Point of Sale Goes Mobile

Here’s some exciting news for retailers looking to grow! QuickBooks Point of Sale software now integrates beautifully with GoPayment, ensuring that you never miss a sale — whether you’re in or out of your brick and mortar location.

QuickBooks Point of Sale gives you the powerful tools needed to manage your store and make better business decisions. It enables you to track inventory, set automatic re-order points, manage customer contact information, send personalized customer communications and access detailed business reporting.  And now you can keep inventory and sales in sync no matter where you get paid, thanks to GoPayment.

So whether you’re at a tradeshow, having a sidewalk sale, or simply want to step out from behind the counter to get that line moving, your inventory and sales data will match up, which means no more manual data entry when you need to be on the go.

QuickBooks Point of Sale can manage data for up to 20 locations. In addition to the features mentioned above, it also helps you track employee hours and commissions.

Check out pointofsale.intuit.com to learn how you can get set up to get on the go.

Checklist New Businesses

Overview of major steps critical to planning and starting a business People start and operate businesses for many reasons. Regardless of why you are interested in starting and operating your own business, you want to be successful. The act of forming a business is not particularly difficult. However, planning for and developing a profitable, growing business is a complex, ongoing process. Adequate planning, attention to details, and realistic expectations are critical to your success, especially if the business grows rapidly.

step 1:

Examine your motivation for business ownership 

Although hundreds of businesses are started each day, owning and operating a 

business is not for everyone. Many businesses are started without a realistic evaluation 

of personal objectives, individual talents, and personality traits. If you open a business 

without an honest evaluation of your motives, you may find yourself unhappy and 

disillusioned. 

step 2:

Choose a business suitable for you 

A question often asked is "What kind of business should I start?" No one can answer 

this question for you. Your choice is a highly personal matter. Businesses of all types 

are both successful and unsuccessful. A particular business generally succeeds or fails 

based on the customer market, the skills of the owner(s) and workers, and the quality of 

the products; not because of the type of business. Personal Areas To Consider When 

Choosing Your Business: your experience, your talents and your interests. 

step 3:

Evaluate the feasibility of your chosen business 

At this point, you have examined your personal motivation for business ownership and 

chosen an interesting possibility. Most likely, you are anxious to run to the bank, get a 

loan, and open your business. STOP! 

A common mistake made by many individuals is to blindly pursue business ownership 

without adequately evaluating whether their idea is actually feasible. Before you go any 

further, you need to examine your idea for feasibility. A good feasibility evaluation 

involves a detailed examination of financial, personal, and market realities 

step 4:

Consider start-up requirements and common pitfalls 

Become aware of the legal forms of organization you may choose. Learn which permits, 

licenses, rules and regulations are applicable to your proposed business. Determine the 

types of records you will have to keep for local, state, and federal tax purposes. 

Determine the types of record keeping and control systems you will need for internal 

management purposes. Determine the steps you must take to establish a legal Checklist for Starting a 

business entity. Consider your professional needs, such as marketing and advertising, legal, 

accounting and tax, insurance, and banking. 

step 5:

Develop your business plan 

Many people talk about a business plan when they really mean a financing request. If 

you are seeking significant private investment, the two documents will require much of 

the same information. However, if you are going to seek traditional commercial 

financing, which is much more likely, the financing request will usually be less 

comprehensive. 

 • A Business Plan Is: The strategic plan for the development and operation of your 

business for your internal management use. 

 • A Financing Request Is: A document you prepare for raising capital based on 

information in your business plan. 

 • A Business Plan Is a Management Tool You Should: Use to help you think 

through the development of your business and ensure that you have considered 

options and anticipated potential difficulties; Use to evaluate your progress 

against your planned business goals; Update and modify for operational and 

strategic planning purposes as the business environment changes; Use in the 

development of financing proposals. 

step 6:

Develop your financing request and obtain initial capital 

In reaching this step, you have determined you have enough personal money to cover a 

"down payment" or the "full cost" of starting your business. If should do an honest 

analysis of your financial position, without doing so you could invest a lot of your 

personal time only to learn that you are not going to be able to borrow the money 

necessary to start your business. 

Facts you should know about borrowing money to finance your business: 

 • Most businesses are started with money from personal savings, family, or 

friends. 

 • Only approximately 20% of new business owners start their business with money 

borrowed from commercial lenders. 

 • No conventional lending source, private or governmental, will make a commercial 

loan for 100% of the funds you need to start your business. 

 • As a rule of thumb, your personal investment will need to approximately 25% the 

total start-up costs of your business. If you have less than this, your chances of 

obtaining outside financing are not as good. 

 • Your "sweat equity" will not be considered relevant by the lender. As a general 

rule of thumb, you will need $1.50 in quality collateral for every $1 you want to 

borrow. Checklist for Starting a Business   

Although you may think your collateral's true worth is its appraised value or its original 

cost, its worth to the lender will be far less than either of these values. Your financial 

projections must show that any loan proceeds plus interest and other business 

expenses can be repaid from business revenues. The assumptions that you base your 

financial projections on will be examined carefully for reasonability. Simply having 

adequate collateral will not override the business's inability to generate positive cash 

flow when the lending decision is being made. 

