Bookkeeping Challenge Questions
Ever been faced with a bookkeeping challenge and didn’t know where to turn to have your questions answered? Well here’s your chance. Ask your questions about bookkeeping and managing your company’s books and we’ll respond to you within 36 hours. Just leave your questions in the comments below.
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THE INS AND OUTS OF MAKING PAYROLL EASIER
I’ve decided to dedicate the month of June’s posts to payroll. Typically whenever you mention payroll to a small business owner, immediately they cringe at the idea of having to pay payroll taxes. And of course, the complexities of taxes don’t make the situation easier to bare. Then what’s the solution? Well, the solution to make this whole process easier can be three fold.
First, you can be proactive by educating yourself on payroll processing and handling it yourself (and by the way it’s more than just cutting a check to an employee).
Second you can outsource the entire function.
Or third, you can keep the easier components in house, and outsource the difficult parts, such as the payment of payroll taxes and filing of reports.
Whatever method you decide to use, it’s best to prepare yourself up front by making sure that you have all pertinent information in each employee’s file. Information such as; name, address, hire date, employee status, birth date, social security or tax id number, means of contact, form I-9, age certificates and state exemption certificates. Your best course of action is to have a completed employee information sheet with all this data in the front of their file. In addition, make sure that you also have a completed W-4 form. The average employee doesn’t understand how to accurately complete one of these, that’s why it’s not only necessary to include the instruction sheet, but to also review the form carefully before including the data in the employee records. Remember, it’s the employee’s responsibility to determine the amount of withholding s to report on form W-4, not the employer. The employer only provides assistance in the completion of the form.
One of the most important components of payroll processing is making sure that your worker is properly classified. Time and time again, I’ve counseled business owners on the difference between employee and independent contractors. Many are determined to take the Independent contractor route because of the benefit of not having to pay payroll taxes. However, the IRS has very stringent rules concerning this classification. Independent contractors are workers who are in control of how and when their work is performed. They are also responsible for the payment of any related federal and local taxes on their earning. On the other hand, employees are under the control of the employer, and the employer is responsible for the submission and payment of any related payroll taxes. The consequences of mis-classification can be costly. Therefore, it’s to your benefit to make sure that you determine this relationship before making any payments to the party involved. Create a questionnaire. This should help to make the process a lot easier.
So as you see, the ease of the process comes with the collection of data. It’s all in the initial set up that determines your success in having a decent payroll experience.
Partnering for your success!
Jacqueline Williams
Financial Strategist
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
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.