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Posts tagged accounting
Duplicating Invoices in QuickBooks, Efficient or Time Consuming?
Aug 28th
QuickBooks has many neat features to help make a business owner be more efficient with his/her accounting. Below I discuss one way to be helpful, but is it really?
Duplicating Invoices – there is a feature inside QuickBooks that allows a user to duplicate an invoice. It is easy to use. Simply find the invoice that you want repeated, click edit from the main menu bar, and click on duplicate invoice. Enter any new information that you want and click save and close. Wa lah! Fast and convenient, right?
Well, not really. I had a client that was using this feature for invoicing but there was one small flaw. The computer program saved the “due date” of the duplicated invoice as the original invoice no matter what the terms of the new invoice was or what the date of the new invoice was. For example, if the original invoice was dated 7/1/2011 and had terms due upon receipt, the due date was 7/1/2011. The due date does not necessarily show up on the invoice unless you have customized the invoice to show it. Otherwise, just the terms shows up and the due date is in the computer system behind the scenes.
What the computer program did was to keep the original due date of 7/1/2011, even though the subsequent invoice was dated 8/1/2011 and was due 8/1/2011. This made the Accounts Receivable Aging report look all out of whack. The duplication made it appear as if the invoices were all at least one month past due when they were current.
Because of this problem, each month I had to go in and edit each invoice one by one, changing the terms to something else, saving the invoice, going back to the invoice and changing the terms back to how it should have been and saving the invoice again. So using the duplicating invoice technique was not cost effective for my client. There are two other ways to get to the same efficient goal with invoicing without having to change the terms and save the invoices again like I had to do.
Memorizing as Automatic Transaction – you can save an invoice as a template that automatically enters itself and you tell it the frequency, such as weekly, monthly or annually. This technique is great when the dollar amount of the invoice does not change each month. For example, if you invoice $1,500 for rental income each month, you can use the memorized transaction and have it automatically enter the invoice each month.
Memorizing as a Template – you can save an invoice as a template that does not automatically enter itself. Instead, you click on it to use it when you need to enter in the invoice and then change the information on the invoice such as the dollar amount owed. For my client that duplicated invoices, I used this technique because a lot of the verbiage was the same but the dollar amount changed.
By using the memorized transaction option, you will not have strange due dates on your invoices and your Accounts Receivable Aging report will be accurate.
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Should You Start a Bookkeeping Business?
Aug 15th
Maybe you have just been laid off from your job. Maybe you are tired of your current job and want a change. You may be thinking to yourself, “should I open a bookkeeping business?” And why not? Every business has to keep track of its accounting records and pay taxes each year so there must be a high demand for the service, right? That statement may be true, but the real question is are you a good fit for owning and running a bookkeeping business?
Below are some ideas I would like to share about my experience as a self-employed bookkeeper (and QuickBooks guru) that may help you with your decision:
Greater Responsibility – when you are hired as an outsourced bookkeeper, as opposed to an employee, you have a greater responsibility in making sure your work is accurate. Companies are more willing to forgive an employee for making a mistake that cost it $300 than an outside company. If the bookkeeping company made a $300 error it may be fired or be asked to reimburse the company the $300. Worst case it could sue your company and if you are not insured against errors and omissions the money could come out of your firm’s pocket.
Also, as an outsourced bookkeeper, the client will expect you to know the answers to all their accounting questions. You will not have the luxury of talking to a co-worker or bouncing an idea off of your supervisor. Instead, you are expected to have the answer right when the client asks the question.
Ability to Read & Understand Financial Statements – in your experience working at a company were you responsible for the day-to-day data entry or did you also review financial statements? You need to have a keen understanding of a Profit & Loss statement and a Balance Sheet in order to be an effective bookkeeper. Most small business clients do not even read and/or understand their financial statements so they do not know if the balances are accurate. You have to be able to apply the “smell test” by looking at the report and just knowing if an account balance seems off. Remember, the client expects you to know all accounting answers and therefore expects you to produce perfect financial statements.
Tax Knowledge – although it is not a requirement to be a bookkeeper, having some tax experience is helpful. Knowing how some items are treated on tax returns for a Limited Liability Company vs. a C-Corp. vs. an S-Corp. makes you look smarter and more valuable to your client. For example, you should know that a member of an LLC cannot be an employee of its company and instead takes a member distribution and that an Officer of an S-Corp. has to take “reasonable” wages even if the company is not making a profit. Knowing some tax knowledge also helps you properly set-up some chart of accounts.
Some clients collect sales tax. Are you up-to-date on the current North Carolina sales tax laws? Some clients want you to prepare payroll. Do you know how to prepare Federal and State payroll tax forms? Some clients use subcontractors. Will you be preparing the 1099′s?
