Tag Archives: organization

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.

To LLC or not to LLC: that is the question

Being an artist or working in a creative industry as a freelancer isn’t always easy. Unless you’re fortunate enough to find steady clients and gigs, you feel like your professional life is forever going in a circle of feast and famine.  And, if you have worked as an artist of a creative freelancer, you know that being talented at what you do isn’t enough. That myth of the carefree artist with his head in the clouds and no notion of how the business world works is simply that – a myth. Being a great artist goes hand-in-hand with being a savvy businessperson, because as much as you love your art, you need to eat and keep the lights on, too.

One thing every entrepreneur thinks about eventually is whether to operate as a Sole Proprietorship or to form a Limited Liability Corporation (LLC).

In most cases, you’re probably going to start with and stay with a Sole Proprietorship. This is the easiest business to start because there isn’t much set up required. Although you may be required to get a business license, there isn’t any paperwork you need file unless you choose to “Do Business As” (DBA) a name besides your own. You may also want to consider going ahead and applying for an EIN (Employer Identification Number. While it’s not necessary for a Sole Proprietorship, it will help protect your social security number. It also legitimizes that what you are doing is more than a hobby. You report your earnings annually and you are responsible for paying self-employment taxes as well as covering contributions to Social Security and Medicare.

If you’re fine with all of that, and you’re careful with your accounting practices, then you will probably want to form a Sole Proprietorship.

Keep in mind though, that if your business should ever be sued, then you are personally liable for everything. And if you should lose, your house, your property, and other assets will be at risk.

Forming an LLC takes some legwork, preparation, and money. After you chose a name and make sure it’s not already being used, it’s time to file articles of corporation. Depending on the state you live in, expect to pay between $100 and $800. In Kentucky if you forgo the ease of having someone else do the heavy lifting for you, it will only cost you a $49 fee paid to the State Treasurer to file your articles of corporation.

Some states also require an operating agreement that outlines how your business is run; Kentucky, however, does not. You’ll then need to get an EIN (Employer Identification Number), which is free and can be obtained online at the IRS website. Keep in mind though, that you can only register for one EIN at a time. At this point, you can separate your personal and business assets. This is the main advantage for forming an LLC as an artist or freelancer.

Finally, you’ll need to register for state tax and unemployment insurance. Even if you happen to be your only “employee” you will still need to do these things in order to be in compliance of state law.

Depending on the nature of your work, forming an LLC might be overkill. Many artists and members in what is termed the “creative class” keep it simple. And, unless the kind of work you do expands to the point that you need to bring in extra help, you will want to seriously consider keeping your work life as least complicated as possible.

If you’re reading this and your business or business concept doesn’t fall under the umbrella of the “gig economy” or you don’t identify as part of “the creative class,” keep in mind that every entrepreneur has to make the decision at some point whether to operate as a Sole Proprietorship or as an LLC.

Cash or Accrual – What’s the Difference?

The Cash method is like a checkbook. You record the income when you receive it, and record the expense when you write the check. It is easy to maintain, and good way to start for new businesses figuring out where they are going. It does not include the Accounts Receivable or Accounts Payable so may misrepresent your true income and expenses. As your business becomes more complex, you may decide you need the detail of Accrual accounting.

The Accrual method records the income when the sale is made, whether you have been paid or not, and records the expense when incurred, even though it has not been paid. It is a more intricate system to learn, however, more accurately tracks your finances. Preferred by Accountants and CPA’s for management purposes.

If you have questions about which is best for you, Contact MJB’s Bookkeeping Solutions now.

Find hidden profits

  1. Review Balance Sheet and Income Statements (P &) at least quarterly if not more.
  2. Reconcile Bank accounts monthly.
  3. Bank at more than one financial institution to develop a relationship that may help you when you need a loan.
  4. Hire a Bookkeeper to help you part time so you can focus on growing your business.

MJB’s Bookkeeping Solutions assists businesses and individuals with their accounting needs. Services include but are not limited to installation, setting up chart of accounts, training, and troubleshooting problems. We understand the challenges of owning a business, and are ready to connect you to the answer for all your business questions.

Contact us at 805-764-1MJB or 502-309-9MJB,  follow us on Twitter and Like Us on Facebook.

“A nickel ain’t worth a dime…”Basics of Bookkeeping

Every Business is unique, you need a bookkeeping system customized to your business operation.

Two Considerations for creating your basic bookkeeping system:

  1. Types of transactions the business enters into and how information about those transactions can be captured:  Income, Expense, Asset, Loan or Credit Card Liability, etc.  Will you manually enter the data, or download from the Bank?
  2. Type of financial information the business needs to efficiently manage its operations: In addition to tracking Income and Expenses, do you need to track inventory, valuation and profitability;  income and expense across multiple locations; or Employee costs?

The Chart of Accounts (COA), is the heart of every Company file. The COA should include:

Accounts to capture Income, Assets, Expenses, Liabilities, and Equity specific to your business, and be flexible enough to allow for future growth. Every transaction you enter is allocated to the appropriate COA account.

On a regular basis, you, your Bookkeeper, or Accounting Professional should run at least these (3) financial reports to make sure your Company is healthy and on track:

  1. **Profit and Loss or Income Statement- Summarizes your income and expenses for a period of time, so you can tell whether you’re operating at a profit or a loss, and where you might trim spending
  2. Balance Sheet – Summarizes the financial position of a business as of a specific date – a “Snapshot” of your company. The value of the assets is always exactly equal to the combined value of the liabilities and equity.
  3. Statement of Cash Flow – This report shows how your cash position changed over a period of time. Shows cash earned from profit; Where you received additional cash; Where your cash was spent; How cash was provided or used in terms of Operating, Investing, and Financing Activities.

Seeking Funds for your Business?  Contact MJB’s Bookkeeping Solutions for credible and tailored assistance.

 

Essential Financial Reports for Any Business

Whether you are a new start-up, or an existing business, there are (3) important financial analysis reports you should create  on a regular basis, especially if you are seeking funding for the business:

  • Profit and Loss Statement – This report shows you your income, your operating expenses, and the Net Income or Profit from all your hard work.  Analyzing this report regularly will show where you may be spending too much. 
  • Balance Sheet – This report shows your Assets such as  cash, accounts receivable, inventory, equipment, furniture, building, and land; your Liabilities such as short/long term notes, accounts payable,  taxes, and interest;  and your Equity in terms of invested capital, and retained earnings.
  • Cash Flow Statement  This report shows how your cash position changed over a period of time. It shows the amount of cash earned from profit, where you received additional cash, and where your cash was spent in terms of operating, investing and financing activities.

 Two documents that are particularly helpful for New Businesses are are the Start-Up Costs worksheet where you will estimate the capital you will need to open your doors,  and the Break-Even Analysis which will show the exact point where you will start making profit after covering all of your operating expenses.

You have many choices when selecting a bookkeeping service.  What sets us apart is our tenure of professionalism, passion for accountancy, believing in the value you provide the world, working with you to help you measure your business’ success.  We serve a broad range of business client types and sizes, with expertise in various accounting software platforms. Contact  MJB’s Bookkeeping Solutions today.