RECENT UPDATES FOR QUICKBOOKS 2009
Last week I delivered a tele-seminar that focused on time management techniques using Quick Books. In that seminar I spoke of the online banking feature and its recent updates that allow you to transfer your bank transaction more efficiently. For those who were not able to attend, I wanted to give you a brief update of some of the enhancements that were made to online banking for Quick Books 2009. Here are just a few of the latest updates in release 7:
- IT RUNS FASTER! Yes, I’m sure you’ll agree that this is the number one upgrade for the feature. Especially for those with large files.
- The first split line of a transaction is now Pre-filled with the total amount.
- You are able to access other areas of the software while the Online Banking window is open.
- The Add New option now appears on the Account dropdown in a Deposit transaction.
- If your company file has more than 65535 names, QuickBooks no longer crashes when trying to load Online Banking.
- Bills now display properly if ‘Use Account number’ is enabled in Preferences.
- When opening splits and deposits for editing, the full downloaded amount will automatically appear.
For more information on this update, refer to your copy of Quick Books or visit one of Quick Books online forums or communities.
Partnering for your Success
Jacqueline E. Williams
Financial Strategist
Bookkeeping is not only for Business
The term bookkeeping is enough to send people running for cover. Why is it that, of all the business tasks to perform, this one is the most popular when it comes to procrastination? We all know the importance of having a clear financial picture of our business activities. But what about our personal lives? In terms of bookkeeping from a personal perspective, many consider this to be simply “budgeting”. Actually this is not the case. Budgeting involves determining how much money you have, and where to spend it. Bookkeeping in a sense involves the same, however it’s more complex because it’s also about creating a system or process for managing the flow of your financial data. For instance, a simple household budget would not typically go any further than a spreadsheet consisting of “income in and income out”. Bookkeeping on the other hand shows the details behind what’s coming in, from where, so that you’ll be able to create trends and make decisions based on the cumulative data. Bookkeeping involves the process of not only the input of data but the manipulation and placement of that data. So, the next question is how would you set up an effective bookkeeping system for your household? Well, I’ll show you.
First, let’s start with the beginning, which is the source of this data. For instance, our major source of household income is from salaries or business revenue. A good bookkeeping system would have separate bank accounts to receive the income. Any expenses associated with the earnings would also flow through this account. It may seem a bit redundant, however, it makes for a cleaner process when it comes to tracking your sources.
Next, any information from these sources should be kept in their own files or folders. Items received in the mail should be immediately sorted and filed according to their categories. Thus far, you can already see the importance of an efficient filing system.
Once the data has been received, next you must enter this information into a spreadsheet. Today, most people use financial software to accomplish this task. I often refer to Quick Books, because it’s my software choice for both business and personal. Quick Books has a line of software products geared towards your specific need. Even on the most basic of levels, the software is easy to maneuver. For personal financial software, there is no need to understand debits and credits. This is where most folks get confused. You will work directly from your bank account. The software even has features to track other items such as investments, property, and retirement accounts. The biggest task here is making sure than you keep your files updated. Rule of thumb is to update based on the number of transactions you produce on a monthly basis. 0-100 transactions, you can update your files monthly. 100-250, you should update your files more often, probably weekly. After you have organized all your information, from receipt to recording, now is the time to analyze your data to make some key decisions.
Streamlining your household finances is an important process and must be handled with the same focus and energy as if you were conducting business. After all, your financial picture is the framework of your family.
Partnering for your success
Jacqueline Williams
Financial Strategist
Characteristics of a good Bookkeeper
Finding the right Bookkeeper doesn’t have to be a tedious task. If you put forward the proper effort and research, you will find that a minimal amount of time would be spent in this process. I thoroughly believe in doing my homework up front when it comes to making key business decisions. So, to make your process easier, I am supplying you with these necessary tools. Let’s take a look at some important characteristics of a good Bookkeeper.
Detail oriented
Attention to detail is a must! Imagine having a person who doesn’t read the fine print or always looks for shortcuts. Or even worse, imagine trying to make a deposit not knowing who paid you the money or for what service. Believe it or not, this does happen. Being thorough in your documentation is critical to accurately reporting your financial information. A good Bookkeeper will know this. They should be able to determine what information is necessary and what’s not.
Must love numbers
We always hear about how important it is to have a passion for what you do. Whether it’s a hobby, your profession, or your business, it makes good sense to enjoy it. Hence, it makes perfect sense that you not only like, but love dealing with numbers. Working with numbers requires that you have a clear understanding of math, and that you are not intimidated by its concepts. Math is such an exact science. There are no maybes in summing up totals or calculating balances. Either its right or wrong! It takes great courage to deal on this level with a very small margin of error. I’m not trying to scare you here; just trying to stress the importance of taking responsibility for numerical accuracy.
Analytical
A good Bookkeeper will have the necessary skills to be able to review and decipher information for varied purposes. They must be able to understand what to look for and how it impacts the entire picture. The ability to create what-if scenarios will also come into play. For planning purposes, analysis of financial documents is crucial to making important decisions such as, how much financing could be needed for expansion, the affordability of benefits, or the necessity of working capital.
