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Six Downsides of Doing Your Business Bookkeeping by Yourself

Wed, 19 Jun 2024 21:57:20 GMT

Bookkeeping is a crucial aspect of running a successful business. Accurate financial records ensure that your company stays compliant with laws and regulations, provide insight into financial health, and facilitate strategic decision-making. However, while some business owners may opt to handle bookkeeping tasks on their own to cut costs, this decision often comes with several drawbacks.

Here are six significant downsides to managing your business bookkeeping by yourself.

Time-Consuming Tasks

One of the most immediate challenges of managing your own bookkeeping is the sheer amount of time it consumes. Bookkeeping involves tracking all financial transactions, from sales and purchases to payments and receipts. This extensive process can take up a considerable chunk of your day, diverting your attention from core business activities. Instead of focusing on growth strategies, customer service, and product development, you find yourself bogged down with entry logs and reconciliations.

Increased Risk of Errors

Accuracy in bookkeeping is non-negotiable, as even minor mistakes can lead to significant financial discrepancies. When business owners handle their bookkeeping, the risk of errors inherently increases. Misclassified expenses, overlooked transactions, and calculation mistakes can all contribute to faulty financial statements. These errors can have severe repercussions, from incorrect tax filings to misguided business decisions based on inaccurate data.

Lack of Expertise

Professional bookkeepers spend years honing their skills and staying updated with the latest industry standards and changes in tax laws. Unless you have a background in finance or accounting, the learning curve for effective bookkeeping can be steep. Without the necessary expertise, you may miss out on potential deductions, overlook compliance issues, or fail to implement best practices, all of which can cost your business money.

Stress and Burnout

Balancing bookkeeping responsibilities with running a business can be a recipe for stress and burnout. The constant pressure to maintain accurate financial records, especially during peak times like tax season, can be overwhelming. This added stress can take a toll on your mental health and overall well-being, reducing your productivity and affecting other areas of your life.

As a business owner, you often find yourself juggling multiple roles, from managing employees to overseeing operations and ensuring customer satisfaction. Piling on the meticulous task of bookkeeping can stretch your resources thin. The anxiety of potential errors, missed deadlines, and compliance issues loom large, further exacerbating stress levels. Over time, this relentless cycle can lead to burnout, negatively impacting both your personal and professional life.

Delayed Financial Reporting

Timely financial insights are critical for making informed business decisions. Accurate and up-to-date financial data allows business owners to identify trends, allocate resources efficiently, and make strategic decisions that can drive growth and profitability. However, when you manage your own bookkeeping, there is a significant risk of delays in financial reporting due to other pressing responsibilities and the sheer volume of tasks that require attention. These delays can result in outdated or incomplete financial information, which hinders your ability to respond to financial issues promptly. This can potentially lead to cash flow problems, missed opportunities for growth, and an inability to capitalize on market trends or competitive advantages.

Inadequate Financial Analysis

Finally, running your own bookkeeping can limit your capacity for thorough financial analysis. Professional bookkeepers bring valuable insights into financial trends and performance metrics that non-experts might overlook. They can provide detailed reports and analyses that help you understand your profitability, manage your expenses, and identify areas for improvement. Without this level of expertise, your business might miss out on opportunities for optimization and growth.

While handling your business bookkeeping by yourself might seem like a cost-saving measure, it often leads to a host of downsides. The time-consuming nature, increased risk of errors, lack of expertise, stress, delayed reporting, and inadequate financial analysis can impede your business's success. To ensure accurate financial management and allow yourself to focus on growing your business, consider outsourcing your bookkeeping tasks to a qualified professional.

If you need professional bookkeeping services, contact Quality Bookkeeping Services Inc. for more information.

3 Puzzling Aspects Of Cash Flow Monitoring Explained

Tue, 19 Dec 2023 14:53:23 GMT

Cash flow management is vital for businesses of all sizes, yet many entrepreneurs struggle to understand the complexities involved. Knowing how to manage and monitor cash inflows and outflows in your business can help you make informed decisions, prevent cash shortfalls, and improve your company's financial health.

However, several puzzling aspects of cash flow monitoring can make it challenging to understand. This blog post will explain these complex elements in simple terms to help you better manage your business's cash flow.

1. Understanding the Cash Flow Statement

The cash flow statement is a financial report showing how cash flows in and out of a company during a specific period. It includes three sections – operating activities, investing activities, and financing activities.

Operating activities include cash inflows and outflows related to the company's day-to-day operations, such as revenue from sales and supplier payments. Investing activities involve cash flows related to buying or selling long-term assets, like equipment or property. Financing activities include cash inflows from borrowing money or issuing stock and outflows from paying off debts or distributing dividends.

The main purpose of the cash flow statement is to provide insight into a company's liquidity or ability to pay off short-term debts. It also helps identify areas where a business may be spending too much or not generating enough revenue.

The statement is often compared to a checkbook register, where you can track and monitor every penny that goes in and out of your business. If you're unfamiliar with how to read a cash flow statement, it can initially seem overwhelming. However, once you understand the different sections and how they relate, you can gain valuable insights into your company's financial health.

2. Timing of Cash Inflows and Outflows

Timing is everything when it comes to money. You may have plenty of sales on the books, but if customers are not paying on time, that lack of cash coming into the business can cause a shortage. You still have bills and expenses to pay, such as payroll, rent, and supplier payments. This timing mismatch can result in a cash flow problem, even if the company is turning a profit.

Conversely, if you have a large cash inflow from a new investor or loan, it may seem like your business is in excellent financial shape. However, if that money is used to pay off existing debts or invest in long-term assets, it may not be reflected in your day-to-day operations and can diminish the company's liquidity.

To avoid these cash flow imbalances, you need to accurately track the timing of cash inflows and outflows. You can use cash flow projections and budgeting tools to anticipate and plan for future cash needs. This requires close attention to detail and constant adjustments to ensure that the timing of cash inflows and outflows align.

3. Cash Reserve Management

Every business needs enough cash on hand to cover immediate expenses and emergencies. However, some struggle with maintaining a sufficient cash reserve due to seasonal fluctuations, slow-paying customers, or unexpected expenses.

A cash reserve is a buffer against unexpected financial challenges and allows the business to continue operating smoothly. Your cash reserve should ideally cover at least three to six months of expenses if possible.

To build and maintain a healthy cash reserve, you need to closely monitor your cash flow and make adjustments as needed. This may involve reducing unnecessary expenses or improving collections from customers.

You can also establish a line of credit with your bank or set aside a portion of your monthly profits to build up your cash reserve. This may require sacrificing short-term gains for long-term stability.

If our business is struggling to maintain a positive cash flow, Quality Bookkeeping Services Inc. can help. Our experienced professionals can review your cash flow statements, identify areas for improvement, and create a customized plan to help you better manage your company's cash flow.

Contact us today to get started on improving your financial health and achieving long-term success.

Unlock Your Business Potential: The Best Strategies for Cash Flow Management

Wed, 11 Oct 2023 02:39:04 GMT

Cash flow forms the heartbeat of any business, small or large. Ensuring a steady and healthy cash flow is not just about survival but also about unlocking your business's immense potential. It's about having the freedom to take calculated risks, make strategic investments, and thrive in a highly competitive marketplace.

This blog post outlines the three best strategies for cash flow management that will set your business on the path of sustainable growth and scalability.

Create a Cash Flow Forecast

Creating a cash flow forecast is pivotal to enhancing cash flow management because it provides a clear vision of your business's financial health. This exercise gives an estimated projection of the cash coming into and going out of your business over a certain period, which helps you to understand your business's liquidity position.

Liquidity refers to a business's ability to meet its short-term financial obligations, such as paying suppliers, employees, and bills. A detailed forecast reveals the peaks and troughs in your cash flow. It can help you anticipate potential cash shortages and take corrective measures before they affect your operations.

In addition, a cash flow forecast promotes proactive financial management. It allows you to anticipate and mitigate risks associated with late payments, unexpected costs, and market downturns.

For instance, if your forecast shows an impending cash shortage, you can reduce overhead costs, expedite invoice payments, or secure short-term financing to bridge the gap.

On the other hand, if you foresee a cash surplus, you can consider making strategic investments to drive business growth. This proactive approach propels your business towards financial stability, even in times of uncertainty.

Manage Your Accounts Receivable and Payable

Accounts receivables are the amounts customers who've purchased your goods or services on credit owe your business. Timely collection of accounts receivable ensures your business has the necessary cash on hand for day-to-day operations and unexpected expenses.

Therefore, if collections are delayed, it can lead to a cash crunch, inhibiting your ability to invest in growth opportunities or even meet basic operating expenses.

To improve your accounts receivable management, consider implementing measures such as offering early payment discounts, sending out timely invoices, and having a clear credit policy. Additionally, regular follow-ups and consistent communication with customers can help expedite collections.

Similarly, effective management of accounts payable—the money you owe suppliers or other short-term creditors—is also vital for cash flow management.

While delaying payments as long as possible may seem beneficial to maintain higher cash reserves, this can lead to strained relationships with suppliers, potential penalties for late payment, and a negative business reputation. This is why negotiating favorable payment terms and setting up a transparent system for tracking payments can help maintain cash flow stability.

Optimize Your Inventory Management

Holding too much inventory ties up cash that could be used elsewhere in your business, while keeping too little can lead to missed sales and disappointed customers. Both scenarios can harm your cash flow by depleting your available resources or limiting incoming cash due to lost sales.

Therefore, striking a balance is essential. Efficient inventory management ensures you have the right amount of stock at the right time. It eliminates the risk of overspending on surplus stock and the need for storage space, reducing overhead costs and freeing up cash for other business operations.

Moreover, efficient inventory management goes beyond just maintaining the right inventory level. It also involves tracking your inventory's turnover rate, the number of times a product is sold and replaced over a certain period.

A high turnover rate indicates strong sales and a healthy cash inflow. On the other hand, a low turnover might suggest overstocking or difficulties in selling a product, which could tie up your cash and result in stock obsolescence, leading to further financial losses.

If you're struggling with cash flow management, consider working with one of our qualified professionals at Quality Bookkeeping Services Inc. We can help you develop a customized cash flow management strategy that won't just address your immediate concerns but also set your business on a path of long-term financial stability.

3 Pivotal Situations That Can Redefine Your Business Tax Commitments

Thu, 10 Aug 2023 20:33:48 GMT

In the ever-evolving business landscape, tax obligations are not set in stone. They can shift and change, often triggered by critical moments or pivotal changes within your company. These changes can significantly impact your financial strategy and require you to adapt quickly.

Some of these key turning points are unexpected, but you can plan for others in advance. This blog post outlines a few situations that may require you to restructure your business's tax commitments. With this information, you can anticipate these changes, understand their implications, and navigate them effectively.

1. Changing Your Business Structure

Each business structure has its own unique set of tax rules and liabilities. For example, if you run a limited liability company (LLC), you may be taxed differently when your company becomes a C corporation. This form of restructuring could require you to apply for new licenses and permits, adjust your payroll procedures, and modify how you file taxes.

You'll also want to assess potential changes in how shareholders or members distribute profits. This could affect the taxes you owe on any profits the business makes.