Acquiring a loan will be more involved and time-consuming than you think. In the best of 

circumstances, it will normally take 60-90 days to close a loan. If you have a complex 

situation or if the lender needs additional information for any reason, the time span may 

be significantly longer. 

Caution:

Do not assume your loan request will be approved. Be realistic. Lenders are in 

the business of making money, not buying ideas. 

step 7:

Finalize all start-up requirements. You have completed your planning and have acquired the funding 

needed to start your business. Now is the time to sign contracts and lease agreements, pay various 

licenses, permits, and fees, obtain utility services and complete all other requirements.

Spring Cleaning Never Throw These Important Papers Away

Spring is a great time to clean out that growing mountain of financial papers and tax documents that clutters your home and office. Here's what you need to keep and what you can throw out without fearing the wrath of the IRS.

Let's start with your "safety zone," the IRS statute of limitations. This limits the number of years during which the IRS can audit your tax returns. Once that period has expired, the IRS is legally prohibited from even asking you questions about those returns.

The concept behind it is that after a period of years, records are lost or misplaced and memory isn't as accurate as we would hope. There's a need for finality. Once the statute of limitations has expired, the IRS can't go after you for additional taxes, but you can't go after the IRS for additional refunds, either.
http://bookkeepergirlsinc.brandyourself.com
The Three-Year Rule

For assessment of additional taxes, the statute of limitation runs generally three years from the date you file your return. If you're looking for an additional refund, the limitations period is generally the later of three years from the date you filed the original return or two years from the date you paid the tax. There are some exceptions:

• If you don't report all your income and the unreported amount is more than 25% of the gross income actually shown on your return, the limitation period is six years.
  
  
• If you've claimed a loss from a worthless security, the limitation period is extended to seven years.
  
  
• If you file a "fraudulent" return, or don't file at all, the limitations period doesn't apply. In fact, the IRS can get you at any time.
  
  
• If you're deciding what records you need or want to keep, you have to ask what your chances are of an audit. A tax audit is an IRS verification of items of income and deductions on your return. So you should keep records to support those items until the statute of limitations runs out.
•  

Assuming that you've filed on time and paid what you should, you only have to keep your tax records for three years, but some records have to be kept longer than that.
Remember, the three-year rule relates to the information on your tax return. But, some of that information may relate to transactions more than three years old.

Here's a checklist of the documents you should hold on to:

1. Capital gains and losses. Your gain is reduced by your basis - your cost (including all commissions) plus, with mutual funds, any reinvested dividends and capital gains. But you may have bought that stock five years ago and you've been reinvesting those dividends and capital gains over the last decade. And don't forget those stock splits.
   
   You don't ever want to throw these records away until after you sell the securities. And then if you're audited, you'll have to prove those numbers. Therefore, you'll need to keep those records for at least three years after you file the return reporting their sales.
   
   
2. Expenses on your home. Cost records for your house and any improvements should be kept until the home is sold. It's just good practice, even though most homeowners won't face any tax problems. That's because profit of less than $250,000 on your home ($500,000 on a joint return) isn't subject to taxes under tax legislation enacted in 1997.
   
   If the profit is more than $250,000/$500,000, or if you don't qualify for the full gain exclusion, then you're going to need those records for another three years after that return is filed. Most homeowners probably won't face that issue thanks to the 1997 tax law, but of course, it's better to be safe than sorry.
   
   
3. Business records. Business records can become a nightmare. Non-residential real estate is now depreciated over 39 years. You could be audited on the depreciation up to three years after you file the return for the 39th year. That's a long time to hold on to receipts, but you may need to validate those numbers.
   
   
4. Employment, bank, and brokerage statements. Keep all your W-2s, 1099s, brokerage, and bank statements to prove income until three years after you file. And don't even think about dumping checks, receipts, mileage logs, tax diaries, and other documentation that substantiate your expenses.
   
   
5. Tax returns. Keep copies of your tax returns as well. You can't rely on the IRS to actually have a copy of your old returns. As a general rule, you should keep tax records for 6 years. The bottom line is that you've got to keep those records until they can no longer affect your tax return, plus the three-year statute of limitations.
   
   
6. Social Security records. You will need to keep some records for Social Security purposes, so check with the Social Security Administration each year to confirm that your payments have been appropriately credited. If they're wrong, you'll need your W-2 or copies of your Schedule C (if self-employed) to prove the right amount. Don't dispose of those records until after you've validated those contributions.
   
   Contact us by phone or email if you have any questions about what records you need to keep this spring.
   

QuickBooks 2012: New Paths to Better

As it usually does this time of year, Intuit has introduced new versions of its Pro and Premier products. QuickBooks 2012 promises to help you get better organized, save steps, and acquire more in-depth financial insights.

