Audits, Reviews and Compilations: What is the Difference?

Difference between Audits, Reviews, and Compilations

Owning a successful business is no child’s play. It takes a lot of effort and hard work. Hence, once you’ve established your company, you need to make sure that when you apply for a loan for the expansion of your business, your bank has enough evidence of your success so that they can finalize your loan without any hesitation. 

So, what is this evidence that your bank would require to determine if you qualify for the loan? Financial statements. 

In case you’re looking for stockholders, private investors, and creditors to invest in your company, then they too would require a record of your business’s financial position to assert whether your company is worth their investment or not. 

You can prepare your financial statements by yourself. However, hiring professionals might be a better option since they’re trained and can issue financial statements that accurately represent the economic position of your business with ease. 

At ThomasRoss Financial Group, we offer sublime accounting services New Jersey. Our accountants  are highly-qualified and have years of experience under their belts, which ensure that all the records they draft are error-free and a true representation of your business’s financial status.

There are three different types and levels of financial statements:

1. Audit

2. Review

3. Compilation

Depending on the type of financial statement drafted, the level of assurance may vary. 

1. Audit

Audit offers the most accurate representation of your business’s financial position. An auditor performs an analytical review and subjective testing to issue an audit. They can also verify a specific piece of information if they determine that it needs investigation. 

The process of drafting an audit requires interaction with third parties, evaluation of internal records, and examination of specifically chosen transactions. On the basis of the research performed, an auditor issues a report that mentions whether the financial statements are error-free and properly recorded or not. 

Here, we have jotted down some of the features offered through an audit: 

  • It provides the highest level of assurance for stakeholders, investing companies, suppliers, employees, pressure groups, and customers.
  • It enables easy, accurate, and on-time payment for goods and services tax, corporate tax, and other taxes.
  • It follows the bank agreements. 

It enables the selling and buying of businesses with ease. 

Every public company needs to have an annual audit. However, we recommend that non-public establishments, such as non-profit organizations and other entities that receive finances from the government should also get an annual audit. 

2. Review

This financial statement is not as thorough as an audit but is more extensive than a compilation. A review is a record of the methodical processes used for the financial statements of a company. It also contains information about the queries made for your business’s management team. Further operations may be executed if the financial statements or information related to it seem questionable or inaccurate. 

A review doesn’t need procedures such as extensive studies, evaluation of your business’s internal controls, physical examination of your business’s possessions or confirmation of statistics with third parties. Instead, a review draft provides a limited assurance as it doesn’t contain the report of any material modifications for the financial statements in accordance with the Generally Accepted Accounting Principles. A reviewed financial statement should definitely contain all the important disclosures and footnotes. 

A business may ask for a review report of your business’s financial statements because it offers a neutral surface on which you can provide the data acquired by a CPA (Certified Public Accountant), without paying the hefty price of an audit report. This is advantageous for your business as well as the company interested in your business. 

3. Compilation

A compilation report offers the lowest level of assurance. This procedure is simple in the sense that it only includes the compilation of the financial statements of a business. The information provided in this report is purely the representation of the management of a company, which doesn’t offer any opinion or assurance for the statements. No investigation of the management or methodical procedures is required to issue a compilation. Rather, only the knowledge of accounting principles and basic perception of your company are utilized to draft this report. 

In addition to this, many times, banks need compilations in order to verify the status of your business’s financial position for loan approvals. 

All three financial statements have various purposes and different things to offer. Certain situations require specific types of financial reports. Hence, it’s important that you understand the differences between these statements in order to be able to choose the one that fits your circumstance the most, since all of these financial statements have unique weaknesses and strengths. 

If you need any further assistance or have a requirement for professional accountants, then please get in touch with us at ThomasRoss Financial Group. 

How to Start a Business in New Jersey

Business startup new jersey

The thought of being your own boss is always thrilling, isn’t it? However, in order to start a successful business, it’s important that you follow a good plan. We, at ThomasRoss Financial Group, offer our clients highly-skilled and experienced business analysts who create schemes that ensure the success of your startup. Our business startup services New Jersey allow individuals to fulfill their dreams of owning a company that thrives on the corporate world in little to no time.

