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.

Organizing Financial Records

Keeping good financial records is a common nightmare for most small business. What should you keep? How long? Is electronic OK? How to organize all these documents? Here are some high level guidelines, but bear in mind that the law around bookkeeping records is loaded with exceptions and corner cases. In case of doubt, always check with your CPA or attorney. Another disclaimer: this blog is about financial records as they are relevant to the IRS. Records that are HR related or that involve legal contracts follow very different rules.

1. The IRS is OK with electronic records.

The days when the IRS wanted every bookkeeping record to be on paper are long gone. As long as you can retrieve documents easily and as long as they are very clearly readable, IRS inspectors are fine with electronic records.

2. Electronic records are safer than paper.

The beauty of electronic records, besides their obvious advantage in term of space savings is that you can keep backups in multiple locations. With paper, you are at the mercy of a flood, fire or theft. With electronic bookkeeping records, make sure to have backups offsite. Options include online backup services such as Mozy, online document management solutions such as SmartVault or simply DVD copies kept in a safe deposit box at your bank.

3. Don’t rely on 3rd parties to keep records for you.

Many of your financial records are peppered around with 3rd parties such as your bank, your payroll provider, your CPA, your bookkeeper, your insurance company, etc… By the time you get audited, you may no longer be using these providers and you may not have access to this bookkeeping data anymore. Always store copies on your side. For instance, save a PDF of all your bank statements.

4. Keep everything!

The IRS says that you don’t need to keep receipts under $75. However, it also says that you need to be able to substantiate ANY expense that you incur, implying that, if you don’t keep the receipts, you need to keep a log that includes the date, time, place, amount, who was involved, and the business purpose of the expense. Why sweat it then? Just keep all your receipts and handwrite on them the business purpose. You can then file them or scan and shred.

5. Keep the organization simple.

For small businesses, there is no need to create complex indexing systems. For instance, keeping bookkeeping records in separate folders for each vendor might be overkill. A folder per month for all your receipts and statements is often sufficient. You can then rely on QuickBooks to tell you when a given transaction took place, to help you find the correct folder. This is a case of quantity over quality. Focus on keeping everything rather than on the way it is organized. The more complex your organization system is, the less likely you are to stick with it.

6. Keep records for at least 7 years.

The regulations on how long to keep financial records varies wildly depending on the type of record. If you are current with your taxes and filing, 7 years is a safe rule of thumb. Some people might say that it’s too long, but it is simpler to follow this rule than to have to keep different types of records in different folders and once a year go through the excruciating process of having to decide what to get rid of and what to keep. The main exception is for tax returns. Try to keep those for the life of the company. Digitize them if necessary to save space.

7. QuickBooks is your ultimate database.

Where does the IRS inspector go first when they audit you? The general ledger. The inspector will start asking for supporting documentation based on what he/she sees in QuickBooks. The cleaner QuickBooks is and the more details you have about each transaction in QuickBooks, the less documentation you will have to retrieve.

8. Beware of Meals and Entertainment.

It’s the small stuff that gets you in trouble. Write down who you met with and why on each receipt.

9. Archive your calendar.

The IRS will compare the entries in your calendar to the transactions you made. Each year, archive a paper or electronic copy of last year’s calendar in your files.

10. Keep a mileage log in all your car.

The IRS wants you to track the mileage of your odometre at the beginning of your trip and at the end of your trip. An entry like “2/25/11 – 32 miles to go meet with Bob” is not sufficient. It should look more like this: “2/25/11. 45,000 miles through 45,032 miles. Met with Bob Smith from Acme Ventures at 205 1st Street, Austin. Sales call.” Once a month, rip the pages of your log, enter the mileage into QuickBooks and archive the log.