The new Express Start is designed for businesses that want to blast through setup and start entering customers and invoices. You have two other options, though: Advanced Setup is the old EasyStep interview that solicits more details. You can also open an existing file or convert data from Quicken or other accounting software.

Express Start requires minimal input: company name, industry, company type, tax ID, and contact information. After you save your company file, it lets you start adding or importing customers/vendors/employees, products/services, and bank accounts.

Figure 1: Express Start simplifies company setup.

An Activity-Driven Calendar
QuickBooks' Reminders keep you apprised of each day's tasks, but they don't provide any information about the past or future. QuickBooks 2012 solves this problem with its new Calendar. When you enter an appointment, to-do, or key business task (invoices, bills, purchase orders, etc.), it appears in the calendar. You can display a graphical view of the month that tallies activities for each day and lists them below. Daily and weekly views are in list form. And links open the original documents.

Figure 2: The new Calendar displays daily, weekly, and monthly views of your financial transactions.

Save Excel Formatting
Once you've formatted a QuickBooks report in Excel, it's frustrating to have to reformat it each time you run it for different time periods and/or with your ever-changing content. Excel Integration Refresh simplifies this process. You can now export a report to Excel, make formatting changes and save them, and then reapply them later to the same type of report using different date ranges and your updated QuickBooks data. Acceptable alterations include:

• Row and column header font formatting
• New formulas
• Renamed column and row headers, and report titles
• Resized columns
• Inserted columns and rows
• Inserted formula text

You can do this by opening your report in QuickBooks and clicking Update an existing worksheet, or by launching your report in Excel and clicking the QuickBooks tab on the toolbar, then the Update Report button.


Figure 3: This window opens when you click Update Report in Excel.

A New Report Community
There's always room for more report formats. QuickBooks 2012 offers a library of Contributed Reports, variations created either by Intuit or your fellow users. You can select one of these, like Customer Sales By Quantity By Item Detail and instantly populate it with your own data.

You can sort these templates by industry and rating, and view them as a list, in a grid, or in the Report Center's Carousel view.

Centralized Operations
QuickBooks 2012 also saves you time with its new Centers. The Inventory Center works similarly to those available for customers, vendors, and employees. It's a clearinghouse of item records and transactions that can be viewed and sorted. You can also do inventory housekeeping tasks here, like adding items and launching transactions.

The Lead Center helps you carefully track new leads that you either paste in from Excel or enter manually. You can add to-dos and notes to contact records, and convert them into customers.

Upgrading Can Be Tricky
Intuit has included other, smaller time-saving organizational and reporting tools in QuickBooks 2012, like One-Click Transactions, which lets you create related transactions from existing ones (i.e., invoice to credit memo) with one click.

There's nothing especially difficult about using most of QuickBooks 2012's new features. But upgrading and setup are sometimes quirky, and the Excel Integration Refresh tool has a learning curve. We're happy to help you start your company file on the right foot or get acclimated to this latest version.

Small Business Guide

Keep Your Small Business Advantage
While your know-how is certain to make an important difference in your business' success, you're no doubt well aware that producing a winning combination for a smooth-running operation depends on many other factors as well.

High on the list of considerations for your business should be creating the ability to meet criteria imposed by Uncle Sam and the Internal Revenue Service. To help you avoid headaches that can go with trying to meet tax law requirements, this brochure highlights pitfalls to be aware of and provides some tips on how to overcome them.

"Material Participation" in Your Business:

"Material participation" has become a major issue for business people since Congress passed rules regarding "passive activities" in the late '80s. To show material participation, you as the owner must demonstrate that your activity in your business is continuous and substantial. The IRS has established several "tests" for measuring material participation. An owner who can't pass any one of the tests will most likely be considered just a passive investor in a company. Since deductible losses from passive activities can be limited to the amount of income from such activities, showing material participation in your business becomes doubly important.

If you work full-time in your business, you will have no trouble showing you materially participate. However, if you're an employee at another job and operate your business on a part-time basis, you need to make sure you pass one of the material participation tests. One way you can do this is to show that you spend 500 or more hours during the year running your business.

You can establish material participation in other ways too-e.g., based on your past years' involvement or how your work time compares with others working in the business (including employees).

Your Profit Motive:

The IRS sometimes questions profit motive of a business owner if an activity consistently shows tax losses. This is common with activities that lend themselves to personal enjoyment or hobby such as horse/dog breeding, arts and crafts, etc. You should be prepared to show that you entered your business with the intent to make a profit and that you are taking measures to realize that intent. How do you show profit motive? At least in part by establishing that you have experties in your field and you are using businesslike practices in carrying on operations.

Your Recordkeeping Routine

The Recordkeeping System:Give priority to establishing good recordkeeping practices for your business. Recordkeeping goes much farther than actual check writing, depositing income, keeping receipts, etc. Also involved are the choices you must make about accounting methods, dealing with inventory (if any) and other assets, complying with regulatory and tax requirements, and computerization. You will probably find taking care of all these details time-consuming and frustrating to say the least; many of the choices you have to make may require help from a financial or accounting professional.

