Posted by Mariann Goff on Tue, Oct 26, 2010
Greater than expected sales always make business owners happy—until it’s time to pay sales tax. That’s a client pain point.
When a client doesn’t know how to record sales tax collected and sales tax paid in QuickBooks revenue may be overstated and/or tax expense may be overstated. This results in financial reports that don’t accurately reflect income, expenses or liabilities. That’s a client pain point.
When visiting a client for the first time I always review the balance sheet. Companies that collect sales tax have a sales tax liability account—or they should. Sale tax liability with a negative balance is a red flag. If taxes paid are posted to the liability account but taxes collected have not been posted to the same liability account, the result is a negative balance. Where can the taxes collected be? Often they are included in the revenue account. Ouch! Sales tax collected is not revenue.
An unusually high balance in the sales tax liability account is also a red flag. If sales tax payments are not offsetting the liability account, where can they be? Often they are processed as a tax expense. Sales tax collected is never an expense.
Getting sales tax processing right begins with activating sales tax in QuickBooks then correctly setting the sales tax preferences. For detailed information on how to process sales tax click “Help” on the QuickBooks menu bar and search “sales tax”.
Posted by Mariann Goff on Fri, Jul 30, 2010
Why Choose Hosted QuickBooks?
For a variety of reasons the QuickBooks files for several of my clients are either on my laptop or my desktop. I also have clients that have Mac computers and are disappointed in the functionality of the Mac version of QuickBooks. The obvious solution these clients is the application hosting model offered by Intuit certified providers.
Cost and data security concerns are the major obstacles to convincing clients to make the move. It's the question--Why should I rent the software and the rack space when I can own my own.
Security, Reliability, Support
Hosting services are in the business of providing customers data security and reliability. They invest in state-of-the-art hardware and software to insure the highest levels of network security and virus protection and they employ well-trained engineering and technical support staff to assist with technical issues that end-users may experience.
Recently I read an article that likened paying for hosting services to paying for an insurance policy. The monthly fee paid to the hosting company insures that no matter what major malfunction may occur with computers in your office, your QuickBooks files will always be accessible and up-to-date.
Cost is a factor, but the security and support provided for a fixed monthly fee as well as the convenience of the accessibility anytime/anywhere via the web make the application hosting service model a no-brainer choice for me.
Achieve your "everywhere from anywhere" solution, learn more about Hosted QuickBooks and remote access setup.
Posted by Mariann Goff on Thu, Jul 01, 2010
Has your bookkeeper or your payroll company told you about the Hire Act of 2010? If you hire a new employee between February 3, 2010 and January 1, 2011 your company may be exempt from paying the employer Social Security tax on wages paid from March 19, 2010 to December 31, 2010. This represents a savings of 6.2% of payroll tax on gross wages paid to qualified employees.
Determining Qualification Status
To qualify for the tax exemption, the new employee must have been unemployed or employed for less than 40 hours for a continuous 60 day period prior to being hired by you. Recent high school and college graduates who did not work because they were in school also qualify under the Act. There are other requirements. The newly hired individual must not be a family member and must not be replacing another worker for the sole purpose of claiming the tax exemption.
What Needs to Be Done?
What documentation must the new employee complete? IRS Form W-11 must be completed by the employee and maintained with company payroll records.
What documentation must the employer complete? The IRS has produced a revised Form 941 that takes into consideration the payroll credit.
If you outsource your payroll, your payroll processor will complete the correct 941 form for you.
Would you like more information about the Hire Act?
For answers to your questions about the Hire Act and other Payroll Processing Questions Contact Mariann at Back Office Works, LLC.
Posted by Mariann Goff on Tue, Jun 22, 2010
Professional Bookkeeper
What should every business, new or well established, look for when hiring a bookkeeper?
A basic requirement is knowledge of double entry bookkeeping.
An individual with formal bookkeeping training understands how to categorize transactions as debits and credits.
They know the difference between income and expense accounts and balance sheet accounts and how to set them up in the chart of accounts.