You are not just servicing your client, but also making the tax preparer’s life easier at tax time which saves your client money.
Untangling Accounting Messes – most small business owners are good at their business, which might be selling furniture, building a deck, or baking a cake. However, most of them do not have any formal accounting training. Usually a small business owner will try to tackle his/her bookkeeping using QuickBooks without using the services of a QuickBooks trainer and ends up making a huge mess. By the time you are asked to help with the bookkeeping, you may be faced with an initial clean-up of the books.
Unique Characteristics – there are many bookkeeping services in existence. If you want to be successful, you need to have some unique characteristics that set you apart from the “general” bookkeeper. And having a different price structure from your competitors does not count. For example, you may have specialized knowledge in an area, such as working with non-profits. For me, I have experience creating import files by scratch in Excel and importing them into QuickBooks. I also have three masters degrees, one of which is in Accounting.
Doing Almost Everything – owning your own bookkeeping service is more than performing bookkeeping services. You have to do almost everything else, especially if you are new and on a shoestring budget. You may have to create your own website, Google Place page, and Google Ad Words. And do not forget about making a Facebook page, opening a Twitter account, getting LinkedIn, hopping on inside919, and any other social media page you can think of. You will have to create your own blogs, tweets, and updates. With no secretary to take your calls and schedule your appointments, you will have to return calls in between clients and have great time management skills to be able to allocate the proper amount of time to each client each month.
Networking – if you worked as a bookkeeper and felt great when you spent time alone with numbers, then owning a bookkeeping business may not be for you. Owning your own bookkeeping business means constantly networking to build business relationships with CPAs and tax preparers, other small business owners, and even your competition. You must become a people person and be outgoing to try to earn new business clients.
The above are just a few ideas I had to share. There is a lot more to think about when trying to determine whether or not you should open a bookkeeping business.
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FreshBooks for Invoicing
Aug 12th
Not quite ready to use QuickBooks because you think your business is too small? Well, there is a FREE program called FreshBooks which is an online program that you can use just for invoicing.
I have met with some clients in the past that all they used QuickBooks for was invoicing, and then I would teach them other features such as entering checks/debits, reconciling bank statements, and generating financial reports. I was amazed at how much time clients would spend making the perfect invoice and applying payments received but when it came to the vendor side of things they paid little or no attention to it.
Here are some benefits of using FreshBooks:
Integration with PayPal – according to the website (I have not tested out this feature), you can integrate FreshBooks with PayPal to receive your money faster than receiving a check in the mail.
Late Payment Reminders – the program is supposed to send out reminders to customers with past due balances….automatically….so you do not have to think about it.
Recurring Invoices – just like in QuickBooks, FreshBooks lets you set-up an invoice template to invoice a client automatically each month with the same dollar amount.
Monitoring - the program is supposed to let you see who viewed your invoice and when, so it takes out the guesswork of wondering if the invoice was sent to a SPAM box or not.
Now, FreshBooks has other features besides invoicing, but they are not as strong as QuickBooks. For example, you cannot split a transaction for expenses, meaning you cannot allocate a total payment of $500 to $250 Office Expense and $250 to Meals & Entertainment. Also, there is no class tracking in FreshBooks. In addition, you cannot tag a customer to an expense like you can in QuickBooks.
You cannot enter bills into FreshBooks, only expenses that were already paid. By not having this feature you could not generate an Accounts Payable Aging report to see a listing of all your bills coming due which could help you manage your cash flow better.
You cannot reconcile your bank statement in FreshBooks and there are no balance sheet accounts for the program.
The reporting is limited. There is a Profit & Loss report, but there is no Balance Sheet report.
Although FreshBooks is not an all inclusive accounting software program, I would recommend people use the invoicing feature if all they enter is invoicing activity and then put their expenses into Excel or a shoebox. It seems like a nice program to get a person introduced to an accounting software program before moving on to the more sophisticated and complete solution that QuickBooks offers.
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QuickBooks Simple Start……or STOP!
Jul 28th
Intuit used to make a product called QuickBooks Simple Start, which was a version of QuickBooks lower than QuickBooks Pro and less expensive. But sometimes less expensive means less valuable and meaningful. Even though Intuit has discontinued QuickBooks Simple Start, you can still purchase older versions online for about $60 or less, and on one site I found it was FREE! Buyer beware – you get what you pay for, right?
I recently had the pleasure of helping out a client clean up a QuickBooks file using QuickBooks Simple Start and showing the client to use additional features of the program. However, I was not happy with the lack of functionality of the program and do not recommend anyone to use it, even at free. The program is a very watered down version of QuickBooks Pro and is missing a lot of stuff (technical accounting term).
