Tag Archives: business accounting

Keeping The Edge

As with any game in sports, it’s rare that a good offense wins without a good defense to back it up. Your finances are no different.

So how often should You analyze your “game” to determine any weaknesses and reposition resources as necessary? Once a month is the best practice, subject to the unexpected, a flag that could put Your income at risk and elevate expenses.

Having an “A” game in place is good, and having a plan “B” is also recommended for reasons noted above. Here are a few tactics on how to fortify Your game plan:

  • Are there other possible revenue streams You could implement
  • Ideally you already have and are using a budget, and make sure You include Owner Draws in the budget
  • Document all cash purchases to capture any deductible personal or business expenses
  • Save consistently for rainy day and/or the emergency funds
  • Be as debt free as possible, pay off credit cards regularly if possible
  • Rotating credit cards and paying them off affects credit scores in a positive way

Accountancy is all about the numbers, achieving offensive/defensive balance, and being able to quickly adjust to change.

MJB’s Bookkeeping Solutions will work the sidelines to assist You in creating a clearer economic path, so that You can spend your effort and time on what is important.  Call, Email, or Make an appointment for Your No Obligation Consultation Today.

Classifying transactions

Pinpointing Your Niche: Classes…QuickBooks Style

September has arrived and many are sharpening pencils as well as skills. If you are managing multiple revenue streams and looking for a good way to assess what is working  and what is not, grab your favorite note taking device and explore the ABC’s of “Classes”, and how it might provide you a clearer economic path.

Maybe you need to track product and service lines in detail. QuickBooks Classes differentiate transactions by departments, locations, product line, service type or other defining category relevant to your business or personal finance preference. QuickBooks keeps it easy and clean using the same chart of accounts across all Classes. Run a report and you will quickly see the line of business metrics.

When setting up Class Tracking think about

  • How do you want to see your business segmented on your financial reports? Classes will capture not only income and expense, but also assets, liabilities, and equity transactions.
  • Be consistent in how you enter class information on registers to be sure that your financial reports are accurate.
  • Need additional specifics? Set up “Sub-Classes” under the main Class.

Once you have mapped out your system you will have the ability to analyze your business finances from different perspectives…using built in reports “by class”.

When you might use Classes

  • A business with two or more locations – like a grocery store – could use to analyze the profitability of each location.
  • A contracting business with both maintenance and installation services may want to track the return on investment of each service separately. Or, perhaps need to track by a single family, commercial, or renovate and sell investment property.
  • A Non-Profit will track income and expenses by grant, event or project.
  • A Property Management Company might track by tenant within a single location, or for each property location.
  • A service business may be interested in tracking the location of current clients, in order to increase marketing in an untapped area.

You want to know if you are getting paid for your hard work – where, how much and when your money is coming and going, and most importantly what’s left for you.  Class tracking is a great tool to do this.

If you have questions about classes or other accounting questions, please contact me or make an appointment now, to ensure that you are focusing your hard work, passion and commitment for creating value in the right direction.

Looking for an organized way to manage your personal or business finances, and save time preparing various tax returns like Payroll, Sales Tax, and State and Federal Tax Returns?

Anyone, business or individual, can use QuickBooks for this purpose, and get organized with less paper and shoebox clutter.  We will customize the learning to You, whether a beginner or beyond. For the beginner we start with a few items like:

  • Easy Installation (The Wizard)
  • Homepage (The Roadmap)
  • Customize for your individual or business with preferences and settings
  • Create Invoices for Customers & Bills from Vendors
  • Basic Financial Reports

For those beyond, sessions will tailored to your specific questions.

Call  or Email Today for more information, or to get started with Your organized financial future. You work hard and deserve more freedom to choos how You use your time.

The Vitals, Heart of a Personal or Business Operation

Have you ever considered that accounting is the health sustaining organ of an operation, and that its health has an impact on success or failure? An operation will survive when there is sufficient cash flow, however, what about when expenses are exceeding the income for a prolonged period? Perhaps an analogy will help clarify this concept.

The human heart is divided into two flow systems, which continuously pump oxygen and nutrient rich blood to sustain life. The Income flow from the organs and tissues of your body enters the right side of your heart, pumps to the lungs to remove waste and recharge with oxygen, and returns into the left side of your heart. The flow then Expenses to all parts and organs, ensuring oxygen and nourishment for your body to work efficiently.

