Why You Should Always Consider Accounting Ethics in Your Organization
January 31, 2023
Accounting Ethics: Working with Integrity and Trustworthiness
As a business owner, accounting ethics are an important consideration when hiring a bookkeeper. No matter how big or small your company, having a code of trustworthiness and integrity is a key part of any responsible financial management team.
Accounting ethics help ensure that everybody involved – from clients to employees – is operating honestly and transparently. But with so many different principles and expectations around decisions related to accounting, it can be difficult for small business owners to know what exactly is ethical or not-ethical behavior. Here are a few things you need to know about accounting ethics:
What is Accounting Ethics?
Accounting ethics is the moral compass for the accounting industry and its professionals. It is based on a set of core values and principles that guide the decisions and activities of accounting professionals. Accounting ethics are essential to ensuring trust in financial reconciliation and reporting, audits, as well as other services provided by accountants. With this trust, investors, lenders, regulators, and other stakeholders would have confidence in the accuracy and quality of financial data.
Accounting ethics also encompass the rules, regulations, and codes of conduct that govern the activities of accountants. These standards have been developed by professional accounting organizations such as the American Institute of Certified Public Accountants (AICPA) and national and international regulatory bodies. They guide ethical decision-making in conflicts of interest, professional competence, and integrity.
What Diligence in Following Accounting Ethics Looks Like
Accounting professionals have to serve their clients with integrity and diligence. Their responsibility is great; they must provide ethical services with the utmost care. These include:
- Honesty in all decisions related to client's financial matters, such as sales tax/tax prep
- Explain and be open about charges
- Avoid conflicts of interest
- Protect confidential information
- Maintain up-to-date knowledge of industry regulations and procedures
- Adhere to accepted professional standards and laws related to accounting
- Ensure accuracy and traceability of financial records
- Act with integrity and objectivity at all times
- Develop processes to prevent fraud and other illegal activities
Examples of What it Looks Like to Have it Challenged by a Client
Accounting ethics come up in many situations where clients may attempt to pressure an accountant into unethical behavior. Examples of this include:
- Pressuring the accountant to alter financial records or reports
- Asking the accountant not to disclose certain information
- Pressuring the accountant to ignore applicable laws or regulations
- Making inappropriate requests related to confidential information
- Attempting to influence an audit result by offering favors
These ethical challenges can create a difficult situation for an accountant since a client is usually their employer, and they are expected to be compliant with their requests. However, accountants must stand firm in upholding their values and ethics even when faced with pressure from clients. Examples of the best practices include:
- Setting clear expectations upfront, such as requesting that all requests be put in writing
- Making it clear that any unethical behavior will not be tolerated
- Documenting their conversations with clients, so they can reference them if needed in the future
- Always consult a professional ethics expert when faced with particularly difficult ethical dilemmas
If a client is exhibiting any of these behaviors, it is the responsibility of the accounting professional to refuse any such requests and stand firm on their ethical obligations.
Balance Ethics and Accounting
Accountants need to adhere to a strict code of ethics. This means that they should always work with integrity and be trustworthy. There are many examples of accounting ethics being challenged by clients. However, it is up to the accountant to maintain their ethical standards.
If you need help following accounting ethics or keeping your business afloat,
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Keep on Booking is based out of Lincoln, Nebraska, but provides exceptional booking and accounting services in Nebraska, Colorado, New Mexico, and Arizona.