If you decide to switch your business structure from one type to another, make sure you research the new rules associated with your chosen structure and ensure that you meet all of the necessary requirements. It also helps to involve a tax expert who can advise you on the best approach.

2. Merging With or Acquiring Another Business

A merger or acquisition can be an excellent way for companies to expand and enhance their offerings. But it also requires an understanding of how taxes will be affected by the new arrangement.

When two companies merge, or when one company acquires another, they may need to adjust their tax strategies and rework how taxes are paid on profits. It could include changes to corporate income tax, payroll tax, or even capital gains taxes. This is especially true if you merge with a business that operates in a different state or country as there could be additional taxation implications to consider.

In some cases, it may also be necessary to amend existing contracts or agreements with vendors and suppliers as part of the merger or acquisition process. This has more to do with the business's financial structure, but it could also affect taxes. It could impact the way you report taxable income or deductions.

3. Entering a New Industry

If you enter a new industry or start offering new products, there may be specific tax rules and regulations you need to comply with. Each industry has its own taxation norms, such as specific deductions, credits, and compliance regulations.

For instance, a tech startup that moves into the manufacturing sector would be exposed to different tax laws and incentives. This could range from sales and use tax on equipment purchases to research and development (R&D) tax credits and special deductions for energy-efficient machinery.

In addition, your company could encounter new employment taxes if the industry requires different types of workers or working conditions. For instance, in some states, certain workers may be classified as independent contractors, which means the company doesn't have to withhold a certain amount from their wages.

There might also be state and local taxes to consider depending on the geographical location of the new industry. Some states have different rules for businesses operating in certain sectors or jurisdictions, which would then require different tax calculations.

These changes often necessitate a thorough review and, potentially, a restructuring of your business's tax strategy. Therefore, carefully research the new industry's tax landscape, and then consult the experts at Quality Bookkeeping Services Inc. to understand the implications and strategically plan to optimize tax liabilities.

Petty Cash: 4 Steps To Manage This Small But Important Tool

Mon, 10 Jul 2023 14:44:47 GMT

Does your business keep and properly account for petty cash? While petty cash may be a minor part of your operation, it's an important tool to have around. How should you be handling and accounting for your petty cash? Here are a few steps to follow.

1. Assess Your Needs

First, how much petty cash should you have? There is no one answer to this question, as it depends on your business size and what tends to come up. However, the best approach is to be conservative about using petty cash. Cash can disappear or be abused. The more you have, too, the more work you'll have to do to track it.

If you have recurring needs, consider alternatives like opening a vendor account or using company credit cards. This is especially important if you find it being used for larger purchases. These will drain petty cash too fast, resulting in either reimbursing it too often or having too much cash on hand.

2. Track Transactions

Make a log to be used each time someone takes cash. This log should include the date, who took the cash, what it was for, how much was taken, and how much was returned. Place any related receipts with the log for later reference.

Place a responsible employee in charge of maintaining the cash and its records. While the security of your cash is undoubtedly important, the same emphasis should be put on tracking it accurately. Without good records, there is little accountability or accuracy. That could easily mean frustration, extra work, and even losing money.

3. Reconcile What's Left

Once petty cash gets low, it's time to reconcile it. The bookkeeper reconciles the amount of cash that actually remains versus the remaining balance on the tracking log. Hopefully, these two numbers match. Receipts, along with the details logged when employees used the money, help the bookkeeper categorize the various expenses into the right expense accounts.

This step is vital. It's how you ensure that your company has accurate records of expenses. Petty cash may be small, but it adds up. If you regularly buy last-minute supplies for jobs but fail to attribute those transactions to the jobs, you really don't know how much you're spending on each one.

4. Reimburse Petty Cash

Now that you've reconciled, reimburse the petty cash fund for what has been taken. This is usually done by issuing a company check to cash at the bank. The most efficient way to do this reimbursement is to enter all the different expense accounts when creating the check. Essentially, this process then charges those expenses to various accounts so that they are all tracked.

Some companies, though, separate reconciliation and reimbursement into two steps. They create the check for the desired amount, using a temporary expense account. Later, the bookkeeper uses a general ledger entry to move those expenses into their correct locations.

Pay attention to how much and how often you reimburse your cash. You may need to adjust how petty cash is managed over time as the business grows or its needs change. You may even need to raise or lower the amount kept on hand to account for cycles like your busy season and slow season.

If this sounds more complicated than you expected, don't worry. The trained accounting staff at Quality Bookkeeping Services Inc can help. We'll help you set up a great petty cash system, keep accurate records, and understand how to reimburse the fund when you need to. Start learning how by meeting with a member of our team. Give us a call today to set up your appointment or to ask any questions you may have.

5 Strategies To Maximize Tax Deductions for Small Businesses

Wed, 03 May 2023 19:18:49 GMT

As a small-business owner, you know that every penny counts. One of the ways you can save money and maximize your profits is by taking advantage of tax deductions. Tax deductions are expenses that can be removed from your taxable income, significantly reducing your overall tax bill.

However, many small-business owners are unaware of the various deductions available to them. These tax deductions save you money that you can utilize for the expansion of your business. This article will explore five strategies for maximizing tax deductions for small-business owners.

1. Keep Accurate Records

The first step in maximizing your tax deductions is to keep accurate records of all your business expenses. Business records include receipts, invoices, bank statements, and other relevant documents. Keep track of your yearly expenses to identify tax-deductible business expenses and maximize your deductible amount. Involve your bookkeeper or tax expert in this process to ensure you don't miss a thing.

2. Take Advantage of Section 179

Section 179 of the IRS tax code gives leeway for businesses to deduct the total cost of qualifying equipment and software acquired during the tax year. This tax code means you can subtract the entire equipment cost from your taxable income to a certain maximum each tax year. The equipment must be purchased and put into service during the tax year.

This deduction is particularly useful to small businesses that purchase expensive equipment such as computers, vehicles, and machinery as they start to establish themselves.

3. Deduct Business Mileage

If you use your vehicle for business purposes, you can deduct the mileage on your tax return. To qualify for this deduction, you must keep records of your business miles, including the date, destination, and purpose of every trip. You can also deduct other expenses related to your vehicle, such as gas, parking fees, toll charges, oil changes, and repairs when you prefer to use the actual expense method instead of the standard mileage rate.

4. Home Office Deduction

You may be eligible for a home office deduction if you operate your business from home. This deduction allows you to deduct a portion of your home expenses, such as rent, mortgage interest, utilities, and insurance, based on the percentage of your home used for business purposes.

To qualify for the home office deduction, you must have a designated area of your home that is used exclusively for business purposes. This area can be a separate room or a portion of a room in your home. The designated area is eligible for home office deductions, provided it is used regularly and exclusively for business activities.

5. Deduct Business Expenses

Small-business owners can deduct several business expenses, including office supplies, travel expenses, advertising, and professional services. The business expense must be necessary and ordinary for your business to qualify for these deductions.

Business expenses like meals and entertainment are only partially deductible. For example, you may only be able to deduct half the cost of business meals and entertainment. Professional services to the business are tax deductible. Legal services, tax consultancy, and business consultancy are tax deductible in the year they were incurred.

Work closely with the expert filling your taxes. Present all the business documents to ensure a smooth and productive process. When you involve an expert, you stand to benefit from their rich expertise, which is instrumental in maximizing your tax deductions.

Avoid filing your business taxes yourself. We at Quality Bookkeeping Services, Inc., are experts in accounting, payroll, and tax services. Engage us for more strategies on how to maximize your tax deductions. We don't just provide services, we deliver value. Contact us today to book an appointment.

The 10 Generally Accepted Accounting Principles

Fri, 23 Dec 2022 05:09:48 GMT

The United States mandates all publicly-traded companies to adhere to generally accepted accounting principles (GAAP), a set of ten principles that provide a guideline for corporate accountants. While privately-owned companies can choose which accounting principles to adhere to, GAAP can increase your creditworthiness and investment potential to third parties. Thus, consider these ten principles if your company wants to shift to this standard.

1. Principle of Regularity
If your company chooses to adhere to GAAP, you must continue with the GAAP standard. You cannot adopt this standard only when it's convenient for your company and then relinquish its implementation once you achieve your financial goals. You must ensure that your accountants stick to the standard around the clock.

2. Principle of Consistency
GAAP requires that your company consistently apply the accounting methods you use from one period to the next. For example, suppose your company uses first-in-first-out (FIFO) to account for inventory. In that case, your accounting manager should use this method for all financial documents. If you make any changes to your accounting methods, you must clearly disclose them.

3. Principle of Sincerity
Accounting errors may occasionally happen due to inaccurate book records, which might affect the final statements. However, accountants should always double-check with original documents and books to ensure accuracy and information legitimacy. Thus, accounting records and financial statements must not contain intentional misrepresentations or omissions.

4. Principle of Permanence of Methods
Once your company adopts an accounting method, your accountant should use it continuously. You should only make changes when there is a valid business reason.

5. Principle of Non-Compensation
Your accountant must report all transactions, whether they affect the final financial overview of your company negatively or positively, with no debt compensation. Thus, gains or losses from one transaction or event must not offset gains or losses from another transaction or event unless required or permitted by GAAP.

6. Principle of Prudence
In recognition that business is subject to uncertainty, the principle of prudence requires that accountants use caution when estimating amounts they must report in financial statements. This principle also requires that account statements recognize revenue and expenses in the period they actually occur rather than when the company pays or receives cash.

7. Principle of Continuity
The continuity assumption requires that a business make account statements like it will continue to operate into the foreseeable future. This principle mostly applies to the accounting management of assets, which most companies refer to as the going concern assumption.

8. Principle of Periodicity
Every significant accounting report should come out at regular intervals. For example, suppose a company makes quarterly reports (four times a year). It must compile and report statements every three months. These periods should be standard within the accounting world.

9. Principle of Materiality
The financial statements should include all relevant information highlighting a company's situation. Accountants should rely only on the material facts that represent and concern the company's financial health and operations. Thus, accounting should fully disclose the firm's monetary situation.

10. Principle of Utmost Good Faith
Individuals, groups, and other organizations that use your financial statements expect that you present accurate and verifiable information. They do not expect any unethical reporting standards in your statements. They assume that you prepared the records with the utmost good faith.

An accounting firm can help you transition to the GAAP standard and prepare your bookkeeping and accounting assets to incorporate these principles in your financial reports. You can rely on Quality Bookkeeping Services Inc. to help you implement GAAP standards. Contact us today to book an appointment with our accountants and learn how we can assist you.

A Payroll Taxes Benchmark for Your Small Business

Wed, 12 Oct 2022 13:44:13 GMT

You are accountable for your employees' payroll taxes as a business owner. Delayed or unsettled taxes have severe effects that do not always go well for businesses. You must follow payroll tax directives even if you do not have employees, which is why you must understand what payroll taxes entail.

This guide points you in the correct payroll tax direction.

How Do You Define Payroll Taxes?

Payroll taxes are deductions from your employee's wages and salaries. The taxes pay for government programs, e.g., unemployment, Medicare, and social security. In addition, you can expend the taxes directly or keep back the given finances from your employees' paychecks. Examples of payroll taxes to cover your small business are state, federal, and local income taxes.

