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How to Establish Accounting and Tax Services for a Successful Partnership?

Business partnership entails several responsibilities, and among them is the determination of accounting and…

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Business partnership entails several responsibilities, and among them is the determination of accounting and taxation services to be adopted for the partnership business. It is crucial that all financial activities especially accounts, taxes, and reports should be handled efficiently and precisely as a measure or structural importance of the partnership.

It is for these reasons that for anybody interested in managing business finances, taking an income tax return filing course will be a good way of enabling the business to avoid such pitfalls. This guide takes you step by step on how to complete accounting and tax services required for your partnership firm including documentation of your records and tax compliance.

What are accounting requirements for a partnership?

Compared to sole traders, partnerships involve set procedures and policies when it comes to accounting. It is for this reason, that when there are many partners involved, issues to do with financial, and proper documentation are even more crucial. For your partnership agreement to be workable, you must have clearly outlined records on income and expenditure, profit-sharing ratios, and capital contribution.

The main accounting tasks include:

  • Recording daily transactions, including sales, purchases, and expenses.
  • Keeping track of accounts payable and receivable.
  • Managing payroll if your partnership hires employees.
  • Preparing financial statements like profit and loss statements, balance sheets, and cash flow statements.

Using accounting software such as Tally, QuickBooks, or Zoho Books can streamline these processes and help maintain accurate financial records.

Choose an accounting method

Partnerships can use either the cash accounting method or the accrual accounting method. The choice depends on the nature and size of your business.

1. Cash accounting method

Income and expenses are recorded when cash is received or paid. This method is simpler and is suitable for small businesses with straightforward transactions.

2. Accrual accounting method

Income and expenses are recorded when they are incurred, regardless of when the cash is received or paid. This method provides a clearer picture of long-term financial health and is recommended for larger partnerships.

Consult a professional accountant to determine the best method for your business.

Set up a business bank account and separate personal finances

Incorporating both business and personal finances is one of the biggest mistakes that may cause a lot of problems in closing and taxes. To prevent such mischief, it is advisable to open a business account for your partnership. It should be confined to business operations only, meaning that the client payments, or payment of suppliers, and even the salaries to be paid to employees should be paid from this account only.

A business credit card also has the advantage of budgeting, would enable one to distinguish the difference between money spent for business and that spent on personal issues. This makes work easier in terms of bookkeeping as well as legal compliances to do with tax laws.

Register for tax identification numbers

To operate legally, partnerships must register for tax identification numbers at both the federal and state levels. In most countries, this includes:

1. Employer Identification Number (EIN)

This is required by tax authorities and is used to file tax returns, hire employees, and open business bank accounts.

State tax registration: Depending on your location, you may need to register for state income tax, sales tax, or other applicable taxes.
Failing to register properly can lead to penalties, so it’s essential to complete this step as soon as your partnership is formed.

2. Understand tax obligations for partnerships

Unlike corporations, partnerships are considered pass-through entities, meaning that the business itself does not pay income tax. Instead, profits and losses are passed through to the individual partners, who report them on their personal tax returns.

Key tax obligations for partnerships include:

1. Filing an annual partnership tax return

This return reports the partnership’s income, deductions, and net profits but does not require the partnership itself to pay tax.

2. Issuing Schedule K-1 forms to partners

Each partner receives a Schedule K-1, which outlines their share of the profits and losses to be reported on their personal tax returns.

3. Paying self-employment taxes

Since partners are not considered employees, they must pay self-employment tax on their share of the partnership’s income.

Understanding these tax obligations is crucial to ensuring compliance and avoiding penalties.

Keep track of deductible business expenses

Properly tracking business expenses can help reduce your tax liability and improve financial efficiency. Common deductible expenses for partnerships include:

  • Rent for office space or business premises.
  • Salaries and wages paid to employees.
  • Business-related travel and meals.
  • Professional fees for accountants, lawyers, or consultants.
  • Marketing and advertising expenses.

Keeping detailed records of these expenses, along with receipts and invoices, will make tax filing easier and ensure you claim all eligible deductions.

