Articles

How can an LLC be taxed?

What is a Limited Liability Company (LLC)? An LLC is a business where the owners are not personally liable for the debts and liabilities. The business structure of an LLC combines the limited liability protection of a corporation but with the flexible tax structure of a partnership or sole proprietorship. An LLC is therefore regarded […]

COVID-19 Bill Enhances Your Unemployment Benefits

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act provides individuals and businesses significant financial relief from the financial strain caused by the coronavirus epidemic. Here is a snapshot of the unemployment benefits section of the bill and how it affects individuals and businesses. WHO QUALIFIES TO RECEIVE STATE UNEMPLOYMENT BENEFITS? In addition

Creating a Projected Cash Flow Statement

An important part of your overall financial forecasting is to include a projected cash flow statement. Essentially, this financial statement will show you exactly where your money is coming in from and to where it is going out. This type of financial statement will be required by many investors and loan officers; however, it is

What is the Equity Ratio and how is it Calculated?

Financial ratios such as the equity ratio play an important role in financial statement analysis because they are easy to calculate and provide a gauge for business performance. The equity ratio is a solvency ratio, providing insight into capital structure, the company’s assets, equity and the financial well-being of a business. Below are the advantages

What is the Labor Efficiency Variance Formula?

The labor efficiency variance formula is referenced under several names. To be accurate, the formula is used to measure direct labor rate variance. That sounds pretty technical, but it’s a simple enough concept. Direct labor variance is a means to mathematically compare expected labor costs to actual labor costs. More specifically, the formula looks at

How to Calculate Target Profit

As a business matures and stabilizes, it’s common for management to begin planning the company’s goals, with the most common being profit. The term for this is called Target Profit, and here we will discuss the planning and formulas to help you begin this process. Target Profit Definition Target profit analysis refers to the anticipated

What are Permanent Accounts?

The bookkeeping process utilizes permanent accounts, also known as real accounts, to record balance sheet items, such as assets, liabilities, and owner’s equity, as of a point in time. This is the opposite of temporary accounts used to measure activity over a specified date range. Understanding permanent accounts are critical for month-end-close and the generation

What are Temporary Accounts in Accounting?

When preparing an income statement or cash flow statement, journal entries of temporary accounts are used to record financial activity because they measure activity over a period of time. Company accounts such as temporary accounts are closed during the month-end process or when a company decides to publish financial statements. Without temporary accounts, it would

What Is Unearned Revenue?

In accrual accounting, revenue recognition can become complicated, especially when companies sell subscription services or complete projects in installments. This is known as unearned revenue or deferred income accounting. There may be instances when full payment is collected before revenue can be recognized. In these situations, unearned revenue must be reported to remain compliant with

What Is Contribution Margin? | Ratio Calculation

Analyzing a company’s income statement yields many insights about the efficiency and effectiveness of operations, especially as it relates to total sales revenue and variable costs. The contribution margin is a metric that illustrates profitability before fixed expenses such as rent or salaries are factored into the equation. Below are additional details about the contribution margin, and