You are the sole employee if your business is incorporated but lacks external employees, so you pay the payroll taxes for yourself. If your business is not incorporated, you pay estimated taxes on self-employment instead of payroll taxes.

How Do You Calculate Payroll Taxes?

Payroll tax calculations depend on three factors that dictate your responsibilities.

Taxable workers

You are only accountable for your employees' payroll taxes, not independent workers. The distinction between the two sets of workers is often thin, but the IRS provides identification guidelines. For instance, you do not have predetermined employment timeframes with your employees. On the flip side, independent workers stay for a predetermined time or project life.

Taxable wages

Gifts, bonuses, and rewards for your employees' services are examples of taxable wages. So, you should deduct taxes for such payments from payrolls. Conversely, cash advancements, nonmonetary holiday gifts, and business travel reimbursement do not attract taxes.

Withholding Amounts

Once you identify who and what to tax, evaluate the amount to pay for local, state, and federal taxes. Tables to guide you in computing the amount for state and federal taxes are found on the IRS website.

After you consider the factors above, use the steps below to calculate the exact tax amount:

Take your employee's gross income
Minus pretax payments to retirement plans or health insurance
Compute the tax rates as per the IRS guidelines
Withhold FICA taxes and contribution to state payroll taxes where applicable from the salary or wage
Send the payroll tax payments alongside your tax documentation to relevant government agencies

How Do You Submit Payroll Taxes?

You submit payroll taxes to the IRS via an Electronic Federal Tax Payment System (EFTPS). The four forms you can use to present the tariffs are as follows:

Form 940 (Federal Unemployment Tax Return (FUTA)). You pay FUTA on Schedule H with your individual income tax return.
Form 941 (Quarterly Federal Tax Return). You apply the form to reconcile your employees' medicare , income, and social security taxes . Form 941 also handles the wages of non-farm employees.
Form 943 (Federal Tax Return for Agricultural Employees). Use the form mentioned to report payroll taxes to farm workers subject to medical and social security taxes.
Form 944 (Annual Federal Tax Return). The form is specific to non-farm employees with yearly payroll taxes of less than $1000.

What Are the Consequences of Overdue or Unpaid Payroll Taxes?

Payroll taxes are unique because the deducted share belongs to the government , not you. So, you should not delay or pay the funds late. Otherwise, the IRS will charge you high penalties. Late payments also attract visits from IRS officials.

The consequences of unpaid payroll taxes harm your business's operations and reputation. Besides the enormous fines, the payment mistakes could lead to a business shutdown. In the worst cases, you could serve jail time because you have withheld government funds.

Tax matters can be complex, especially if you do not have professional expertise. Furthermore, costly mistakes can cost you a lot in finances and legal consequences. Fortunately, you do not have to do complicated work. Instead, consult the pros at Quality Bookkeeping Services Inc . for excellent accounting and bookkeeping services.

Accounting Mistakes That Cost Your Business Money and Time

Wed, 03 Aug 2022 15:13:11 GMT

Many small businesses spend approximately $1000 to $5000 on accounting. But some companies spend way much more than that. Such businesses often lack accounting systems in place. Or, they don't pay as much attention to their accounting processes.

If your annual accounting spending is higher than the average, you might have made the following accounting mistakes.

Failure to Separate Personal and Business Finances

This mistake is prevalent among new entrepreneurs just starting out. Such business owners often use their personal credit cards or bank accounts for business transactions. The mistake makes it difficult to track business expenses and can lead to financial problems in the future.

Suppose you commingle your personal and business finances. You may not manage to separate the finances when the time comes to file your taxes, which may lead to an IRS audit. Additionally, you may put your personal assets at risk if your business is sued.

To avoid these problems, open a separate bank account for your business and use it exclusively for business transactions. Also, get a business credit card to help you track expenses.

Failure to Rectify Minor Data Errors

Even the tiniest errors in accounting can potentially cost you big in the long run. For example, some errors may force you to redo your entire financial statements, while others may lead to costly penalties and interest charges. So check out some of the minor accounting errors you shouldn't ignore.

Data Omission

Data omission happens when you fail to include some crucial information in your financial statements. For instance, you may forget to include a vendor invoice in your accounts payable. Consequently, your financial statements will be inaccurate, which can lead to major problems down the road.

Miscalculation

This error occurs when you compute math incorrectly or use the wrong formulas. For instance, you may miscalculate your inventory amount, which can impact your cost of goods sold (COGS) and gross profit margin.

Duplication

Duplication occurs when you enter the same transaction twice in your accounting records. For example, you may forget that you have already entered a particular transaction, so you end up recording the transaction twice.

For instance, you may accidentally record a vendor invoice twice in your accounts payable. This error can lead to overpayment and cause cash flow problems for your business.

Failure to Hire a Qualified Accounting Professional

You may think that if you entrust an in-house team or accounting software to handle your business finances, you will save money.

However, the value you get from an expert accountant is worth much more than the fee you pay for their services. First, a good accountant will handle all complex financial tasks such as preparing financial statements, filing taxes, and auditing. They will also offer valuable insights to help you make sound business decisions.

Additionally, a good accountant has a solid understanding of the latest accounting regulations and changes in tax law. This way, they can help you comply with the law and avoid costly penalties. As such, a qualified accounting professional is one of the best investments you can make for your business to save time and money and help you avoid costly mistakes.

To avoid these mentioned mistakes, be more diligent in your accounting practices and hire a qualified accountant to handle your financial affairs.

Quality Bookkeeping Services Inc. offers you quality and affordable accounting services. We have a team of highly trained and experienced accountants. Trust us to help you save money on accounting while ensuring compliance with the latest laws and regulations. Contact us today for a consultation. We look forward to meeting with you soon.

3 Tips for a More Efficient Payroll Process

Wed, 08 Jun 2022 16:51:54 GMT

A good payment system for your employees can be a huge boost for your business. But the process has its fair share of challenges. You have to complete many steps to gather employee information and submit paychecks on time.

If you follow these three tips, you can streamline your payroll process and make your business operations more efficient.

Gather Employee Information in Advance
To properly prepare payroll, you need to gather your employees' data in advance. This way, you can be sure that you have all the necessary information on hand and that every piece of information is accurate.

You'll need crucial information for every worker, including:

Employee name
Social Security number
Date of birth
Address and phone number

You can gather this information manually. Have new employees fill out a payroll onboarding form. This form should include all of the information listed above, as well as other important details such as emergency contact information and bank account information.

The idea is to have all the necessary information before you start the payroll process to ensure that everything runs smoothly and without any delays in payment. You should also store this sensitive information in a secure location so only authorized personnel have access. This strategy can help you prevent payroll fraud.

Automate Your Payroll Process as Much as Possible
Several software programs can help you automate the payroll process. These programs integrate seamlessly with your payroll and time tracking systems.

Payroll software systems automate many of the tasks involved in payroll because they help you calculate taxes and prepare paychecks. Time tracking systems can also help keep track of employee hours worked. This way, you'll know exactly how much to pay your employees for each payroll period.

You can also set up automatic payments for your employees. A direct deposit system electronically deposits paychecks into your employees' bank accounts on payday. This system is convenient for both you and your employees since there's no need to physically hand out paychecks.
When you automate your payroll process, you free up time that you'd have otherwise spent on manual tasks. But remember that not all tasks can be handled easily by software. There are some payroll tasks, such as timesheet reviews, that require a lot more scrutiny. Automation errors in these payroll tasks can be hard to track down and fix, especially if you have little knowledge about payroll processing.

If you're not sure which payroll tasks you can automate, an accounting professional can help. With their involvement, you won't have to worry about subtle automation errors that can create heavy losses.

Reconcile Payroll and Bank Statements Regularly
Statement reconciliation is where you match the amount of money that you deposit into your payroll account with the money that's withdrawn from the account. If there are any discrepancies, you'll need to figure out where the error is and perform quick fixes.

The reconciliation of your payroll and bank statements also helps you pay employees on time. You won't make mistakes that would make you overpay your workers, something that can have costly financial implications.

In addition, reconciliation of payroll and bank statements can help you keep track of employee hours and vacation days. This way, you ensure that you pay your employees correctly for their time off.

If you don't have time to reconcile payroll and bank statements yourself, hire an accountant or bookkeeper to do the job for you. This option can be a lifesaver if you have a complex payroll system or if you don't feel confident in your payroll management skills.

With these tips, you can find the right balance to ensure that your payroll system works for you and your business. Contact Quality Bookkeeping Services Inc. for more information on how you can ensure maximum payroll efficiency.

What Cases Do Forensic Accountants Cover?

Thu, 21 Apr 2022 12:18:41 GMT

Forensic accounting deals with the identification, analysis, and presentation of financial evidence. Law enforcement agencies often employ forensic accountants, but they may also work for private companies or accounting firms. In either case, their job is to gather and analyze financial evidence to solve crimes or resolve civil disputes.

Forensic accountants must have a strong understanding of accounting and law to succeed in their field. They must also be able to think creatively in order to find clues that others might overlook. As a result, forensic accounting is a complex and challenging field requiring technical expertise and critical thinking skills.

Forensic accountants can be involved in a wide variety of cases, and here are some of the most common ones.

Fraud

Fraud is the intentional deception of a person or entity for financial gain and can include anything from embezzlement to Ponzi schemes.

Forensic accountants play a vital role in investigating and prosecuting fraud cases. They use their skills in accounting and auditing to detect and uncover fraudulent activity. In many cases, forensic accountants can trace the flow of funds from the point of origin to the point of destination. This information is useful to identify fraud perpetrators and bring them to justice.

In addition, forensic accountants often work with law enforcement agencies to develop financial profiles of suspects. This information helps to track down assets that have been obtained through fraud and recover stolen funds. Without the skills of forensic accountants, many fraud cases would go unsolved.

Business Disputes

Business disputes can take many different forms, but they all involve two or more parties in disagreement over some business-related issue. Disputes can arise from disagreements over contracts, product quality, employee theft, and a host of other issues.

Forensic accountants often help resolve business disputes. They use their skills in accounting and auditing to analyze financial data and determine the source of the dispute. They can also provide expert testimony in court proceedings to help resolve the dispute. In many cases, forensic accountants can find evidence that can help settle the dispute out of court. This can save both parties time and money.

Money Laundering

It's no secret that money laundering is a huge problem. People launder billions of dollars every year, and the methods used to hide the money are getting more and more sophisticated — this is where forensic accountants come in.

Forensic accountants have the necessary training needed to trace money through complex financial transactions, and they can often uncover evidence of criminal activity that would otherwise go undetected. In money laundering cases, forensic accountants play a vital role in identifying the parties involved and tracing the flow of funds.

Bankruptcy

Forensic accountants play a vital role in bankruptcy cases. They are responsible for investigating the financial affairs of businesses and individuals who have filed for bankruptcy. Their work includes reviewing documents, interviewing witnesses, and analyzing financial records. In some cases, the court may also ask them to testify.

Their work aims to determine whether the debtor has acted fraudulently or misrepresented their financial situation. As a result, their work is essential for ensuring that bankruptcy proceedings are fair and just.

