Tag Archives: accounting

Marbles and monkeys: tracking your hours and expenses

Even though Richard Florida’s 2004 brain child, “the creative class”,  has come under fire in the last few years, many cities trying to redefine themselves in the wake of an increasingly dominant technological economy have still spent considerable time and capital trying to accommodate young urban creatives – freelance writers, graphic designers, computer programmers, artists, and media workers, as well as people working in healthcare, business and finance, the legal sector, and education.  As a matter of fact, a 2010 report predicted 40% of American workers will be earning their living as part of the “gig economy” by 2020.

 The next few blog posts will be focusing on accounting issues and challenges that face entrepreneurs whose work falls under the category of “the creative class” in a “gig economy.”

So either you’ve been sucked in by allure of being your own boss or you’re unable to find a single, stable job in your chosen career field. Now here you are. You are part of the gig economy. You have several clients with rotating deadlines, or you have a slew of single-project clients.  You get to work from home. You get to work in your pajamas. Sometimes you can grab your laptop and go to your favorite coffee shop and work. You might even be able to work from the beach! You have more control over your schedule than your parents did. And it’s awesome being your own boss.

But unlike the days of The Organization Man, you also have to shoulder the responsibility for tracking your hours and being more aware of your expenses. Even though sources like Forbes Magazine and Investopedia praise the gig economy and the idea of a mobile creative class, you know there’s a large part of your job that isn’t creative even if it is mobile.

Depending on the client, you will charge for your time differently: by the hour, by the project, or even by the word if you are a copy editor/copy writer. There are a lot of marbles to keep track of when you work for yourself. Different hours worked on different projects on any given day. Different hourly rates for different clients. Record keeping is essential. If you’re good with spreadsheets, that’s helpful. If not, consider finding some accounting software, cloud accounting, or — if you have a large enough client base – find an accountant to take the guess work out.

Not only do you want to keep a precise record of your work hours so you can bill your clients correctly, you also want to keep track of any taxes you will be required to pay. Why? Because now you’re now your own boss, without anyone in human resources or payroll to arrange for deductions. You are responsible for making sure Uncle Sam gets his cut. With all the joys and challenges of being your own boss in the “gig economy,” you don’t want that big angry monkey on your back weighing down your success.

GrinchtoGlee

From Grinch to Glee – Make year end easier with these bookkeeping tips

It’s not that your heart is two-sizes too small like the Grinch, but rather that your head might explode from all the year-end bookkeeping tasks on your list. While these to-dos could certainly put your holiday spirit in short supply, we know how and Who can help.

It’s essential that your data is accurate, complete and organized for tax time and the year ahead. But where do you begin?

Like the Whos in Whoville helped Grinch, we offer tips to keep you and your books on the nice list.

  • Evaluate your financial standing

Review profit and loss, your balance sheet and general ledger. Make sure they aren’t mangled up in tangled up knots by checking that all transactions have been recorded and posted to the proper income, expense, asset or liabiity accounts. Also check the accuracy of your accounts receivable and accounts payable, and write off uncollectible debt so as not to overstate your income (especially if accrual based), and overpay the You-Know-Whos.

  • Complete bank reconciliations

Make sure your checking, savings and credit card accounts have been reconciled. Loan interest should be separated from the principal and accurately logged. And a decidedly, non-grinchy trick: reconciling monthly makes it easier to catch errors.

  • Review Personal Expenses

You shouldn’t, wouldn’t, oughtn’t, mustn’t mix your personal and business expenses (although for the Sole Proprietor it’s often a necessity), so look at your expenses closely and if that’s the case find receipts and/or cancelled checks and log the expenses in your books. Then watch your heart grow because you avoided paying extra taxes.

  • Review Subcontractor Services

If you’ve hired any Whos who are Sole Proprietor’s or LLC’s, for contract services totaling more than $600 during the year, you’ll be required to send them a 1099 Misc form. It’s a best practice to send each new subcontractor or vendor a W9 at the time of hire to ensure you have complete address information and either their Social Security Number or Federal ID Number information on file.

  • Take Inventory

Review your inventory during the last month of the tax year and make necessary adjustments to align the inventory account of floofloovers and whowonkas to match the items in stock.  Your inventory value should show the cost price or price paid rather that the selling price for your items.

