Turn Your Trading Losses Into Gains

It may sound counter-intuitive, but a trading loss actually offers certain opportunities. You can offset it against Corporation Tax in the past, present or future. On the other hand you may want to consider re-setting your financial year, or even creating a loss through pension contributions.
An actual trading loss is far from perfect, but in the current climate especially, it's becoming more common for businesses to experience erratic levels of profitability. Handled correctly, you can turn the loss into a tax saving - now or in the future.
The trading loss can be offset against the current year, carried back one year to the previous accounting year (and offset against tax due for that year), or carried forward for an indefinite period.
It's also possible to alter the parameters of your financial year to evade a boom and bust scenario where you're greatly taxed for the successful period and then suffer a weaker period without any compensation.
Pension relief
Pension contributions are usually allowable deductions for corporation tax purposes and because the deductions form part of the company's expenses, any trading loss can get relief under the trading loss rules for a company.
It's possible to create or increase a trading loss by making an employer pension contribution.
Understandably, you may think that making a pension contribution during a trading period when profits are low (or a loss is made) is a futile exercise. However trading losses may be offset against the proceeding year or carried forward to set against future profits, so the net result could be a tax saving.
As long as your company either paid Corporation Tax in the previous period, or will be paying it in subsequent periods, tax relief will be given for pension contributions providing they are exclusively for the purposes of the trade.
It's also worth noting that pension contributions need to be paid before the end of the accounting period.
Example
· ABC Ltd anticipates profits in the trading year ending 31 December 2010 of £10,000.
· They had a £400,000 profit in the accounting period ending on 31 December 2009.
· Annual pension contributions for the directors and other employees are £100,000
Should the payment be made now or delayed?
Possible solution
If the payment is made in the accounting period up to 31 December 2010, the company will have a trading loss of £90,000.
This loss can be set back against the previous year's profits, gaining a Corporation Tax repayment (or saving, if the tax hasn't been paid over to HMRC yet) of £26,775 (29.75% of £90,000), with no tax due for the year ending 31 December 2010.
The total tax saving is £28,875. This means tax will be saved at an overall effective rate of 28.87%.
In this example the pension contribution does not need to be delayed, even though the consequence of the contribution being made is that the company has no profit in the period. To delay the payment until the next accounting period would mean a delay for any Corporation Tax relief for the payment, potentially until 1 October 2012.

Short Sale/Foreclosure Tax Info By a CPA (Accountant)

The Mortgage Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their principal residence through 2012. This includes debt reduced through mortgage restructuring and foreclosure, but only applies to debt used to buy, build or substantially improve your principal residence. Refinanced debt is only forgiven up to the amount that would have qualified before refinancing and the loss sustained on the short sale or foreclosure of your principal residence is not deductible.
Discharge of debt on rental property is not excluded from income. If a financial entity cancels or forgives debt of $600 or more, you will receive a Form 1099-C, Cancellation of Debt. Unless you meet one of the exceptions, this canceled debt is ordinary income and must be reported on your tax return. Exceptions include bankruptcy or insolvency. Insolvency occurs when the total of all your liabilities is more than the fair market value of all of your assets immediately before the cancellation of debt. If the cancellation of debt exceeds the amount by which you were insolvent, the difference must be reported as income.
If discharge of debt is excluded under the bankruptcy or insolvency exceptions, you must reduce your basis in the rental property by the amount of excluded cancellation of debt income. The lender's foreclosure or repossession of the rental property is treated as a sale or disposition and may result in realization of a gain or loss for income tax purposes. The gain or loss on the disposition of the property is measured by the difference between the fair market value of the property at the time of the disposition and your adjusted basis in the property. Your adjusted basis in the property is your cost plus improvements, less depreciation and less the amount of excluded cancellation of debt income.
Real estate and taxes go hand and hand. If your personal real estate is in a foreclosure please consult an accountant or tax professional. Taking a short sale offer on an investment property could have substantial tax consequences. Many clients are choosing to walk away from the property vs accept the short sale for tax reasons. Your home is another issue and the two should not be treated the same. Accounting rules are moving more in the direction of helping homeowners get out of this financial crisis by giving tax leeway to homeowners in poor financial conditions.

Accounting Firm: Top Ways That an Accountant Can Help You

If you are not sure whether an accounting firm could help your financial situation, you should find out what the typical company offers. Many people find that they need help from someone who is good with numbers and knowledgeable about finances, which does not describe the average person. Thus, you should learn a few of the services that are most commonly appreciated by most individuals.
Of course, tax time is the busiest season for the usual accounting firm, as many people do not know where to begin when doing their taxes. This is especially true if you have various deductions, or complicated situations, such as status as an independent contractor. Even if the situation seems simple, and you do not have many deductions, you may still benefit from a professional looking at your taxes since they may find some deductions that apply to you. Whether you are unsure about where to start, or just want someone to check your work, you should hire a company to check out your taxes.
If you do not have a retirement fund set up through work, as many people do, you should start checking out your options. An accounting firm can help you explore the choices that would work for your situation. Even if you decide not to set up a fund just yet, it is good to know your options. This will result in you having some money put away when you stop working. Thus, meeting with a company, even just to start preliminary planning, can allow you to have peace of mind about your retirement.
Most small businesses need the help of an accounting firm, as well. Even if you do not have employees, you may want help with the financial details, especially when it comes to tax time. Getting tips on saving money during the first few years of business is particularly helpful, as most new companies fail during this time. Clearly, meeting with an accountant may just be the difference between succeeding and failing at your business, as so much depends on having stable finances.
These are just the top few ways that an accountant can help an individual, family, or business. If you are still not convinced that you need this type of assistance, consider having an initial consultation with an accountant. Many offer at least a few minutes of free advice, giving you a glimpse of what you should be doing to keep your finances in good condition.