Forensic accountants have a strong understanding of both accounting and the law. They are able to detect fraud and irregularities and can communicate complex financial information clearly and concisely. As such, they play a critical role in ensuring the integrity of the bankruptcy process.

These are just a few cases that forensic accountants can be involved in. Forensic accountants have a wide range of skills and experience that make them invaluable to the legal system and the business community. Thanks to their work, many criminals have been brought to justice and businesses have resolved disputes fairly and equitably.

Without forensic accountants, the legal system would be much less effective. Quality Bookkeeping Services Inc. is a full-service bookkeeping and accounting firm that provides forensic accounting services. If you need help resolving a business dispute, contact us today for a consultation.

What Traits Should a Good Bookkeeper Have?

Wed, 23 Feb 2022 20:21:10 GMT

Effective bookkeeping enables your company to submit invoices on time, pay bills on time, and track expenses. On the other hand, poor bookkeeping can result in financial inaccuracies that create loopholes for accounting fraud.

You need to hire a good bookkeeper to manage your company's cash flow, write excellent reports, and give financial insights. Discover traits that an excellent bookkeeper should have.

Transparency and Trustworthiness

You should hire a bookkeeper willing to list their previous clients if they have any and quote the service fee without hiding any costs. Have a transparent person to avoid accounting fraud.

An honest bookkeeper will facilitate you to build a trustworthy relationship and feel safe. You must trust whoever manages your financial records since they have access to most of your financial records. You need to ensure that you hire a bookkeeper you trust not to embezzle your company funds.

Analytical Thinking and Numeracy

Hiring a bookkeeper who can analyze financial information and relate it to your business is prudent. To beat the competition, have someone who can think ahead and find out how your company can use resources effectively to save money.

If your bookkeeper is proficient in handling large numbers, you can rest easy. The daily activities of bookkeepers involve performing calculations. Furthermore, your company will benefit from having confidence in the accuracy of the data and reports you present to stakeholders.

Technical Know-How and Credentials

Technology keeps changing, and so does online accounting software. Hire someone familiar with the best software to enhance speed and accuracy. If you already have a software package, ensure they can use it and stay updated with the latest versions.

A certified, trained bookkeeper who has experience working in the real world can significantly benefit your business. If you prefer a newbie, ensure you offer on-the-job training. Hiring a bookkeeper with the correct credential translates to quality services, as certifications prove compliance with the relevant standards.

Organization and Efficiency

Good bookkeepers streamline processes to ensure they make reports on time and beat deadlines. Therefore, hire someone with a detailed understanding of the industry and your business activities. In addition, your company needs to meet the rigid government guidelines for filing taxes. You can only surpass the set standards if your bookkeeper is highly organized.

Your company must prepare for the tax season. For this reason, hire a bookkeeper who is a good planner and aware of deadlines for audits and taxes. Whereas you need an accountant to prepare taxes, the bookkeeper must ensure your company's preparedness.

Communication Skills and Time Consciousness

A bookkeeper needs to communicate with clients, suppliers, and managers constantly. Therefore, you need to hire one who can communicate effectively and maintain good relationships with all parties. Sometimes, the bookkeeper will require information or files from your staff, and this process will be challenging without good communication skills.

You can also benefit from a bookkeeper who can manage time to meet deadlines, maximize productivity, and handle multiple projects effectively. In addition, you need someone who can maximize the daily share of time to get priority tasks done first. Businesses also face strict government deadlines for filing taxes. You can only meet such deadlines when working with a time-efficient bookkeeper.

Attentiveness and Problem Solving

Bookkeepers deal with numerous numbers that can be confusing and challenging. Therefore, ensure you hire one who can notice minor errors that may have extreme consequences for the company.

Also, hire someone who can solve problems such as numbers that do not reconcile. In addition, you need someone to fix issues since overlooking mistakes can result in significant errors. These aspects require an attentive bookkeeper who doesn't miss any minute details.

While hiring a bookkeeper makes you spend more initially, you stand to achieve financial benefit in the long run. At Quality Bookkeeping Services Inc. , we offer excellent and unique bookkeeping services to meet your desired needs. Call today.

5 Steps To Prepare For A Workers Compensation Audit

Fri, 31 Dec 2021 06:45:08 GMT

Have you been informed by your workers compensation carrier that they will perform a workers comp audit? The idea of an audit often strikes anxiety into the heart of any business owner or manager. But a workers comp audit is actually a fairly routine part of ensuring that your company pays the correct amount for coverage for its employees.

What can you do to prepare for your audit? And how can your accountant help? Here are five important steps to take.

1. Learn What to Expect

It's normal to be anxious about a process you don't fully understand. How can you prepare to discuss your company's policies and bookkeeping when you don't know what will be asked or what the auditor is looking for? Start by meeting with a qualified accountant to learn the basics of what to expect at the audit. They will also help you by providing tips and recommendations based on their experience.

2. Look at Prior Audits

Has your business been through any workers compensation audits in the past? If so, these are handy resources to prepare for the current audit. Past records of audits may help you see weak areas you might want to focus on during preparation. You may also note how employees were classified in prior audits and use appropriate job descriptions to maintain consistency. If any current staff participated, consult with them too.

3. Prepare Your Payroll Records

One of the biggest components of a workers comp audit is the payroll records. This audit is aimed at confirming that your employees are classified correctly and are being paid exactly as you reported to the carrier and that job positions are listed correctly. So you'll want to make sure your payroll and human resources records are accurate and complete.

Some of the most common payroll records that an auditor will look for include:

Payroll ledger or journals
Records of accounts payable
Forms 1099 and Forms W-2
State unemployment tax forms
Employee compensation rates
General ledger
Overtime records

As you can see, a workers comp audit can cover extensive ground. And many small businesses' recordkeeping may not be as complete as they would like. This is why you should work with your accounting service to get everything ready accurately and on time.

4. Make Detailed Job Descriptions

A workers comp audit is somewhat unusual compared to many bookkeeping audits because it's mainly interested in what your employees actually do for the company. Workers comp rates are, in part, based on how risky each covered employee's job is. So your auditor will need to see what your employees do. Take time to create detailed job descriptions if these don't already exist. Individual workers can help with this, too.

5. Check Your Subcontractors

Did you know that independent contractors are also part of a workers comp audit? These can, in fact, impact you in two ways. First, the auditor will look for indications of anyone paid as an independent contractor (who would receive Form 1099 annually) when they should have been classified as an employee under IRS rules. Second, you may be responsible for contractors who don't carry their own workers comp.

Your accountant can help make sure none of your independent contractors have been misclassified and may be able to help you obtain things like certificates of insurance if you don't have them on file already. And they'll help you prepare to explain potential misclassifications to the auditor and prevent this from happening in the future.

Where to Start

Want to know more about preparing your business for a workers comp audit? Unsure what documents you need? Need assistance getting your books up-to-date before the audit? Start by meeting with the accounting professionals at Quality Bookkeeping Services Inc . No matter what your audit concerns, we can help. Call today to make an appointment.

Should You Hire a Bill-Paying Service?

Tue, 19 Oct 2021 18:59:26 GMT

Could you benefit from a bill-paying service? Few Americans know that this option exists, but it can be a great investment for people in a variety of positions. Are you one of them? Here's what you need to know about bill-paying services and who should consider using one.

What Is a Bill Paying Service?

A bill-paying service is, as its name suggests, an organization you hire to manage and pay your personal or business bills on a regular basis.

The service begins by working with the client to see how they have been managing their bills and finances in the past, what challenges they want to solve, and what bills they receive on a regular basis. With that information, the service takes over receiving, reviewing, electronically paying, and organizing bills. The client retains access to all bills and payments, and they can be as involved - or not - as they wish.

Who Should Consider This Service?

While most Americans would agree that it would be nice to have someone else do the onerous task of managing their household finances for them, not everyone may actually need this service. However, a wider variety of people than you might think should consider it. Here are a few of these.

Older Persons

As a person ages, they may have more and more difficulty handling daily money management than they used to. This could be due to physical ailments like a stroke or impaired vision. It could be due to being more forgetful or confused. It could even be that they haven't embraced the modern technology that many bill payment methods call for. For these, hiring someone to help reduces stress and mistakes.

Busy Individuals

Are you just too busy with life to keep up with your household, personal, or small business money management? Many people struggle to carve out the time to sit down and work on time-consuming tasks because they're busy working at the office, trying to succeed as an entrepreneur, volunteering, or taking care of their kids.

You may already outsource many regular tasks - ranging from yard maintenance to house cleaning - so why not outsource the household bills? Certainly, your time could be better spent in many ways.

Travelers

Do you travel extensively or plan to start doing so? Whether you're a young person taking time off to explore the world or a retired couple who finally has time to indulge their travel dreams, you need people on your team who will ensure your life at home continues to operate as normal while you're gone.

With no one minding the home front, your trips could easily be interrupted by shutoff notices, unpaid credit cards, and an empty bank account. Even with virtual billing and automatic bill pay, travelers can fall behind either from simply being preoccupied or having inconsistent access to the internet.

People Who Don't Enjoy It

Some people have great skills and talents, but money management just isn't one of them. You might be disorganized and have things fall through the cracks. You simply might not enjoy crunching numbers. Or maybe you struggle with sticking to a budget. If so, let a professional help out with this job. Bill paying services not only ensure timely payments, but they can also help you budget successfully.

Do you think that a bill-paying service could help free up time, reduce stress, improve your credit history, and make budgeting work for you? If so, start by learning more. Quality Bookkeeping Services Inc. provides a wide variety of personal and business accounting services so you can tailor our assistance to your specific needs. Call today to speak with a member of our skilled bookkeeping team.

5 Ways to Improve Your Quarterly Estimated Tax Payments

Tue, 17 Aug 2021 14:51:36 GMT

Do you or your business need to pay quarterly estimated taxes? For most businesses, these tax obligations are not only mandatory but also help keep their tax bill manageable. But not every business has success managing their quarterly payments right from the beginning. If you've overpaid, underpaid, or scrambled to correct your quarterlies, here are a few tips to improve how you handle them.

1. Work With an Accountant

For most businesses, determining the right amounts to pay and when isn't as easy as simply looking at last year's tax forms. You may be growing your business and expecting higher earnings. Or you might have a big expense or two planned that will result in big tax deduction changes. Or you might be able to take advantage of different tax strategies that can lower your taxes overall.

If you've had trouble getting the quarterly amounts right on your own, now is the time to consult with an accountant about them. Many accounting professionals also provide reminder services for quarterly due dates and are even willing to handle the physical payment if you need it.

2. Check Up During the Year

Whether you decided how much to send each quarter or you received recommendations from your accountant, don't consider that the final word on quarterlies. Things can change during the year, and errors can happen. So, schedule some time during the midyear to review how your quarterlies are going.

At this appointment with your bookkeeper or accountant, you should accomplish several things. First, verify that your record of payments so far matches the IRS' record provided through your online taxpayer account. Second, ensure that you have reconciled any taxes held in remittance accounts, such as sales and employment taxes. Finally, check on how your earnings projections are aligning with actual income.

