David J. Mlcak, P.C. Certified Public Accountant |  327 Fowlkes Street | Sealy, Texas | 77474 | Tel: (979) 885-4878
Certified Public Accountant
David J. Mlcak, P.C.
Home Services Business FAQ Resources Other About Archive Contact Business

An accurate record keeping system is one of your most

valuable assets.

Your record keeping system must provide you with current information on the cost of production and materials, direct and indirect labor and overhead to allow you to calculate the true cost of doing business.  Most business owners do not recognize under-pricing until it is too late.  Cash flow generated from increased sales due to price cuts coupled with short term working capital loans, may give a false sense of profitability.   Operations should be funded from operations, not from debt, except for seasonal peaks or occasional growth spurts.  You must, therefore, rely on your current financial and accounting information to analyze cost-price relationships and take corrective action in time to prevent losses.   Accurate and complete financial information will answer three important questions for you 1) Where have you been?  2) Where you are now?  3) Where you are going? At David J. Mlcak, P.C., we provide our clients with monthly, quarterly or annual financial statements.  These statements give details of the financial position, results of operations and cash flows.     

Supporting Documents

In addition to your record keeping system supporting documents must be kept to validate the entries in your books of account and on your tax return. Sales/Gross Receipts Invoices Cash Register Receipts Bank Deposit Slips Credit card charge slips   Expenses Invoices Credit Card Receipts Cancelled Checks Petty Cash Receipts   Travel, Entertainment, Gifts & Transportation You must keep records to substantiate travel, meals, lodging, entertainment, transportation and incidental expenses. Travel Amount of each separate expense for travel, lodging and meals. Incidental expenses may be totaled in reasonable categories Date departed and date returned for each trip and number of days for business Name of city or other destination Business reason for travel Business benefit gained or expected to be gained Entertainment Amount of each separate expense Date of entertainment or use of facility Name and address or location of place of entertainment or use of facility for entertainment Business reason or the business benefit gained or expected to be gained.  Nature of business discussion or activity Person entertained that shows business relationship to taxpayer Gift Cost of gift Date of gift Description of gift Business reason for giving gift or business benefit gained or expected to be gained Name of recipient that shows his business relationship to taxpayer Transportation Amount of each separate expense, including cost of car Mileage for each business use of car and Total miles for tax year Date of the expense or use City or other destination Business reason for the expense or use of the car IRS publication 463 provides specific information on properly substantiating these business deductions.

Starting A New Business

When starting a new business, consider the following:

Business Plan

A business plan is a valuable management tool.  IIt will outline the proposed business venture and help inform lenders to assess its profitability.

Business Entity

Compare the business aspects of various types of business entities available to you with your CPA to determine which entity will best meet your business needs.  Businesses can be established as a 1) Sole Proprietorship, 2) Partnership, 3) C Corporation, 4) S Corporation, 5) Limited Liability Company.  A limited liability company (LLC) may be treated as a disregarded entity, a partnership, or a corporation for federal income tax purposes.

Employment Issues

A business must comply with state and federal regulations on hiring employees, on compensation, on termination, on filing of payroll returns and forms, and on depositing payroll taxes. Labor Laws The federal Fair Labor Standards Act (FLSA), commonly referred to as the Wage and Hour Law, regulates the minimum wage, overtime pay, recordkeeping requirements and child labor standards for certain employees Americans with Disabilities Act (ADA) Provisions of this act cover employers with 15 or more employees. Workers’ Compensation Laws These laws are legislated and regulated by each individual state and may require employers to furnish standardized insurance coverage that will provide compensation in the event of a job related injury, illness or death of an employee.  Regulations govern reporting of injuries, returning employee to work and type of job offered to recovering employee. Occupational Safety and Health Act OSHA monitors and regulates working conditions of employees.  Compliance, Safety, and Health Officers conduct frequent job site inspections to protect employees from workplace hazards. Equal Employment Opportunity (EEO) Laws The Equal Employment Opportunity Commission enforces the EEO laws.  Federal Human Rights laws are designed to prohibit discrimination in employment based on race, color, religion, sex, national origin, age, disability or genetic information.  Most companies with 15 or more employees are required to meet these standards. Immigration and Nationality Act (INA) These provisions apply to all employers.  It is illegal for an employer to hire a person not authorized to work in the United States.  United States Citizenship and Immigration Service Form I-9 (Employment Eligibility Verification) is to be used to document that a person is a U.S. citizen or national, or is an alien legally authorized to work in the United States. See also IRS Publication 4591 provides information to start-up businesses      
Accounting Software
Purchasing accounting software is only the beginning.  Adapting this software to be used as a management tool is a must in today’s competitive environment.  While it is important to keep current, accurate and complete records of your day to day business operations, it is equally as important to work closely with a CPA knowledgeable in accounting principles and tax law to assist you to perfect this important task.  Simply engaging a CPA to prepare your tax returns, using your in-house financial statements, does not ensure that you are paying the least amount of taxes legally required.  Your accountant can only work with the information provided to them.  Take time out to discuss your affairs with us so we can help you take every tax benefit that will fit your individual tax situation.  While it is not necessary to learn detailed information about tax laws and changes, a general knowledge of these will aid you in informing your CPA of your current tax situation.  David’s business philosophy is to provide personalized client services; which means taking the time to know and understand his clientele and their businesses.