Prepare and file tax returns on time

Meeting tax deadlines is essential to avoid penalties and interest charges. Partnerships typically have different filing deadlines than individual tax returns, so it’s important to stay informed about due dates.

Many partnerships hire a tax professional to handle tax filings, ensuring accuracy and compliance with changing tax laws. If you prefer a hands-on approach, using tax software can simplify the filing process.

Set up a financial reporting system

Regular financial reporting helps track your partnership’s performance and identify potential issues early. Key financial statements that should be prepared periodically include:

  • Income statement: Shows revenues, expenses, and net profit or loss.
  • Balance sheet: Provides a snapshot of the partnership’s assets, liabilities, and equity.
  • Cash flow statement: Tracks the movement of cash in and out of the business.

These reports provide valuable insights into your partnership’s financial health and aid in decision-making.

Conclusion

It is advisable to always seek assistance from the professional in accounting and tax services for your partnership with a view of legitimizing the business. Some of the factors that can help check challenges include recording accuracy, estimating the tax responsibilities and compliance, and appropriate financial procedures that are profitability.

For more information regarding tax filing and other finance-related courses, you should take courses in S20. Their courses have all the information you need, for example, on tax compliance and accounting for your partnership firm. Visit S20 today to explore their courses and take your business knowledge to the next level.

Simple Steps to Create Company in SAP FICO

A company is a business organization or a group of businesses that work together…

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A company is a business organization or a group of businesses that work together and make their own financial statements based on the country’s business law. The local currency is used to record the financial transactions of the company.

A five-character alphanumeric key tells us about a company. A business can have more than one company code and have operations in different places, but they all have to be part of the same business unit.

SAP: Define Company

About Company in SAP: A company is an organizational unit for which a separate set of financial statements can be made based on the rules of business. One or more company codes can make up a company. A company has local currencies that are used to keep track of its transactions. All of a company’s company codes must use the same Chart of Accounts for transactions and the same Fiscal Year. SAP doesn’t force you to create a company.

Company in SAP: Key things to know

You can make financial statements that meet the laws of the country where the business is based.

  • You can give a company one or more company codes.
  • It is a SAP organization unit that can be chosen or not.
  • If a business has more than one company code, all of them should use the same chart of accounts.

Defining a Company in SAP:

SAP IMG Path: SPRO > Implementation Guide for R/3 Customizing > Enterprise Structure > Definition > Financial Accounting > Define Company

OX15 is the code for “Define Company in SAP.”

For making a new company, enter the following information.

  • Type in the six-character alphanumeric code that represents the company group.
  • Type in the name of your business.
  • Change the address in the “Detailed information” box – Street name, PO Box number, ZIP code, and City.
  • Enter the company’s country code.
  • Enter language key
  • Enter the company’s local currency (also known as Company code currency)
  • After making the necessary changes, click the Save button or press CTRL+S.
  • Pick “Customizing request” from the drop-down menu or make a new one. To make a new Customizing request, click on the icon that looks like a request, as shown in the picture below.

How to Start a Business in SAP

In SAP, you can describe a company by:

Transaction code: – “OX15”

Navigation: SPRO | SAP Reference IMG | Enterprise Structure | Definition | Financial Accounting | Company | Define Company.

  • Step 1: Type “OX15” into the SAP command field, as shown in the picture below, and press enters to move on.
  • Step 2: On the “Internal trading partners” tab, change the view to: To set up the company in SAP, click the “New Entries” button on the overview screen.
  • Step 3: Make the following changes on the “New Entries” screen.
  1. Business: Enter a key that helps SAP figure out the company group. In our case, we changed “TKART” so that we could start a new company.
  2. Name of Business: – In this field, you should put the full name of the company.
  3. Name of business 2:- If the company has a second name, add it here, or leave it blank. Information in-depth
  • Street: – Name of the street where the business is
  • Postal code: – Enter postal pin code
  • City: Change the name of the city. In our case, we changed “Bangalore.”
  • What country? You need to change the country key here. For example, IN for India, US for the United States, etc.
  • Language key: – Our language is English by default, so the language key is “EN.”
  • Currency: Enter the key for the currency in which transactions for the group company are kept. It is also called “local currency” or “home currency.”