3. Don't Wait to Pay

Each quarterly amount is due at a certain time. Traditionally, these deadlines are April 15, June 15, September 15, and January 15. However, you don't have to wait until these dates to actually send in money. You may opt to pay two, three, four, or more times between the due dates.

Because many businesses don't have the liquid cash to make a large payment when it's due, more frequent small payments could be easier to keep up. You might schedule these on a regular basis, such as monthly, or make irregular payments when cash is flowing well.

4. Include Quarterlies as Payables

Do you fully utilize your accounts payable system? If not, now is the time to start. An accounts payable system allows you to enter items into your software that will be due in the future and have them as a permanent part of your budgeting process. You can enter items with due dates as far out as you would like. A business might create an account for taxes payable on each quarterly date, making planning easier.

5. Consider a Separate Bank Account

Entrepreneurs and very small businesses often benefit from setting aside money for their tax obligations in a separate bank account. Because one-person businesses and independent contractors often run an operation with a much tighter budget and lower profit margin, it can be much better to put aside money as you earn income. Using a separate bank account keeps this money from being spent on other needs.

Where to Get Started

Could your quarterly payment process be improved by any of these changes? If so - or if you're not sure - start by meeting with the business accounting team at Quality Bookkeeping Services Inc . We will help you assess your processes and identify ways that you can make quarterlies go smoother for yourself. Call today to make an appointment.

5 Indicators You Need Help With Your Business Bookkeeping

Fri, 11 Jun 2021 20:16:08 GMT

Do you need to hire help with the bookkeeping of your small business? Most small business owners try to keep costs low and do as much of the work as they can for as long as they can. But at some point, every growing business needs to work with professionals to have success in this important part of their business. How do you know when you've reached this point? Here are a few indicators to look for.

1. You Have Piles of Papers

Bookkeeping comes with a lot of paperwork in most businesses. And if you're not able to keep up for some reason, the ordinary ebb and flow of documents can become an insurmountable mountain of papers. Look around your office and think about how long piles, files, and papers have been sitting around. If it's been a while - or if you can't remember when they weren't there - the job has become too much.

2. You Procrastinate More Than Ever

Many business owners aren't fond of keeping the books. After all, they usually didn't get into business to do accounting work. But have you become worse at procrastinating than you used to be? This usually indicates that you lack the time, don't have confidence in your skills, or your dislike for bookkeeping has grown over time. Whatever the reason, it may be time to offload it and get rid of that guilt.

3. Your Taxes Have Gone Up

The amount of taxes your business must pay can be partially a product of who is handling the books. The reason? First, someone unfamiliar with the IRS rules and accounting practice may not capture all possible deductions, may use wrong categories, or may not enter transactions in ways that provide tax benefits. Second, a set of unorganized books is hard for tax accountants to use.

No one can guarantee a reduced tax bill, but with the help of professionals you will know that you're getting the best savings possible. And you can work proactively to make things better.

4. You Do Only the Bare Minimum

Keeping the books is about more than just entering transactions into a computer. It should also include conducting research, analyzing trends, making and using reports, and improving your methods.

But an overworked business owner or manager may find that they only have time to do the bare minimum. Recording your transactions may not be helping you much if you have no time to use that information to determine your cash flow, shorten delays in getting paid, or reduce bookkeeping errors. Treading water may keep you up-to-date, but it's not helping you improve your business.

5. Other Business Elements Are Taking a Hit

Think about your business beyond the books. Is it suffering in other areas? Is your marketing lacking? Have you not had time to build your brand? Would you like to expand but can't get started on the project?

Some or all of these elements may be more important than keeping the books, and they can often only be done by you. On the other hand, you can outsource bookkeeping to others who will do it just as well or even better than you. Focus on where your business needs you to devote your energy.

Where to Start

Does your business situation fit any of these indicators? Then start taking back control by meeting with the bookkeeping team at Quality Bookkeeping Services Inc . We will help you ensure that your business accounting is done on time and correctly so you can focus on running and growing your business instead. Call today to make an appointment.

Does Your Small Business Need Checks and Balances in Accounting?

Tue, 13 Apr 2021 18:24:00 GMT

Does your small business have checks and balances in its accounting processes? If not, you may be at risk for fraud, error, embezzlement, and theft. What are bookkeeping checks and balances and how can you implement them no matter what your size and scope? Here's what you need to know.

What Are Checks and Balances?
The concept of a check-and-balance system is to divide up rights and responsibilities in order to ensure no one person has too much control over anything. It's based on the same idea written into the United States Constitution, which divides up the roles of making laws, enforcing them, and determining their constitutionality. This way, no one office can act with impunity.

How Can a Small Business Use Checks and Balances?
Of course, your business is not the U.S. government. So how can checks and balances work in your accounting system? Rather than have one employee who does a sensitive process all on their own, the company includes other employees at various stages to ensure no one can act without anyone else's knowledge. This reduces the chance of both fraud and mistakes.

Consider the receipt of cash. Customers give cash to a clerk who puts the cash into the safe. Someone must then record the cash and take it to the bank. Finally, the amount of money is entered into the books. To create a check-and-balance system, each of these three steps would be done by a different staff member to check the others. One takes cash, one deposits it, and one records it.

Dividing these jobs ensures that no one employee could skim off the cash, record cash they didn't receive, or falsify the books. In addition, errors at all points are more likely to get caught before they mess up your books.

What Tasks Should Be Broken Up?
So, what jobs should you divide up? This varies for each business, but here are some common ways many use checks and balances.

Avoid having the same person receive, record, and deposit cash or checks.
Have someone aside from accounts payable or receivable reconcile bank statements.
Use the buddy system when handling, counting, or depositing cash.
Require two signatures on company checks.
Request receipts for all credit card transactions.
Have different individuals conduct audits at various times of the year.
Assign different staff to do inventory counts or rotate assignments.
Ensure the person ordering inventory is not also receiving and counting items.
Verify vendor statements against invoices recorded in your books.

Clearly, most companies have many areas where they could craft a check-and-balance arrangement. Analyze your company's particular risk points, including anything involving cash or inventory, company checks or credit cards, authorizing expenses, or preparing the company's financial statements.

What Are the Challenges of Checks and Balances?
Most small businesses face two main challenges in implementation. The first is that it makes processes less convenient and less efficient. Having to round up another person in a busy company every time you open the safe is a pain. But it protects everyone. The trick is to minimize these inconveniences without sacrificing the safety provided by dividing up the work.

A second common complaint is that there simply isn't enough personnel. One helpful solution is to outsource some of your checks and balances to an outside bookkeeping service and/or accountant. You may also need to cross-train employees so they can complete limited tasks, like having the receptionist help count cash or a driver go to the bank with accounting staff.

Where Can You Get More Ideas?
Could checks and balances help you reduce financial risk or errors? If so, the best place to begin is to consult with the pros as Quality Bookkeeping Services Inc . We offer a variety of services to fit any small company's needs and can provide suggestions on best accounting practices based on years of experience as well as what works for other owners like you. Call today to make an appointment.

Divorcing? Forensic Accountants Unravel Issues From All Stages of Marriage

Fri, 12 Feb 2021 15:36:08 GMT

Most people who are contemplating or in the process of seeking a divorce know that they need a divorce attorney. But do you also need a forensic accountant? If you face a wide variety of financial and legal issues during your divorce, the answer may be yes. Here are a few of the most important ways they can help straighten out issues before, during, and after your marriage.

How a Forensic Accountant Helps With Pre-Marital Finances

If you brought any assets into the marriage from your single days, these may be protected from division as marital assets. However, you will need to prove both their origin and how they were used during the marriage. A forensic accountant knows what assets may qualify for this protection and how to demonstrate their origin. They can also build a record showing whether they were or were not used for household expenses.

How a Forensic Accountant Helps With Marital Finances

Most divorces involve the disentangling of finances over the lifetime of the marriage. While some financial situations are easy to untangle, most can be very challenging. Why?

First, you'll need to locate and identify all potential marital assets and debts which must be divided. This may not be easy if you suspect your spouse is hiding (or has hidden) some assets or debts from you. Forensic accountants go beyond the surface to look for signs of hidden financial assets ranging from secret bank accounts or undeclared property to cash disappearing from joint accounts.

Some couples need assistance valuing their shared and individual assets. This is particularly challenging if there is a business involved. In addition to agreeing on an honest business valuation, one or both spouses may need to ensure that they know about all sources of income and identify legitimate expenses. A forensic accountant can also help value unusual sources of income such as royalties or foreign income.

You may also want to go over your income tax returns (and any other taxes you may have been responsible for) with your forensic accountant. Because you both are equally liable for all statements and taxes calculated on joint tax returns, it's important to ensure they are correct. If your spouse has been the one to do most or all of the tax filing, it's good to find any potential errors or omissions before the IRS does.

How a Forensic Accountant Helps with Post-Divorce Finances

A good forensic accountant can also help you prepare for your future as a single individual. They may begin by assisting you in deciding how much to request in child and spousal support. Support calculations can be complex because they depend not only on your spouse's assets and earning power but also your own future earnings capabilities and the style of living you shared in the marriage.

Once you have a firm grip on your marital and individual assets, the other main goal will be to agree on a division of those assets and accompanying debts. Failure to find an agreement that works for both parties results in expensive court hearings and losing control as state rules take over. Your accountant will take the information they've uncovered to help you find the best solution for equitable distribution.

Where to Learn More

Could your divorce benefit from the investigative services of a forensic accountant? If you think it might, start by consulting with an experienced firm that provides these services. Quality Bookkeeping Services Inc. has aided North Carolina residents in ensuring they have all the facts at hand to engage in truly fair divorce negotiations. Learn how we can help you by making an appointment today.

What Is Accrual Accounting? Should Your Business Use It?

Wed, 16 Dec 2020 18:46:32 GMT

Are you considering using accrual-based accounting for your small business? Some businesses must use this method, but many others have the choice. The decision between using cash and accrual accounting affects how and when your revenue is recorded.

To help you make the best decision about accounting methods, here's what you need to know about accrual accounting and how it might be important for your business.

What Are the Accounting Methods?

There are two main methods for recording your company's revenue and its expenses. The first is the cash method of accounting. This simply records revenue when you receive the money and expenses when you pay the money. It's simple and often the go-to option for small-business entrepreneurs.

The other choice is called the accrual method. With this system, the company matches the reporting of revenue and expenses with when the business gets the benefit of these. For instance, once you send out an invoice for finished goods, you may report that income even before the customer's check arrives. This is because you have an unencumbered right to the revenue earned.

Which Businesses Must Use Accrual Accounting?

Some businesses are required to use the accrual method, at least for a portion of their operations. Generally, this includes any company that maintains inventory. This is in order to match up the purchase and maintenance of inventory with the production of and payment for finished goods.

In addition, you may have to use accrual accounting if your business is a C corporation or your revenue is greater than $5 million annually. When corporations and larger businesses use the same accounting methods, you can more easily and accurately compare companies' profits, losses, and accounting standards.

Why Should You Choose Accrual Methods?

If you're not subject to this requirement, should you choose accrual accounting anyway? First, accrual accounting is a good idea if you have significant revenue or expenses that you prepay. For example, if you prepay for annual insurance, cash accounting would show a large expense in January but no insurance costs for the rest of the year. Accrual accounting more accurately reflects your ongoing insurance costs.

