Top Three Benefits Of Payroll Software To A Small Business

Posted by admin in Accounting, Tips on March 1, 2012

As a small business owner, you are going to be spending a lot of time being both an employee and a manager. You will have to help customers, stock shelves and clean the toilets if need be. On the other hand, you have to be responsible for keeping track of invoices, payroll and other administrative tasks. Therefore, using payroll software can have many benefits to your business.

1. Spend Less Time On Payroll

Unless you are an accountant, you probably didn’t start your business with the hopes that you could verify time cards and write checks. Using payroll software will allow you to simply put in the numbers and let the program take care of the rest. Allow your software to make the calculations instead of having to pore over charts and tables all day long.

2. No Need To Hire Someone To Handle The Payroll

Your options as a small business owner are to either hire an accountant, or to do your payroll yourself. By using payroll software, it is like having your own accountant without having to pay someone to keep your books. Some estimates claim you can save up to 150,000 dollars a year by automating your payroll operations.

When you are a small business, every penny that you can save is going to be critical toward making your business a thriving and successful endeavor. Small business software can do the job just as well and for a fraction of the cost. A payroll program like QuickBooks can be had for around 20 dollars a month.

3. Make Sure That Your Payroll Is Done Correctly

There is more to doing payroll then simply adding up the hours worked and paying your employees. You have to be sure that you are taking out the payroll taxes and keeping track of benefits paid out. With small business software, you can ensure that your payroll is being done right and being done quickly. Read the rest of this entry »

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Producing To Profits – Pitfalls of Absorption Cost Systems

Posted by admin in Accounting on March 1, 2012

When goods are manufactured there are typically two types of costs that comprise the “total cost” of manufacturing the product. Fixed costs are the costs associated doing business, such as lease of the land that the production facility is built on, the building itself, marketing, administrative, and other overhead are all combined into a “Fixed Cost”. A Variable Cost is the incremental cost to produce one more unit of output, for example the amount of electricity needed to produce another unit, the additional materials required, and the additional labor hours required to assemble it. These variable costs are directly tied to the production of the good, while the fixed costs are shared among all units produced.

In an absorption cost system the variable cost of the manufactured good is added to 1 share of the fixed costs for that unit.

For example in a factory that produces 1000 cars their costs could be broken down like this:

Fixed Cost: $100,000
Time& Materials: $100,000
Units Produced:1,000
Variable Cost Per Unit: $100
Fixed Cost Share Per Unit: $100
Total Cost Per Unit: $200
Sale Price $1,000
Profit Per Unit $800
Total Profit: $800,000

If that same factory doubled production but could only sell 1,000 cars the costs would look like:

Fixed Cost: $100,000
Time& Materials: $100,000
Units Produced:2,000
Variable Cost Per Unit: $100
Fixed Cost Share Per Unit: $50
Total Cost Per Unit: $150
Sale Price $1,000
Profit Per Unit $850 Read the rest of this entry »

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