  • Create a Filing System

It may sound overly simple and antiquated, but we know an organized system for easily accessing the documents you need, when you need them come tax time will make you happy as a Who.

As you celebrate the close of 2016, it’s also time to look to the year ahead. If one of your goals is to have more flexibility and time to achieve your personal and business goals, consider the advantages of having a Bookkeeper. Not only an excellent resource to simplify your financials and ensure accuracy, a Bookkeeper can also be a personal advocate, a partner as loyal as Max, and someone to help you make your Holidays mean a little bit more for years to come.

Make The Holidays Count!

My favorite time of the year is upon us… the season of thanksgiving and bestowing gifts upon others. It all starts with reflecting how grateful we are for our many blessings and successes over the past year. Whether these accomplishments were made through businesses endeavors or simply through our personal sweat-equity, we are grateful for those opportunities. We can profit from the many benefits that come from having a grateful heart such as improving our physical and psychological health. Gratitude also enhances empathy and reduces aggression and it can help people sleep better too. These are just a few good reasons how feeling grateful can improve our bottom line which allows for the next step.

Being grateful is only half of what stands out during the holiday season. As soon as the dishes have been cleared from the Thanksgiving feast, we are reminded that, “Hey, “Black Friday” is only a few hours away!!” In an instant, our thoughts go from being “grateful” to thinking about gifting and sharing with others. We can all understand how giving to others is good for our community and the world, but giving can also reap huge benefits in our own lives as well. Did you know that giving to others lowers our blood pressure and stress levels? This, alone, will help each one of us live longer and happier lives.

So, in honor of the season, I have put together a few examples where you can reach out to the community and show your gratitude by giving back.

For Businesses:

  • Choose a local Charity Event that is relevant to you and your business and donate money, be a sponsor or volunteer your time.
  • Encourage your business team to get involved in a fundraising event such as Toys-For-Tots.
  • If your company has a budget for donations, provide a Turkey Give Away program for families in need.

For Individuals:

  • Have a garage sale in your neighborhood and donate the profits to charity.
  • The local homeless shelter or soup kitchen could always use a helping hand.
  • Provide care-packages for people in need; For example… the troops, seniors, kids and teens in group homes, the homeless
  • Let us help our planet by recycling! The proceeds can once again go to a charity.

With all of the wonderful benefits that go along with being thankful and giving back, let’s make a difference in our communities through our valued time and efforts this holiday season.

Need A Raise? Then Read This…

What would you do with an extra $500 – $1500 of free money each year? Take a family vacation, put it in savings, add it to your college/retirement fund, pay down debt etc… In other words, there would be many uses for that money, right? OK, so now you are probably wondering, where do I go to find this “free” money?
Well let me start by telling you a story that I’m sure we can all relate too. Last January, my friend received a flyer in the mail from her cable company stating that because she was such a “loyal” customer, she was going to get 3 months of HBO for free! Well she thought, “How cool is that? I’m definitely going to take advantage of this and then I will call back and cancel it before my “free service” is up”. So for the next 3 months, she totally enjoyed “free HBO” and by the time came to cancel, she kept saying, “I’ll do it tomorrow”… even after she was sitting there watching the 110th viewing of “Grease” with John Travolta and Olivia Newton John! Then, life stayed busy and she just never got around to canceling, so over the last eight months she ended up adding $80 to her account… and they said it was free HBO!?
Almost every company that we have an account with, entices us with these low cost items throughout the year and we honestly think that we will try it “only once” and then we ultimately forget about cancelling, so much so that by the end of the year we are spending hundreds of dollars that we had no intention of spending in the first place! Plus, trying to remember everything that we signed up for gets so complicated that we just throw our hands up in the air and go on paying and paying…
Instead of giving up, there are two things you can do right now to stop putting money into their pockets and start putting it back into your own pocket:

  • Call your service providers and simply ask them to review your account to determine if there is any way you can reduce your bill. Most representatives tend to be very helpful with finding ways to reduce the money that you are spending because they want to keep your business.
  • Do a little research on how much you may be able to save by switching to another company. By knowing the competition’s rates you can either switch and save or you can let your company know that you want to stay with them but you may have to switch if they cannot offer you the same rates or find some incentive (less money) to keep your business.

