Archive for the 'Small Business' 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.
Advertisements

Internal Controls… AGAIN

March 24, 2016

I originally posted this in April 2014 and I truly believe it is still very relevant and so I decided to recycle it; enjoy…

Internal Controls are really quite simple; for example, in just looking at an accounting department – preparing a well documented departmental SOP (Standard Operating Procedures) detailing each area’s (Accounts Payable AP, Accounts Receivable AR, Payroll PR, General Ledger GL) duties so that anyone could pretty much step in and do the job and then simply utilizing a “Month End Checklist” that has all the pertinent tasks on each row (bank reconciliation, GL account analysis, payroll reporting, etc.) and a column each for the initials & date of the person performing the task & the person performing the review will result in providing assurance that everyone’s work not only has a second set of eyes at some point but that they actually document the fact.

For most companies this would be a simple one sheet form that they could print off each month to fill our or fill it out online; of course you would want to have this document in your month end file for later review by the auditors. Now everyone – the company, the auditors & any other stakeholder’s – can be more confident that the Company’s financial information is accurate and reliable as can be; because, let’s face it, we all make mistakes.

This process should then be duplicated for each department in the Company and the net result is having a very good set of Internal Controls detailed through Departmental SOPs; which are then “audited” by the “Internal Audit” department for compliance. Non-compliance is not a failure but an opportunity to learn & grow by identifying outdated procedures and to change to what is actually working. So next time the “dreaded” auditors come, embrace them with a “How can you help me streamline while preserving the integrity of my work”. It’s a Win-Win situation!

I love having a second set of eyes on my work, you get so caught up in the minutia that you need that second set of eyes and that second set of perceptions. Since I am self-employed, I usually am performing that first review but I love it when I can send it to someone else & ask for a quick review (nothing worse than having a typo or a column of numbers that so clearly do not add up – it just diminishes your credibility.)

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

What is the purpose of recruiting?

September 24, 2014

If it is to facilitate the match between employer & employee, why then do you (as a potential employer) get a pool of candidates that do not come anywhere close to the mark of a competent employee much less the nearly perfect fit.  And when it IS a nearly perfect fit, the great divide in compensation ruins it. Ultimately, It seems to come down to either choosing the lesser evil of hiring “a warm body” to do the work or starting the whole horrendous process over.

How about from the employee side – you go to the recruiter & give them what your “ideal dream job” is and what do you get in return?  Sent on a bunch of interviews that aren’t even in the same hemisphere as your dream job and when it IS a nearly perfect fit, the great divide in compensation ruins it.

I’m just wondering, just what IS the purpose of recruiting…

Disclaimer – I have been on both sides of this employer/candidate dance and I totally abhor the entire process. As an employer you start to wonder why you hired a recruiter at all, did they even LOOK at the resume or TALK to the candidate? As a candidate you start to believe that nobody cares about what you want – if you keep saying no to interviews the recruiter will quit calling you, so you end up going on interviews where you are usually either way under- or over-qualified…

This is just something I have often wondered about but never said out loud before.

Internal Controls

April 23, 2014

They say everything comes full circle at least once in your life. When I graduated college my first position was as an Internal Auditor. While I loved the idea of helping people maintain controls I wasn’t particularly fond of being the dreaded auditor, as in “omg, the auditors” are coming. There needed to be a change in mindset on the part of for both employees – the operating department & the audit department – so everyone understood that the “auditors” were not simply trying to catch employees making mistakes, but trying to help strengthen the company’s core.

Fast forward through an 8 year stint in public accounting and then back to corporate accounting for 15 years and finally entrepreneurial consulting for 8 years… I am once again performing Internal Audit work (on a contract basis) although this time around I am absolutely loving it. I am educating clients on how to mitigate lacking controls due to limited resources – i.e. very small staff.

It is really quite simple, for example, in just looking at an accounting department – preparing a well documented departmental SOP (Standard Operating Procedures) detailing each area’s (Accounts Payable AP, Accounts Receivable AR, Payroll PR, General Ledger GL) duties so that anyone could pretty much step in and do the job and then simply utilizing a “Month End Checklist” that has all the pertinent tasks on each row (bank reconciliation, GL account analysis, payroll reporting, etc.) and a column each for the initials & date of the person performing the task & the person performing the review will result in providing assurance that everyone’s work not only has a second set of eyes at some point but that they actually document the fact.