The Enterprise Reconciliation Lifecycle - Phase 3: Exception Resolution

What next after matching?
To be frank, the important stuff. The reason to match is to find exceptions, or breaks as they are called in some industries, even though we hope to see none. The best result is a blank exceptions listing. However, this scenario frequently evades us, often as a consequence of situations outside of our control (such as third parties). Exceptions are what cause risk to the business: financial risk, reputational risk, the risk of losing clients, or of failing an audit, or of falling foul of compliance-related regulations and legislation. If, therefore, we accept that exceptions happen, how best can we deal with them?
Degrees of exception resolution
The answer is quickly and efficiently, commensurate with the level of risk they pose, and in a way that clearly demonstrates this. In this article we define two degrees of exception resolution: exception management and case management. The latter builds upon the former and may - or may not - have validity in various situations. Consider two scenarios:
The first is a traditional bank (check) reconciliation: matching checks issued to those cleared by the bank. The match rate is high - over 99% - and the transaction values low. The transactions should match one-to-one. Where there is a discrepancy it is likely sufficient and appropriate for a user to review these on screen, work through them, annotate notes and comments, and get them resolved. The above represents base exception management.
Now envision the matching of trading activity at an investment manager. Very high transaction values, many-to-one or many-to-many matching, high risk associated with clients' monies. A million dollar break requires immediate attention. Here multiple transactions may need to be grouped together, and defined resolution workflows, likely with multiple resolution paths, applied. Initial and ongoing alerts, reminders, and escalation triggers for delays need to be automatically generated. Here we are talking about case management.
How increased automation can help boost compliance
If good financial governance dictates that the timely reconciliation of accounts is in order and the resolution of exceptions a necessary step in this process, then legislation and other regulatory requirements across most geographies and industries require it to varying degrees. It is insufficient merely to undertake exception resolution; one also needs to prove it. An enterprise reconciliation solution allows all these activities to be recorded within a single, easily accessible database. This not only reduces day-to-day operational costs, but also renders audit activities, internal and external, much more efficient.

An Interest In Math Could Lead To An Accounting Degree

Math whiz-kids: are you looking for a career that every business needs, doesn't come with a lot of stress and has job placement almost instantly upon graduation? Look no further than a degree in accounting. Career training can range from certificates to Master's degrees in accounting. Most accountants hold at least a Bachelor's degree.
To make the grade, you'll have to be analytical, interpret facts and figures quickly plus sport the ability to clearly and concisely communicate the results to management or clients. High standards of integrity are an important trait in this profession. Since the recent financial catastrophes and Ponzi schemes have hit the news, you'll more likely be closely monitored, at least initially.
Accounting is a system of economic information that's identified, recorded, summarized and reported. Then the managers and decision-makers decide on a course of action based upon the findings. Computers handle most of the mundane tasks of accounting, so professionals are freed up to spend more time analyzing data. Two of the newest study areas to combine accounting degrees are ethics and computer science.
Staying current with industry standards and technological applications is imperative in maintaining a successful, progressive accounting career. Even accountants with degrees seek continuing education or work towards more specialized degrees. Online classes allow more students to join the growing industry or take refresher courses or earn advanced degrees.
Although this is one career where advancement is steady, the competition is also fierce and it looks like it will remain competitive for many years to come. Certification requirements will probably become more rigorous, specialization will become more evident and accountants with the highest degrees will be much sought after. Certified Public Accountant (CPA) certification not only demonstrates your professional commitment and expertise, but it is also a crucial designation to perform certain functions. For instance, only a CPA has the ability to sign an audit option, which is the official declaration representing a company's financial position.
According to the Bureau of Labor Statistics, accounting is divided into four categories: public accountants, management accountants, government accountants and auditors/internal auditors. Each category has its own niche that it covers. Public accountants focus primarily on auditing and tax-related functions. Management accountants often start as trainees in a corporation and work as cost accountants or internal auditors. Government accountants oversee the performance and allocation of government funding. Internal auditors conduct compliance audits and accounting information systems.
There are also private and public accountants. Public accounting offers higher salaries, more variety and better opportunities for advancement based on merit. Your actual working hours as a public accountant will be applied to your CPA requirements. Private accounting is considered more stable with a fixed location, set hours and steady workload. Private accountants also usually get a Bachelor's degree, but aren't required to have a CPA.