Many businesses buy and sell items or services on credit. They may receive the items 30, 60, or even 90 days before an invoice is due. With cash accounting, you may report the cost you incurred to make something several months before or after you recognize the sale. Your books would be inaccurate, and your decision-making information would be out-of-date unless you accrue these items to match them within periods.

Accrual bookkeeping can also help a business that often does work on long-term contracts or large projects. For example, a construction company that does projects over the course of 3, 6, or even 12 months may buy materials months before they use them or before they earn the accompanying revenue. By employing accrual methods, you keep expenses and earned income in line so you know how the project really is.

Finally, a business that grows and thrives may have to switch to accrual accounting once it reaches certain thresholds. If you plan to hit that $5 million revenue threshold soon, for instance, a switch to accrual methods now is a proactive move that makes future growth less disruptive.

Do you want to know more about whether you must - or should - use accrual bookkeeping? Start by meeting with the accounting team at Quality Bookkeeping Services Inc. today. We will guide you through this decision and help you implement the best choice for your company. Call to make an appointment. We look forward to helping you with your accounting.

What Is Payroll Reconciliation and How Can It Help You?

Thu, 15 Oct 2020 12:13:51 GMT

Payroll is one area of accounting that can cause many problems if not managed diligently and thoroughly. One tool to accomplish this is payroll reconciliation. What is payroll reconciliation and how can you use it to avoid extra costs and legal issues? Here are some answers to your questions.

What Is Reconciliation?

Reconciliation is a common accounting practice in which two sets of data are matched to each other to see if there are discrepancies.

The most common reconciliation most people are familiar with is reconciling a bank statement with the balance in a check register. If the two bottom totals don't match, you would determine which individual entries may be in one list but not the other. By adding and subtracting these, you eventually come up with a total that agrees or you must figure out the root problem in your system.

What Can Be Reconciled in Payroll?

So, how should you use reconciliation in payroll? First, when entering changes into your payroll software for new employees, raises in pay, or bonuses, you would reconcile what comes out on the paychecks versus what is in employee information and what was on paper forms. When these three match, you know people are being paid correctly.

You may also use payroll reports to reconcile the amount on paychecks with what was expected. A list of salaried employees' gross pay could be compared to the total on reports printed from the payroll check run. If the salary total doesn't match the total gross pay for the group, you would need to determine why.

Reconciling payroll from one period to another also helps you notice errors or trends. If this month's payroll report is significantly higher than last month but operations haven't changed, you can follow clues to find out why. Someone's pay or hours may have been entered incorrectly - especially by automated timekeeping systems. You may have an overstaffed department. Or someone could be committing payroll fraud.

Payroll taxes are some of the most important reconciliations. The employer is responsible for calculating the right amount of taxes to be withheld from paychecks, placing these in a holding account, and remitting the correct amounts to tax agencies. The payroll department, then, should reconcile what's withheld versus what's in the holding accounts and whether the holding accounts are equal to remittances.

When Should You Reconcile Payroll Items?

Ideally, you should take time before each payroll check run is finalized to reconcile many of these items. If reconciliation finds errors - such as incorrect pay rates or withholding - this is the best time to correct them. At a minimum, someone should reconcile payroll reports on a regular schedule (perhaps monthly) so that errors or trends don't go on for too long.

And certainly, payroll taxes should be reconciled as part of your quarterly (or more frequent) payment process. It's expensive to allow errors in taxes to continue.

What Should You Do If There Are Problems?

The most common problem with payroll reconciliation is simply finding the time to complete it. If your busy accounting staff doesn't have the time to research these numbers, you should consider hiring outside help to make it possible. Because your company is at risk for incorrect taxes, additional penalties, payroll fraud, and disgruntled employees, getting payroll right is vital.

What if you are able to reconcile elements of payroll but find problems? This may call for professional assistance to sort out. If payroll tax calculations are consistently wrong, for instance, you may not have set up your payroll software correctly. And if payroll hours are consistently reported or entered incorrectly, your bookkeeping system might need an overhaul.

Do you need help reconciling your payroll information? If so, don't delay. Start by meeting with the payroll professionals at Quality Bookkeeping Services Inc . We can help you make a plan that allows your staff to ensure accuracy and consistency throughout the payroll process.

Does Your Growing Business Need an Accounting Controller?

Wed, 12 Aug 2020 20:10:22 GMT

Is your business growing? Could you use help managing the money, planning for the future, and ensuring that the company meets its legal and ethical obligations? Then you might need to hire a controller for the business. What is a controller in the accounting world, and what can they do for you? Discover a few answers.

What Is a Controller?

In the accounting industry, the position of controller is a managerial accounting role. The controller oversees accounting staff - including data entry clerks, mid-level technicians handling day-to-day accounts receivable or payable, and payroll practitioners - and reports to management. They take what the accounting staff does and roll it upward into usable information that leadership can use to steer the ship.

How Does a Controller Differ From Others?

Controllers do a variety of work, but they generally don't do a lot of data entry and lower-level analysis. Instead, they would design the processes others use and then delegate and direct the work that gets done. They do, though, oversee things so as to ensure quality standards are being met at all levels.

That doesn't mean that a controller is the same as an accounting manager or a CFO (Chief Financial Officer) either. Accounting managers are less likely to have the deep accounting background or advanced degrees (such as a CPA license) as a controller. And the CFO is a managerial position that has much less dayto-day interaction with staff and transactions.

How would a controller fit, then? Consider the preparation of financial statements. Clerks or technicians do data entry and are trained to perform auditing procedures to verify the accuracy of the data. The controller would answer specific questions from the clerks about the data and analyze the completeness of the resulting financial statements. They then meet with a CFO or management about the statements.

What Can a Controller Help You Do?

Because the hiring of a controller is another expense for any small business, you should understand what you get in return. First, the controller is a skilled accountant who knows how bookkeeping and accounting work should be done in line with ethics, IRS standards, and industry norms. Their job is to give you confidence that things are done the right way.

The controller also manages staff. As your accounting needs grow, staffing needs also grow. If you've managed people directly, you will likely need to start hiring others to run departments for you. A controller has experience working with teams and managing individuals as well as understanding accounting issues, so they are the ideal person to oversee this vital and unique department.

Finally, the controller helps plan for the future. A bookkeeper's job is to deal with what has already happened and what is happening right now. They enter transactions that have already occurred and make reports about the immediate future. A controller, though, helps draft plans for the next month, quarter, year, and even decade. They then work with management to implement plans and boost growth.

Can You Get a Part-Time Controller?

If you think the company could use this type of manager over your accounting work, you may still be held back by the cost of hiring such a skilled manager. The good news is that you can still have the benefits by hiring an accounting service that offers part-time controller services.

At Quality Bookkeeping Services Inc. , we offer bespoke business consulting that includes outsourced controller services. We can design a program for your business that meets its long-term planning needs, ensures accurate procedures, and builds a team atmosphere. Call today to make an appointment and learn more.

How Forensic Accounting Helps Your Legal Case at All Stages

Wed, 17 Jun 2020 13:35:35 GMT

Is your company involved in a legal case springing from a potential crime involving its finances? Modern companies face a variety of legal and financial entanglements ranging from employee theft to partner misconduct to cyber security issues. And for many of these cases, one of your best assets is a forensic accountant.

Many people know little or nothing about forensic accounting, but this specialty examines financial data and analyzes it to aid in pursuit of financial-related legal matters. And they can help your case in all stages of its development, from planning to execution. Consider these major steps and how forensic accounting can move the case forward at each point.

1. Case Development

An accountant can help the client and their lawyer understand and define the relevant information needed for the case. Because they are especially experienced in company bookkeeping and financial statements, they're in the best position to know what data is needed, how to find it, and how to make sense of it.

If the case involves employee theft, for instance, a trained accountant is uniquely qualified to follow the flow of money through the company's books. They can also avoid unnecessary research that won't further the actual case, such as by recognizing unusual transactions that appear questionable to the untrained eye but really aren't related.

2. Witnesses and Interviews

The individuals involved in your case can have a big impact on its success. And while an attorney should be involved in determining who can provide the witness assistance you need, an accountant is familiar with the ins and outs of working with company finances. The forensic accountant knows what specific questions to ask and who to ask them of. And they can converse fluently with other financial professionals.

3. Case Analysis

Once you know what your case is and who is likely to be involved, the accountant will get to work analyzing the books to find the truth. Building a solid case is vital to winning, but financial matters can get very complicated very easily. Money laundering, for instance, is deliberately designed to make certain transactions or the source of certain money invisible through multiple layering. Often, only a pro can unravel this.

Even less complex situations may need thorough research and analysis. If an employee has been siphoning off cash during transactions, the analysis may need to begin by comparing receipts and invoices with deposits. But they may need to identify apparently unrelated transactions in which the loss might have been hidden, prove who was responsible for the funds at various points, or establish a pattern of loss.

4. Presentation of Findings

Finally, the complex data and analysis needs to be turned into something your attorneys can present in a court of law. If the financial aspects are convoluted - such as fraud using derivatives or the difference between legal and illegal methods of tax avoidance - substantial translation may be necessary to help others understand. This is where a skilled, professional accountant can help.

The forensic accountant may also be called upon to provide an expert report as evidence or to refute an analysis by the opposing party's own experts. The earlier that an expert is on your team, the better they can help provide that professional assistance.

Clearly, forensic accounting analysis is helpful at all points during complex financial litigation. Could your case benefit from the services of a pro? No matter whether it's relatively straightforward or a complex subject, the answer is probably yes. Learn more about this legal service by making an appointment with the forensic analysis experts at Quality Bookkeeping Services, Inc. , today.

What Is Double-Entry Bookkeeping? Should You Use It?

Wed, 15 Apr 2020 19:53:55 GMT

As a small business owner, you undoubtedly have heard of bookkeeping and your accounting books. But in order to enjoy the best success at controlling your money, you will do well to understand the basics of how your books are kept. And the best place to begin is to learn just a little about double-entry bookkeeping.

How does double-entry accounting work, and why does it help your business? Here are a few answers.

What Is Double-Entry Accounting?

Double-entry accounting (or bookkeeping) is the process of recording each financial transaction with two concurrent entries in the books. The entries generally increase one type of account while they decrease another account. This way, the books are always balanced, as each entry in the set matches the other.

Consider an example where you purchase an inventory item for $1,000. With double-entry accounting, you would record a $1,000 decrease in cash and a $1,000 increase in the value of your inventory. Everything remains balanced. You can see at a glance that you have less cash on hand but an equal increase in inventory.

Why Use Double-Entry Accounting?

The smallest of businesses usually start out with single-entry accounting, where each transaction is recorded roughly the way that a traditional checkbook register is kept. The transaction occurs once - when cash is actually exchanged - and either adds to or subtracts from a single account balance.

However, single-entry accounting becomes unwieldy as businesses grow and have different types of transactions that affect different parts of the business. For instance, when you buy a piece of manufacturing equipment, you might write a check for a down payment and make further payments monthly. The machine is also valuable, so it adds to the worth of your business.