For most companies this would be a simple one sheet form that they could print off each month to fill our or fill it out online; of course you would want to have this document in your month end file for later review by the auditors. Now everyone – the company, the auditors & any other stakeholder’s – can be more confident that the Company’s financial information is accurate and reliable as can be; because, let’s face it, we all make mistakes.

This process should then be duplicated for each department in the Company and the net result is having a very good set of Internal Controls detailed through Departmental SOPs; which are then “audited” by the “Internal Audit” department for compliance. Non-compliance is not a failure but an opportunity to learn & grow by identifying outdated procedures and to change to what is actually working. So next time the “dreaded” auditors come, embrace them with a “How can you help me streamline while preserving the integrity of my work”. It’s a Win-Win situation!

I love having a second set of eyes on my work, you get so caught up in the minutia that you need that second set of eyes and that second set of perceptions. Since I am self-employed, I usually am performing that first review but I love it when I can send it to someone else & ask for a quick review (nothing worse than having a typo or a column of numbers that so clearly do not add up – it just diminishes your credibility.)

 

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.

Annual Recycle: Best Practices for Consultants…

February 11, 2014

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!

Kathleen

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

December 6, 2013

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

Bartering Opens Your Business to New Possibilities

February 4, 2013

It conserves cash and puts idle resources to work – Just be aware of the Pitfalls

Let’s assume for a moment that you are working so hard and fast you have no time to analyze anything, but, no worries, everything is running smoothly and you have a fairly steady cash flow throughout the year so you just don’t worry about anything. Hey, you even saved some cash by bartering with several customers – good idea, right? Maybe yes… Maybe no…

Many people believe that as a cash basis taxpayer you do not have to pay taxes on income  never received; that is not true in the case of bartering because you did receive value in return, which means you were “paid” for your services.

When you barter you have to report that income you would have received and then you offset it by the expenses you would have incurred.

Where the rub comes is if you happen to barter your business services (income) for personal services (not a business expense) – you end up with income but no corresponding expense. And you did not get any cash money but you have to pay taxes on that income anyways because you received value for the service.

When bartering, make sure you barter business services for business services and personal services for personal services so you don’t have to pay taxes on “income” you never received cash payment for.

For instance, I personally would not barter my accounting services for home lawn care since the lawn care would be a personal service that I could not deduct, but I would have to report the income from the service I provided. I would barter for lawn services if I had office property that was in need of lawn services – that would be a legitimate business expense.

Family Operations – Letting go to Nonfamily Management Team

January 7, 2013

Family run operation had never shared information with employees other than the individual projects to be worked on. The owners had a hard time sharing what they considered personal financial information with managers & employees. The result – department managers did not have a clue of what it took to run the organization outside their small world and everyone was making their own purchases; there was no one looking at overall purchases and cost savings so expenses just kept going up and up. The owners realized that they could not grow any larger until they let go and allowed others to be involved in the management of the company.

I was hired mid-year to set up financial information on a departmental basis in order for managers to be held accountable. I analyzed all the information for the current year and reclassified expenses to their respective department. Next I prepared a current year budget for each department based on the current activity and the expected activity for the remainder of the current year. The owners and managers assisted int he finalizing of these budgets.

The next step was educating all the managers in how to utilize the reports and I sat down each month with each manager to go over their monthly P&L to show what actually happened versus what we thought would happen. Starting in October, together, we began the process of preparing each department’s budget for the next year. Each manager had a hand in creating the budget that they would ultimately be held accountable to. The first year they would still be learning so they would not be held accountable financially; but ultimately, they would get bonuses based on their performance.

The managers now get together monthly to review financial information, they know where the organization is going and they are helping to get there. They now feel as if they have some input into how the organization is run, the owners value their input and the company is on even more solid ground than it was before.

The company is now expanding internationally with the same management team in place all because they shared vital financial & operating information.

Moral: You can only do so much all by yourself. You need to trust others and educate them on the management of your company and then let them manage with you. When you get the right people in the right seat on the right bus… let them do what you hired them for!