Business Infographics on LinkedIn: Deferred Tax Assets vs. Deferred Tax Liabilities Credits to Nevena… (2024)

The complexities of Deferred Tax Assets and Deferred Tax Liabilities simplified in an infographic by Nevena Miskovic.

It is very important to know about deferred taxes

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EBITDA, which stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, is a financial metric commonly used by businesses and investors to assess the profitability and operational performance of a company.To understand EBITDA in simple terms, let's break down each component:Earnings: Earnings refer to the profits generated by a company from its core operations, which are its primary business activities. It represents the amount of money a company makes before accounting for other expenses.Before: The term "before" indicates that EBITDA is calculated by excluding certain items from the company's financial statement. These exclusions are made to provide a clearer picture of the company's operational performance, without the influence of non-operational factors.Interest: Interest refers to the cost of borrowing money. By excluding interest from the calculation, EBITDA focuses solely on the company's ability to generate profits from its operations rather than its financing activities.Taxes: Taxes represent the amount of money a company pays to the government based on its profits. Similar to interest, excluding taxes from EBITDA allows for a clearer evaluation of the company's operational performance without the impact of tax obligations.Depreciation: Depreciation is an accounting term that represents the gradual loss in value of assets over time. It is an expense recorded to reflect the wear and tear, obsolescence, or aging of tangible assets like buildings, machinery, or vehicles. By excluding depreciation from EBITDA, it focuses on the company's performance without considering this non-cash expense.Amortization: Amortization is similar to depreciation but specifically applies to intangible assets like patents, copyrights, or trademarks. It represents the gradual reduction in the value of these assets over time. Excluding amortization from EBITDA helps to assess the company's performance without the impact of this non-cash expense.By removing interest, taxes, depreciation, and amortization from the company's earnings, EBITDA provides a measure of profitability that reflects only the operational performance of the business. It allows investors and analysts to compare the financial performance of different companies without the influence of financing decisions, tax rates, or accounting treatments of assets.It's important to note that while EBITDA can provide insights into a company's operational performance, it does not consider other important factors such as capital expenditures, working capital, or changes in the market environment. Therefore, it is often used in conjunction with other financial metrics to gain a comprehensive understanding of a company's financial health and profitability.

Operating across borders can present unique challenges, particularly for Canadian public companies with US subsidiaries. In this post, we will address some of the specific reporting issues these companies face, focusing on the importance of keeping separate books for US entities and understanding the implications of failing to do so. Additionally, we will explore the potential benefits, such as US R&D tax credits, that can be missed when inter-company transactions and spending are not properly documented.The Need for Separation:Canadian exploration companies acquiring US properties are often required to incorporate US entities to own these properties. However, many of these US entities are treated as inactive and their financial records are not kept separate from the Canadian parent company. This approach may seem simpler for bookkeepers keeping those records and accountants who prepare the consolidated financial statements. However, it can lead to significant reporting complications.Reporting Requirements and Penalties:Failure to file certain forms, such as disclosing inter-company transactions between the US entity and the non-US parent, can result in penalties of US$10,000 per year. These penalties can quickly accumulate and negatively impact the company's finances. Understanding the reporting requirements is crucial to avoid such penalties and maintain compliance.Potential Benefits Missed:By not keeping separate records for US spending, companies are not only risking penalties but also forfeiting potential benefits, such as US research and development (R&D) tax credits. These credits can provide significant financial incentives for companies engaged in qualifying R&D activities, but proper documentation and separate accounting are necessary to claim them.Importance of Proper Bookkeeping:Maintaining separate books for US entities is essential for accurate financial reporting, compliance with US tax laws, and optimizing potential benefits. By having distinct records for US subsidiaries, companies gain visibility into the financial performance of each entity, identify key expenses and profits, and fulfill their obligations to both Canadian and US regulatory authorities.Conclusion:Canadian public companies with US subsidiaries must pay close attention to the unique reporting issues they face. Keeping separate books for US entities and ensuring compliance with US tax laws is not only a legal requirement but also a way to access potential benefits, such as US R&D tax credits. By understanding and addressing these reporting challenges, companies can navigate the complexities of operating across borders and position themselves for success in the global marketplace.Are you dealing with US subsidiaries? Do you know, if these records are kept appropriately?