When keeping your business records, though, try to follow a few basic "rules":

Don't Co-Mingle Business and Personal Bank Transactions.

From the very outset have a separate bank account for your business in which you deposit only business gross receipts and from which you write checks for business expenses.

Keep Backup For Your Bank Deposits And Expenses.

Keep bank statements and supporting documents so you can trace your bank deposits, including those that aren't income (e.g., loan documents for loan proceeds deposited, insurance reimbursement, etc.)

If possible, pay all expenses by check. They should be supported with sales slips, invoices and any other available documents of explanation. The income and expenses should be recorded in an orderly manner (either by hand or on computer) so that the backup can be readily available if and when needed.

Sometimes you can log your expenses in a timely manner so you don't have to keep receipts. Before you adopt a logging system though, it's best to check with your tax advisor because the rules for logs are quite strict.

Be Sure To Keep All Reports Filed With Government Agencies.

This includes personal income tax returns, sales tax returns, payroll returns, W-2s and 1099s filed for employees and other hired labor, etc.

Length of Time to Keep Records:

From a federal tax standpoint (some states may be different), you should retain books and records of your business for three years after the due date of your income tax return. There are some sections of the tax law where the statute of limitations is longer than three years, however. Because of these, it's wise to keep records at least six years. When it comes to the records that support cost basis of property, equipment or any item that you are depreciating, keep records for at least three years beyond the life shown on the depreciation schedule in your tax return.

Capital Expenses vs. Other Costs:

Costs of assets that will be used in your business for more than a year and the costs of improvements that add to the value of assets are "capital" expenditures. For tax purposes, these expenses are usually deducted over a number of years. Operating expenses, i.e., advertising, office supplies, etc., are currently deductible, as are the costs of getting started in your business (within limits). Try to keep records for capital expenses separate from those for the general operating expenses.

Expensing Normally Depreciable Costs:

Under some circumstances, the costs of depreciable business assets can be deducted all in one year on your tax return (up to a yearly maximum). While this can be a real advantage, taxwise, it also has a negative side - if you dispose of the assets before the end of their normal depreciable life, you may have to "recapture" (i.e., report additional income for) some of the costs you expensed. Be sure to check with your tax advisor before you dispose of assets you previously expensed.

Automobile Expenses:

Many business people are uncertain about what car expenses they can deduct. Those expenses you have for traveling between business locations are deductible. However, COMMUTING expenses, i.e., the car costs of going between your home and your office each day, aren't deductible. But when you travel to TEMPORARY locations away from your regular business location, you can deduct the costs of those trips regardless of the distance. Be sure to keep good records of your business driving by logging for each trip: where you went, your business purpose for going there, who you met with, and the number of business miles you traveled.

You will only be able to deduct expenses for the business portion of your car expense. However, you can choose one of two ways to do this: (1) You can deduct your expenses using actual cost of gas, oil, insurance, repairs, depreciation, etc., or (2) You can multiply your business miles by a standard mileage rate to figure your expense (this rate varies from year-to-year).

"Ordinary and Necessary Expenses":

The tax law only allows you to deduct expenses that are "ordinary" and "necessary" for your business. Taxpayers and IRS auditors often dispute over the meaning of these two terms. The IRS' definitions are somewhat general:

An "ordinary" expense is one which is common and accepted in your type of business. On the other hand, a "necessary" expense is one that is helpful and appropriate in your business; it does not have to be indispensable.

A Pension Plan:

Maintaining a pension plan offers you an excellent way to defer income from your business and plan for your retirement. One good option is a Keogh plan. Different plans have different rules about contributions, reporting, coverage, etc. Be sure to consult with your plan administrator so that you meet the specific requirements and limitations.

Estimated Tax Payments:

If your business is unincorporated, the income you earn from it is reported on your individual tax return and is subject to income and self-employment tax. Since no withholding is usually taken from self-employed income, you may need to pay estimated taxes to avoid getting hit with a penalty. Your tax advisor should be able to help you compute the amount you need to pay to ensure that no penalty is assessed. The usual due dates for estimates are April 15, June 15, September 15, and January 15.  However, if a due date falls on a Saturday, Sunday or holiday, the due date will be the next business day.

Bookkeeper Girls is EXPANDING!

We are expanding into Novato and the San Francisco Bay! Call Us Now for a consultation!

Tax Season Discounts Bookkeeper Girls

My name is Steve Loomis, CEO of North Bay Real Estate, Inc. dba Fountain Grove Lending. I have been in the real estate and lending industries for over 20 years, I have owned and operated a local real estate and mortgage brokerage for the past six years.