By doing these two simple things with all of your accounts (phone, internet, auto insurance… etc.) you will be able to save some money. It took my friend about an hour to call both her cable and cellular company and when finished, she was able to get her bills reduced and will now be able to save a total of $250 over the next 12 months! By tightening up your budget, you will be able to put that extra money to better use… maybe even get out of debt that much quicker.

Make it a great day!
Marla J. Blanchard
MJB’s Bookkeeping Solutions

Don’t keep me a secret, if you know someone who could use a bit of Bookkeeping TLC let them know that they are not alone and have them call me 805-764-1MJB (1652).

Healthy Finances = Living Debt Free

A few months ago, we discussed how maintaining a “healthy budget” can keep everyone on course in reaching the lifestyle dreams of their future. It is also a great tool to help you get out of debt too, since debt is the primary reason that prevents most people from reaching their financial goals. So today we are going to discuss 2 types of debt and then go over 3 strategies that will help you stay on track towards eliminating that debt for good.

All debt is not the same and understanding the difference between secured and unsecured debt will help you prioritize your payoff strategy.

  • Secured Debt: Any money that is borrowed is attached to an asset that is considered collateral, meaning that if you don’t pay back the loan – the asset/collateral will be taken away and sold off to pay your debt. In addition, if the asset/collateral is sold for less than what you originally borrowed, then you may still owe the difference. Your home and car are examples of secured debt.
  • Unsecured Debt: Any money that is borrowed is not attached to an asset therefore you will not lose any tangible items – However, you are still held accountable for what you owe and creditors have a number of tools at their disposal to get their money paid back such as, reporting to the credit agencies which will lower your credit rating, garnishing your wages or by hiring a debt collector. Credit cards and medical bills are examples of unsecured debt.

Now that you understand the difference in each type of debt let’s look at a few strategies for paying down your debt.  But first, a must do before you add any new strategy…

            PAY YOUR MINIMUM BALANCE ON EACH OF YOUR BILLS EVERY MONTH!                                        

By paying your creditors the minimum balance each month, let’s them know that you are staying on track and it keeps your accounts from receiving any negative feedback with the credit bureaus. Once you have paid your minimums you can then take the extra cash to pay down your debt in one of the following ways.

  • Snowball System: In this plan, you will organize your debt from smallest to largest then pay any extra money toward the smallest debt each month. Then once you have paid of that bill then start paying down the next largest and so on. The benefits here are that you will see one of your debts being paid of sooner which is a great boost to your financial goal.
  • Avalanche System: This plan is much like the ‘Snowball” method instead you arrange your debts according to the interest rates from highest to lowest then pay the highest rate bill first until it has been paid off then move on to the next highest, and so on. By taking the interest rates into account, you are putting more money toward your higher interest rate debt first. Not only does this approach save you money, “it gets you completely debt-free faster.
  • Financial Fast/Debt Detox: Since we have been discussing how to get financially fit, why not take it a step further by doing an actual spending fast? With this method you will be required to honestly ask yourself, “What do I really need?” – vs – “What do I really want?” Then make a list for each question. Once you have your two lists… then for the life of your fast (1 yr.?, 18 mos.?, you decide), spend your money on only what you really need each month and then use the rest of the money to pay down your debt until it has all been paid off. Once you have accomplished paying off your debt, but your spending fast isn’t over yet, then start putting the monthly income into a savings account and continue this habit until your fast has been completed. At the end of your financial fast, I am sure that you will be super impressed on what you have accomplished!

As with any goal that you are trying to achieve, be it financial goals or health and fitness goals, you’re more likely to succeed if you have a good plan in place, a fair amount of willpower and a desire to change your habits.

Make it a great day!
Marla J. Blanchard
MJB’s Bookkeeping Solutions

Don’t keep me a secret, if you know someone who could use a bit of Bookkeeping TLC let them know that they are not alone and have them call me 805-764-1MJB (1652).

Forewarned Is Forearmed

One of the best ways to measure your overall fiscal fitness is to run an actual credit check on yourself, by requesting a copy of your credit report from the three main credit bureaus, Equifax, Experian and TransUnion.  Maintaining your finances takes a lot of time and energy and even more… the quality of your life depends on understanding what is being said about your spending habits. So here are three reasons that you need to think about in order to care for the health of your money.