A trained bookkeeper knows how to create customer invoices and record customer payments.
They know how to enter vendor bills and record payments to vendors.
A formally trained bookkeeper can reconcile bank statements and credit card statements and knows how to locate and correct differences when they occur.
Basic bookkeeping skills are a prerequisite for any bookkeeping position.
How Do I Choose a Good Bookkeeper?
Reputation, reliability, knowledge and experience are essential qualities of a high-quality bookkeeper. When reviewing applications and resumes, look for professional certifications such as the QuickBooks Pro Advisor Certification and Advanced Certification; look for memberships in professional organizations such as AIPB, Sleeter Group, NAN; ask for referrals and testimonials from current or past clients. Certifications and memberships provide business owners incite into the degree of knowledge and professionalism an applicant brings to the job.
Want to learn more about reconciling your bank statement? Contact Mariann at Back Office Works, LLC.
Posted by Mariann Goff on Tue, May 25, 2010
Is there a difference between a certified bookkeeper and just a bookkeeper?
Well of course!
According to the American Institure of Professional Bookkeepers (AIPB) a certified bookkeeper must be able to:
- Understand basic bookkeeping tasks such as double-entry accounting.
- Pass a national exam in advanced bookkeeping at Prometric Test Centers.
- Accomplish at least 3,000 hours (or 2 years) of on-the-job-experience in bookkeeping.
- Sign a Code of Ethics to assure a commitment to integrity.
- Constantly update skills by earing 20 Continuing Education Credits every year.
Why does this matter? I mean, can't you get by with just downloading some software and entering your bills and invoices?
Sure, you can also cross your fingers and hope you are making the right decisions for your business, or that you will not get audited, or miss out on some important tax deductions. I mean it's just money afterall right?
So what do you have to gain by using a certified bookkeeper?
Here are just a few:
- Have accurate financial statements to base your business decisions on and submit for taxes. Your financial statements and tax returns are only as good as the books you give to your CPA.
- Save on expensive accounting hours. At more than $150 an hour, does it make sense to have your accountant enter your receipts and balance your books? Most accountants will not even do it!
- Find accounting errors before the IRS does. No one likes to hear the "A" word. But audits are on the rise and more businesses are being caught off guard.
- Manage your company's payroll. This can not only save you on overtime pay, but a certified bookkeeper can also make sure things are classified correctly.
- Maximize your tax depreciations. (without inviting an audit!)
- Reduce waste by correctly recording and managing your inventory. You can always know what you have on hand and then only order what you need when you need it. No surprises.
- Avoid costly losses from fraud and theft. It happens, and not just from employees helping themselves to the cash register. But it also can happen with customers who scam, or vendors who are dishonest.
Want to learn more and find out what all this means to your company? Start by downloading the 2 page AIPB Certified Bookkeepers Guide.
Knowledge is power!
Posted by Mariann Goff on Wed, May 05, 2010
When you open a bank statement reconciliation, what do you see?
Outstanding checks from 8 months ago, 12 months ago or longer? It's time for t
hose items to go! They're never going to clear the balance in your register is incorrect. First, never void or delete a check in a closed accounting period. If a closing date has not been set in QuickBooks this is an easy mistake to make. Before you hit that delete key--stop and think about the consequences!
How do you make outstanding items from closed periods go away without impacting previous financial reports? Here's my recommendation.
- Identify the stale item and place a checkmark next to it, clearing the item even though it is not on the statement.
- Let's assume you are reconciling the April statement, create a deposit with an April date for the same amount of the check you cleared. On the deposit form the "from account" is the expense account used on the check cleared.
- Return to the reconciliation and place a checkmark next to the deposit.
By following these easy steps you clear stale checks from your bank account without impacting closed financial periods.
Want to learn more about reconciling your bank statement? Contact Mariann at Back Office Works, LLC.
Posted by Mariann Goff on Sat, Apr 24, 2010
What would you pay to have your bank account in balance? How about nothing! Back Office Works will teach you to keep your accounts in balance for free!
Balancing your business begins with timely reconciliation of bank statements and credit card statements.