In this case, a single purchase affects current cash, future monthly obligations, overall company assets, and production costs. How can you account for all these affected areas? This is where double-entry accounting comes in. With this method, you record the decrease in cash, the increase in company assets, new monthly obligations (along with the decreasing loan balance), and the increase in the cost to produce your goods.

This increase in complexity is one important part of why all public companies are required to use double-entry bookkeeping. So if you plan to take your business to the next level, you will eventually have to make this move as well.

How Does Double-Entry Help You?

Because it balances your accounting numbers, double-entry bookkeeping ensures more accuracy. The amount of assets must equal your liabilities and the amount of equity (owners' capital) currently built up. When you pay a bill, your assets (cash) go down but so do your liabilities (accounts payable). As a result, you can much more easily know that your books are in balance and everything is entered correctly.

Double-entry accounting also helps a business create useful financial statements. Lenders, vendors, customers, and owners can always see how money flows through your organization. This system produces simple statements like the Profit and Loss Statement and Balance Sheet. The balance sheet distills all your transactions into an easy-to-read format that groups assets, liabilities, and equity into one balanced equation.

Where Should You Start?

Is your business growing beyond single-entry bookkeeping? Have you had trouble ensuring accurate books? Do you want to learn more about the benefits of double-entry accounting for your particular enterprise? Start by consulting with an experienced bookkeeping service in your area.

Quality Bookkeeping Services Inc. can help. Our bookkeepers and accounting professionals will work with you to create the right accounts and teach your staff how to use double-entry books. Call today to make an appointment.

Why Your Business Needs to Complete a Schedule K-1

Tue, 11 Feb 2020 19:01:32 GMT

Are you a partial or whole owner of an S corporation, a partner in a business, or a beneficiary of a trust? Then you may have learned that your income tax filing must include a Schedule K-1. This is an unfamiliar form to most American taxpayers, so it may sound confusing. To help clear up any questions you have about this key business income tax form, here is a brief guide to the K-1.

Who Must Create a Schedule K-1?

Schedule K-1 is part of the business tax filing requirements for most pass-through entities. A passthrough entity is a business structure in which income and expenses are passed through to the owners to declare on their personal income tax returns. The owners also pay income tax due based on income and expenses.

The most common pass-through entities are partnerships, S corporations, and limited liability companies. Less commonly, trusts fall into this category even if they are not a typical business.

When a pass-through entity earns income and pays expenses, then, it must proportion out the amount attributable to each shareholder, partner, or beneficiary and report this information to them. A Schedule K-1 is how the business does this. This document must be prepared by the business and provided to relevant parties by the due date of the business tax return.

Why Is Schedule K-1 Necessary?

You may ask why you can't simply use the company's accounting books as a base and do the math of how much your portion of profit is. The answer is that the company's books and its income tax returns may end up looking quite different from one another. That's because what is allowable for tax purposes may be different than what is allowable under standard accounting practice.

For instance, depreciation for tax purposes is taken on a set IRS schedule based on the asset, its life expectancy, and any special depreciation claimed. However, on the books, your company may find that it's better to continue using standard depreciation for financial statements. Using two different methods is acceptable practice and has benefits for each purpose. But it will change the tax form's bottom line.

Should You File a Schedule K-1 on Your Own?

Understandably, many small businesses on a tight budget would rather create a Schedule K-1 in-house to save money. But is this a good idea? Generally, it's not. Here are two reasons why that is usually true.

First, the K-1 can be a complicated form to understand and report correctly. In a partnership, for example, it must include information about the partners' capital account balances, their share of Section 179 depreciation, short- and long-term capital gains, and relevant business credits. Since an S Corporation can have up to 100 shareholders, correctly proportioning all these elements can take a lot of work.

Second, because the K-1 affects the taxes of shareholders or partners, a single error on this form could have far reaching and expensive consequences. If the business fails to properly calculate which items are tax-exempt or nondeductible and then report this wrong information, shareholders could end up paying higher or lower personal taxes than they should. That may attract the attention of the IRS or state tax agencies.

Where Should You Start?

If your business or trust needs to file a Schedule K-1, begin by consulting with an experienced accounting and bookkeeping service. Quality Bookkeeping Services Inc. can help. Our team includes professionals qualified to assist with everything from routine bookkeeping data entry to preparation of company tax forms to how your personal taxes will be affected. Call today to make an appointment.

Crowdfunding Your Business? 3 Tax Tips

Thu, 12 Dec 2019 20:31:41 GMT

Crowdfunding is a boon for today's entrepreneurs. It allows individuals - friends, family, and strangers alike - to help you fulfill your business dreams and create valuable new products without the obstacles and setbacks of traditional venture funding.

If you are planning to start a crowdfunding campaign for your new business idea, though, you'll need to understand how to account for and report this income and its associated expenses. Failure to do so could create new hassles and open you up to problems with everyone from the IRS to state oversight agencies.

So, what should you know about accounting for your campaign? Here are three key things you must do now.

1. Choose the Right Entity

Crowdfunded donations to a business are generally considered to be reportable - and potentially taxable - income. While the IRS rules around this new form of funding are still somewhat vague, you do well to start out by assuming that you'll need to report it and pay taxes on it.

How that income is taxed, though, also depends on the business structure you choose. Income of a passthrough entity, such as an S corporation or sole proprietorship, is generally passed on to the owners and must be declared no matter how it was (or wasn't) yet used. A C corporation, though, pays income taxes at the business level rather than at your personal level. You may, therefore, have more leeway for tax purposes.

2. Report Income at the Right Time

Income is generally reported for income taxes when it is constructively received. Constructive receipt means that the money is available for the business to use how they see fit and that it has no other obligations tied to it. A loan that must be paid back is not 'constructively received' income because you must return the money. But a check you have not yet deposited is constructively received.

Following this idea, when crowdfunded money is available for your use without obstructions, it would likely be reportable income. Crowdfunded campaigns can be tricky in this area, though. A pledge to give money in the future is likely not constructive receipt of the funds. And money that is considered to be part of a long-term contract that is not yet fulfilled could also be considered not constructively received.

When your funds are constructively received, then, may depend on how your campaign is set up and what type of services (or products) are expected in return.

3. Decide Between Cash and Accrual Accounting

The decision to use cash method accounting or accrual method accounting is important for a crowdfunded business venture. With cash method accounting, you report income and expenses paid when money actually changes hands. You might, then, take in money for your campaign long before you pay any expenses. In this case, you have a lot of taxable income without expenses to counter it.

On the other hand, accrual accounting reports income and expenses when they are earned or incurred. In this scenario, you would report those expenses when you incur them rather than when you actually pay the money. This might better match up the timing of your funding and the associated expenses.

Clearly, accounting for this type of business funding can be complicated. For the best results consult with an experienced accounting service before starting your crowdfunding efforts. The earlier you seek professional assistance, the easier these aspects will be.

At Quality Bookkeeping Services Inc. , we can help. Our accounting professionals are ready to guide you through everything from the selection of a business entity to how to choose the right accounting method for your particular needs. Call today to make an appointment and start your crowdfunding journey.

Is Your Business Taking Advantage of These Tax Deductions?

Tue, 20 Aug 2019 01:48:49 GMT

The federal and state governments permit businesses to write off many of their expenses as tax deductions. If you run a business, here are some specific deductions that your business might be able to lower its tax liability with.

Driving Done for Business Purposes

If you use a vehicle for business purposes, you can write off the mileage that you cover as a tax deduction. The miles that you can write off don't include commuting from your home to your primary place of business, but any other driving done for work can count.

There are two ways you can claim your business mileage as a business tax deduction. If you'd like, you can keep track of your actual vehicle costs, including depreciation, insurance, maintenance, fuel, and other expenses, and deduct those. Alternatively, you can deduct the federal rate per mile. In 2019, the federal rate will be 58 cents per mile.

For some businesses, this deduction can be quite substantial. For instance, if you cover merely 20 miles per day of qualified driving, you could write off 100 miles per week. Assuming a two-week vacation annually, 100 miles times 50 weeks would net you a 5,000-mile deduction. At 58 cents per mile, that comes to $2,900.

You should talk with a qualified tax professional to determine exactly what driving you do qualifies for this deduction. You may be surprised how many qualified miles you rack up, though. Running errands, going to meet clients, shipping packages, and lots of other driving normally counts.

Home Office Used for Business

If you keep a home office, the space that's dedicated to your office also qualifies as a business deduction. To qualify, the space must be used exclusively for work. It can't double as your in-home yoga studio or have kids' toys strewn across the floor (unless you teach yoga or work on kids' toys). It also has to be the main place where you work.

As with the mileage deduction, there are two ways to calculate your home office deduction. You can keep track of your real expenses, such as the portion of your mortgage or rent that goes toward the space, and claim those costs. Alternatively, you can claim $5 per square foot on an office that's up to 300 square feet. This comes to a maximum deduction of $1,500.

Although calculating your home office deduction may seem complicated (and can be), going through the math is often worth the effort. If you have a legitimate $3,000 in home office expenses, that could save you anywhere from $300 to $1,110 on your federal tax bill depending on your income bracket. Federal rates for 2019 range from 10 percent to 37 percent.

Insurance Premiums That Protect Your Business

Insurance premiums that protect your business or its assets - and not you personally or your assets - are generally tax-deductible. Because these insure the business against liability, property, and other risks, they're part of your overhead and can be subtracted from your revenues.

Depending on what type of business you have, there are many different commercial insurance policies that you might be able to deduct the premiums for. Some more common types of coverage include:

General liability coverage
Commercial auto coverage
Professional liability coverage
Commercial umbrella coverage
Cyber liability coverage

If an insurance policy protects both you and your business, you might be able to deduct the portion of the premiums that go toward ensuring your business. A tax professional can help you calculate what portion this is.

If you need help filing business taxes, contact Quality Bookkeeping Services Inc. about their tax services .

5 Questions to Ask Your Bookkeeper Before You Open Another Location

Mon, 24 Jun 2019 14:02:00 GMT

If your business is doing great, you may consider expanding. But are you ready for a second location? A second location comes with all the benefits and drawbacks of the first. Often, it's risky and costly, but it carries with it a tremendous potential for profit. And the viability of a second location is going to depend on your books. Before you expand, you should ask your bookkeeper a few key questions.

1. How Long Can Another Location Last Without Revenue?

You shouldn’t count on your second location earning as much as your first, at least right away. Could your new location possibly last years without any profit? Where would the money come from? Would it come from investors, the bank, or your other business?

You need to determine how long you could fund a profitless location before you attempt to do so. Your bookkeeper can run the numbers to determine how much money the business could potentially lose and what situation you would be in if you did experience substantial loss.

2. How Are the Current Numbers Trending?

If your growth has slowed down or reversed, you may want to hold off on opening another location. Opening another location carries with it so much risk that you only want to do it when you can absolutely afford to. You may need to wait a few years for your current numbers to even out.

Trends may not be immediately obvious. Your business may be currently booming, but your accountant will be able to look at records and see if it's a brief boom following slowed growth.

3. Do We Need to Change Our Business Structure?

Many companies start out as a sole proprietorship, LLC, or LLP, and then find out that they need to restructure to a true corporation later on. As a business expert, your bookkeeper will know whether changing your business structure could save you money. Your new location may even need to become a business of its own.

