D.I.Y. Accounting

The information below is summarized from the Entrepreneur magazine article When to Hire a Bookkeeper or Accountant by Eileen P. Gunn

Understandably, small business owners seek to cut costs in every possible way. Pinching pennies until they beg for mercy is absolutely necessary for survival. Entrepreneurs work long hours in part because, in addition to managing and growing their business, they’re forced to do many tasks that large companies either outsource or assign to employees.

One such responsibility that is commonly DIY is the bookkeeping. User-friendly applications such as QuickBooks Online and Xero make it easy for small business owners to maintain their own books. But because they wear so many hats in their business, they often struggle to find time to keep the books updated, and as a result their financial records never present an accurate picture of where the business stands. If their business survives and grows, when they do hire a bookkeeper, they usually discover they weren’t doing as well with the bookkeeping as they thought. This discovery does not indicate they’re bad business managers. They simply are neither bookkeepers nor accountants, and lack the in-depth training and knowledge required to conform to Generally Accepted Accounting Principles (GAAP).

Outsourced or Internal?

Once a small business owner decides to stop doing the bookkeeping themselves, the first question is this: Do I outsource this function, or can I afford to hire an internal employee to handle it? If your bookkeeping workload is heavy enough to fill 6 or 8 hours of every day, you should probably hire a part-time or full-time employee. Freelance, independent bookkeepers and accountants will most likely have multiple clients, and probably won’t have sufficient time to devote to your books. Otherwise, a freelance finance pro may be a perfect fit for your company until it grows. You will want to institute safeguards such as still writing/generating all the checks yourself to avoid theft (more on this in another post).

Bookkeeper or Accountant?

The answer is, both. A bookkeeper typically charges less than an accountant, but is quite capable of executing daily tasks such as setting up bills for payment in your accounting application, generating invoices, tracking expenses, monitoring financial accounts for fraudulent activity, payroll, and account reconciliations. An accountant charges more, but is best qualified to offer strategic advice, produce financial reports that can’t be generated in with your financial application, and file taxes.

Contact me today for more information on how my bookkeeping services can benefit you, or request a quote online.

New Xero Feature

In your job, do you frequently create invoices that are very similar? Xero includes the ability to copy invoices for modification and creation of a new (but similar) invoice. And last week, Xero added the ability to copy details from an invoice in order to create new Quotes, Bills, and Purchase ordres. And if you use multiple currencies in your business, Xero will update the currency if needed when you change the customer name.

Learn more about this added feature on the Xero Blog.

This is just one example of how Xero features can save you time and effort. If you’d like more information on converting to Xero, please contact me.

QB2013 Support Ends 5/31/16

Intuit, the parent company of all QuickBooks products, will be discontinuing support and all add-on services for QuickBooks 2013 effective 5/31/16. (Support for all versions prior to 2013 has previously been discontinued.) Your product will still function, but you will not be able to access the following:

  • QuickBooks Payroll Service
  • Live Support
  • Online Backup
  • Online Banking
  • Other services accessed through QuickBooks 2013 software

In addition, Intuit will issue no further critical security updates after 5/31/16. For more information, please visit this page of the Intuit website.

Now is a great time to upgrade to a cloud accounting application! Contact me today to learn more about how easy it is to switch to QuickBooks Online or Xero. Or, if you’re ready to make the switch, request a quote.

 

Customer Records

After reading my last post covering the biggest QuickBooks mistake most users make, you may be wondering, “Why do I want to keep my customer records (QBO or Xero) updated anyway?”

The answer is that there are a multitude of situations where having information on each customer is highly useful in managing your business, increasing sales, and meeting your customers’ needs. Maintaining this information in Quickbooks allows you to generate several different important reports. It also enables you to quickly provide a customer with a copy of specific sales receipts or their entire purchase history. Finally, doing so can be beneficial in any kind of financial audit.

Biggest QB Mistake

The biggest or most common Quickbooks mistake that I see in my practice is not using Undeposited Funds.

I have to admit, when I first started using Quickbooks in 2006, I found the idea a bit ludicrous. Initially, I saw no reason why deposits shouldn’t be entered straight into the bank account. I saw Undeposited Funds as a design flaw in Quickbooks, because I thought deposits didn’t need to be a two-step process.

But after thinking about it, I realized I was wrong. Undeposited Funds is actually essential to maintaining accurate customer records in Quickbooks. Here’s why. Deposits will not always consist of single payments from a single customer. Therefore, in order to track a single customer’s payments, you must first enter those payments into the customer record in any accounting program, including Quickbooks. Posting those payments to Undeposited Funds then allows you to group payments from different customers together into the deposit you actually made before posting it to the bank account.

Of course, there’s nothing that <em><strong>requires</strong></em> you to use Undeposited Funds. And maybe at the present time, for some reason, you don’t need to maintain accurate customer payment records in Quickbooks. But that could change in the future. For this reason, and because it is the Quickbooks-recommended best practice, I encourage all my clients to use Undeposited Funds.

Paper and the IRS

Many times prospective clients have asked me, “But don’t I have to keep the paper copies for the IRS?”

I am a virtual bookkeeper. That means I don’t go to clients’ offices very often; almost all the bookkeeping work I do for them is done from my office. This requires clients to share receipts, bills, and other documents with me in digital form. This system works very well because it (a) eliminates travel time, allowing me to serve clients more accurately and in less time, and (b) for disaster recovery purposes, creates a digital copy of important documents which is stored offsite.

Yes, the IRS accepts digital receipts and other documents. Read the official IRS publication, or Google “IRS ruling on digital receipt copies” to locate numerous articles by CPAs and other tax professionals for verification.

And if you don’t want to scan all those receipts, invoices, bills, and other documents yourself, I highly recommend either Hubdoc.com or Shoeboxed.com. (These services are included free for all my clients.)

New! My Bookkeeping Blog

I just recently decided to start a blog. As often as possible (one to five days a week), I’ll be publishing short articles to help with your bookkeeping tasks.