The Forward and Back Button – In QuickBooks Pro if you are entering an invoice, a sales receipt, a journal entry, or making a deposit there are these two arrows that let you scroll forward and backward to see transactions you have already entered. QuickBooks Simple Start does not have these arrows! So if you make an entry, press save and new, and go ooops – I forgot to add something to that invoice, you cannot press the back button to edit the transaction. Instead, in QuickBooks Simple Start you have to click on a button for a “list” and find the transaction.
Preferences – There is a preference menu item in QuickBooks Simple Start, but it has about 5 or less items to choose from. You cannot turn on class tracking. You cannot tell the program to use account numbers. You cannot set a preference on reports to be cash or accrual basis or to refresh automatically when you make a change. You cannot edit the email message that is sent out with invoices and statements. You cannot change the default date for entering new transactions. You cannot set the program to automatically recall the last transaction for the name. You cannot set a password to “close” your books. There are no options for finance charges. And you cannot change the default account “undeposited funds” when receiving customer payments which forces you to always go into the banking – make deposit screen even to make a single receipt!
Reports – You can generate a Profit & Loss statement and Balance Sheet in QuickBooks Simple Start like in QuickBooks Pro, but the Balance Sheet report in Simple Start is summarized. For example, instead of seeing each individual chart of account line item on the report, some accounts are combined. There may be a name that says Other Assets, but it consists of undeposited funds, credit cards, and loans. You have to double-click on the dollar amount to obtain the details. The same is true with the equity accounts. Let’s say you have two or more partners, you cannot easily see how much each partner withdrew or contributed during the year because the program combines the accounts. Again, you have to double-click on the dollar amount to see the detail. So you would have to create several reports for your tax preparer which would increase tax preparation time and money!
Bank Reconciliations – If you want to reconcile your bank statement, there is no menu Banking – Reconcile in QuickBooks Simple Start. Instead, you have to use a menu that takes you to For Accountant – Reconcile. So is this program inferring that you, the business owner, cannot reconcile your own bank statement and that it can only be performed by an accountant? I found that menu odd, maybe event a bit insulting to a business owner.
Those are just a few limitations I found with QuickBooks Simple Start when compared to QuickBooks Pro. My professional recommendation is to never use QuickBooks Simple Start and start with QuickBooks Pro.
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Neat Features of Peachtree Complete Accounting
Jul 17th
QuickBooks is not the only accounting software package out there for small business owners. Another choice people have is a program called Peachtree Complete Accounting. Here are some neat features of the program:
Memorized Transactions – if you use an outside payroll service, this feature is a time saver. Usually payroll generated from an outside firm is entered as a journal entry and there are several accounts to post to such as wages, FICA withheld, Federal Tax withheld, State Tax withheld, garnishments withheld, retirement withheld, and checking account. If you do not use a memorized journal entry to enter your payroll, then each time you have to remember which accounts to use. However, a memorized journal entry that is created can be used as a template ~ the accounts will already be there and you just have to update the dollar amounts and description (such as payroll w/e 3/15/2011). You can set-up a memorized journal entry to enter your payroll and then another one to enter your payroll taxes.
You can also memorize invoices. For example, if a customer is invoiced $150 per month for lawn maintenance services, then you memorize the invoice once and then use it as a template to enter in subsequent months.
Another type of transaction you can memorize is payments. Let’s say you pay $1,200 in rent each month. You can memorize the payment, select it, and then print the check or assign a manual check number to the transaction. You can also memorize payments such as automatic withdrawals from your checking account that are the same each month.
Memorized transactions save you time and aggravation.
Very Specific User Access – Peachtree allows you to set-up users with very limited or broad access to areas of the program. There are 7 different areas to restrict access to: Business Status, Customers & Sales, Vendors & Purchases, Inventory & Services, Employees & Payroll, Banking & General Ledger, and Company. For example, if you want an employee only to have access to Customers & Sales, you set the other areas to no access. Within the Customers & Sales area you could further restrict access to only allow the person to maintain the customer list but not be able to have access to credit card information, create invoices, or create customer reports.
Report Snapshot Screens – The Customers and Vendors have a management tab to quickly show you the activity of a specific customer or vendor on one screen. For example, if you choose a customer, you can see all the invoices, receipts, credit memos and account totals for a specific period of time. If you choose a vendor, you can see all the purchase orders, payments, item purchase history, and totals for a specific period of time.
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Clothes Hound – Grand Opening!