Finances also have two flow systems, Revenue (income) and Expense (outgo). To gain a better understanding of financial health, a tool is also used that helps identify where the transactions are going and that’s the Chart of Accounts (COA). Arteries and capillaries organize and direct your blood on a path to where it’s needed, the COA organizes your finances in a way so that you see how your cash flows, and determine if the income/outgo flow is healthy.

Independent of the operation type, size, industry, or structure all use a chart of accounts, generally organized the same with bank accounts, assets, liabilities, equity, income, and expenses. From there, the unique personal or business aspects will determine the necessary customization of the COA.

  • Bank: where cash is deposited (petty cash, checking, savings, mma)
  • Asset: bank accounts, accounts receivable, or other current assets (prepaid expenses or loaning money to someone for example), and fixed assets (major purchase like furniture and equipment).
  • Liability: accounts payable, loans or lines of credit, credit cards, security deposits from customer, sales or payroll tax.
  • Equity Account: track money invested in or money taken out by owners or shareholders.
  • Income: money earned from sales of product or service, residual income, commission.
  • Expense: categorizes money spent immediately during normal operations, not purchased as accounts payable (office supplies, rent, advertising, utilities, etc.).

Company finances can be very complicated, however, with the proper tools it is very possible to keep track of your operation’s health. Whether you are using the old-fashioned paper and pencil or using accounting software, it is vital to know where the money is coming from, and where it is going. Categorizing expenses properly gives insight into ways to adjust and improve health, and assists in getting every tax deduction entitled to.

As you would seek out professional advice to ensure that your body’s heart is functioning properly, consider the professional advice of a professional bookkeeper or accountant to safeguard the heart of your business.

To Your Health

Who’s Managing Who? Lassoing The Runaways

Sooo, how do you keep your finances organized? Shall I expect your reply to include a sour look and an attempt to change the subject real fast? Many would rather be stuck in a huge traffic jam or go sit in the dentist’s chair rather than think about organizing their finances. But the truth is, if your costs, both business and personal, are running amok… then perhaps you might be throwing money to the wild, or down the drain.

Have you ever been surprised by that pesky late fee, then again, and again in rapid succession? Have you ever complained to the credit card companies that you never received the bill, only to find months later it had fallen behind the desk?

The cost of disorganization is not only financial, it can waste time and take a toll on our mood (and the unknowing around us). Consider how much replacing lost tools, recreating lost files, or time putting out fires costs your business. And there’s more… consider the losses involved with forgetting to send invoices to customers, paying for overtime labor and dealing with employee turnover. Disorganization costs money and could lead to measurable losses in profitability. It is time to stop the stampede, break in and bridle!

The good news is that it only takes 5 simple steps to help lasso in your business costs. You probably already have heard of that nasty “B” word, budgeting?

  1. Figure out your monthly net income (if it fluctuates, take the previous 12 months divided by 12 for the estimated monthly)
  2. Figure your monthly fixed expenses (rent, utilities, lease, insurance etc.)
  3. Figure variable expenses – commodities that don’t have a fixed price tag each month (office supplies, groceries, repairs and maintenance, meals and entertainment etc.)
  4. Figure a monthly contingency or reserve expense for the unexpected (trust me the unexpected is inevitable)
  5. Review the budget versus actuals monthly and fine tune your numbers

Your budget is a very useful tool to help plan for near and far range, and be able to go the distance. You might think you lack the time to organize your expenses, however, a few hours of organization with a professional accountant/bookkeeper, could spur you on towards being knee deep in clover sooner than later.

Make today be the day for changing horses. Decide to run free and keep up with the finances monthly yourself, contract a professional to saddle up on a regular basis, and/or occassionally opt for a bookkeeping/accounting audit to know that you are on the right track. The important thing is to corral the dark days.

Run for the roses.  Unwrap your Daily Double by Contacting Us Here and sending a message.

Does Math Really Count?

