systems a company can use for bookkeeping. In the past, all entries had to be made manually. With the advancement of technology, various kinds of accounting software and apps have come to the bookkeepers’ aid. Digital Bookkeeping Systems Businesses can reap many benefits from using bookkeeping apps. All primary operations are automated and can be carried out remotely from your phone anytime, anywhere. The main features and automated functions of these apps include: Tracking all outgoing payments and fund transfers Digital tracking of all incoming finances Reports available anytime for mass sending Encryption of financial and confidential business data Apps for both iOs and Android devices Affordable monthly rates starting at $9 External functions such as e-filing and online banking Bookkeeping software such as Quickbooks, Freshbooks, and Zoho have basic accounting features in addition to their comprehensive tracking and management systems. Smaller businesses employing the single-entry method can use these apps to speed up the process further and increase accuracy. If you own a small business and are bent on cutting costs, the chances are that with one of these apps, you won’t even need to hire a bookkeeper - you’ll be able to do the bookkeeping yourself. Virtual bookkeeping means that independent, remote bookkeepers will manage and balance your books instead of a physically present bookkeeper. This is often a time- and cost-saving option for companies. A virtual bookkeeper can manage and monitor your finances in real time beyond office hours. It can be a good solution for companies with a bigger budget allocation specific to these tasks, covering many departments and their complex financial dealings for the company. Often, there are inventories and accounts payable and receivable that need to be checked and prioritized. How Bookkeeping Benefits Your Business There are many advantages to bookkeeping. Financial insights from tracking all your financial transactions will help you manage the business, maintain supplies and payrolls, and keep payments on time. This way, you’ll avoid costly penalties and other negative consequences of late payments.  All numbers will match when your books are balanced at the end of a month, quarter, year, or another specified period. These detailed lists of numbers may look complex and intimidating, but when laid out and checked, they’ll enable you to easily assess priorities.  Even just a simple bookkeeping system can help detail the financial state of your company. Your working capital gap is a good indicator of this - it’s the total difference between your assets and liabilities.  Positive cash flow is maintained and received on time. From here, you can allot budgets and give priority to specific expenses or additions to inventory or assets. Being able to execute the business’s balances correctly and on time will help the company deal with loans, bank payments, and other obligations more efficiently. All of the bookkeeping methods discussed here will help you control your company’s finances and can be a big help to avoid penalties and bigger financial issues when going through an audit process.  

August 27,2021
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News

Finance

The downward direction mortgage rates are taking indicates this is the time to buy a home or start refinancing mortgages. The downward direction mortgage rates are taking indicates this is the time to buy a home or start refinancing mortgages. The average rate for the 30-year fixed-rate mortgage dropped to 3.231% last week, showing a 0.015% decline in a single day. This rate drop is the first since mid-March.  Mortgage rates already decreased in 2020, and many homeowners seized the opportunity to refinance existing loans or get new ones. Others have bought homes thanks to the more affordable rates. In January 2021, the rates reached a record low for a short time before they rose back in February. More companies are thinking of using real estate CRM software to battle these sudden changes. As for the near future, experts predict a continued rise in mortgage rates. The ascent will not be drastic, though, nor will it happen quickly. Different factors such as the Covid-19 situation and economic relief packages could affect the rates. They should remain low through the first half of the year, with a slight rise in the second half. Even with the expected rate increase, this is a good moment to buy a home or refinance loans. With the 30-year fixed mortgage rate decreasing, you would currently pay principal and interest approximately $434.00 for every $100,000 borrowed. Property management software might be of great help here as well. The average 15-year mortgage rate is also dropping, hitting 2.473% last week. The principal and interest should be $665 for every $100,000 borrowed. On the other hand, the average 5/1 ARM rate was 2.893% on April 15, showing an increase of 0.025% compared to the day before.  Joel Kan, associate vice president at MBA, said that the refinance activity has decreased for nine of the past ten weeks. Total mortgage application volume decreased 3.7% last week.

April 21,2021
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Startups

Due to the ongoing pandemic and companies increasingly relying on cloud services and work from home, cybersecurity investments in 2020 resulted in a record $7.8 billion and 665 international deals. The US cybersecurity investments increased by 22% last year compared to 2019. Businesses are turning to small business insurance companies for an added layer of protection. The entire US venture market has risen a mere 15% during the same period. Of the total venture capital funds, 39% went into cybersecurity startups in seed or early stages. On a global scale, the funding reached 45%. The trend continues this year as cybersecurity worldwide has already seen more than $3.7 billion worth of investments - $1.4 billion more than in the first quarter last year. Despite a 10% increase in cybersecurity spending, Canalys believes that companies are not investing in cybersecurity enough. The tech market analyst company reports more breaches in 2020 alone than in the last 15 years combined. The main reason are the ever more dangerous ransomware attacks, disrupting or even shutting companies down. Therefore, having a cloud backup should be considered mandatory by now. The US and Israel had a 90% presence on cybersecurity venture funding last year. US companies earned $5.9 billion or 76%, while the Israeli companies got $1 billion of the entire cybersecurity funding. UK companies secured $262 million or 3% of the fundings, thanks to the Series C funding of the data privacy company Privitar equaling $80 million. The majority of the funded companies are from San Francisco. New York businesses gathered $874 million or 15% of last year’s funding. Massachusetts came in third with 12%, followed by Texas companies, which claimed 7%. Thanks to the record investments in 2020, six new cybersecurity unicorn startups (worth more than $1 billion) saw the light of day. It is the highest number of unicorn companies on an annual basis so far. Five are from the US, while the sixth, called Cato Networks, is Israel-based. The record is clearly to be beaten this year, as nine cybersecurity unicorns have emerged thus far. Furthermore, cloud infrastructure investments increased by 33% in 2020, cloud software by 20%, notebook PC sales by 17%, and wi-fi router sales by 40%. One of the first steps for increasing security could also be employing remote desktop software within companies to improve internal IT support services.

