I wouldn't try to separate bookkeeping from accounting too much. As a cpa, the lines are blurred too often because we're usually making decisions and adjustments along the way.
But, a little information can definitely be dangerous. It can be a huge time sink to "restate" the books to suit someone's vision and at worst it allows people to misrepresent the information.
>I wouldn't try to separate bookkeeping from accounting too much.
I think of them as distinct and separate concepts:
bookkeeping: the recordkeeping of transactions. The "data entry". You can have lower wage data entry clerks tearing open envelopes to type in data from vendors' invoices and recording deposits of checks from customers. At this layer, the data needs to be recorded correctly.
accounting: literally the management of "accounts". This is a position of education (CPAs). Their value-added thinking happens above the layer of bookkeeping. They use professional judgement to set up a "chart of accounts" ... what kind of buckets to keep track of various money, how many buckets, etc. They are in charge of "closing the books" each month and preparing financial reports.
Yes, sometimes the activities blend into each other. Some bookkeepers do higher level "accounting" activities and some Certified Public Accountants also do grunt work of "bookkeeping" but they're still separate cognitive activities.
Lastly, there's finance. The finance layer sits above accounting and bookkeeping. Finance management (CFO, treasurer, etc) focuses on strategy of money. Should the company lease or buy the building, the tax implications of foreign earnings, stock buybacks, etc. The accountants & bookkeepers can report exactly how much money is sitting in the bank but they are not the ones who decide what the best strategy is for it.
It's the small businesses where "bookkeeping" and "accounting" are synonymous (e.g. using Intuit QuickBooks). In those mom & pop shops, the "finance" strategy is handled by the owner(s) of the company.
From your description, it sounds like bookkeeper:accountant as DB-user:DB-admin - the accountant/admin defines the schema, and the bookkeeper/user only gets to work at the data level, with no metadata level decisions. Is this analogy sound?
I believe this is a good analysis if you see the DB administrator in the role of scheme and report design, interpreting reports, and using those reports to plan for the future, and the DB user as inserting new rows (never updating!) and doing simple queries on the data.
I've wondered the difference between a good bookkeeper and a CPA. After looking at your comment, I finally looked up the requirements to become a CPA. I won't list them; they are easily found online.
I have wondered the difference, because I had two friends who had vastly different incomes, but were doing essentially the same work.
My first friend(former girlfriend in college) became a CPA, and was working for a small VC.(when I knew her I don't think they were calling themselfs venture capitalists? They were just small cap investment firms--basically a rich guy who invested in small business.) Well, since she was a CPA she had no problems in obtains jobs, and salary was not an issue.
I guess she was a good accountant?
My other friend who dropped out of school, and didn't get his bachelor's degree went into bookkeeping. He took a tremendous amount of business and accounting courses at various community colleges. He wanted to get his CPA, but didn't have the auditing experience(not required anymore in CA), and didn't have a bachelors degree. He did some amazing things for just a bookkeeper. He was highly instrumental in making the owner of a small local bike manufacturer a multimillionaire. He was always working, but never got close to the salry of the CPA. I recall him saying he coukd pass all four sections of the CPA exam, but couldn't get his license because he lacked the education/auditing requirement.
I have thought about the two over the years; and without a doubt If I needed an accountant, I would hire my friend without the CPA license. Why, because I know what he did professionally. I still think about that deal he put together. I know we need a CPA licensing system, but don't discount the bookkeeper with the spectacular work history?
My point is get that CPA if you can afford it? I'm pretty sure the bachelor's degree can be in any major. You need certain amount of accounting courses, and a one year of experience working under any CPA, at any company.
(What I find troubling in CA is under Brown--it appears Lobbiests got their mits on Gov. brown and made it harder to gain entrance into certain professions. I'm not sure if easier, or harder to become a licensed CPA before Brown? I do know he caved into the Realeste brokers lobby. It is harder to become a real estate broker under Gov. brown. When Gov. Scheartzenegger was hit by the Reators lobby he said, 'I'm sorry. I don't want to make the broker's license more difficult to obtain. You haven't presented one instance where the old system failed?' He vetoed the bill.
That day, I went from a militant, strict Democratic to someone who didn't care which party you were affiliated with.)
I always appreciate new ways to make accounting easier. A lot of accounting should be automated because most of it is ministerial.
But, I do thinking that financials are something that each person should learn a bit more about. I find it too common that people aren't spending enough time to understand what their financials are trying to tell them. For example, they're generate awesome revenues, but failing to convert it into cash fast enough to meet their debts (statement of cash flows).
Always a fan of everyone gaining financial literacy =).
I found that article to be rather obtuse and very complicated (I think it was an intellectual exercise rather than a primer), but that's my personal opinion. Definitely not the "light reading" GP wanted. A useful primer would, in my opinion, start with the accounting equation, explaining its components, and move on from there.