Guest Blog by Barbara J. Waite, Your Chief Priority Officer – Projects, Your Way

How many of you have had that experience in high school where you were wondering, “Now how in the world will math be useful to me in real life?” Well it wasn’t until I was asked to tutor a high school student on the fundamentals of algebra did I develop a real appreciation for the language of numbers. The real cool thing about this language is that it ties all humanity together… math is a universal phenomenon whether it is represented by the dollar, euro, yen or peso. As I began to ponder over this implication, I could clearly see how math is so immersed in our daily routine that our life would be chaotic without it! Here are a few examples of what I mean:

  • MATH HELPS US BUILD THINGS: Creating something that will last and add value to our home requires creativity, the right set of tools, and a broad range of mathematics. Having the ability to do minor home improvements will save a lot of money and headache. Armed with math, we will also have the ability to check the work and project estimates, ensuring we’re getting the best value.
  • MATH HELPS US BECOME GREAT CHEFS: More math can be found in the kitchen than anywhere else in the house. After all, recipes are really just mathematical problems or self-contained step-by-step sets of processes to be performed.
  • MATH HELPS US MANAGE OUR TIME: With only 1,440 minutes in a day, we really need help in prioritizing what we need to accomplish and thankfully, with the help of math, we can! By assigning each task a number and the higher the number, the more priority it receives. This mathematical to-do list allows us to dedicate yourself to the most important and time-sensitive tasks first.

And most importantly,

  • MATH HELPS US MANAGE OUR FINANCES: Experts agree that without strong math skills, people tend to invest, save, or spend money based on their emotions. Someone who thoroughly grasps the concepts of exponential growth and compound interest will be more inclined to better manage their finances.

These are but a few ways in which math helps us to make better daily decisions… not only in our personal lives but also our business, where the accounting system is the heart of the operation and the state of its health can mean success or failure. Simply put, math is about solving problems and it plays such an integral part in our daily activities both personally and professionally, it’s no wonder why our high school math teachers were so intent on teaching us this very valuable language skill.

If math makes you squirm or you just want a second opinion, consider an external Bookkeeper/Accountant Doctor for your finances.

Declare your Independence – From being the “Everything to All” for Your Business

Consider an outside bookkeeper/accountant in the same way as you would a longtime friend, as a source of reliable information and advice, but in relation to your business finances, they have specialized experience and focus.

The business scope of an accountant does not end with tax preparation; they can and should be a business partner throughout the year bringing their knowledge and perspective into your industry to help improve your bottom line and navigate through an uncertain economy.

Here are many reasons why all entrepreneurs should work with an outside bookkeeper/accountant:

  1.  Focus on the reason why you started your business. Entrepreneurs are very passionate, so why get bogged down with tasks that do not help to achieve their passions? On the other hand, a bookkeeper/accountant is inspired to take on the heavy lifting of the tedious money details of your business.
  2. Achieve work/life balance. You might be asking “What is that?” Many business owners might ask. In spite of how new or well established a business is, owners across the board are struggling to find the right balance between work and life. And this goes back to point 1; performing functions that you are less enthusiastic about handling, which allows you to sell, market and grow during the day and take your child to soccer practice at night.
  3. Represent your business professionally. Your bookkeeper/accountant and you represent your company in the best possible way. Companies that use such an external resource report that the service is vital to their success. In a recent study conducted by accounting experts among U.S. business owners, 89% of respondents stated that this is an essential element of their success.
  4. An Outside Accountant can introduce a new perspective. Most times entrepreneurs are so buried in the daily operations of their business that they might not be able to see the complete picture. Relying on your bookkeeper/accountant in this way allows you to take a step back, look at the wider picture and thus a fresh perspective. Who knows, you may come up with the next big idea the world has been waiting to hear.

Continuing the Pursuit of Independence
Today, July 4th, many entrepreneurs will be going to the celebrations of fireworks and barbecue with their families to celebrate Independence Day. Others might sneak some pieces of work between the parties, but mostly three-quarters of them (72 percent) agree on one thing: having their own business gives them greater freedom and independence than to work for someone else, which makes each day independence for them.

Being a business owner is not an easy role. Once a challenge is successfully resolved another takes its place. In working with small independent business owners, I have learned that would not give it up. The desire for continued independence is as strong in them as in the early settlers who declared their intent by the Declaration of Independence.

