MS BOOKKEEPING SERVICES
Bookkeeping Help Blog
Bookkeeping Help Blog
|Posted on June 16, 2022 at 7:30 AM||comments (0)|
As annoying as it can be to track bills, it’s absolutely necessary for your business.
Tracking all of your account payable items in your bookkeeping system is going to help you see where a majority of your operating expenses are going. It’s also beneficial when it comes time for tax season.
What do you need to track?
So… what exactly counts towards the bills you should track when it comes to your business?
The answer to that question will depend on the type of business you have as well as where your business is located. But, the majority of recurring bills you will need to record include the following:
Subscriptions are another item on most people’s list of bills. This could include the virus protection you have for your devices, software you use to send emails or even applications for scheduling social media.
How do you track your bills?
First things first, you need to remember when your bills need to be paid.
Some helpful tips to make sure you never miss paying or tracking your bills is to set reminders by either placing the reminder dates on your calendar or by setting a recurring notification.
When it comes time to record your business expenses, there are a few different ways you can track your bills in your financial records.
- Using a digital tool
- Hiring a bookkeeper
Manually tracking your finances isn’t always the easy way to go. However, if you do own a smaller business or your business is a side gig, then it might not be too difficult to maintain.
In the long run, though, tracking your bills and other finances are going to be easier with a tool. There’s no shortage of tools you can use to track your finances. Even free apps on your phone can be used to simply record your month-to-month spending.
And, if you don’t have the time to do your finances on your own, it might be time to consider hiring a bookkeeper to help you with the financial side of your business.
|Posted on May 18, 2022 at 3:15 PM||comments (0)|
Issuing refunds is a part of almost any kind of business whether you offer services or products.
Maybe someone overpaid an invoice, a customer didn’t like the product, or the service/product sold resulted in damage.
So, how do you go about issuing a refund and setting that up in your financial records?
Refund Best Practices:
One of the policies you should have for your business is a refund policy. Although you might be in a business where refunds are rare, it is still beneficial to have guidelines in place.
The policy should have information regarding what would be considered for a refund such as:
- Damage to the product
- Product was never shipped
- Service wasn’t completed
- Amount of bill was overpaid
The number of days after purchase until a refund is no longer considered is also important to note. For instance, if you only process refunds for items/services purchased before 30 days, then you will want to have that written within your policy.
Another thing to keep in mind is how the refund will be processed. A few options for a refund are:
- Returning the amount to the card that was used
- Crediting the amount to the customer’s account for future purchases
- Applying the amount to the next open invoice
Setting Up Your Process
After you have your policy in place, it’s time to consider your process.
Typically, a credit memo will be sent to the client or customer notifying them of the amount that will be refunded.
You can include a link to a PDF view of the credit memo or have the information in a document that is attached to the email. When setting up the memo it should include, all participants’ information, the invoice number, a description of the product or service included in the refund, and the amount being refunded.
A refund will then be sent either manually from your business account or through the software your business uses. One software that is capable of refunds is https://quickbooks.intuit.com/oa/get-quickbooks/" target="_blank">QuickBooks.
It’s also best to ask the client or customer why they want a refund, so you can fix various areas of your business and incur fewer refund occurrences.
Now, that you have taken care of everything on your client’s end, it’s time to take care of everything on your end.
Tracking refunds in your financial records is going to be extremely important.
The best way to track refunds is by first tracking the original sale, the payment of that sale, and then noting the return amount for that purchase.
If you would like help tracking your financial records, it’s best to look for bookkeepers online or in your area such as https://mksbookkeepingservices.com/" target="_blank">MS Bookkeeping Services.
|Posted on April 20, 2022 at 5:25 PM||comments (234)|
Owning a business means that you will have financial responsibilities.
So, it’s important to know these terms when handling your finances or when discussing your finances with your bookkeeper or accountant.
1. Accounts Receivable
When you perform a service or provide a product, the amount your customer owes you will be the account receivable. Although you are waiting for this amount to be paid, it will still be added as a credit to your account since your business will eventually receive that amount.
2. Accounts Payable
Similar to accounts receivable, accounts payable is the amount that is owed from a service or product. However, it is the amount you owe someone such as a supplier or a vendor.
