Professional Bookkeeper and QuickBooks Certified Consultant

Copyright 2007 Bookkeeping R Us All Rights Reserved

Are you looking for a free (yes I said free) or inexpensive way to handle your company’s financial needs?  QuickBooks Simple Start 2008 comes in two editions, the free edition (free QuickBooks!) and one that costs under a hundred dollars.    This is one rare case of inexpensive being a great deal.

 Let me tell you what you can do with these two programs so you can decide for yourself whether they are the solution you have been looking for. 

First the free version – based on the same user friendly format that all QuickBooks programs have, Simple Start’s free edition is the solution for start-up or small businesses that need just the basics.  But don’t be fooled into thinking you will not get what you need to organize your business finances.  As reliable as all QuickBooks programs are, Simple Start Free Edition is just what it says – a simple start.   As you enter your everyday transactions you will be tracking your income and expenses preparing you for tax time.  No more last minute rush to organize all those receipts into some kind of sense for your tax preparer.  You will be able to see the money coming in and going out, where it comes from and who it goes to all in one easy to access place.  This is not a trial version with an expiration date but can be used for as long as you desire and easily upgradeable to another QuickBooks edition as your company grows with a seamless transfer of data.  It is very simple to get started, just answer three quick questions and you are on your way.  And QuickBooks provides you with step by step tutorials to walk you through all your tasks such as preparing invoicesand recording expenses.  And if you have the need you can export your data to an Excel (Excel 2000, 2002, 2003 or 2007) spreadsheet for more advance analysis.   Fourteen reports are available to help you understand where your business is at and how it can grow.  Reports such as Total Sales By Customer, Invoices That Haven’t Been Paid, Income Tax Summary, Profit and Loss and Balance Sheet reports and more are great tools for the business owner.   Customize estimates and invoices for a more professional look.  Have you ever sent out an invoice with a math error?  How embarrassing and expensive if you can’t go back and correct the error.  This won’t happen again if you are using QuickBooks Simple Start.   So how can you go wrong, it’s free after all.  Download for free, or have it shipped for a small shipping and handling charge. 

So what’s the difference between Simple Start (the free edition) and Simple Start Plus Pack ($99.95)?   Simple Start Plus Pack is the free edition plus it includes 250 standard or voucher checks for you to use to pay your vendors, a one-year, 1GB QuickBooks Online Backup service starting with your product activation which must be completed by January 31 2009 to receive full year of service, and A Learning Accounting Essentials training CD.  Your checks are not included in your package but must be ordered within three months following product registration. 

You should know that Simple Start is for first time QuickBooks users and will not import data from other QuickBooks editions or Quicken or Peachtree.   Inventory tracking, purchase orders and automatically downloading of credit card and bank transactions are not available features in the Simple Start programs.  And you will not be able to automatically populate and print 1099/1096 tax forms. Should you require these features consider the QuickBooks Pro or Premier Editions

Follow the QuickBooks links at the top right section of your screen to check out Simple Start for yourself and get a discount on Simple Start Plus.  Once at the QuickBooks site, click on Learn More under the QuickBooks for Windows section and you are on your way to organizing and understanding the in’s and out’s of your business.

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Copyright 2006 Bookkeeping R Us All Rights Reserved

If you haven’t already now is the time to get prepared for your year end. Tax planning will not be an option for your business if you haven’t been keeping up with your bookkeeping. Your CPA or tax preparer needs time to review your financial information in order to help you with decisions that will need to be acted on before the end of the year. Should you purchase equipment now to reduce your tax bill? Are there expenses you will be paying for in January that might be better paid in December? These are just two of the issues your accountant will review with you.

Also if you meet with your accountant soon you will have the knowledge to pre-plan tax payments. It is always better to know in advance an estimate of your tax liability.

However, if you have been procrastinating getting everything in order, don’t delay. It is not too late. Start today. Remember you don’t have to do it all by yourself. There are excellent bookkeepers available to help you and the small amount of money you spend on outsourcing your bookkeeping will save you at tax preparation time.

