Archive for the 'Accounting 101' Category

Set Up a Simple System NOW and Deter Headaches Next Tax Season

February 11, 2017

It’s mid-February if you’ve got your taxes completed, you ROCK! You are definitely doing things right. If, however, you find yourself scrambling for receipts, mileage and other information, put together a system NOW in order to avoid headaches and late nights next year:

  • Have your business expense files easy to access so that you file your expenses immediately. This means that your files are not hidden in the back of your file cabinet but are at the front or in a stand up file on your desk. Expandable folders, hanging folders, manila folders are all fine. Use whatever helps you to file right away.
  • Get out of “shoe box syndrome” by categorizing major expenses – separate your business expenses as you file: office supplies, phone, advertising/marketing, dues…
  • Get in the habit of using the “Reconcile” feature and actually balance your checkbook on a monthly basis –catch errors when they happen rather than 6 months later… (or work with a bookkeeper regularly)
  • Run the “canned” reports on spending each month and actually look at your business reports to see where your money is going, looking for anything out of place, odd or unusual (or communicate with your accountant regularly)
  • Track your business mileage as you go rather than try to piece it together after the fact. Include a mileage log in your car, purse, briefcase or wherever you will see it often. A post it on your dashboard can help you to remember. You know there are several APPs for that, I personally use Everlance now, after using MyLog for years.
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Prepare for tax season… its never too late… or too early :-)

December 15, 2015

Annual December Posting…

Utilize simple recordkeeping software – quicken or MS money come preloaded on new computers

Categorize major expenses –

Home: mortgage, utilities, auto, contributions, taxes

Small business: office supplies, phone, advertising/marketing, dues…

Utilize the “Reconcile” feature and actually balance your checkbook on a monthly basis – catch errors when they happen rather than 6 months later…

Run “canned” reports on spending & actually look at them to see WHERE your money is going, looking for anything out of place, odd or unusual

Use a filing system – expandable folders, hanging folders, manila folders: Use Labels…

Personal

– Tax related documents – 1099s, W-2, real estate taxes, auto taxes, sales tax on major purchases, contribution receipts, purchase agreements

– Capital expenses – home improvements, major appliance purchases

– Other personal receipts that you need to keep – in order to return items or get service done

– Shred – To be shredded – wait at least 90 days before you shred just in case you need it later

Small Business

– AR Invoices sent –

Numerical copy kept in monthly folder or 3 ring binder
Copy kept with job/project information
– AR Checks received – copies attached to deposit slips

– AP Invoices received – folder by due date

– AP Invoices paid – alphabetically by vendor

– Capital equipment purchases – copies of AP invoices for depreciation purposes

– Bank reconciliations – folder for each account

– Credit card statement reconciliations – folder for each CC

– Advanced Accounting Issues:

Payroll records – whole system of PR / HR issues
AR aging reports – past due reports
AP aging reports – unpaid liability reports
Inventory – monthly counts / reconciliations
Depreciation spreadsheets
Prepaid expenses
Accrued expenses

Set Up a Simple System NOW and Deter Headaches Next Tax Season

March 17, 2014

If you’ve got your taxes completed, you go girl! You are definitely doing things right. If, however, you found yourself scrambling for receipts, mileage and other information, put together a system NOW in order to avoid headaches and late nights next year:

  • Have your business expense files easy to access so that you file your expenses immediately. This means that your files are not hidden in the back of your file cabinet but are at the front or in a stand up file on your desk. Expandable folders, hanging folders, manila folders are all fine. Use whatever helps you to file right away
  • Get out of “shoe box syndrome” by categorizing major expenses – separate your business expenses as you file: office supplies, phone, advertising/marketing, dues…
  • Get in the habit of using the “Reconcile” feature and actually balance your checkbook on a monthly basis –catch errors when they happen rather than 6 months later… (or work with a bookkeeper regularly)
  • Run the “canned” reports on spending each month and actually look at your business reports to see where your money is going, looking for anything out of place, odd or unusual (or communicate with your accountant regularly)
  • Track your business mileage as you go rather than try to piece it together after the fact. Include a mileage log in your car, purse, briefcase or wherever you will see it often. A post-it on your dashboard can help you to remember.