You can also consult with a business attorney, but they will be more concerned about the legalities and legal protections involved. Your accountant is the professional who will tell you whether you can save money through structuring changes.

4. How Much Will We Pay in Taxes?

As a business owner, you probably know most of your expenses pretty well. But one thing you may not be aware of is how much you'll pay in taxes. When you expand into a new location, you will pay local taxes, and you may find your tax expenses to be greater than in your first location.

Ask your accountant not only how much you'll pay, but also whether there are opportunities to reduce these rates. You may be able to get discounts for things like energy-efficient equipment.

5. Will We Divert Any of Our Own Customers?

Let's say you currently have 1,000 customers for your business. If you open up a second business in another city in the area, you may find that the number of customers in your first business has actually gone down to 500. This happens when a new location diverts customers away from the original.

If customers outside of your service range already use support your business, your new location may end up serving the exact same customers — just with a little more convenience. Your bookkeeper can print out a report of your customer information to find out where your customers are primarily located.

For your business questions to be answered well, you first need to make sure your books are accurate. Hiring a quality accountant will help. Contact the experts at Quality Bookkeeping Services Inc to learn more.

6 Ways to Know You Have an Ethical Tax Preparer

Tue, 23 Apr 2019 14:44:32 GMT

When you choose a tax preparer, you want someone who not only knows how to reduce your taxes legitimately but who also follows ethical practices. This protects your business from legal and governmental problems.

Since you likely don't know the tax code intimately, though, how can you ensure that you chose an ethical preparer? Here are six ways to tell.

1. They Know the Law

Good tax preparers are familiar with basic tax guidelines and tax law. In conversation, ask about specific parts of your returns and your industry. What tax deductions are available to you? Which ones are more particular to your type of business? What tax strategies do they recommend? What effect does recent reforms have on your return?

Asking questions and getting satisfactory answers will help you know you have an experienced preparer.

2. They Ask Questions

Each tax situation is different, and how to handle them depends on your situation. A quality tax preparer will endeavor to understand your business, your financial life, and your needs before preparing any returns. They will want to know about any life changes, any financial or family goals you have, and questions that you've had during the year.

In addition to general questions, a tax preparer should ask questions about most of your tax information. They should want additional information about asset purchases, business transactions, dependents, and income sources.

Anyone who doesn't request clarification is likely not doing their due diligence to protect you against unethical returns.

3. They Have Certifications

The IRS offers several certifications for different levels of preparers. A certified public accountant (CPA), for instance, has been trained in many aspects of accounting and can generally prepare most tax returns. An enrolled agent (EA) must pass an IRS exam in three parts and follow up with annual continuing education requirements.

The IRS also offers the Registered Tax Return Preparer (RTRP) program annually, which offers enrollment to those who have passed an annual exam. In addition, some states also have their own certifications.

Choosing a tax preparer who is certified by an authority means they have to adhere to a code of ethics and receive ongoing training. This helps you have confidence in their skills and their ethics.

4. They Warn You

A good tax preparer, like any good accountant, will help you avoid any reckless or illegal behavior. They will not suggest any choices that are dubious, at best, when it comes to IRS rules. And they will warn you off of any less-than-ethical tactics that you may have heard about from others.

Ask about the ethics of tax maneuvers, and if you're less than satisfied, you may not have the right preparer.

5. They Work With a Team

Does your tax preparer work with both your team and their own team? Isolation is a key indicator of someone who may not act in your best, most legal, interests. Look for someone who shares the workload with a valued team. That team should be empowered to make decisions, complete forms, and do their own research.

The tax preparer should also be able to work well with your own in-house team. That includes your bookkeeper, data clerks, managers, and accountant.

Open communication and teamwork between all these individuals will help prevent anyone from taking advantage of your business.

6. They Explain in Clear Terms

You should understand how your finances are being handled and how your tax returns are prepared. A good tax associate can make complex tax maneuvers and choices clear in a way that the client understands it. You are, after all, signing the tax return either as a business or an individual. You are ultimately responsible for the way things are presented, and so you should understand those aspects.

The experienced tax preparation team at Quality Bookkeeping Services Inc. is here to help with all your tax needs. We can help you lower your tax bill while adhering to the highest ethical standards. Call today for an appointment.

GROWING YOUR LANDLORD BUSINESS? WHY YOU NEED ACCRUAL ACCOUNTING

Mon, 25 Feb 2019 15:33:05 GMT

As a landlord, your goal is to make a profit and keep a stable income coming in quarter after quarter and year after year. But as your landlord business grows, it is often harder to keep everything straight and ensure good, organized accounting.

To help you understand your profit margin and boost it, you should consider using the slightly more complex, but ultimately beneficial accrual method of accounting. Why? And How? Here's a short guide to get you started.

WHAT IS CASH AND ACCRUAL ACCOUNTING?

Business owners have two methods to choose from for keeping their business books: cash and accrual. The cash method of accounting records income when you actually receive the money and expenses when you actually pay the money. This method is simple, so many landlords begin with this method when they acquire their first rental unit or two.

While cash accounting is simple, it does have some drawbacks. If you get a large sum of prepaid rent money in December, for instance, your books would show a huge profit in that month but no income for the next few months. The same can be said of expenses. If you prepay your insurance for the year in January, you have a large expense in one month and then no insurance expense for the next 11 months.

This situation makes it hard to tell what your actual expenses are and what your real profit is from month to month or from year to year.

The answer to this dilemma is called accrual accounting. In this method, your business records income and expenses when they're earned rather than when the money changes hands. In accrual accounting, you would spread out that prepaid insurance cost over all 12 months, resulting in more balanced profit margins.

WHY CHOOSE ACCRUAL ACCOUNTING?

For landlords, the accrual method makes a lot of sense. As you see above, it evens out both income and expenses throughout the year.

A property owner pays a number of expenses on an irregular basis, including property or liability insurance, seasonal maintenance, property taxes, and management fees. By spreading these seasonal or quarterly costs across multiple months, you get a better picture of what your rentals are really costing.

Similarly, you may get prepaid or post-paid income on various occasions. You may request some amount of prepaid rent, get paid previously owed rent, or have tenants that consistently pay the rent late. In all these situations, recording income when the check arrives gives a distorted report of when your unit earned money.

Banks and potential lenders also know this and may find accrual-based books more valuable for determining credit as well.

Even if you choose the accrual method for accounting in order to even out your expenses, you can still use the cash method for reporting income taxes. Since many landlords of smaller facilities aren't required to use the accrual method by the IRS, opting for it in your regular books gives you options for filing taxes under both methods.

WHERE SHOULD YOU GET STARTED?

Do you think that the accrual accounting method might work better for you than your current system? Work with an experienced accountant or bookkeeper to determine if you should switch. While you can switch methods at any time, doing so at the beginning of a fiscal or calendar year is often best and easiest.

Changing accounting methods is somewhat complicated - likely involving informing the IRS - and should be done with the assistance and direction of professionals. At Quality Bookkeeping Services Inc. , our accounting professionals can help you determine the best way to report all your operations. Call today to make an appointment.

3 401(K) Alternatives for Small Business Owners and Employees

Thu, 27 Dec 2018 08:28:00 GMT

As the owner of a very small business, you have a lot of benefits. You can control your own destiny, you make your own schedule, and you reap the rewards of your work.

Capital Gains and How They Affect Your Taxes

Mon, 29 Oct 2018 15:13:00 GMT

Many Americans are affected by capital gains, but don't fully understand what they are. Learn more about capital gains and how they affect your taxes.

Want to Boost Profit? Understanding Your Cost of Goods Sold

Thu, 30 Aug 2018 18:16:00 GMT

Small business owners have to manage expenses carefully. And truly understanding your profit margin on everything you sell is key to doing that. What should you calculate to find the right expense and profit? And why is it so important? Here are a few helpful steps to determining your Cost of Goods Sold.

5 Practical Steps to Take When Your Employee Passes Away

Sat, 30 Jun 2018 08:18:00 GMT

Few businesses plan how to handle the death of their employees, but it could happen at any time. If it does, you'll need to focus on how to help co-workers and supervisors or clients through this difficult time. But as an employer, you're also responsible for a few practical steps to keep your business running and help your employee's loved ones.

Costly Payroll Tax Mistakes

Thu, 03 May 2018 07:31:00 GMT

Payroll and taxes demand exact calculations. Read this blog to learn about some mistakes you should be sure to avoid with your company’s payroll.

4 Reasons Small Businesses Need to Hire an Accountant

Mon, 05 Mar 2018 08:15:00 GMT

Starting a small business is a labor of love. The path to entrepreneurship is expensive and physically and mentally demanding. Given the sacrifices, new business owners often take a parent-like approach to their business, in that, they try to handle every facet of the operation on their own, including finances.

Automating Your Bookkeeping Services For Accuracy And Speed

Thu, 28 Dec 2017 20:48:00 GMT

A professional bookkeeper is advantageous for a number of reasons. Not only are they skilled in following issues of regulation and compliance, but they also have the advanced technology to make your bookkeeping services faster and easier.

Save Money and Reduce Liability With These Accounts Payable Best Practices

Thu, 02 Nov 2017 19:59:00 GMT

Managing your accounting practices is important as a business grows. As you hire employees and deal with larger and larger operations, you lose much direct control over day to day operations.

Moving to North Carolina? 5 Tax-Related Moves to Make Before Spring

Sat, 02 Sep 2017 00:30:00 GMT

Moving to a new state can be a hectic time. To help you with your move to North Carolina, take these financial steps before and after you settle in.

Are You a High Earner? 6 Ways to Reduce Your Income Tax Bill in 2017 and Beyond

Thu, 06 Jul 2017 19:49:00 GMT

Most, if not all, taxpayers want to reduce their income tax obligations. Keep reading for some tips on how to reduce your 2017 income tax bill.

Bookkeeping Considerations for Hiring

Fri, 05 May 2017 08:00:00 GMT

As a small-business owner, you probably handle as much of the work as possible yourself to keep costs low.

Want Faster Payment? 6 Ways to Make Your Invoices Work Smarter

Sun, 05 Mar 2017 08:00:00 GMT

As an entrepreneur, you likely have little extra money with which to keep your cash flow and your business running. This fact makes it imperative that you get paid on time and in full as often as possible.

Reasons to Have a Payroll Service

Mon, 02 Jan 2017 00:47:00 GMT

Quality Bookkeeping Services Inc. has payroll service options to help keep track of your business and employees.

The Biggest Tax Changes in 2017

Tue, 01 Nov 2016 12:57:00 GMT

Williams & Associates Tax Services helps clients understand the biggest tax changes coming to 2017.

A Quick Guide to 2017 Tax Services

Thu, 01 Sep 2016 19:10:00 GMT

The 2017 Tax season will soon be here, and for those who have children, there are some very important changes that are occurring. In December 2015, Congress enacted the Protecting Americans from Tax Hikes (PATH) Act of 2015, and many of its provisions go into effect Jan. 1, 2017. These provisions include changes to the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and American Opportunity Education Tax Credit (AOTC).