On a balance sheet, you will mainly see credits and debits to your account. A credit will be an entry that either increases your liability or decreases your assets.
On the other hand a debit, will either increase your assets or decrease your liabilities.
Business owners tend to diversify in order to reduce overall risk. This is done by allocating your investments into various assets. In other words, you aren’t putting all of your eggs in one basket.
6. Cash Flow
Money going into your business and the money going out of your business is what determines your amount of cash flow. It will be calculated from your revenue and expenses over time.
7. Fixed Expenses
If you rent a space, that amount you pay is fixed because it will not change. Fixed expenses are expenses that will remain consistent over a set period of time.
8. Variable Expenses
Opposite of fixed expenses, variable expenses is something that isn’t a consistent amount. For instance, your delivery fees or raw material purchases may vary.
Equity can be calculated by taking your assets minus your liabilities. That number will show you how much your business is worth.
In short, liabilities are what your company owes. They are your financial obligations that need to be paid such as loans and credit card balances.
11. Return on Investment or ROI
Return on investment or ROI is used to determine the profitability of an investment. To calculate ROI divide the net profit by the cost of the investment. Your total will be read as a percentage. So, if you have a net profit of $100 and the cost of the investment is $1000, you will get an ROI of 10%. A good annual ROI is going to be around 7% or higher.
12. Single-entry Bookkeeping
For each transaction that occurs, one entry is made when it comes to single-entry bookkeeping. This form of bookkeeping can often lead to errors and isn’t the best way to check your company's overall financial health. However, if you have a small amount of transactions a year (usually if your small business is part time or a side-gig for you), then single-entry might not be a bad option.
13. Double-entry Bookkeeping
For each transaction that occurs, there are two entries made. A record is made in both the debits account and credits account. Often, bookkeeping is done this way, so it is easier to review where and why transactions are taking place. An example could be to take out $100 dollars to purchase $100 of office supplies. The amount going out ($100 being taken out) will be in the credit account and the amount going in ($100 of office supplies) will be in the debit account.
14. General Ledger
All of your entries and business accounts can be found in your general ledger. It holds all of your records and all transactions should be properly accounted for.
15. Balance Sheet
All of your assets, equity, and liabilities will be reported in your balance sheet, and it will be the best resource for understanding your financial health.
If you are ever unsure of what a term means or how your finances work, always ask your bookkeeper for more information.
Although it is extremely useful to have someone complete the financial side of your business, it can be just as or even more useful to understand how the main components work.
|Posted on March 16, 2022 at 3:20 PM||comments (3)|
Have you been tracking your jobs?
Keeping all projects, clients, and purchases together when completing a job is extremely important for invoicing. It can be helpful in other areas as well such as:
- Job History: By continuously tracking your time, you are able to look back at similar jobs to give your clients better estimates on how long something will take.
- Tracking progress: All parties included (you, your clients, third party, bookkeeper, etc.) are able to see what stage a job is at by tracking everything in a downloadable report.
- Staying organized: Especially with bigger jobs, it can be difficult to keep track of what items were purchased and how much time was allocated to various projects. By putting everything in a report, you are able to look back at how much money and time was spent throughout the process.
When it comes to creating job records, it’s important to be consistent with the names used. To keep everything as simple as possible, you can use the following titles in your report:
- Job: This will be the main title for the overall record.
- Client: You’ll want to have the name of your client(s) when it comes time to send invoices for the corresponding jobs.
- Date: It’s important to have the date for each job and even each project started. You can begin a new record at the start of each month for invoicing purposes.
- Project: Some jobs require multiple projects, so having a breakdown of each one might be helpful depending on your business.
- Time or Hours: This field will be used to clock the amount of hours used on each project. If you don’t use projects, then it will be used to clock the amount of hours used on each job.
- Item: Item will be used for any purchases that were made to complete a job/project.
Example of what a record will look like:
Job: Developing the website of MS Bookkeeping Services
Client: Maria Soeder
Project: Home Page
Hours: 1 Hour 30 Minutes----------
Item: Purchase of Website Account
Project: Blog Page
Hours: 2 Hours 5 Minutes
Your record(s) may have more information, but this is the general idea behind tracking everything. You can use tools like Harvest, Toggl, or Quickbooks to track everything for you, or even a spreadsheet will do the trick.