Performing these tasks is a key function of every business and should be done as soon after statements are received as possible.
Why is Bank Reconiliation So Important?
Reconciling the bank statement may reduce costly overdraft fees by identifying transactions such as electronic vendor payments deducted by the bank but not recorded in QuickBooks or monthly processing fees deducted by credit card companies. Reconciling the credit card statement insures that all expenses are being recorded and that all charges on the statement are, in fact, correct.
QuickBooks software makes bank statement and credit card statement reconciliations easy to complete. Just follow these steps:
- Select "Banking" from the menu
- Select "Reconcile" from the drop down menu
- In the "Account Box" the name of the bank account being reconciled should appear
- The statement date is the date of the statement being reconciled
- The beginning balance is the ending balance of a previous reconciliation
- The ending balance is the balance that appears on the bank statement
- Select "Continue"
- In QuickBooks place a checkmark next to all the checks and payments that appear on the statement and in QuickBooks
- Place a checkmark next to all deposits that appear on the statement and in QuickBooks
- If all items on the statement are accounted for in QuickBooks the difference should be zero. If not--that's when the work begins!
Follow the same procedure to reconcile credit card statements placing checkmarks next to charges and payments made that appear both in the QuickBooks file and on the statement.
What if Quickbooks Doesn't Match the Bank Statement?
When discrepancies occur between statements received and the QuickBooks file it is important find the source of the discrepancies and resolve the problems. This may be as simple as recording transactions in QuickBooks that had been overlooked during the month.
If all transactions in the QuickBooks file match to the bank statement and there is still a difference--the beginning balance is the most likely culprit. If a previously cleared transaction has been changed for any reason (check voided for example) the beginning balance changes and throws off the reconciliation.
In my next blog I'll talk about how to properly handle changing or voiding transactions cleared in previously reconciled bank statements.
Contact me with any questions or for one on one training how on best to use your Quickbooks application to balance your business.
Posted by Mariann Goff on Mon, Apr 05, 2010
One of the most misused and misunderstood accounts in QuickBooks is the Undeposited Funds account. Undeposited Funds is a repository for payments received but not yet deposited in the bank.
Think of it as the deposit bag you put your cash and checks in to take to the bank. You know they are going to the bank, but they haven't hit your bank account just yet. Often new clients tell me they didn't even know that they had an Undeposited Funds account and so, they ask, "How did the money get there?"
When customer payments are received using either a Sales Receipt or the Customer Payment screen QuickBooks provides the option of selecting where to deposit the funds. The default is set to Undeposited Funds.
Sound complicated? It really is quite simple once you get into the habit of following the 3 step process for receiving and depositing funds in QuickBooks.
- Receiving a customer payment is the first of a 3 step process.
- Clear the balance from Undeposited Funds by selecting Make Deposit option under the Banking menu.
- Select the payments included in a particular deposit at the Payments to Deposit window. The payments selected should equal the deposit being made at the bank.
Posted by Mariann Goff on Sun, Mar 21, 2010
Welcome to the Back Office Blog!
This could very well be the corner office blog since that's where I'm located, but most businesses refer to the space where the numbers are crunched as the back office. In the back office I'm behind the scenes making financial sense of what can be financial chaos.
It can be like reading a good mystery--sometimes you just can't leave the file until you've solved the problem. 
In the back office there is no such thing as close or almost. The job is never complete until all is in balance.
I like to think of myself as an accounting detective. The mystery begins with the reading of the balance sheet. Ah, what subplots can be revealed in the balance sheet.
Chapter 1 introduces the characters, or in this case, the chart of accounts. QuickBooks users have characters known as items that add more intrigue to the story.
Throughout the process of restoring financial order the misuse of items and the total abuse of the chart of accounts can be quite entertaining.
Like any good mystery there are always lots of twists and turns in an accounting file full of processing mistakes.
When the last chapter is complete and the new income statement and balance sheet printed the back office detective is ready to take on a new mystery--I mean client.
Would you like to learn more about Back Office Works?