Note: If you press the F4 key on your keyboard, you can choose from the list of keys for City, Language, and Currency.

Step 4: Once you’ve changed all of the necessary information, click the “Save” button to save the company information. Now that you’ve been asked for a custom request, click the “New Entries” button to make a new one.

Now, change the request’s description and press Enter to move on. Here’s an updated description of how to set up SAP FICO.

This tutorial shows you how to do the following things step by step:

  • Make a new business in SAP FI
  • Use SAP FI to make a company code.
  • Give the company a company code.

Giving a Company Code

Step 1: Go to reference IMG in SAP.

Step 2: You have to choose the menu path from there.
SAP customization implementation guide > Enterprise Structure > Assignment > Financial Accounting > Assign company code to company

Step 3: Enter the company’s unique ID next to the company code you want to give it.

Step 4: Save the information and enter the customization request number.

In the above screen, the company is given a company code.

Conclusion

This was in brief about simple steps to create a company in SAP FICO. Even a beginner-level learner can abide by these steps and take on creating a company in SAP FICO. If you are based out of Ahmedabad you ought to look out for SAP Training Institute in Ahmedabad, which will be able to help you better.

Accounting Coaching Classes for Upskilling and Training Employees

Today, most businesses will agree that employees are their biggest assets. Companies invest a…

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Today, most businesses will agree that employees are their biggest assets. Companies invest a lot in terms of hiring the right candidates and then retaining them too. At the same time, employees are also very passionate about their careers. They don’t shy to move on if there is stagnancy in terms of career growth or learning new skills of accounting training. Therefore, to align the interests of both, it is essential for businesses to make significant efforts towards constant development of the employees.

What Do You Coach About?
Businesses usually provide training to impart skills that are essential / required to perform existing jobs. Obviously, this is given; considering you would like to ensure that the employee can perform in the best possible manner in his/her current role.

However, organizations today also invest in ‘Upskilling’. Upskilling refers to the process of teaching new skills to existing employees through academies like Super 20 Training Institute. Such upskilling could also be essential, or in other cases, desirable for employees; which are discussed below.

Is Upskilling Required In Accounting?
Absolutely! In this constantly evolving business environment, accounting concepts and methods are being updated too. Entire accounting framework is being rejigged and new accounting standards are becoming applicable to the business. Fo example, accounting software (like Tally) is being updated to incorporate changes in laws like GST and so on. In such a scenario, providing training to employees is definitely the need of the hour! Training academies offers excellent accounting coaching classes in Ahmedabad, suitable to different coaching needs.

Whom To Upskill In Accounting?
Upskilling could be classified into two categories. One, teaching those skills which are essential to the changing work environment. For instance, training the existing accounting personnel about the new accounting standards applicable to the organization would be absolutely essential.

Second category could be teaching those skills that may not appear exactly essential to the existing role at hand, but could go a long way in improving efficiencies. For example, familiarizing tax team about the new accounting concepts, accounting software offering Tally courses, would help them in gaining a better understanding. And this will eventually reduce their dependence on accounting team. Sometimes, it could be essential too, say when the tax team needs to understand the applicability of ICDS and how they diverge from accounting standards that the organization follows. In either case, it improves employee morale as he feels he is learning something new and challenging.

A lot of corporates have in-house L&D (Learning & Development) team. Others may tie up with a dedicated accounting academy for this purpose. In either case, the importance of upskilling employees cannot be emphasized enough.

Classroom Courses for Practical Knowledge and Training on GST

It’s been a while now that GST became applicable. A lot has been discussed…

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Training-for-GST

It’s been a while now that GST became applicable. A lot has been discussed before and after its introduction. The provisions have been explained and thrashed out at various forums, and many teething issues have also been identified. Moreover, some of these issues have even been resolved by the Government from time to time.