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Copyright 2006 Bookkeeping R Us All Rights Reserved

This is not a course in how to get rich by embezzling funds from the company your work for but a group of suggestions on how to protect your company from this heinous crime.

Embezzlement is defined as theft of money or property from a business by someone who has custody of the funds or property. Often embezzlers are the people you would least suspect. After all you wouldn’t put your money into the hands of someone you didn’t trust now would you? So don’t get fooled by an innocent looking face. Of course not everyone you meet who comes across as trustworthy is a crook in disguise. But by putting into place a few simple procedures you can protect your company.

New Features in QuickBooks 2007

First of all whether you are just starting in your business or been in business for awhile, educate yourself in the basics of bookkeeping. You should be familiar with the terms used and their definitions as well as the proper flow of paperwork.

Secondly know how to read your financial statements. Understanding the types of accounts and how they increase or decrease as transactions are posted will help you see when things just don’t look right – a possible sign that someone is dipping into your funds for their own benefit. You should at the very least have a realistic “guesstimate” of how much you are spending for the different expenses your company incurs. If you are seeing higher than expected expenses on your financial statements, than you might have a problem that needs to be investigated. If you do not review your Balance Sheet and Income Statement each and every month you might miss these important clues.

Review your bank statements every month checking for checks or charges that do not make sense to you. If you are making deposits made up of cash and not preparing and making the deposits yourself (which I highly recommend) than also verify the deposits recorded on your bank statement. I know you might leave the actual reconciliations to your bookkeeper but you should give the statements a once over yourself. You will also want to check the dates, amounts and signature on all the checks because the automated systems the banks now use do not always catch unsigned checks, old dates and mismatched amounts.

Only you should have the responsibility of signing checks. If you are signing all the checks you will have the opportunity to spot errors and possibly outright thefts.

Company credit cards should be used judiciously and statements should be checked by you when they arrive each month. If you cannot identify a charge then investigate it with the company holding the card. Often the problem is cleared up quickly and you realize after talking with them it is a legitimate charge. But better safe than sorry.

Payroll checks can be especially problematic even when processed by an outside payroll service. After all, who is calling in the payroll? Not you the business owner I bet. Check out your payroll reports before the checks are given out. Know your employees pay rates. Verify that vacation, sick and other paid days off are correctly handled.

Only on your authority should an employee expense reimbursement or loan be issued. Make this a hard and fast rule.

There are many, many hard working and very honest bookkeepers but a few have unfortunately given these good people a black eye. By being vigilant you are not only protecting your company but you are verifying that the bookkeeper you employ is in fact the trustworthy person you already believe them to be – and for all you great bookkeepers this is protection for you as well. You cannot be accused of misuse of funds if you don’t sign checks, use credit cards and authorize payments.

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Copyright 2006 Bookkeeping R Us All Rights Reserved

You have either started a new business, decided to get your financial information in order for your existing business or your tax preparer has announced that he/she won’t do your tax return anymore if you bring in one more year’s receipts in a shoebox or plastic bag. So on the recommendation of friends, business associates, accountant, or other professional in the know you have purchased QuickBooks. And if you are like most people you have installed it on your computer with great expectations. But you don’t have a clue about bookkeeping and so getting started is not so easy. What are items you ask. I am already part through my year – when and how do I start my beginning balances? Do I need inventory? So many questions and so little time.

New owners of QuickBooks usually take one of several paths. The most common I have seen is to use only the checkbook and invoicing features of the program, never diving deeper into the tools that QuickBooks offers the business owner. However, the smart business owner knows they will be better off in the long run to hire a Certified QuickBooks ProAdvisor right in the beginning to set up their books using the tools QuickBooks provides to the company’s advantage.

A QuickBooks Certified ProAdvisor can set up your Chart of Accounts in a way that will allow you to get meaningful financial reports and can also design and save templates (memorized reports) so that these custom reports can be pulled up by you with just a click of your mouse.