Working for yourself is exciting—you're your own boss, setting your own schedule, and building something you're proud of. But when it comes to taxes, things can get a little tricky. Unlike traditional employees who have taxes withheld from their paychecks, self-employed individuals are responsible for managing and paying their own taxes throughout the year. That’s where estimated taxes come in. They help you avoid a surprise tax bill (or penalties) when tax season rolls around, and they’re a big part of staying compliant and financially healthy as a business owner. Let’s break down how estimated taxes work and what you need to do to stay on top of them. What Are Estimated Taxes? Estimated taxes are payments you make to the IRS throughout the year on income that isn’t subject to withholding. This includes money you earn from freelancing, gig work, contract jobs, or running your own business. If you expect to owe at least $1,000 in taxes for the year after subtracting withholding and tax credits, you’ll likely need to make estimated payments. These payments cover both your income tax and self-employment tax (which includes Social Security and Medicare). When Are Estimated Taxes Due? Estimated tax payments are made four times a year: - April 15 – for income earned January 1 to March 31 - June 15 – for income earned April 1 to May 31 - September 15 – for income earned June 1 to August 31 - January 15 (of the following year) – for income earned September 1 to December 31 If the due date falls on a weekend or holiday, your payment is due the next business day. How Much Should You Pay? There are a couple of ways to figure this out: - Safe Harbor Method: If your income is similar to last year’s, you can avoid penalties by paying at least 100% of last year’s tax liability (or 110% if your adjusted gross income was over $150,000). - Current-Year Estimate: If you expect to earn more or less than last year, aim to pay at least 90% of what you’ll owe this year. You can use IRS Form 1040-ES and your prior year’s return to help calculate your estimated payments. How to Make Payments You have a few options when it comes to sending in estimated tax payments: - IRS DirectPay – an easy way to pay online - IRS2Go mobile app – convenient for on-the-go payments - Mail a check – using Form 1040-ES - IRS online account – track payments, balances, and access past tax records No matter how you pay, be sure to mark your calendar and avoid missing a deadline. What If You Don’t Pay Enough? If you underpay or make late payments, the IRS may charge you a penalty. For 2025, the interest rate for underpayment is 7% plus 3 percentage points, and the interest is compounded daily, which can add up quickly. You can usually avoid this penalty if: - You owe less than $1,000 when you file, or - You paid at least 90% of your current year’s tax bill, or - You paid 100% of your prior year’s tax (or 110% if your income was higher) Reassess When Life Changes Life happens—maybe you got married, took on a second job, or had a child. Any of these events can change how much tax you owe. Check in on your income and expenses every few months and adjust your estimated payments if needed. If you also earn W-2 income, consider increasing your withholding through your employer by submitting an updated Form W-4. This can help offset your self-employment tax and reduce what you need to pay quarterly. Why Hiring a Bookkeeper Can Make a Big Difference Being self-employed means wearing a lot of hats—and tax planning doesn't have to be one of them. A professional bookkeeper can help you stay organized, track your income and expenses, and make sure your estimated payments are accurate and timely. At Keep-On-Booking, I work with self-employed individuals and small business owners to take the guesswork out of tax season. From ongoing bookkeeping to estimated tax support and financial reporting, I'm here to help you stay on top of your finances—so you can focus on doing what you love.
Schedule a consultation today and let’s make your next tax season the easiest one yet!
Tax season can be a challenge for self-employed individuals, but it’s also an opportunity to save money by leveraging deductions. Unfortunately, many people overlook key expenses that could significantly reduce their tax bill. Here’s a quick guide to the top 10 commonly missed tax deductions: Retirement Plan Contributions: Contributions to SEP-IRAs, SIMPLE IRAs, and solo 401(k)s are tax-deductible. Tax-deferred growth helps you build a stronger financial future while reducing your current taxable income. Self-Employment Tax: You pay the full 15.3% Social Security and Medicare tax as a self-employed person. Deducting half of this tax aligns your tax burden closer to that of traditional employees. Home Office Expenses: Deduct a portion of your rent, mortgage, utilities, and insurance if you use a part of your home exclusively for business. Use the simplified method to calculate your deduction or opt for actual expenses if they’re higher. Health Insurance Premiums: Deduct premiums for health, dental, and long-term care insurance for yourself, your spouse, and dependents under 27. This deduction applies even if you don’t itemize your deductions on your tax return. Internet and Phone Bills: Deduct the business portion of your phone and internet expenses. Ensure you separate personal and business use to avoid IRS scrutiny. Meals: Deduct 50% of meals for business purposes, such as client meetings, conferences, or travel. Meals must be reasonable and not considered extravagant to qualify as deductible. Office Supplies: Items like pens, paper, printer ink, and other business essentials are fully deductible. Don’t forget to deduct larger office equipment like desks, chairs, or computers if used solely for business. Marketing and Advertising: Deduct the full cost of promoting your business, such as website hosting, social media ads, and printed materials. Costs related to branding, like logo design or promotional items, are also deductible. Professional Services: Costs for accountants, lawyers, consultants, or other professional