Having said that, no one can deny the novelty as well as the vastness of the subject. While concepts may seem similar to VAT and service tax, there are so many new provisions as well. Further, there are various aspects to the law like applicability, rate, input credit, compliances etc. and each aspect has its own nuances. Gathering a good understanding is important for all professionals, whether you are advising your own company or your client’s.

Why take a GST training?
As is in all cases, the Internet definitely comes in very handy to get a quick overview on the basic provisions. Some blogs may help you identify certain problem areas as well. But as they say, nothing beats classroom training.

A proper training on GST would not only answer your WHATs, but also WHYs. A classroom training would start from the basics including history and genesis of the legislation, it’s structure, and what the law says. And most importantly, the reason why a provision in law says what it says. Also, formal training helps you understand the practicalities, all at one place. The Internet might tell you the deadline for filing GST return, but only a good training institute would tell you the issues that you would face while filing the returns and how to deal with it. What’s best is that you don’t need to spend your precious time on reading and comprehending various sources on the internet. You don’t have to waste time trying to summarize them – and not to forget – getting confused with divergent views / thoughts that people may have. Instead, training on GST could help you get a good grip on the subject without wasting any time, as the experts would have already done their research.

What to Expect From a GST Training?

1) Practical, Practical, Practical Knowledge!
No one needs to know the section number or exact wording. ‘Bookish knowledge’ is not what you would want. It’s the practical GST training classes that is required so as to be able to apply it in your everyday work. Now in doing so, if you need to know some history, that would be fine!

2) Going Beyond The GST Law
Yes, a good GST training may also integrate some accounting and related aspects to it. Though, it may not be completely possible sometimes, and you may have to subscribe to a related accounting course. The point is that you should aim to get a good grip of the law and how it merges with other facets relevant in an organization.

While the Internet is a good source, it is not the answer when you are looking for a structured, thoroughly researched learning on GST. Subscribe to centres like Super 20 Training Institute for its very educative, practical GST training courses.

Education : How To Bridge The Gap Between Academic Curriculum & Industry Requirements?

“Irrigation yourself with better grades and your economic future is secure”. This is the…

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“Irrigation yourself with better grades and your economic future is secure”.

This is the basic idea on which academic curriculum runs, by securing the economic future of an individual through categorising them in grading system, like product in factory. Which explains why the curriculum put students in straight rows, nice and neat, tell them sit still, raise their hands if they want to speak, give them a short break to eat and for 8 hours a day tell them what to think and make them complete to get an “A”. A letter which determines product quality or student’s abilities. And this schedule is practiced from primary schooling. Despite of categorising the minds in stereotype criteria’s, the inbuilt skills of a student must be enhanced.

But rather than creating and developing the skill of their interest, the importance is given to the report card. Due to which the child grows with the aim to score good marks, neglecting his field of interest.

The situation is worst when at a time, the interest is buried with the expectations, competition and huge academic syllabus. And later when they opt for Job, they are “rejected”. This is only because Industries don’t want a person with good academic background but should have some skills required for the vacant post. This is equally true that industry also need skilful employees as much as the aspirants need the job. For bridging the gap following ideas can be taken care of.

1. Besides the domain skill, the industry also looks at soft skills, team building, values and attitude of an individual at the time of hiring. This can be developed by collaboration of joint degrees in academic institutes which results in almost job ready students.

2. Events of short term interaction of students with industrialists, which will generate a sense of understanding the requirements of industry.

3. It should be made compulsory for higher degrees mentors or professors that they carry a specific practical exposure in their field. Because, only if they carry a sound practical knowledge in reference to their field, then only they can teach the students accordingly.

4. Importance should be given to practical knowledge. For example, engineers don’t even know different programming languages for which they are forced to join some coaching institutions. For a Commerce Student he is never thought the basics of Tally practically. And for the students of humanity, the practical exposure is the basic requirement which is not available in academic syllabus.

Concluding, the situation of academic curriculum and requirements of industry, this should be kept in mind that every person is born with some additional ability different from everyone, only the requirement is bridging gap between the ability, or skills and the stage this skill should be honored on. And a world where the currently reoccurring statement can be erased from the tongue of fresher’s

“Inconvenience deeply regretted sir”.