Also having your items set up properly by a Certified QuickBooks ProAdvisor (inventory, service, discounts and other types of items) will allow you fill in forms such as invoices, purchases orders, sales receipts and others, quickly and with less key strokes.

And if a QuickBooks ProAdvisor is also an experienced bookkeeper you will also get professional advice on entering your everyday data in a correct and efficient manner thereby assuring your books and reports have correct information and your tax preparer or accountant are not struggling to “fix your books” at year end which will surely save you some money.

And even if your company has an in-house bookkeeper who has used QuickBooks, they have not had the extensive training and experience a Certified QuickBooks ProAdvisor will have with the family of QuickBooks products. Retraining and updating your bookkeeper’s knowledge of QuickBooks will enhance their productivity and efficiency.

As with anything, doing things right the first time saves time and money not to mention frustration. Just a few hours with a Certified QuickBooks ProAdvisor will save you hours of work, and give you financial reports that will help you keep on top of your company’s needs and growth and save money as well.

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The home office deduction is either overlooked, or misunderstood by most small businesses when filing their tax returns. Here is an article from the Internal Revenue Service that provides you with the basic requirements and regulations on this deduction.

Home Office Deduction Reminders

FS-2006-25, September 2006
WASHINGTON— Overstated adjustments, deductions, exemptions and credits account for up to $30 billion per year in unpaid taxes, according to IRS estimates.
In order to educate taxpayers regarding their filing obligations, this fact sheet, the fourth in a series, explains the rules for deducting home office expenses.
Home Office Deduction: Basic Requirements
Generally, expenses related to the rent, purchase, maintenance and repair of a personal residence may not be deducted as a business expense. However, taxpayers who use a portion of their home for business purposes may be able to take a home office deduction if they meet certain requirements. Expenses that may be deducted include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, painting, repairs and depreciation. Note: The amount of depreciation deducted, or that could have been deducted, decreases the basis of your property.
In order to claim a deduction for that part of a home used for business, taxpayers must use that part of the home:
• Exclusively and regularly as their principal place of business, as a place to meet or deal with patients, clients or customers in the normal course of their business, or in connection with their trade or business where there is a separate structure not attached to the home; or
• On a regular basis for certain storage use such as inventory or product samples, as rental property, or as a home daycare facility.
In addition, taxpayers working as employees can claim this deduction only if the regular and exclusive business use of the home is for the convenience of their employer and the portion of the home is not rented by the employer.
“Exclusive use” means a specific area of the home is used only for trade or business. “Regular use” means the area is used regularly for trade or business. Incidental or occasional business use is not regular use.
Non-business profit-seeking endeavors such as investment activities do not qualify for a home office deduction, nor do not-for-profit activities such as hobbies.
Example: An attorney uses the den in his home to write legal briefs or prepare clients’ tax returns. The family also uses the den for recreation. The den is not used exclusively in the attorney’s profession, so a business deduction cannot be claimed for its use.
These requirements are discussed in greater detail in Publication 587, Business Use of Your Home.
Computing the Amount of Home Office Deduction
Generally, the amount of the deduction depends on the percentage of the home that is used for business. The deduction will be limited if gross income from the business is less than the total business expenses.
A taxpayer can use any reasonable method to compute business percentage, but the most common methods are to:
• Divide the area of the home used for business by the total area of the home, or
• Divide the number of rooms used for business by the total number of rooms in the home if all rooms in the home are about the same size.
Taxpayers may not deduct expenses for any portion of the year during which there was no business use of the home. If the gross income from business use of the home is less than the total business expenses, the deduction for certain expenses is limited. Publication 587 includes examples, worksheets and additional information on computing the allowable deduction.
Personal Expenses Are Not Business Expenses
It is important for taxpayers to realize that business expenses may be deducted only if they are ordinary and necessary for the particular type of business. Personal, family and living expenses are not deductible under any circumstances. A common error is to deduct expenses for a portion of the home that is not used regularly and exclusively for business.
Example: The basic local telephone service charge, including taxes, for the first telephone line into a home is a nondeductible personal expense. However, charges for business long-distance phone calls on that line, as well as the cost of a second line into a home used exclusively for business, are deductible business expenses.
The IRS encourages taxpayers to familiarize themselves with the requirements before taking a home office deduction and to keep complete and accurate records to substantiate deductions. According to IRS research, understated business income, including underreported receipts and overstated expenses, is an area where compliance is a concern. In addition to increasing outreach and education in these areas, the IRS will also be focusing enforcement efforts, including examinations, on these issues.