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Controversial opinion: accounts and tax returns are worthless 😮❓Is reporting on history i.e what happened 9 months ago really going to help a business owner?❓Would clients actually prepare GAAP accounts if they didn’t have to?❓What value do statutory accounts actually have in helping a client manage their business finances and make decisions?Pretty much zero, right?Clients only pay you to do their accounts because it’s a legal requirement. 🤷♂️There’s no inherent value in it for them.🔎Where the value lies is actually helping clients in real time with real time numbers.You can do this now with the software available to you.Don’t become complacent with the year end model that has served you until now.Before long, accounts and tax returns will fall out of software…They will become a commodity…So make sure you’re doing the stuff which actually adds value to a client in real time🗯️Which helps them manage their finances🗯️Helps them make better business decisions.🗯️Gives them access to the financial acumen that they don’t have..What do you think? Have you transitioned? And do you work in this way?Penelope Allard, Carly, Ellis, Samantha, Jo, Michele,Follow Reza Hooda FCA CTA for more like this and hit the 🛎so you don’t miss a post!#accountingandaccountantsPS: 📌Want to see the rest of that talk I delivered at Accountex where I went through the WHAT, HOW and WHY NOW is the best time to grow your firm and win clients at higher prices? Comment ‘live training’ below and i’ll send it across 👇

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As the year comes to an end, it's time to buckle up and make final accounting adjustments and prepare for taxes🖋. As professionals ✍️, there is great need and importance of ensuring accurate ⚔️financial statements and complying 🔗with tax regulations.Year-end accounting adjustments play a crucial role in reflectingthe true financial position of an organization. By reviewing and reconcilingaccounts, we can identify and rectify any errors or discrepancies, ensuringthat the financial statements are a reliable representation of the company'sperformance.Additionally, tax preparations are essential to meet legalobligations and minimize tax liabilities. By organizing and analyzing financialdata, we can determine eligible deductions, credits, and exemptions that cansave both individuals and businesses valuable resources.Working diligently to complete year-end accounting adjustments andpreparing for taxes requires attention to detail and a deep understanding ofaccounting principles and tax laws. As professionals, we strive to stay updatedon the latest regulations and employ the best practices to ensure accuracy and compliance.While this process may seem daunting, it presents an opportunityto reflect on the financial health of the organization and strategize for theyear ahead. It's a chance to identify areas for improvement, make informeddecisions, and set realistic financial goals.As we embark on this journey, let's approach year-end accountingadjustments and tax preparations with professionalism and dedication. By doing so, we contribute to the overall success of our organizations and build a solid foundation for the future.#YearEndAccountingAdjustments #TaxPreparations #FinancialAccuracy#Compliance #Professionalism,#bookkeeping,#bookkeepingservices, #realestatefinance,

Business Tax CreditsPrivate Equity (PE) firms and successful businesses share surprising similarities, primarily around the theme of value creation and enhancement. Both entities strive for excellence, focusing on strategic growth, operational efficiency, and profitability.PE firms bring a wealth of experience and a refined business acumen to the companies they acquire. They analyze, strategize, and execute plans to maximize the intrinsic value of businesses. Successful businesses, on the other hand, often naturally embody these principles, constantly innovating, optimizing operations, and seeking growth opportunities.Tax credits become a crucial factor in this equation. Both PE firms and successful businesses leverage business tax credits as a strategic tool to enhance their operational efficiency and overall profitability. Tax credits allow businesses to reduce their tax liability, facilitating more significant investments in growth and development areas.For instance, Research and Development (R&D) tax credits are one such lever that both PE firms and successful businesses commonly pull. It incentivizes innovation, allowing companies to develop new products, optimize existing processes, and remain competitive.In conclusion, PE firms and successful businesses operate on similar paradigms of value creation, utilizing tools like business tax credits to enhance their financial posture and foster innovation and growth.📘✨ Click Here for a Free Bookkeeping Audit!: https://lnkd.in/evAfTZTa

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Not all accounting and tax services are the same. Picking the right one for your small business can make all the difference in whether you succeed or fail when it comes to money. Learn how to choose the best in our latest post!https://bit.ly/3UziAje

Get to grips with accounting for depreciation in our Plain English guide to depreciation.#tax #accounting #businesstips #depreciation