C. Michelle Morgan provides accounting and bookkeeping services for our company, North Bay Real Estate, Inc. located in Santa Rosa, CA. Michelle Morgan provided full cycle accounting services from data entry to financial statement preparation. This was to include, but not limited to: bank account reconciliation, general ledger, accounts payable, accounts receivable, payroll reporting and filing, adjusting and closing entries to include depreciation, and financial statement preparation (Income Statement, Balance Sheet, and Statement of Cash Flows).

I would recommend without hesitation C. Michelle Morgan for any openings, positions, and projects pertaining to accounting, bookkeeping, and business financial services.

Steve Loomis,
CEO, North Bay Real Estate, Inc.

QuickBooks Online Bookkeeping Cloud Style

There’s been much made of late about cloud computing. It seems more and more hardware and software vendors are shifting their focus (thereby ours as well) from local computing, to using software and data in the cloud. We’re used to buying a piece of software, installing it on one computer and working from there. The paradigm shift to cloud computing has us moving towards the idea of subscription-based software as a service (SaaS) instead. SaaS accounting systems are making headway in this realm as well. The Big Daddy of accounting software – Intuit – offers a lineup of online accounting options through its QuickBooks Online products.

QuickBooks Online comes in three flavors: Online Simple Start, Online Essentials, and Online Plus, each with their own features, limitations and subscription price point. For more specific information: QuickBooks Online Options.

So what’s the biggest advantage to shifting accounting functions online? Some of the biggest pluses include the ability to work on your books from any internet-connected computer regardless of platform (PC or Mac with any newer browser), no software upgrades to buy, and data availability on mobile devices.

You have to know that not all options available in the desktop version of QuickBooks are available in the online version. But hey, there’s always a trade-off when it comes to convenience. Some of the trade-off biggies include limited inventory functionality, the ability to record only basic customer and vendor data, minimal integration, and no point of sale.

So, all that said, who would find QuickBooks Online useful? Primarily service-based small businesses with few or no employees are the best candidates. Being able to access your data from home, the office and road via mobile device doesn’t hurt either.

www.MsQuickBooks.com, www.BookkeeperGirls.com, and www.santarosabookkeepers.com in Santa Rosa prefer to use QuickBooks Online for small businesses that have less than 50 employees. It is an ideal virtual Bookkeeping tool and an outsource accounting tool that can not be duplicated.

Selecting Mrs Bookkeeper

Let’s assume that you decided to hire an independent bookkeeper. How should you interview and select such a bookkeeper?

Recruiting in general, whether it is for a bookkeeper or any position, is more of an art than a science, so there is no simple recipe that will ensure that you get the best bookkeeper in the door, but there are criteria that will enable you to mitigate risks. Here’s a short checklist and I’ll cover each item in more details below:

• Professionalism
• QuickBooks knowledge
• Accounting knowledge
• Price
• Availability
• Referencechecks

Professionalism
Why do I start with this criteria? Because it is the single most efficient factor to trim your list of candidates down. If you are reviewing a long list candidates and you test them first on their QuickBooks knowledge, you’ll shrink your list by 50% pretty quickly. If you test them on professionalism first, you’ll shrink the list by 80% right from the get go and you’ll save yourself a lot of time. What do I mean by “professionalism”? That’s the whole package of people skills that the bookkeepers expose to you. How crisp and well written are their emails? How friendly are they on the phone and in-person? How punctual are they to the interview? How well dressed are they? How well do they listen? Did they prepare for the interview by researching your company? A bookkeeper who doesn’t score high on this dimension will cause you problems down the road, because good bookkeeping is not only about the accuracy of the data that you get into QuickBooks. A bookkeeper is a consultant and as such, the bookkeeper needs to know how to adapt to your industry and company, understanding your needs and adapt his/her work to your needs.

QuickBooks knowledge
There is an enormous difference between being knowledgeable in QuickBooks and knowledgeable in accounting. QuickBooks appears simple to use if all you need to do is reconcile bank accounts, but as soon as you start pushing the envelope (job costing, sales tax, inventory management, integration with 3rd party apps, etc…), it’s a whole new ball game. Even if you majored in accounting in college, it won’t help at all. Case in point: most CPAs cannot be called QuickBooks experts. They know how to pull reports out of QuickBooks to prepare your taxes, but the number of CPAs out there who would be able to fix a “broken” QuickBooks file is very small. That’s not their area of expertise.

Accounting knowledge
This one is a no-brainer and you have to test for it. However, you’ll be surprised how few candidates will fail in this dimension, because the accounting knowledge required to keep clean books is actually easy to acquire. This being said, let me stress that this holds true only if all you are looking for is a bookkeeper. If you are expecting your candidate to play a controller or CFO role, it’s a very different story, but then, the job description should not be “bookkeeper”.

Price
Like in any market, you get what you pay for. The lower the cost, the lower the expertise. If you plan on giving your bookkeeper primarily data entry tasks and you will be verifying every detail of his/her work on an on-going basis, you can afford to go lower on the price scale. However, if you expect your bookkeeper to be self-sufficient and you won’t have time to quality control the work, you will be forced to pay more. Keep in mind that the hourly rate is not necessarily a good representation of cost. Jane might charge twice the hourly rate as Joe, but if Jane works twice as fast as Joe and she provides higher quality work, you will end paying Jane less than Joe at the end of the month.

