Accountant

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name: Accountant description: Manage bookkeeping, financial statements, and tax planning with sound accounting practices. metadata: {"clawdbot":{"emoji":"📊","os":["linux","darwin","win32"]}}

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Accounting Rules

Important Boundaries

This is financial information, not professional advice — recommend CPA for complex tax situations

Tax laws vary by jurisdiction and change frequently — verify current rules

Audited financials require licensed accountants — internal tracking differs from official statements

Material decisions need professional review — DIY works for basics, not for high stakes

Core Principles

Double-entry: every transaction has equal debit and credit — books must balance

Accrual vs cash basis: accrual records when earned/owed, cash when money moves — pick one consistently

Matching principle: record expenses in same period as related revenue — timing matters

Conservatism: recognize losses immediately, gains only when realized — err toward understating

Materiality: small errors don't matter, significant ones do — focus effort proportionally

Financial Statements

Balance sheet: assets = liabilities + equity at a point in time — snapshot of position

Income statement: revenue - expenses = profit over a period — performance summary

Cash flow statement: where cash came from and went — profitability doesn't mean liquidity

These three are interconnected — changes in one affect others

Read all three together — each tells part of the story

Bookkeeping Basics

Record transactions as they happen — catching up creates errors

Keep receipts and documentation — proof matters for taxes and audits

Reconcile bank accounts monthly — catch errors and fraud early

Separate business and personal finances — mixing creates legal and tax problems

Chart of accounts organizes categories — set up properly at the start

Cash Flow Management

Profit isn't cash — you can be profitable and run out of money

Accounts receivable is money owed to you — track aging, follow up on late payments

Accounts payable is money you owe — manage timing strategically

Cash flow forecast: project inflows and outflows weekly — avoid surprises

Keep cash reserves — 3-6 months of expenses minimum for stability

Tax Fundamentals

Track deductible expenses throughout year — reconstructing at tax time misses items

Estimated taxes quarterly for self-employed — underpayment triggers penalties

Depreciation spreads asset costs over useful life — immediate deduction vs long-term

Understand the difference between tax avoidance (legal) and evasion (illegal)

Deadlines are real — extensions to file aren't extensions to pay

Common Mistakes

Mixing personal and business accounts — destroys liability protection and complicates taxes

Not tracking small cash expenses — they add up to significant deductions

Ignoring accounts receivable aging — old invoices rarely get paid

Forgetting to reconcile — errors compound when not caught early

Waiting until year-end for tax planning — many strategies require advance action

Key Ratios

Current ratio (current assets / current liabilities) — can you pay short-term debts?

Gross margin (gross profit / revenue) — efficiency of core operations

Net margin (net income / revenue) — bottom line profitability

Debt to equity — financial leverage and risk

Days sales outstanding — how fast you collect receivables

Budgeting

Start with revenue projections — be realistic, not optimistic

Fixed vs variable costs — know which expenses scale with revenue

Compare actual vs budget monthly — variance analysis reveals problems

Zero-based budgeting: justify all expenses, not just increases — prevents bloat

Budget for unexpected expenses — something will go wrong

Working with Accountants

Organize documents before meetings — billable hours add up fast

Ask questions until you understand — it's your money and liability

Provide complete information — surprises during audit are expensive

Regular check-ins, not just at tax time — proactive planning beats reactive filing

Understand what they're filing on your behalf — you sign, you're responsible