Frequently Asked Questions
Find answers to questions on various accounting topics
Why is Peak Platforms different from other accounting & tax/bookkeeping firms?
There are very few industries that are as fixated on legacy solutions as the accounting industry. It’s simple math: anything that has to deal with numbers is usually best left to old and proven solutions. But it’s also something else: the accounting field tends to deal with highly educated, intelligent professionals, who are usually not tech savvy. That is where Peak Platforms is different. Peak Platforms differentiates itself as a leader in the industry by focusing on the use of cloud-based technologies. These technologies allow us to provide efficient & cost effective services, using easy to use cloud-based solutions.
What is Cloud Accounting?
Traditionally, accounting was executed using software hosted locally on a desktop computer’s hard drive (e.g., QuickBooks Desktop). Cloud accounting, on the other hand, is accounting that is executed using software that is hosted remotely on the cloud – i.e., online.
How does Cloud Accounting Software work?
Cloud-based accounting software works in essentially the same way as all other cloud-based software. Files that would normally be stored on a hard drive are stored online. Because the information is stored in such a way that it is always accessible, you can log into our solutions at Peak Platforms and perform accounting practices and processes on any computer on the planet with an internet connection.
What are the benefits Cloud Accounting?
The cloud accounting software landscape encompasses many solutions designed to serve several accounting/bookkeeping functions. For instance, QuickBooks is a cloud-based accounting software, whereas Bill.com is a cloud-based solution to help manage Accounts Receivable and Accounts Payable.
Although benefits will vary between solutions, on a general level, some of the benefits of cloud accounting applications include the following:
- The ability for data to be accessed regardless of location or device.This facilitates remote services and “anytime” communication, which will help to build stronger relationships between an accountant/bookkeeper and their clients.
- The ability for data to be updated in real-time. Being able to access financial data and information quickly (i.e., in real time) will empower businesses to make informed decisions sooner rather than later.
- The ability to easily scale to meet growing business needs. Let’s say your business currently makes 0-100 transactions per month, but experiences rapid growth that causes this number to jump to 10,000+ transactions per month. Your cloud accounting software should be able to easily support this growth.
- The ability to facilitate a paperless environment. This will eliminate the need to physically store and manage paper documents, which is not only beneficial from a cost and office space perspective, but also for the environment.
- The ability to provide automatic updates. This will help to further improve the functionality of the application and better enforce security.
- The ability to reduce costs. Cloud-based software does not incur the costs associated with traditional software (including maintenance, upgrades, system administration, etc.).
- The ability to integrate with other cloud solutions. These integration capabilities will improve the efficiency and increase the power of your cloud accounting technology stack.
Outsourcing Your Accounting & Bookkeeping
What are outsourced online bookkeeping services?
Peak Platforms uses the power of the internet to provide you with online bookkeeping services. The technical term for this service is an ASP or Application Service Provider. Peak Platforms uses an ASP to host all client data and QuickBooks financial accounting software, which is updated and maintained by the service provider. By using the services of an ASP, your company experiences the convenience of 24/7 access to information on a secure network server, anywhere there is an internet connection.
Won't I lose control if the books are done by an outside service?
The short answer: No. You have more control since you’ll have accurate, up-to-date financial statements at your fingertips. You’ll have more time and money to plan instead of simply reacting to business events.
Why outsource my accounting department?
Let a professional do a professional’s job. If you are like most business owners and CEOs, you take full pride in the services or products your company provides. You want to focus your time and energy on business strategy and goals. Outsourcing the accounting department to a dedicated, highly skilled professional services firm allows you to do exactly that. By outsourcing your accounting to Peak Platforms, you’ll save valuable time in your day, reduce operating costs and gain peace of mind.
What steps can I take to improve business cash flow?
To achieve a positive cash flow, you must have a sound plan. Your business can increase cash reserves in several ways:
- Collecting receivables: Actively manage accounts receivable and quickly collect overdue accounts. Revenues are lost when a firm’s collection policies are not aggressive.
- Tightening credit requirements: As credit and terms become more stringent, more customers must pay cash for their purchases, thereby increasing the cash on hand and reducing the bad-debt expense. While tightening credit is helpful in the short run, it may not be advantageous in the long run. Looser credit allows more customers the opportunity to purchase your products or services.
- Manipulating price of products: Many small businesses fail to make a profit because they erroneously price their products or services. Before setting your prices, you must understand your product’s market, distribution costs, and competition. Monitor all factors that affect pricing on a regular basis and adjust as necessary.
- Taking out short-term loans: Loans from various financial institutions are often necessary for covering short-term cash-flow problems. Revolving credit lines and equity loans are common types of credit used in this situation.
- Increasing your sales: Increased sales would appear to increase cash flow. However, if large portions of your sales are made on credit, when sales increase, your accounts receivable increase, not your cash. Meanwhile, inventory is depleted and must be replaced. Because receivables usually will not be collected until 30 days after sales, a substantial increase in sales can quickly deplete your firm’s cash reserves.
Tax Preparation and Planning
When to use a CPA or tax preparer to prepare your taxes?
For most people, using a tax preparer makes sense in the following circumstances:
- You own a business
- You are considering starting or buying a business
- You own real estate
- You are selling or buying real estate
- You would like tax advice about upcoming or past transactions such as taking money out of retirement accounts
- You’re uncertain if you’re completing your tax return accurately
Should I consult a CPA if I am starting a business?
It is imperative that you contact a CPA. You will need to discuss the organization of your company for tax purposes as well as numerous other issues relating to operations, not the least of which will be setting your target pricing and gross profit margins. Don’t wait until the year-end to have this discussion. You could be making decisions without the proper advice, and that could wind up hurting you financially or legally.
What are pass through entities?
The concept of “pass through entity’s attribution” stems from the fact that this entity’s ownership can be attributed to another entity. The IRS Code prescribes that pass-through entities’ income belongs to that other entity. Pass through entity earns the income but is not responsible to pay the tax related to this income. In effect, the pass-through entity’s income and related tax liability passes through to the entity having ownership. Examples are estates, LLCs, partnerships, S Corporations and trusts.
Small business taxes – how to pay yourself?
We recommend you speak with a CPA to make sure you are doing this accurately. The answers vary depending on the type of business you have set up, the number of years of experience you have, the business’ earnings and how much money you want to take out of the business for personal purposes among other factors.
How long should I keep my tax records?
All business records, especially sales and payroll must be kept for seven years. The Social Security Administration requires discrepancy be resolve anytime within this seven-year window. The IRS and the states will audit within the seven-year window. Keep all federal, state and local returns indefinitely and the all supporting documents for seven (7) years. Real Estate and stock market transactions records should be kept. Tax consequences of a transaction can depend on events that happened years earlier. Taxpayers often keep files in a single, easily accessible location. Consider keeping your files in a safe deposit box or other safe place outside your home.
What are Virtual CFO/Controller Services?
A CFO or controller vacancy can leave you lacking the ability to make critical financial management decisions during times when missed opportunities can bring your goals to a screaming halt. Our certified accounting professionals have the knowledge and practical experience necessary to step in and address your accounting and financial concerns when you need the high level of guidance that a CFO or controller brings to your management team.
As your temporary CFO or controller, we perform the same functions you would expect of your CFO or controller – business and strategic planning, budgeting and forecasting, financial reporting, accounting system selection, financial analysis and guidance, and management of your financial infrastructure – and at a fraction of the cost of hiring a full-time CFO or controller.