Could your business survive without the assistance of an external professional? Perhaps, but the insight, guidance, and expertise shared could be just the catalyst for making your business thrive.  Pursue Your Independence with MJB’s Bookkeeping Solutions and receive the gifts of time, business accountability, perspective, with less stress.  Contact Us.

Wishing all my readers a Safe, and Happy 4th of July Independence Day Celebration.

Your Art is Your Business: Making Time for the Business to Keep Making Art

There are three things that work against artists making a living from making and selling their work: the (seemingly) fickle nature of people’s taste, the fickleness of the market, and (sometimes) the artists themselves.

Movies and television have fed us that trope for years: the temperamental artisté who isn’t good at “real life.” The writer who won’t use a computer. The painter who hates cell phones. It’s not that there’s anything wrong with liking typewriters or hating cell phones. But if you are counting on being discovered, lauded for your eccentricities, and left alone to create while other people handle your money for you, you might be waiting a really long time.

If you’re not interested in making a living with your art, that’s one thing. You working a day job and you make the time to create. But if you want to make a living with your art, you can’t afford embrace that faux artistic temperament and ignore the practicalities of running a business.

If you’re going to make a business of making art, you need to be able to approach it, in part, as a business. It helps to start doing that from the very beginning. That means creating a workable business plan.

What you need to know about creating a business plan

The Mission and Vision Statements

Every business plan, and every business, begins with mission and vision statements. Naturally you know why you’re an artist. You understand the drive it requires. But there’s something about putting it down in writing, codifying and clarifying it so that as you move forward, they are more than words on a screen. They are the foundation of your future success.

Goals

Yes, you want to create art and sell it. That’s the larger goal. Establishing some benchmark goals, however, will help you plan the steps you need to take in order to make that a reality. Where do you want to be in three months? Six months? Nine months? A year? You want your goals to be ambitious, but they should also be reasonable. You want to be able to march forward, but you also want to make sure that your goals aren’t so abstract that you grind to a halt when you hit a stumbling block. (And you will.)

Identify your customer

No, it’s not about making art to satisfy a customer. It’s about focusing your marketing and social media strategies to create the best possible outcome. The thing about being an artist is that while it may sometimes feel like no one notices what you do, it’s important to remember that there is an audience – and a customer – for everything. The hard part is knowing how to focus your marketing so that you’re working smarter, not harder.

 

That’s really the entire trick to giving the business enough time so that you can keep making art. Work smarter, not harder. It means more than just being comfortable wearing multiple hats and working on multiple levels. It means that, on some level, you thrive on it.

Starting and running your own business is always a risk, regardless of the kind of business it is. Turning your art into your business is a unique kind of risk, though, because you’re risking more than just the very important tangibles of time and money. You are also risking that intangible part of you that drives your art and makes you who you are.  The bravery required to put your passion on the line is necessary. But you need to protect that passion as much as you can.

However, if you forged ahead without a business plan, that doesn’t mean you can’t sit down and write one out. There’s never a wrong time to sit down and rethink how you’re doing things, and creating a business plan is a good way to re-evaluate and reorganize your business so you can focus on your art. There’s plenty of information out there to help you, too. Remember, part of working smarter, not harder means making use of available resources. Check out the Small Business Administration (SBA) Small Business Development Center, and SCORE a nonprofit association dedicated to helping small businesses in your state.

Small Business Accounting Pitfalls

There are so many things to keep in mind when you own a small business. Details ranging from inventory to order fulfillment are just the baseline concerns. If you’re a brick and mortar business, your overhead includes a lease, utilities, and maybe additional employees. If you run an online business, your overhead includes the cost of parking your domain somewhere, maybe an email management system. Regardless of whatever kind of business you own, though, you will have to make sure your books are in order.

Keep it separated.

It’s true that you will spend money out-of-pocket to start your business. You’ll also most likely spend out-of-pocket to bolster up your business in the first few years. Until you start turning a profit, pretty much everything you have will go into the business.

In spite of what seems like an endless flow of your personal cash into supporting your business, though, you should still keep your personal finances and your business finances separate. Creating a separate business checking account is a good way to compartmentalize and organize your business. Not only is good accounting policy, it’s also a way to help you mentally compartmentalize and look at your business in a critical and objective way.