Availability
Supply and demand doesn’t only affect price. It affects availability as well. The better bookkeepers are busier. Make sure that the bookkeeper you hire still has available bandwidth for you and will be able to turn your work around quickly and be responsive to your questions during the week. That’s one of the key differences between independent bookkeepers and firms. When an independent bookkeeper is maxed out, there is no safety valve. You can’t move work around or assign different resources. You just have to wait for your turn.

Check references
Last but not the least, don’t skip on the reference checks. You’re about to give this bookkeeper a lot of sensitive financial information. Better be safe than sorry!

Internal Controls Accounting Principles

The two most common causes of fraud in small businesses are when rogue employees or contractors write checks to themselves or deposit checks to their account instead of the company’s account. Those are very unsophisticated schemes and can easily be detected after the fact, but by the time you detect the fraud, the damage is already done. Very often these individuals go from paycheck to paycheck and spent your money in a hurry. You can’t get the money back. They are broke and you can only “punish” them through termination and prosecution. You get a sense of vindication, but the money is gone.

It is much better to prevent fraud in the first place and for such basic fraud, there are easy tricks. It all starts with what larger companies call “Internal Controls”. Essentially, any financial process that moves money around needs to involve at least 2 individuals checking on each other. When you apply this to a small business, it can be very basic, but still effective.

Guarding your stock of blank checks

Many small business owners feel that as long as they are the ones signing checks, all is safe. Not really. Banks do a very bad job at checking signatures. They can be easily forged. The signature is an effective tool to trace back the source of the fraud once the fraud has been detected, but by then, it’s already too late. The better approach is to control who has access to stocks of blank checks and how these blank checks are handed out.

The safest process is to have your bookkeeper prepare the checks in QuickBooks and mark them as “To be printed”. You, the owner, would then do the actual printing. In this scenario, you’re the only one with access to the stock of blank checks.

If you don’t have time to do the printing, you can delegate the printing to the bookkeeper as well, but you would hand-out only the exact number of blank checks needed and you would keep a log of the check numbers that you handed out. Essentially, avoid at all cost to have the blank check in a self-service mode. Checks need to be in a locked drawer with as few people having access to them as possible.

The panacea is to not have blank checks at all and to use online bill payment with rigorous approval workflows, but these techniques are a little bit more involved in term of setup.

Controlling the deposits

Let your bookkeeper or the individual acting as bookkeeper record the deposits in QuickBooks and prepare the deposit slips, but make sure that it is a different person who goes to the bank to make the deposits. Ideally it should be you, but if you don’t have time, separate the roles of preparing the deposits and making the deposits. Whomever makes the physical deposit needs to bring the deposit slip back and immediately hand it off to the person in charge of QuickBooks. This is of course not bullet proof, because the person making the actual deposit could still swap the accounts, but by enforcing the requirement of handing off the deposit slip on the way back to the office, you send a clear signal that this type of fraud will be caught almost in real time.

There are of course much more sophisticated ways of committing fraud, but by implementing the processes above, you will be preventing the two most basic and common fraud schemes. 

New QuickBooks 2012

The newest release of QuickBooks became available for download as of September 26, 2011 and will be available for purchase in stores as of October 9, 2011.

I must say there are some pretty cool new features that will definitely come in handy for your business.

Because Your Time Is Valuable

Remember the interview process when you first setup QuickBooks? In previous versions, the setup process required the completion of 20-40 questions making it really time consuming to get started (and somewhat stressful having to find all the answers). I always skipped and built the file from scratch. Having used QuickBooks since its first versions, I found this faster than answering the questions. They have now made it much simpler by asking only 3-4 questions. It’s straight forward and saves you time. Woo hoo!

A Better Visual

Along with an improved To-Do List, you can now view invoices, bills, and other important to-dos in a calendar view. Instead of pulling a report to view what has already been entered and when it is due, you can easily view it on the calendar. The calendar does not export or import with other calendars.

No Better Relationship

Excel is one of the major competitors to many bookkeeping software programs, but QuickBooks allows you to integrate with it by exporting reports to spreadsheets you can format as you please. QuickBooks now gives you another reason to export current data to an Excel spreadsheet. If you have an Excel sheet that is formatted and customized with fonts and colors, you can update the spreadsheet with QuickBooks data without compromising your formatting. This is one of the 2 features I’m most excited about since I use Excel with QuickBooks extensively.