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Copyright 2006 Bookkeeping R Us All Rights Reserved

You may be thinking that someone is a subcontractor because you pay them by a check or cash without withholding payroll taxes. But that is not how the IRS sees it. According to the Internal Revenue Service an employee is defined as anyone who performs a service that is subject to the will and control of an employer. If you are laying down the rules as to what will be done and how it is to be done, then you have an employer/employee relationship and must by law withhold income taxes.

Now there are many business owners that do not understand this and risk penalties and fines as well as being responsible for your “employee’s” non withheld income taxes, social security and Medicare taxes. This can add up to large amount of money. So if your business is one which often uses subcontractors, you might want to review your policies in this area. The government often conducts “employee audits” within industries that fall into this category.

So what is an employee audit? The IRS will send in an agent to review your payroll records and subcontractor payments. Persons being paid as subcontractors could be reclassified as employees if they do not meet certain requirements. Some, but by no means all, of the criteria the agent will be looking for are as follows:

Does the subcontractor only work for you – or do they have other clients?
Do they provide their own tools, work space?
Do they set their own hours?
Is the work they perform, how and when it is done determined by them?
Do they have a business phone, business cards, and printed billing forms?
Do they have a legitimate place of business (a real office for example)?
Do they advertise?
Do they have employees being paid as employees?
Do they have business insurance?

Ignoring this risk may seem the easiest and most cost effective way to do business, but if you are audited, you will wish you had followed the rules. If you think you might be in a gray area, then give your accountant a call so they may review your situation and make recommendations. And for more information see the IRS Article “Independent Contractors vs. Employees.

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A Business Start-up (Chapter Two)-Educating for Success

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Are you ready to roll up your sleeves and get to work? The first place to start is acquiring knowledge. You need to know all you can about business in general and your product or service specifically. And there are many ways to find this information, some of which will only cost you your time and energy. But before you invest any money in your new business you need to invest in information.

So what do you need to know? First and foremost is whether your product/service is unique or if not can your company provide a better, more reliable and/or less costly version of your competition’s version. Know who your competition is, the market area they cover, their price points, warranty coverage, marketing campaigns, etc. And then ask “can I be a worthy competitor?” “Will my product/service stand up and exceed what they provide to their customers?” To be successful your company must stand out in the crowd in the areas of quality and customer service. And to stand out in the crowd you need to know just what the “crowd” is doing.

Once you know you have a viable, sellable product/service, than you need to ask “who will be my customers and where do I find them?” This is where demographics can help. Demographics in its simplest form is knowing the answers to who, what and where and how much. Who will purchase from my company, what are they most likely to purchase, where are these customers likely to shop, and how much are they likely to spend on the type of product I wish to sell. The answers to these questions will help you make decisions regarding your business location, marketing plans and pricing formulas.

And finally, you need to educate yourself in the fine art of running a business. This includes financing your business both for the start-up and for growth later on, professionals you will need to rely on, marketing strategies, employee laws, state and federal laws, tax planning and compliance, financial statements and record keeping. And this is the short list.

Don’t get discouraged, there are many ways to accumulate this information and I will be giving you some straight forward solutions in the next chapter. In the meantime, buy yourself a deck of index cards and a container to keep them in. I found some brightly colored plastic boxes that are only slightly larger than a 3×5 index card and are only 1” deep. The have built in dividers and I also purchased multiple color index cards. The bright color of the case enhances my imagination and the narrow size allows me to take the cards everywhere. I use the dividers and different colored index cards to break down my projects into segments. So off to your favorite office supply store because we will be using the index cards in the next chapter.

Chapter One

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