April 21,2021
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Startups

Amazon announced another round of investing in Indian startups and digitizing small and medium-sized businesses (SMBs). The investment is meant to help Indian SMBs debut on the online marketplace, ultimately expanding their customer base into a global one. The Amazon Smbhav Venture Fund focuses on agriculture and healthcare, but startups from other niches might get funding, depending on how much they intersect with SMBs. The agri-tech investment section aims to provide farming solutions, such as making agro-inputs more accessible to farmers, providing credit and insurance, and ensuring better produce quality. Healthcare-oriented startups working on telemedicine, e-diagnosis, and AI-powered treatment recommendations are also eligible for the money. The Amazon Smbhav annual event also served as announcement time for the “Spotlight North East” initiative: Through this venture, Amazon plans to bring over 50,000 artisans and small businesses from India’s North East region online by 2025. The effort should bring about an availability boost for tea, spices, and honey from the area. The two ventures represent Amazon’s latest attempt to tackle the India market, after already investing $6.5 billion in it: First, $2 billion in July 2014, an additional $3 billion in June 2016, and finally another $1 billion in January 2020, all with the same goal - digitizing SMBs. Amazon claimed to have created 300,000 jobs in India since the beginning of 2020: 250,000 new sellers, plus another 50,000 local retailers. However, this level of aggressive investment garnered a lot of backlash for Amazon, both from the SMBs it’s focusing on and the Indian government. Tens of thousands of protestors marched on the street after last year’s announcement, and a similar scene unfolded this year. There is an overall concern among Indian trader groups about Amazon’s circumventing of the country’s rules. Amazon has been struggling since its opening in India to adhere to India’s eCommerce rules. Amazon is greatly constricted by these laws: For one, eCommerce firms cannot hold inventory or sell items directly to consumers. Instead, eCommerce businesses have been operating through a web of joint ventures with local companies serving as inventory holders. India fixed this loophole in 2018, forcing Amazon to unlist thousands of items and make their investments in affiliated firms more indirect. Indian retailers have long been raising their concerns about Amazon’s alleged flout of Indian regulations. The Confederation of All India Traders (CAIT) said on the topic: “For years, CAIT has been maintaining that Amazon has been circumventing FDI laws of India to conduct unfair and unethical trade.” India imposed several additional regulations in recent years that extensively hurt US firms operating in India, Amazon being just one of them. Last year, for example, New Delhi started to enforce a 2% tax on all foreign billings for digital services provided in the country. The US Trade Representative estimates that the aggregate annual bill for US companies in India will probably exceed $30 million. Earlier this year, the USTR said that the categories India was taxing are “not leviable under other digital services taxes adopted around the world.” As Amazon has yet to turn a profit in India, it remains to be seen whether its venture there will be a success or a defeat similar to the one it experienced in China.

April 19,2021
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Retail

A recent report titled Retail Trends Playbook 2020 identifies four key pillars as being crucial to taking the retail experience to the next level. With data-driven digital technologies at their disposal, retailers can better understand consumers’ needs, design an intelligent supply chain, empower employees to deliver personalized in-store experiences, and redesigning the business model to highlight the most popular products and services. Listening to customers Compiled by Microsoft and US-based media company PSFK, the report asserts that retailers must gather as much data on customer behavior as possible in order to deliver on the promise of personalized shopping. With that data, merchants can design personalized outreach campaigns. Knowing each shopper’s preferences and previous purchases is key to securing proactive marketing and tailored recommendations. According to the report, 80% of US consumers enjoy such an approach, while 58% plan to sign up for personalized offers. Employee empowerment When consumers think “personalized shopping experience,” they expect more than an occasional email. They want the shopping experience to be tailored to their needs in brick-and-mortar shops just as it is online. To accomplish that goal, retail brands have to empower their frontline staff with knowledge about products and customers alike. Sales assistants can deliver a superior shopping experience only when they have access to lots of customer data. For example, Miami-based footwear brand Melissa Shoes gives shoppers the option to use facial recognition kiosks at their physical stores. When a returning customer stops by a store, employees are notified about their preferences as soon as the customer is recognized. That lets the staff provide an exceptional in-store experience. Smart supply chain According to the report, 52% of retailers are struggling to connect the dots between data stored across different parts of their organization. Yet 58% of consumers consider the visibility of inventory status to be important while shopping online. To overcome the disparity of what’s going on inside organizations and what customers want to see, the authors of the report propose cloud-based communication channels powered by real-time data. Intelligent supply chains can share information among factories, warehouses, stores, and key partners. Reimagining retail More than 60% of retailers who have strategically used information gathered through technology say it has given them a competitive advantage. Retailers can figure out which areas need improvement by getting a 360-degree view on in-store behavior. Data lets them understand how customers interact with products and how loyal they are to the brand. Having this wealth of information is an ideal starting point for creating actionable strategies regarding merchandising, rewards programs, and technology investments. Investing in a series of digital solutions won’t automatically translate into higher profit margins. The report concludes that the secret to success lies in retailers having a clear image of their own brand, their shoppers, and the experience they want to deliver.

December 09,2019
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