Checking For Inaccurate Information: Our lives are always in a state of movement, new home, new job, new car, new banks, new schools and new stores. With each new purchase, we confidently give out more and more of our personal information to store merchants, who then track our credit habits and even how quickly we make our payments. All of this information gets reported to the credit bureaus and then these agencies decide how credit worthy we are. But what happens if some of this information is mistakenly written down wrong or Jane Doe’s information is mixed up with Jean Doe’s?  Inaccurate information can prevent us from getting the best interest rates on new purchases, costing a lot of money in high interest payments or even preventing us from getting that brand new SUV that we’ve had our eye on.

First indicator in Identity Theft: CNN Money reported that identity fraud hits a new victim every 2 seconds which is understandable especially with all of our information being handled by so many different people as we illustrated in the section on ‘Inaccurate Information’. The sad part is, many people don’t even realize they have become a victim until it’s too late or “Uncle Sam” informs them that they filed 2 tax returns last year. Once this happens, it takes months, even years to unfreeze bank accounts and countless amount of time getting lawyers to untangle the messy trap of scrupulous financial deals. By getting an annual credit report, we may be able to stop fraudulent accounts from doing major damage to our financial reputations.

Maintaining and Rebuilding Good Credit: By knowing what information is in our credit report, we can set up a strategy to improve our status with creditors. First, we can educate ourselves in knowing the factors that can hurt or improve our credit score. Then by taking deliberate actions, we can measure our improvements and actually see how our actions affect our score. Finally, wouldn’t it be great, going to the car dealership knowing what our credit score is and actually negotiating the best deal rather than simply hoping you can get a decent deal on that new car?

Now that you have a better understanding of why it’s so important to get your annual credit report I have some good news for you… it’s FREE!! So do it today by using the information below from usgov.com

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Free Credit Reports

You are entitled to a FREE credit report from each of the three credit reporting agencies (Equifax, Experian, and TransUnion) once every 12 months. You can request all three reports at once, or space them out throughout the year. Learn about other situations in which you can request a free credit report.

Request your free credit report: 

Online: Visit AnnualCreditReport.com

By Phone: Call 1-877-322-8228. Deaf and hard of hearing consumers can access the TTY service by calling 711 and referring the Relay Operator to 1-800-821-7232.

By Mail: Complete the Annual Credit Report Request Form (PDF, Download Adobe Reader) and mail it to:

Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281

Make it a great day!
Marla J. Blanchard
MJB’s Bookkeeping Solutions

Don’t keep me a secret, if you know someone who could use a bit of Bookkeeping TLC let them know that they are not alone and have them call me 805-764-1MJB (1652).

Be Prepared

According to Money Magazine, 78% of Americans will have a major negative financial event in any given 10-year period such as:

  • You are unexpectedly laid off from your job
  • You owe a bigger tax bill than you had anticipated
  • Your car is totaled in an accident
  • You are hospitalized from a devastating illness
  • Your apartment is burglarized of most of your possessions that are uninsured

These are just a few of the myriad of possibilities that can wreak havoc with your life making it next to impossible to recover financially without an emergency fund. Even worse if you should have to file for bankruptcy… making your credit worthiness a moot point.

In order to prevent a financial disaster in the making, commit to having a 3-6 months’ worth of savings in a separate account. A savings account may be too easily accessible which would be tempting to take money out so be sure to find an account where you can easily obtain your money within 24 to 48 hours. Your financial consultant would be able to help you find an account that would work best in your situation.

Now that you have seen some very important reasons of why you need an emergency fund, let’s look at a few ways to get started.

  1. Determine your monthly expenses and multiply by either 3 months or 6 months, whichever you prefer or start out with a goal of 3 months and once you met that goal repeat it for another 3 months.
  2. Calculate how much you can put away each month and then treat it like a bill by making regular monthly payments.
  3. Find creative ways to add money to your emergency fund:
    1. Did you get a tax refund?
    2. How about that Holiday bonus?
    3. Do some freelance work
    4. What about those bottles of pennies or coins? These can really add up!
    5. Be committed to creatively save each and every day!

Once you get started, you will be amazed at how easy it is to build your emergency fund; all you need is a strategy and an objective to meet your goal for financial freedom.

Make it a great day!
Marla J. Blanchard
MJB’s Bookkeeping Solutions

Don’t keep me a secret, if you know someone who could use a bit of Bookkeeping TLC let them know that they are not alone and have them call me 805-764-1MJB (1652).