Make Your Job Easier- Hire An AccountantMake Your Job Easier- Hire An Accountant

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Make Your Job Easier- Hire An Accountant

Have you ever thought about how many different hats you wear during the day as a small business owner? One minute you might be talking on the phone with potential customers, and the next you might find yourself meeting with an investing team. Although you might have a large, highly diverse set of skills, chances are that there are a few jobs you should leave to the professionals. Taking care of your books can be challenging, and a few simple mistakes could cost you thousands of dollars. On my website, I have included useful information about how an accountant can make your job a lot easier.

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Annual Trust Accounting — 5 Things To Include For Transparency

The goal of a trust is to protect the assets of its beneficiary or beneficiaries. And one way the trustee does this is to provide an accounting of its financial activities. Some states require this to be done on an annual basis, but it's a good idea for any trust. What should the trust accounting report tell stakeholders? Here are five key elements. 

1. Income and Expenses

Many trusts have assets that earn some form of income. It may be small, such as interest from bank accounts, or it could be the profit from a successful business or royalties. Whatever the income, the beneficiary should be able to see how funds are invested. Similarly, expenses paid should be transparent. A trustee is a fiduciary, meaning that the funds are not theirs. They are merely in charge of the assets of other parties and have a duty. 

2. Payments to the Trustee

Trustees generally have the right to be compensated for their work. This may include both payments for their time and reimbursement of expenses. However, since some trustees might take advantage of their position, the annual accounting should make a specific mention of all money paid to the trustee. 

3. Taxes Owed and Paid

Did the trust have to pay any taxes? If so, the beneficiary deserves assurance that these are being reported and paid properly. In most cases, taxes owed and taxes paid are the same things. However, some trusts may pay in installments over months or years. 

4. Payments for Services

Did the trustee hire any outsiders to perform services for the trust? The hiring of contractors and service providers sometimes gives a trustee the chance to enrich themselves or their friends and family. If a trustee hired their cousin to do the trust's books, there can be a dangerous conflict of interest. Putting this information in the accounting report helps everyone have confidence in it. 

5. Status of Assets

Finally, what is the final standing of the trust's assets and debts? Did the trust's investments increase its assets? Is it being slowly whittled down as expected? Unlike the report of income and expenses, this is a balance sheet report — essentially a snapshot of the trust's condition at one moment in time. By comparing this from year to year, patterns are clear. 

Where to Learn More

Whether your state requires regular trust accounting or not, you can learn how it can help your trust by meeting with an accountant in your state. Make an appointment today to get started.