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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Certified Payroll Software Options
For those of you who execute payroll for your companies, you know that it can be a complicated and consuming process. The demands of maintaining the employee records along with tax payments and schedules can be a full time job in itself. As a small business owner your objective should be to streamline your process so that the majority of your time isn’t spent doing administrative tasks such as payroll. And what about specialized payroll functions and processes? Contractors and construction businesses will know what I’m referring to when I mention certified payroll.
Certified Payroll exists when contractors and subcontractors perform work on federally financed or assisted construction contracts. The Copeland Act (40 U.S.C. § 3145) requires these contractors to “furnish weekly a statement with respect to the wages paid each employee during the preceding week.” U.S. Department of require contractors to submit weekly a copy of all payrolls to the Federal agency contracting for or financing the construction project, accompanied by a signed “Statement of Compliance” indicating that the payrolls are correct and complete and that each laborer or mechanic has been paid not less than the proper Davis-Bacon prevailing wage rate for the work performed. Okay, that’s a mouthful; however, this is what the typical contractor deals with on a weekly basis when handling this special type of payroll. The good news is that this process can be automated with the proper software package.
The software of choice for my business and my clients has been Quick Books. Quick Books already comes with features that handle payroll, but even better, there are software packages out there on the market that integrates with Quick Books for various purposes. One of those purposes is certified payroll. Currently there exist several add-ons that streamlines the whole process of downloading payroll data into modules that will generate this government required certified payroll report. If you have ever had the privilege of completing certified payroll reports, then you know how time consuming it can be, especially when you have workers who are spread across various jobs during different periods. Depending upon the job and the hours performed on each, you may have to prorate that time at different wage rates. This involves numerous calculations. In addition, if you are reporting for union workers, we’re talking about more complications. Integrative software such as Sunburst Certified Payroll Solution or Quantum Certified Payroll Project Manager will assist in collecting the weekly time and wage data needed to complete the report. These programs are designed to import all job specific information from Quick Books directly into its program. Once the data is culminated, reports can be generated that are in a format which complies with governmental standards. The key features of these programs will not only save you time but will allow you to become more efficient so that you can concentrate on your business instead of the paperwork.
Automation is the key, and it’s best that you take full advantage of it to stay competitive in this market. The money you spend today on one of these programs today will save you valuable time and money in the long run.
Partnering for your success
Jacqueline E. Williams
Financial Strategist
10 Questions to ask when interviewing a Bookkeeper
You don’t need to be a manager to hire the right professional. What you need is to know what you’re looking for. Once that’s determined the next step is knowing what questions to ask based on your defined parameters. In searching for the right Bookkeeper for your business, the answers given should be clear, precise, and these answers should reveal the truth of what they have to offer. Let’s take a closer look at the 10 of the most important questions to ask.
1. What services do you provide? Determine if the company can accommodate you by way of their list of services. If not, decide if you’re willing to compromise or barter.
2. What industries do you have experience in? Best practice is to hire a company that knows your industry. To do otherwise will cost you time and money.
3. What Software or applications are used? A good company will have experience using a menu of different software. And they can determine what best suits your needs.
4. Who will be working on my company files? Know who the primary contact person is. You should also know who will be working on your daily files. Generally they will not be the same person. Make sure you have their contact information and specified methods of communication.
5. What is your method of delivery and turnaround? Determine the best method to deliver your files. Examples are; by fax, by email, by courier, or ftp (online).
Verifying the amount of time it takes to complete certain tasks depends on the task itself. Have them give you a schedule of when work is to be completed.
6. How are services delivered? See if your Bookkeeper can perform the services at your office or remotely. The latter is more preferable these days because it saves on overhead expenses such as travel and workplace accommodations.
7. What is your review process? You need to know that the work your Bookkeeper performs is accurate. Check the level of experience of the staff person who will be handling your files. Also, verify that your work does go through a review process at the company before it is delivered to you.
8. Do you work closely with CPAs? Most Bookkeepers have a relationship with an accounting/CPA firm. Especially for tax purposes. Go over with them the process by which they report your information to your accountant or CPA.
9. Do you have any guarantees? In today’s market, to stay competitive, most companies will offer a money back guarantee or trial period. Take full advantage of these offers. If you’re not happy, make sure you regain ownership of your information.
10. What security systems do you have in place? Privacy of your company files builds trust. Make sure the Bookkeeper has systems in place to ensure that your information is secured and not released unless authorized to.
Your journey to finding the right Bookkeeper is not as difficult as it may seem. With good preparation and a little patience, you can be on your way to making the best choice for your needs.
Partnering for your success
Jacqueline E. 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
Hooray for Ratios: The analysis paralysis of financial statements
Analyzing your company’s performance is crucial to making determinations surrounding your investment activities. The objectives you define are generally based on your company’s current and past financial performance. If you’ve ever heard of benchmarks, then you know that the results you determine from your analysis are useless unless you have something to compare them too. Analyzing your company’s financial activities involves using specific methods of investigation. Ratio analysis involves studying the relationship between two or more items on your financial statements. With ratio analysis you’ll be able to make key financial decisions such as; which areas need improvement, which areas are profitable, are you meeting your cash requirements, and are you meeting your obligations. The most common of these analysis are:
Current Ratio
Inventory turnover Ratio
Profit margin on sales
Days sales outstanding ratio
Debt to total assets ratio
Current Ratio
This ratio determines is a company is able to meet its current obligations. In other words, are you able to pay off your current liabilities? Typically a current ratio of 2:1 states that a company is able to meet its current obligations. Also known as the Quick Ratio, it is calculated by dividing current assets by current liabilities.
Inventory Turnover Ratio
This ratio evaluates your inventory and states how many time in a year your inventory is sold or replaced. A low ratio would imply that a company has excess inventory on hand. For example, if a company has an inventory ratio of 6.3, this would mean that inventory would have to be restocked at least 6 times in a year. In this example, sales are good because your products are moving. This ratio is calculated by dividing Cost of Goods sold by the average inventory. The average inventory is calculated by adding the beginning and ending inventory balances and dividing this total by two.
Profit Margin on Sales
This ratio determines how profitable a company has been. It is calculated by dividing the Net Profit for the year by total sales. When compared with prior periods, this ratio is revealing in that shows whether a firm is operating efficiently and able to compete successfully with its competitors. For example: if your net profit is 1,000,00 and your sales are 15,000,000,then your profit margin would be 6.67%. This means that for every dollar of sales, your company made .06 cents profit. When calculating this ratio be sure to reflect net profit which deducts cost of goods sold along with operating expenses.
Days sales outstanding ratio
Based on daily sales activity, this ratio determines how long it takes to get paid after making a sale. It is calculated by dividing the accounts receivable by the average sales per day. It’s important to monitor this ratio closely as it directly affects your cash flow.
Debt to total assets ratio
This ratio represents the total debt as a percentage of total assets. It is calculated by dividing total liabilities by total assets. A low ratio indicates that a company is more likely able to pay its creditors with a reduction in assets, whereas a higher ratio would mean that it would hurt the company to reduce its assets in order to make its payables.
There exist over 20 various ratios that company’s can use to examine and evaluate their financial standing. Using ratio analysis allows you to make decisions concerning credit, management style, and whether the processes chosen are effective in accomplishing the company’s goals.
Partnering for your success
Jacqueline Williams
Financial Strategist