Jun 24th
I met Bryce at the Greater Raleigh Chamber of Commerce speed networking event. She was looking for a person that could help her with her POS system. At the event she handed out flyers of her grand opening event, but the occasion slipped my mind.
Wednesday night at the Greater Raleigh Chamber of Commerce after hours event at Lennar, Kim Niskey (great person to talk to if you want to join the chamber) gave me another grand opening brochure so I decided to check the place out.
Clothes Hound used to be an online boutique store to purchase hard-to-find, yet affordable, celebrity-driven brands of fashion but now it has opened its first store in north Raleigh. The store offers a selection of clothing and jewelry in the price range of $20 to $150. It even sells fashionable doggie collars, doggie bows, and cupcake squeeky dog toys. 10% of the sales proceeds from now until Saturday will be donated to the SPCA of Wake County.
At the ribbon cutting ceremony, people could enjoy white wine, cookies in the shape of dresses w/ pearl necklaces, cupcakes topped off with a high heel shoe, fancy sandwiches and salads and take home a unique bag full of goodies. Reusing this bag gives you 10% off your purchases.
I am not a huge clothes shopper, especially for dresses, but I found a really cute and affordable dress that I bought as well as a nice orange spandex t-shirt.
Check out the Clothes Hound at its new location in Raleigh: 8111 Creedmoor Rd., Suite 149, Raleigh, NC 27613 or shop online at www.shopclotheshound.com.
QuickBooks – For Real Estate Transactions
May 17th
QuickBooks is a very useful accounting software program used by many small business owners. If you own rental real estate property or have a business buying & selling real estate you may have wondered if QuickBooks would help you. Here are some ways that QuickBooks can benefit you if you are in the Real Estate industry:
Class Tracking – QuickBooks Pro has a feature called class tracking that can be turned on in the preferences section of the program. Class tracking allows you to tag income and expense items to a specific class, which in your case would be properties. For example, you could name the class using the street of your rental property or piece of property you want to sell. One class may be called 123 Main Street while the other may be called 45672 Pearl Street.
By using class tracking you can easily view reports that show the net profit of each individual property. For rental properties you can see which houses are generating the most money. For resale property you can see which ones yielded the biggest profits. You can also use the reports to determine where the biggest costs are for your rental properties and use the reports to determine if you want to keep the house as a rental unit or sell it.
Class tracking reports also save you time & money during tax season because it makes completing Schedule E a breeze for tax preparers.
Automated Invoicing – In QuickBooks you can set-up an invoice to automatically enter itself each month for each tenant so you can keep track of who owes you money. For example, if John Smith’s rent is $975 each month, you only have to create an invoice one time. Then you “memorize” the invoice and have it enter itself automatically each month on the first of the month. By automating your invoice process you will not have to wonder if you have invoiced all of your tenants. Invoices can also be emailed out in a batch once they are created.
Template for Selling Properties – You can set-up a journal entry template to use each time you sell a house in order to keep track of the gain or loss you made on the sale of the property. First you would “memorize” the transaction (but you would not enter it in automatically like invoicing). Later you would use the “memorized” transaction, changing the dollar amounts of the chart of account line items and the class (property name). Having the chart of accounts already set-up in the journal entry makes recording the transaction a lot easier, accurate, and consistent than if you recorded the transaction from scratch for each sale.
Pass Costs Onto Tenant – If you pay the utility bills for the rental units you can have your tenants reimburse you the costs. For example, let’s say you paid $500 for an electric bill on 123 Main Street and have two tenants. You want to charge $250 to tenant Bill and $250 to tenant Amy. When you enter the bill or write the check, you split the transaction and tag $250 to each tenant. In the bill or check, make sure there is a checkmark in the billable column. You can then modify the invoice that was automtically created by pressing the Add Time/Costs button on the invoice screen and selecting the cost to be reimbursed.
Those are just a few ways that QuickBooks could help if you work in the Real Estate industry.
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I filed my taxes, so I don’t have to do anymore bookkeeping for a while, right?
Apr 24th
Wrong! One of the purposes of keeping your accounting records in order is to file taxes. But that’s not the only reason or the most important reason to keep your books up-to-date.
One reason why you should not relax and let your accounting slide now is so that you know the financial stability of your company. Now you can use previous years’ data and look at trends so you can plan for this year. For example, which months produced the most income and why? Which months produced the least amount of income? For those months you need to be prepared and have cash on hand.
This would be a great time to set-up a budget so that when your sales are up, you can save money for when sales are down. Also, analyze why your sales go down. Did you go to less networking events? Did you change your marketing strategy? Are there other factors out of your control that made your sales go down?