services are fully deductible. Fees for tax preparation software or financial advisors can also qualify as deductions. Travel Expenses: Deduct costs like airfare, lodging, car rentals, and meals for business-related travel. Parking fees, tolls, and transportation to and from meetings or the airport can also be deducted. Why You Should Hire a Bookkeeper: Keeping track of expenses and deductions can be overwhelming. Hiring a bookkeeper provides: Maximized Deductions: Ensures you claim every eligible expense Time Savings: Lets you focus on running your business while they handle the details. Accuracy: Reduces errors and the risk of audits. Financial Insights: Helps you better understand and plan your finances. Bonus Tip: The cost of hiring a bookkeeper is a deductible business expense! . Final Thoughts Navigating taxes as a self-employed individual doesn’t have to be stressful or overwhelming. By staying informed about commonly missed deductions and maintaining accurate records, you can significantly reduce your tax burden and keep more of your hard-earned money. At Keep-On-Booking, I help take the guesswork out of your finances. From payroll management to tax filing and financial reporting, my services are designed to save you time and money while you focus on growing your business. Contact me today for a consultation: https://www.keep-on-booking.com/consultation
As a Colorado business owner, one of the most important decisions you’ll make is how to classify the people who work for you. Are they employees or independent contractors? Properly classifying your workers in line with Colorado's laws is crucial, as it affects everything from wages and benefits to tax responsibilities. This blog will walk you through the key differences between employees and independent contractors in Colorado, the protections each group is entitled to, and the consequences of misclassification. Whether you’re starting a new venture or managing an established business, getting worker classification right is essential for staying compliant and protecting your business. Employees: Wages and Hours: Colorado employees are entitled to at least the state minimum wage, which adjusts annually. They are also covered by the Fair Labor Standards Act (FLSA), which requires overtime pay at 1.5 times the regular rate for any hours worked over 40 in a week. Benefits and Protections: Employees have access to a range of benefits such as unemployment insurance, workers’ compensation, and health benefits. Additionally, they are protected from workplace discrimination, unsafe working conditions, and wage theft under both federal and state law. Legal Recourse: If their rights are violated, employees can file complaints with the Colorado Division of Labor Standards and Statistics. These violations could include unpaid wages, workplace safety issues, or employment discrimination. Independent Contractors: Flexibility: Independent contractors in Colorado typically enjoy more freedom in choosing their working hours and methods for completing tasks, allowing for greater flexibility in their work-life balance. Limited Protections: Unlike employees, independent contractors aren’t entitled to minimum wage, overtime pay, or benefits such as unemployment insurance and workers' compensation. They also aren’t covered under most employment discrimination laws. Tax Responsibilities: Independent contractors must manage their own taxes, including self-employment tax, and are responsible for covering their own benefits, insurance, and retirement savings. The Importance of Proper Classification In Colorado, workers are generally presumed to be employees unless proven otherwise. If an employer wants to classify someone as an independent contractor, they must demonstrate that the worker is: Free from the employer’s direction and control in performing their work; and Engaged in an independent business or profession related to the work they perform for the employer. Employers cannot rely solely on issuing a 1099 form to classify someone as a contractor. A written contract is required, outlining key elements like the contractor's obligation to handle their own taxes and the fact that they won’t receive unemployment insurance unless they or another entity provide coverage. Key Factors to Determine Worker Classification Colorado uses a variety of factors to assess whether a worker is an employee or an independent contractor. These factors include: Control Over Work: If the employer dictates how, when, and where the work is done, the worker is more likely an employee. Nature of the Work: If the worker performs tasks integral to the employer’s core business, they are probably an employee. Payment Method: Employees are generally paid by the hour or on a salary, while independent contractors are paid per project or job. Tools and Equipment: Employees often use tools and equipment provided by the employer, whereas independent contractors provide their own. Consequences of Misclassification Misclassifying an employee as an independent contractor to avoid paying overtime, unemployment taxes, and other benefits can lead to serious penalties. Businesses found in violation could face: Back pay for unpaid wages and overtime Fines and penalties Back taxes for unemployment insurance and other withheld benefits Proper classification of workers is essential to avoid legal and financial repercussions. Colorado’s Division of Labor Standards and Statistics can investigate claims of misclassification, and violations can be made public under the state’s Wage Theft Transparency Act. Get Professional Help For small business owners, navigating these complex classifications and ensuring compliance can be overwhelming. By hiring professional bookkeeping services, you can ensure accurate worker classification, maintain compliance with employment laws, and avoid costly penalties. Keep-On-Booking's expertise in payroll management, tax filing, and financial reporting allows you to focus on growing your business with confidence and peace of mind. Contact us today to learn more: https://www.keep-on-booking.com/consultation