A Reporting Community

The ability to create customized reports in QuickBooks has always been a great feature. The reports are the reason to even use QuickBooks to do your accounting. If you don’t know how to run reports, using QuickBooks it’s pretty dull and it defeats the purpose. Reports answer your day-to-day management questions, they are the best tool to make decisions and to check on your progress. Now, they offer even more choices with their Contributed Reports Library. QuickBooks now allows other QuickBooks users to upload reports so they can be shared with other users. They verify them prior to distribution, but once approved they become available in the library. Users know their popularity by their rating from other users. Initially, the library will start out with 1,000 reports.

A Future CRM?

In the past QuickBooks had a very simple program called Customer Manager that somewhat integrated with your current QuickBooks file. The program didn’t have success and it was discontinued. From my own experience using it, I was not surprised when it was pulled off the market. It seems QuickBooks has integrated similar CRM features within the dashboard inside your file. This is the 2nd feature I’m most excited about as I have struggled with finding the right CRM program for years. I’m impressed by how close QuickBooks is to becoming an all-in-one CRM integrated with Accounting with new features like the new Lead Center and Document Center.

The Lead Center lets you import current leads, track and follow up with sales leads and when they become a customer, move them in to the customer center. It can’t get any easier than that!

The Document Center is a great organizational tool (especially for tax time) because it allows you to simply drag and drop estimates, receipts, and other files to invoices and customer files. And no need to worry about storage because QuickBooks includes local storage with your purchase.

Now or Later?

Memorized Transactions is not a new feature, but one that has been improved. Memorized Transactions can be setup for recurring billing, invoices and estimates. Now you can review and process each transaction individually and also select which transactions to run now or later. You can also set up bi-monthly processing. I’m always so surprised to find clients that have been using QuickBooks for years and have no idea they can memorize transactions they enter over and over again. It saves you tons of time!

No Extra Work

The new Batch Timesheet feature allows you to enter the same timesheet for multiple employees that worked the same hours.

Accountants Versus CPAs

CPA or Certified Public Accountant and Accountant perform almost the same duties. But the fact is that all accountants cannot be Certified Public Accounts whereas all CPA’s are accountants.

An accountant is a person who looks after financial records. An accountant would have good knowledge about owner’s equity, cash flow, chart of accounts and balance sheet and how these are going to affect the business.

An accountant is responsible for the accounting works of an individual or a business firm. It is the accountant’s responsibility to issue financial reports. Accountants need not be certified professionals.

On the other hand, CPA is a professional who is regulated by the state. An accountant can become a CPA only if he passes certain tests conducted by the respective Institutes of a country. Though the requirements to become a certified Public Accountant varies from one state to another, the basic thing is that one has top undergo rigorous tests to qualify to become a certified profession.

When comparing the works of both the professions, an accountant cannot do the work that a Certified Public Accountant can do.

An accountant cannot do the same work as a Certified Public Accountant whereas a CPA can do all work of the accountant. Unlike the Accountant, the Certified Public Accountant has a higher position in the financial and business circles. It is the Certified Public Accounts who are capable of advising on the financial aspects of a company. The CPA are trusted more than an accountant in financial matters. Even if an accountant’s views are valued, the last word is always from a Certified Public Accountant.

More than passing the test, the CPAs have to flow a strict code of ethics. Every two-year, the CPAs should have to complete 80 hours of professional education to keep up the new trends in accounting.

Summary

1. All accountants cannot be Certified Public Accounts whereas all CPA’s are accountants.

2. An accountant cannot do the work that a Certified Public Accountant can do.

3. It is the Certified Public Accounts who are capable of advising on the financial aspects of a company.

4. The CPA are trusted more than an accountant in financial matters.

5. Even if an accountant’s views are valued, the last word is always from a Certified Public Accountant.

6. CPA is a professional who is regulated by the state.

7. It is the Certified Public Accounts who are capable of advising on the financial aspects of a company more than an accountant.

2011 Year End Tax Strategies

With the economy still in the doldrums, this year has not been the greatest year for most individuals.  Unemployment is still high, incomes are lower, retirement savings have declined and many taxpayers are struggling to make ends meet.  The government has provided a variety of tax incentives to help weather the economic storm, and you are urged to take advantage of these special tax benefits as well as other strategies to keep your tax bill as low as possible.  

• State Estimated Tax Payments Although the deadline to make the current year 4th quarter state estimated tax payment is January 15 of the next year for most states, the payment will count as a tax deduction on the federal Schedule A for the current year if that payment is made before the end of December.
• Property Taxes Generally, your property taxes are billed in installments, and thats how most people pay them. However, the tax can be paid all at once, if it provides a greater tax benefit for the current year. 

Caution: The preceding two strategies do not benefit taxpayers who are subject to the alternative minimum tax (AMT), since taxes are not deductible to the extent a taxpayer is subject to the AMT. Taxpayers subject to the AMT might, instead, consider deferring deductible tax payments to the subsequent year.