New Jersey is a great place to start a new business, as recent statistics show that it’s the 3rd highest rated city for startup growth in the USA.

In this blog, we’ve broken down all the steps you need to follow in order to successfully start a business in New Jersey.

Step 1 — Decide on a Business Idea

This goes without saying, but you can’t start a business without an idea. This is your chance to be creative. However, coming up with a unique idea in a world where it seems like everything has already been invented, can be pretty hard. Hence, in order to stand out in the market, it’s essential that you work on your business idea extremely well.

Step 2 — Choose a Name for Your Business

This is another step that’s incredibly important and isn’t something that you should take lightly.

Your business name will have a huge role to play in attracting your clients. Decide on a name that works with the sort of business you plan to start.

In order to ensure that your business stands out among your competitors, you should choose a name that:

. Showcases the main aspect of your company

. Is easy to say

. Has a nice ring to it

. Is accessible for “.com” domain

Step 3 — Plan Your Business Module

Planning for a new business is incredibly important. Before you go ahead and invest your hard-earned money, make sure that you critically analyze your idea. It’s often seen that when individuals try to examine their business concept, they fail to observe it from a client’s point of view. This is why you need professionals like us to help you out.

Here are the following things that you need to plan before you enter the business world:

Product Development

I) Determine the main aspect of your business.

II) Plan what services you’d provide to your clients.

Advertising and Sales

I) Figure out the demographics of your potential clients.

II) Decide on ways you want to advertise your startup.

Staff and Employment

Determine the number and type of staff and employees you need to hire for your business.

Financial Strategies

I) Plan a budget for your startup.

II) Decide on a number you’re willing to invest.

III) Determine the salaries you’d pay your employees.

At ThomasRoss, we provide all our clients with excellent business startup services New Jersey. Our business and financial analysts guide you in every step of the way, ensuring that you have a solid plan before you begin venturing the business world.

Step 4 — Register Your Business

There are two benefits of registering your company as a Corporation or an LLC:

  • Your business will have enhanced credibility, which means people will find it assuring to work with you.
  • In case your business is sued, then you’ll be protected from personal liability.

For startups, registering as an LLC is an excellent move as they’re extremely easy to set up and administer. In addition to this, you’d be required to pay fewer taxes in comparison to other business entities.

You can successfully register your business as LLC in New Jersey for about $125.

Registering your business is important, otherwise, you’d be held accountable for the liabilities and debts for your business. Along with this, those who don’t register their businesses, may need to apply for a Trade Name, also called “DBA”.

Step 5 — File for Tax Registration

Almost every business requires an EIN (Employer Identification Number). It’s also known as the Tax ID Number. In order to recognize a business for federal tax filings, an EIN is needed. You can’t open business accounts or employ staff without an EIN.

There are some additional taxes that you need to register for when you’re starting a business in New Jersey:

  • New Jersey Sales Tax

If you’re selling a physical product (pillows, toys, soaps, etc), then it’s essential that you register your business for sales tax in New Jersey.

  • Employee Withholding Tax and Unemployment Tax

If you choose to employ a staff for your business, then on behalf of your staff, you need to register for Employee Withholding Tax and Unemployment Tax.

Step 6 — Open Business Accounts

For personal assets protection, opting for specific business credit and bank account is extremely important.

Your personal assets, such as your home, car and other valuables would be at risk, in case you have just one account for your business as well as personal use. If in future, your business faces a lawsuit, there could be a potential danger where you could lose your assets if you choose to not open a separate account for your business.

By following the tips below, you can ensure the protection of your business and personal assets:

  • Open a business bank account

This will segregate your business’s assets from your personal assets, in turn, preventing your risk of losing your personal assets. In addition to this, opening a business account also makes tax filing and accounting easier.

  • Get a business credit card

This will help you segregate your business and personal expenses. Along with this, getting a credit card for your business will also build your company’s credit history, which, in turn, can be used to raise capital on a later stage.

Setting up a startup in New Jersey isn’t a complicated procedure at the least. However, one must be extremely meticulous and calculative while planning the module for one’s business. If you need qualified experts who can help you plan for your startup, then feel free to reach out to us at ThomasRoss Financial Group.