Now you can go back to your records at any time to create an invoice or send the information to your bookkeeper, so they are able to continue the rest of the payment process for you.
|Posted on February 16, 2022 at 3:20 PM||comments (1)|
When assessing finance charges it’s best to review them monthly to keep up with everything owed.
Finance charges can include loan processing fees, interest charges, late fees, and other costs going beyond the amount borrowed/owed.
Luckily, there are ways to improve your cash flow and lessen the amount of finance charges you need to assess:
- Offer discounts when your Clients or Customer pay early
- Reduce the payment cycle. For instance you can have the payment due on the 21st day instead of the 30th.
- Allow customers to pay electronically by setting up a merchant account
- Be more aggressive when it comes to collections
- Notify customers before you begin reviewing charges - giving them an opportunity to catch up on payments.
Another great way to keep up with payments:
Have a bookkeeper help you avoid late penalties and prompt payment of invoices, so you can better track what payments are paid and what payments need to be collected.
When setting up the process for handling late payments or finance charges, it’s important to ask yourself:
- What annual interest rate will you charge?
- Will there be a minimum finance charge?
- Do you want to offer a grace period?
To calculate late payments on finance charges:
- Amount customer owes you multiplied by flat monthly rate
- If your flat monthly rate is 10% and the customer owes you $500, take $500 multiplied by 0.01 which equals $50.
- $50 will be added to what the customer owes you, $500, for a total payment of $550 for the month.
|Posted on January 19, 2014 at 6:58 PM||comments (14)|
It is that time of year again for 1099 filing.
Be sure that you have reconciled the month of Dec. bank statements and credit card statements before running your 1099 report.
Also, make sure all EIN and Social Security numbers are correct and addresses are current before running 1099's.
As always, if you need any help with 1099's please give us a call.
|Posted on August 1, 2013 at 2:16 PM||comments (0)|
Well here it is August 1st.
I hope everyone is doing a good job of reconciling all of their information with the Bank Statements and Credit Card Statements.
Last month was the deadline for quarterly payroll tax reporting. I hope everyone met that deadline.
Now is a good time to look at your net income and put some money aside for estimated taxes, so you don't have this huge amount to pay at the end of the year.
As always if you need any help with any of this I am here to help you. Also, if you don't know what I mean by reconciling just ask me.
Have a great month!
|Posted on June 25, 2013 at 2:29 AM||comments (0)|
This is just a quick note to see how things are going.
It is almost July, do you have all of your bank statements and credit card statements reconciled through May? Now is a good time to get caught up on that so it is not a rush at the end of the year.
Also a reminder, 2nd quarter is quickly coming to a close. July will be time to file and pay those quarterly payroll tax reports.
If you ever need help or have any questions please feel free to call. I enjoy helping people keep their books organized and up to date.
Have a great rest of June.
|Posted on May 24, 2013 at 5:02 PM||comments (0)|
This is for all of those small business owners.
It is almost June, have you reconciled all of your bank statements and credit card statements for the year so far? You need to make sure everything that is on your statements is also in your Quick Books file. By doing this now it will make it easier at the end of the year to get ready for your CPA and taxes.
Other things to be staying on top of:
Sales tax reporting and payments
Payroll tax payments
Also, now would be a really good time to make sure all of your employees and contract labor people have given you their social security/EIN numbers and correct address. This is easier to do now than at the last minute for end of the year W2 and 1099 filing.
I wish all of you a prosperous rest of your year.
If you need any help with your bookkeeping needs please give me a call. I am here to help.
|Posted on April 5, 2013 at 5:23 PM||comments (3)|
Well, it is almost April 15th!
Hopefully all you small business owners have everything gathered up and ready for your CPA or tax preparer.
Here is a list of what you will need for your CPA or tax preparer, of course your CPA or tax preparer will probably have questions and add to this but this is a start.
A Jan - Dec Profit and Loss Statement (with all bank accounts and credit card accounts reconciled)
A Dec 31st Balance Sheet
A copy of any 1099's that your company has sent out
If you have payroll:
A copy of any W2's that your company has sent out
A copy of all quarterly payroll tax filing
If anyone has any questions as to what these reports are or needs help getting these reports please feel free to ask me. I will do my best to provide what help you need.