Another reason to keep your accounting current is to calculate your quartely estimated taxes due. If you’re self-employed you have to make quarterly estimated tax payments. Some people think that as long as they pay the tax in full on April 15th they are OK, but they are not. You can receive stiff penalties and interest for not paying your taxes throughout the year.
A third reason to keep your books up-to-date is for financing. What if you get stuck this year and need a loan? You want to be able to present fair and accurate financial statements to a bank. And trust me, a lender can tell when you haven’t kept your books up-to-date and have a mess on your hands. That would not help you secure a loan.
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How Do I Pay Sales Tax in QuickBooks?
Apr 11th
Paying sales tax using QuickBooks can turn into a mess if you do not use the right screen to pay for sales tax.
To start, how is sales tax calculated in QuickBooks? QuickBooks can calculate the sales tax owed using the cash (when the money is received) or accrual (when the customer is invoiced) method. You can use either method with the State of North Carolina, but you have to be consistent. For example, if you started with the accrual method you have to continue to use the accrual method. If you want to switch to the cash method, you have to contact the NC Dept. of Revenue which will first audit your sales taxes paid before allowing you to switch sales tax payment methods.
In order for QuickBooks to properly calculate sales tax, you have to use either the Customers – Enter Sales Receipt screen or the Customers – Create Invoices (and later Receive Payments) screen. If you record your sales by only making a bank deposit, the sales tax will not calculate for you and the sales tax reports will not be useful to you.
When you are ready to pay your sales tax, whether you file on a monthly, quarterly, or annual basis, there is a report that you can generate to see what is due. From the main menu bar, click Reports – Vendor & Payables – Sales Tax Liability. Be careful which dates you choose because that effects how much sales tax is due. After choosing the right dates, the amount due will show up on the last column of the report with a heading such as “Sales Tax Payable as of April 30, 2011″.
Next, make sure this amount equals the following screen: click on Vendors – Sales Tax – Pay Sales Tax. Again, be careful with the dates. For example, if you are paying sales taxes owed for April, make sure the date under “Show sales tax due through” is 4/30/2011. The amount due in this screen must match the Sales Tax Payable report previously generated. When the amounts match, put a check mark next to the tax agency you want to pay and press the OK button.
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EverChange, LLC ~ Forever Changing Your Business in an Ever-Changing Business Environment!
Should I Use QuickBooks Online?
Apr 4th
One of the best advantages of using QuickBooks Online is that you can access the program from anywhere in the world that has Internet access. However, the Basic program (currently $12.95 / month subscription fee) may not fit your business. Also, you cannot work on QuickBooks Online when the server is down, which has happened to me at a client’s location twice.
No Recurring Transactions – A great feature of the QuickBooks Pro desktop version is the ability to set-up recurring, or memorized, transactions that can be used as a template or enter themselves automatically. For example, you could set-up a payroll journal entry that has all the accounts set-up for you and you just change the dollar amounts for the current payroll cycle. Or, you could use the feature to enter in a rent bill each month automatically. You could also use the feature to automatically enter invoices for customers who owe the same amount of money each month. Recurring billing is available on the QuickBooks Online Essentials version, but that costs $24.95 / month ($299.40 per year, but you can buy the desktop version for $229.95 and use it for a few years).
No Class Tracking – Another great feature of the QuickBooks Pro desktop version is called class tracking. Class tracking allows you to tag income and expense items to specific locations, such as property ABC for a rental company, or to grants for a non-profit agency to track net monies left in grant pools. Unfortunately, the QuickBooks Online Basic version does not have class tracking. Instead, you have to use the QuickBooks Online Plus version which costs $39.95 / month ($479.40 per year. Ouch!).
No Progress Invoicing – This feature allows a user to create an estimate and then invoice a partial amount for the invoice. For example, let’s say your business has a policy of collecting 1/2 of the money up front and 1/2 of the money upon receipt of service. You would create an estimate in QuickBooks Pro and then make a progress invoice for 50% of the estimate. That way the customer sees the total amount agreed up and the amount currently invoiced and due. Estimates cannot be created and progress invoicing does not exist in the QuickBooks Online Basic version.
No Inventory Tracking – Only the QuickBooks Online Plus contains inventory tracking. Again, the price is $479.40 per year for that version compared to the QuickBooks Pro edition for $229.95 per year which could last up to three years worth of usage. If you buy the desktop version now through www.intuit.com when it is on sale, the cost is only $183.95.
Those are just a few examples of the differences between the QuickBooks Online editions and QuickBooks Pro desktop edition. To really know if Quickbooks Online is right for you, seek out a QuickBooks Pro Advisor(r) and discuss your needs with the advisor.
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