I was referring to the Martin Kleppmanm piece on "Accounting for Conputer Scientists". It seems like it was meant as an exercise in mapping accounting to graph theory, but somehow morphed into a go-to tutorial for accounting.
Looking at the comments on that website, it has even developed a sort of fanboyism. But IIRC, it led to some "interesting" insights when it was first discussed on HN, like "sales are liabilities".
I find the alleged impenetrability of basic accounting to be rather baffling in general.
Thanks, happy you were not referring to our document! :-)
Sales (Incomes) are clearly equity, with Expenses being contra-equity. Not sure how anyone could come to any other conclusion, but I'll read the article and it'll probably become clear. :-)
I agree with essentially everything Tom suggests. I think that trademarks (TM) is something a lot of people forget to use, registered (R) trademarks is something I generally tell people to avoid because its often not going to help unless you have a significant amount of intangible monetary value. It does offer some protection like Tom suggests, but clearly it's not full proof. Still its better than nothing.
I would've cut down on communicating with the person. He's obviously illiterate and his income is fueled by fraud. In my experience, you give them a single friendly but frank email with 24 hours to respond and then you just have to go through the proper channels. In this case removing his domain.
I'd like to believe the good in people. But, this individual's conduct from the outset demonstrates bad faith.
Not getting into a fruitless debate and/or antagonizing somebody that doesn't have any interest in being reasoned with.
It's quite possible that he reported you to Adsense specifically as a petty demonstration of the "power" he wields. And while your site may have been your only income, his was probably one of dozens more, so it didn't really matter to him.
Short version: you had a lot more to lose and nothing to gain compared to him.
I practice tax law and write for forbes on tax law.. this area of law may seem confusing, but that is mostly for the media buzz. The law has generally been fairly clear.
Many states have long had laws that taxed "pre-written or canned software." MA is just one of the newer states that have enacted this law. New York has had the law in the books for years.
Pre-written software means that you've previously created software and you've literally re-used the code.
Professional, custom or designed software is still exempt as a "professional service."
What happens when you're like SAP and you start with canned software, but then customize it? Then, you pay sales tax on the canned portion and then you don't pay tax on the customization costs.
In sales tax audits, they test this by comparing code sold off the shelf to the code presented as "custom." Generally, consultants are used.
There are also sales tax on "informational reports." This started as paying sales tax for "stock tips" sent over the fax. But, today this has extended to informational reports that were created by software. Thus, a lot of businesses that "don't sell canned software" and provide a "service" cannot escape the tax law by simply providing the end product alone.
I can understand people getting angry, but the law has been around for a while... I've gone through multiple audits with companies such as reuters, bloomberg and etc. I don't particularly feel that its unfair, since if you provide a "custom service" then you're exempt.
Obviously, there are always going to be ways to "technically" get away with avoiding sales tax, but that doesn't mean that they're inherently unfair. Companies avoided paying sales tax on software for a while, until the states realized that they were being cheated by these businesses. Then, businesses decided that if we don't sell the software on "CDs" then its not tangible property and "legally not taxable." So, they would bring the CDs and install the software and then leave with the CD's to effectively avoid the sales tax.
Then, they started to allow the software to be hosted online and only provide the "end-product aka SaaS." Services are commonly exempt and hard to follow, thus they escaped the states radar for years. Its a cat and mouse game that will continue.
I think the best example is if an attorney or accountant were to provide the same exact tax return or memo to everyone, then it'd be taxable under sales tax law. But, because we provide a different memo or tax return to everyone (maybe using a system like turbotax or something), it is a custom product because the service is only applicable to that person. If the developer provides a copy of turbo tax, then its taxable because its always the same. But, if the developer uses RoR, Python or some other system to "create" the end product for the individual, then its not taxable. Hopefully, this crude example is decent enough to get the point across.
Why do they single out software in this regard? Or are there similar laws on the books for things like legal documents? i.e. if I have a lawyer draw up a lease and its a boilerplate with the correct blanks filed in, is there a tax on that? If not, why not since it seems extremely similar?
off topic, but you could use autotax.me to help deal with the freelancer tax stuff like W9s, security and 1099s (free) without having to fill out the same tax docs a million times.
That would be my fault. I meant to say that Patio11 suggested that Emil should talk to his customers. Emil was more focused on building the product than communicating with his potential customers, which was why he faltered in Picopy.
Unfortunately, that's something that is automatically done through the platform. I'm not used to it yet and I'm still trying to figure out how to turn it off.
I can wholeheartedly agree to this, I probably should've done a better job communicating that. I meant it more as a pointed commentary at the older investors.
(Note, I will totally admit that it was written to gain attention)
I was able to get mine done in about 3ish months.