Anyone who starts a business has to have passion and drive. Without it, there’s little point to making all the necessary sacrifices. But the truth is, it’s just not enough to be passionate about your business idea. You have to be able to look at the business and make decisions as objectively as possible.

Keeping it as separate from your personal finances as possible is a solid first step towards helping yourself do this.

Pay attention to the kind of business credit you get.

Depending on the kind of business you started, you might need seed money to build inventory, or to float your overhead for the first few months — or longer. There are all kinds of options and all kinds of institutions that might be able to help you., from banks to credit unions to even crowd sourcing. Be sure you pick the one that’s right for you; and, if you can, at all costs, try to avoid seeding your business using a credit card. If you find yourself unable to pay it back, it could seriously hurt your chances to access other kinds of funding.

Keep it organized.

Disorganized record keeping is the death knell of small business. If you’re forward thinking enough, you already set how to organize and store your important records. But even if you didn’t think about that in the beginning, it’s not too late to start now. Take the time to go back through your records and organize them. Yes, it’s a pain. Yes, it takes time, which is a commodity that’s already in short supply. Yes, it means some headaches, depending on how long you’ve put off going through and organizing your records.

But it will be worth it. And, it’s also a good lesson for you that will have more good returns than bad.

Update your books on a regular basis… more than just monthly.

You are the heart and soul of your business. But your books are the blood and bones. Keeping your books up-to-date isn’t the sexiest way to spend an evening; but it will give you the confidence you need to make objective decisions.

It may seem like updating your books monthly would be enough, and it may well be enough for a well-established business. If you’re just starting out, however, the ebb and flow of your business isn’t all that stable. The more you put your eyes on your books, the better chances you have to succeed later. It’s not enough to keep your receipts. Add them in weekly, or even bi-weekly. Keep an eye on your receivables and sales. If your business has heavy overhead, it’s even more important that you update your books regularly.

Don’t confuse sales with profits.

You’ve made a few sales, satisfied a few clients, and gotten a few more. Good for you! But if you’re just starting out, be sure to remember that sales aren’t profits. You don’t get to call it profit until after you take out business expenses – if for no other reason than to take pressure off your personal pocketbook – and quarterly or annual taxes.

It’s good to be passionate and important to be excited about your business. But don’t start trying to roll around in profits before they actually start rolling in.

Don’t be afraid to consult a professional.

It’s okay to admit you’re over your head in certain aspects of your business. That doesn’t mean you have to throw in the towel. A smart business owner knows it’s important to sometimes find someone who knows a little more about some aspect of the business. Because in the end, owning a successful business is as much about learning and evolving as it is relying on common sense.

Last minute tax tips for small businesses

As the April 18th deadline for filing taxes looms on the horizon, you may be in the enviable position of having already filed your tax return. If you haven’t already filed, however, as a small business owner or entrepreneur you are probably working overtime to get it done. Depending on the kind and size of business you run, you might have a tax preparation professional do your taxes for you. But you may be just starting out and want to save the expense; if that’s the case – and even if it’s not – there are a few things to keep in mind.

1. Know what you owe

As a small business, you should probably be paying your taxes quarterly. These payments can be easy to forget, though, especially if you are a sole proprietor working in the creative economy or the gig economy.

If you did make your final quarterly payment on January 15th, make sure you take that into account when you file. Take the time to deduct any levies or account for any late fees and penalties the IRS may impose if you happened to miss a payment.

2. Accelerate or defer.

Many sole proprietors use cash basis accounting – which means they report income when payments are received. Depending on the kind of business you have, you might consider scheduling your billing so clients can pay early in the new year for work you completed late in the previous year.

The advantage to this is that you’re getting income early in the year.

However, if you had a successful year you could accelerate your deductible expenses. There are a few things you can do to help relieve your tax burden if you plan ahead, such as:

  1. making extra charitable donations,
  2. renewing professional journals and licenses before the year ends, or
  3. replacing old business equipment.

If you are in the position to, you might also consider

  1. prepaying your state income tax,
  2. selling an investment property at a loss, or
  3. selling securities at a loss.

If you’re a small business owner or entrepreneur, there’s nothing you can do about taxes. They are as much a part of your business as your customers or client base. The trick to making it all less odious, though, is to be proactive. Think ahead early in the year so the end of the year doesn’t hit you any harder than it needs to.