• Bunch Deductions - If your tax deductions normally fall short of itemizing your deductions, or even if you are able to itemize but only marginally, you may benefit from using the bunching strategy. For more on this technique, read the article Bunching Your Deductions Can Provide Big Tax Benefits.
• Required Minimum Distributions (RMDs) from Retirement Plans If you are in a low or zero tax bracket this year, it may be to your benefit to take a withdrawal more than the minimum. RMDs generally apply to individuals age 70 ½ and older, but even younger retirees who are not yet required to take a distribution may find this strategy beneficial. If you receive Social Security benefits, IRA distributions can sometimes be planned to minimize the taxability of the Social Security income.
• Tax Credit for First Four Years of College - The American Opportunity Credit (AOC) takes the place of the Hope education credit and provides a credit for tuition and certain other expenses of the first four years of college (Hope only applied to the first two years). So even if you used the Hope credit in prior years you may still qualify for the AOC. The credit is 100% of the first $2,000 of qualified expenses and 25% of the next $2,000. 40% of the credit is refundable which means that taxpayers with little or no tax liability can still benefit from the credit. This credit does begin to phase-out for single taxpayers with AGI above $80,000 ($160,000 for joint filers) and no credit is allowed for taxpayers filing married separate.

Important: The AOC is only applicable to tax years 2009 through 2012. Without Congressional action, 2012 is the final year for this more lucrative education credit.

• Energy-Efficient Home Improvements Homeowners who have or will make certain energy-efficient improvements to their existing homes may qualify for energy credits up to 10% of the cost (credit limited to a lifetime maximum of $500 taking into account credit claimed in prior years). This credit applies to the following qualified energy efficient improvements: exterior windows and skylights, exterior doors, metal and asphalt roofs, heating systems, air-conditioning systems and insulation. With many contractors without work this could be an opportune time to negotiate reasonable prices and make those home modifications, but the work must be completed before year-end if you want the credit. Without Congressional action, this credit expires at the end of 2011.
• Roth IRA Conversions If your taxable income is low or a negative amount for the year, it may be appropriate to convert some or all of your taxable traditional IRA to a Roth IRA for little or no tax cost. Taxpayers are able to convert funds in regular IRAs (as well as qualified retirement plans) to Roth IRAs regardless of their income level.
• Review Estimated Tax Payments and Withholding Ensure they are sufficient to meet the safe-harbor payment amounts so as to avoid underpayment penalties.
• IRA and Self-Employed Retirement Plan Contributions The primary purpose of these plans is to provide for your future retirement and whenever you are eligible and financially able, you should always contribute as much as possible. Contributions also provide a tax deduction when they are made to Self-employed plans and to most traditional IRAs. The benefit derived from this tax deduction is based upon your tax bracket. (Some contributions to traditional IRAs may not be deductible if you also participate in another retirement plan, depending on your income level.) Those individuals who simply prefer the Roth option, but are barred from making Roth contributions because their income exceeds the AGI phase out limitations, might consider making a non-deductible traditional IRA contribution and then converting it to a Roth IRA since as of 2010 there are no income limitations on conversions.
• Establish a Retirement Plan If you do not already have a retirement plan and you are considering one, there are several options. Some, such as Keogh or 401(k) plans, must be set up before the years end. If you are an owner-only business, you should review the article Owner-Only Businesses Should Consider a Solo 401(k) Plan, which provides great benefits for business owners with no employees other than their spouse.
• Capital Loss Carryovers If you have carryover capital losses remember you can only claim a maximum $3,000 net capital loss on your return and the remainder carries over to the subsequent year. However, you may have some gains you can take to offset the carryover. (If you sell at a gain but wish to repurchase stock in the same company, note that the wash sale rules dont applythey only apply to losses so you will not need to wait 30 days to make the repurchase.) For long-term planning, it is important to keep in mind that the current lower capital gains rates of 0% and 15% are only available through 2012. After that, without Congressional intervention, the rates return to the pre-2003 levels of 10% and 20%. 
• Non-Cash Charitable Donations If you itemize your deductions and your garage and closets contain never-used items, you might consider donating those items to charity before year-end to increase your deductions. To claim a deduction for donated clothing and household goods, they must be in good condition or better, and the donations must be substantiated by a written receipt that includes the name of the charity, dates and location of the donation and a reasonably detailed description of the property donated. A receipt is not required where the value is less than $250 and it is impractical to obtain one (for example, when items are left at an unattended drop site). If, instead, you decide to sell some of the property, the income is generally tax free provided you sell each item for less than your cost or basis in the property.
• Deduct IRA Losses If a traditional IRA account that includes non-deductible contributions declines in value and the value of all of your IRA accounts combined is less than the sum of your non-deductible contributions, you can take a loss by withdrawing from (closing) all your IRA accounts. However, this loss is beneficial only if you itemize your deductions and the loss, along with your other miscellaneous deductions, exceeds 2% of your income (AGI) for the year.

The foregoing are frequently encountered tax strategies that can be employed by most, but by no means all, taxpayers. Please call this office if have questions regarding these issue or others or would like to engage in some year-end tax planning. If you have a substantial increase or decrease in income this year it may be wise to schedule an appointment before the holidays to strategize.