Prepare for tax season… its never too late… or too early :-)

December 31, 2012

This bears repeating annually…

Utilize simple recordkeeping software – quicken or MS money come preloaded on new computers

Categorize major expenses –

Home: mortgage, utilities, auto, contributions, taxes

Small business: office supplies, phone, advertising/marketing, dues…

Utilize the “Reconcile” feature and actually balance your checkbook on a monthly basis – catch errors when they happen rather than 6 months later…

Run “canned” reports on spending & actually look at them to see WHERE your money is going, looking for anything out of place, odd or unusual

Use a filing system – expandable folders, hanging folders, manila folders: Use Labels…

Personal

– Tax related documents – 1099s, W-2, real estate taxes, auto taxes, sales tax on major purchases, contribution receipts, purchase agreements

– Capital expenses – home improvements, major appliance purchases

– Other personal receipts that you need to keep – in order to return items or get service done

– Shred – To be shredded – wait at least 90 days before you shred just in case you need it later

Small Business

– AR Invoices sent –

Numerical copy kept in monthly folder or 3 ring binder
Copy kept with job/project information
– AR Checks received – copies attached to deposit slips

– AP Invoices received – folder by due date

– AP Invoices paid – alphabetically by vendor

– Capital equipment purchases – copies of AP invoices for depreciation purposes

– Bank reconciliations – folder for each account

– Credit card statement reconciliations – folder for each CC

– Advanced Accounting Issues:

Payroll records – whole system of PR / HR issues
AR aging reports – past due reports
AP aging reports – unpaid liability reports
Inventory – monthly counts / reconciliations
Depreciation spreadsheets
Prepaid expenses
Accrued expenses

Accounting 101: Personal Budget: before you can determine how much money to take out of your small business, you must first understand how much money you need to cover your personal bills.

November 12, 2012

That statement may seem like a no-brainer, but a surprising number of entrepreneurs don’t stop to figure this out – they just take the money out. They do not consider that they should leave money in the business to make sure it continues and grows.

At the outset you must determine if the cash flow will be enough to continue the business, pay your personal bills and fund your retirement. Most businesses need to keep some money to keep going [inventory / supplies/ opportunities], and if you cannot live on the excess cash available to take out, you need a backup plan or you will be among the statistics of new business failures.

Accounting 101: What can you do to be sure that you can pay your bills on time?

October 17, 2012

Make sure that you collect your own invoices on time – don’t let customers turn you into a bank. Maintain strong cash flow practices – always know where you stand on a daily, weekly, monthly basis.

Best Practices for Independent Consultants

June 3, 2012

I originally posted this May 4, 2011, but it bears repeating…

First & foremost, it is understood that – you need to be organized and able to multitask.

Then you need to be comfortable with networking, as for best practices…

A       Always be professional; even in the most casual of offices, NEVER wear jeans

B       if you know the Big picture and the details; you will never be blindsided.

C       Create a consistent work flow to follow

D       be Dependable; if you are going to be late, call

E        be Ethical above all else; if it feels wrong, it IS

F        Friendly smile at all times

G       you Get the idea…

Good Luck!

Accounting 101: Depreciation

November 30, 2010

When you buy equipment that you can use for years, you spread that cost over the useful life of the asset rather than expense the entire amount when purchased.

Example: Purchase a computer for $1,800 with a useful life of 3 years: your monthly expense will be $50 [$1,800/36 months]

Accounting 101: The overall reason to forecast…

October 28, 2010

is to help your company reach its’ objectives and to determine which strategies will accomplish this task.

Defining the purpose, scope, and objectives gives you the target at which to aim your strategies.

Accounting 101: Control – the process of establishing procedures and then obtaining feedback in order to ensure that all parts of the company are functioning effectively

September 7, 2010

Internal Control – the entire system of controls, both financial and operational, established in order to provide reasonable assurance of effective and efficient operations, financial control and compliance.