Time Management
My favorite acronym applies here. PPP-Planning promotes progress! A good Bookkeeper knows how to organize their time for optimum results. This involves creating an audit of how your time is spent. The right Bookkeeper will:
1. Determine which tasks have priority over others.
2. Always allow time to focus on problems and their solutions.
3. Schedule for weekly reviews and updates.
4. Not multi-task. This one is tricky because the common practice is to multi-task. Although this is a desirable quality, I’ve found it best to focus on one task to its completion before moving to another. In my opinion this approach yields better results when given the time to focus solely on that task.
Technology guru (or somewhat)
Without a doubt, this proves to be one of the most important characteristics. Everything today is automated, and it doesn’t make sense to partner with someone who is not technologically inclined. Software is used in all aspects of business today. I can’t think of anyone today who uses a manual system. And if they do, believe me, in their search they will be looking for someone who can bring them into the twentieth century. Being wise as to selecting the right software and knowing how to integrate it into the business will improve productivity and performance. The right Bookkeeper will have the skills to accomplish this. They will also know how to troubleshoot for problems, provide installation, configuration, and conversion.
Knowing what to look for in a Bookkeeper is half the battle of finding one. Take your time and make a careful assessment and you’ll be on your way to better bookkeeping.
Partnering for your success
Jacqueline Williams
Financial Strategist
We’re Almost There!
The time has come. April 15th is just around the corner and a lot of us are scrambling to get our taxes in on time. Many of us will take that plunge into the “unknown abyss” and become our own tax specialists. Others will seek the help of qualified professionals. Whichever your choice is, know that you can acquire help directly from the IRS. I know, when we hear those words, we generally want to run in the other direction. But think of it from this standpoint, your taxes pay the salaries of these government entities; therefore they should be at your disposal. The IRS has tons of information available to help educate you on how taxes work. If needed, you can even find information on locations that provide free tax services, as long as you qualify. In addition, their automated responses to the most common tax questions can be very useful. Just remember that since the time is near for the deadline these systems can experience overload with thousands of daily requests. I’d suggest that you try to find what you can via the website www.irg.gov. If you’re still confused, then contact a tax professional for assistance.
We must all remember, the IRS is here to assist us. Don’t take a defensive posture; stand tall and confident that you will get the answers that you deserve.
Partnering for your Success!
Jacqueline E. Williams
Financial Strategist.
The Owner’s Paycheck: How to Get Paid from Your Company
The form of ownership that you choose to operate your business under will determine the method in which you pay yourself a salary. Making this decision in the start up phase requires much research and should be handled with care. We choose our form of ownership, mainly based on the potential tax consequence that we expect. Of course, our goal is to pay as little taxes as possible into the system, so the form of ownership chosen helps to achieve this goal. There are clear advantages and disadvantages based on each method available.
As a small business, many people survive from the earnings from operations. But the key here is to remember to keep your business and personal expenses separate. So the questions is, “How do I pay myself, and what impact does it have on my taxes?” Let’s look at some of the ways a business owner can pay themselves a salary from the earnings of their business.
Sole Proprietors and LLCs
Taking money out your business or paying yourself under these forms of ownership, the owner will be responsible for self-employment taxes on any profits that remain in the business whether withdrawn or not. Because this income is not subject to withholding, the owner could also become responsible for making estimated quarterly tax payments. The estimated tax payments will account for both the self-employment tax along with income tax. The self-employment tax is the equivalent of what an employer’s payroll tax would be for FICA and Medicare. The disadvantage here would be that the owner is fully responsible for the entire tax, whereas corporations are not. The corporation is only responsible for half of the FICA taxes; Social Security (12.4%) and Medicare (2.9%) tax; with the employee paying the other half.
Many owners become confused because they believe that since they are paying the self employment tax, that they are not subject to any further taxation. This is not true. The money you withdraw from your business is still subject to income taxes and you must report this income on your form 1040. The key point to remember here is that, although you are not subject to payroll taxes, you are still required to pay into the system by way of self employment and income taxes. The advantage here is the owner gets a deduction on its taxes for paying self employment taxes, where the owner of a corporation doesn’t. For tax purposes you can elect to have your LLC taxed as a corporation, but be aware that making this choice involves very complex rules and regulations. It’s best to stick with what makes sense for you.
Corporations
If you are established as this form of business, the payment to yourself would be made in the form of a salary through payroll. Under this method, you are subject to payroll taxes, which include income (federal and state), and FICA (Social Security and Medicare). One of the key advantages of corporations is that the owners are not liable for self-employment taxes for profits retained in the business. As with Sole Proprietorships and LLCs, you saw that profits are taxed whether paid out or retained in the business. However, a corporation will be subject to unemployment taxes for both federal and state. The employee does not share in this expense. So, the difference here comes in the classification of a corporation being an entity separate from its owners. Because of this, it has an entire different tax profile than the Sole Proprietor or the LLC. The corporation and its owners are taxed separately. Each must file its own tax form.
Deciding on your method of payment simply comes down to how it must be reported for tax purposes. Take the time to do the research so that you can choose the best method based on your company’s profile.
Partnering for your success!
Jacqueline E. Williams
Financial Strategist