samarak blog

Remember to Accrue Revenue and Expenses In QuickBooks at Year-End

Fri, 23 Jan 2009 00:00:00 -0700

Accrual based businesses typically need to make some adjustments before closing their books at year-end. Different businesses make different decisions regarding exactly what to accrue, but whenever an expense is incurred in one year for which the benefit won't be received until the next year, or revenue is received in one year for products or services that won't be delivered until the next year, then it is worth considing whether or not to make an accrual adjustment.

For information on the types of things companies frequently accrue and how to make the adjusting entries in QuickBooks, see Accrue Revenue and Expenses In QuickBooks at Year-End.

Time to Issue 1099s for CY2008

Tue, 20 Jan 2009 00:00:00 -0700

People often think of 1099s as being essentially a W-2 for independent contractors. While it is true that 1099s are the forms given to independent contractors showing the income they earned during the year, 1099s are also used for many other things. For a list of the types of payments for which 1099s are necessary, see Time to Issue 1099s.

The deadline to give 1099s to recipients of certain types of payments you made during 2008 is January 31, 2009.

QuickBooks Tutorials: Statements, Customer Register, Handling Independent Contractors

Thu, 15 Jan 2009 00:00:00 -0700

We recently added a number of QuickBooks tutorials related to using statements in QuickBooks, using the customer register and handling independent contractors. Samarak's QuickBooks tutorials include detailed instructions and screen shots so you can see exactly what we are talking about.

QuickBooks tutorials recently added include:

To see Quickbooks Tutorials on other topics, see the complete list of Samarak's QuickBooks tutorials.

Independent Contractors Earning Less Than $600

Sun, 11 Jan 2009 00:00:00 -0700

Businesses and individuals that pay an independent contractor $600 or more are required to provide that independent contractor with a FORM 1099-MISC reporting the income paid. They are not, however, required to provide a FORM 1099-MISC when they pay the independent contractor less than $600. Because of this, many independent contractors falsely assume that this income is not reportable.

Unfortunately, there is no minimum amount that can be excluded from gross income. Independent contractors who earn less than $600 from a payer are required to report keep track of this amount on their own and report it.

For information on what types of payments require 1099s, see Time to Issue 1099s.

IRS Toll-Free Numbers and Hotlines

Thu, 08 Jan 2009 00:00:00 -0700

The IRS has many different toll-free numbers and hotlines to help you during the filing season and beyond. Use the chart below to figure out which IRS phone number you should call as starting in the right department is sure to save you time.

IRS Telephone Numbers and Hours of Operation:

Service	Telephone number	Hours of operation
Practitioner Priority Service	(866) 860-4259	M–F, 8:00 a.m.–8:00 p.m., local time
IRS Tax Help Line for Individuals	(800) 829-1040	M–F, 7:00 a.m.–10:00 p.m., local time
Business and Specialty Tax Line	(800) 829-4933	M–F, 7:00 a.m.–10:00 p.m., local time
e-Help (Practitioners Only)	(866) 255-0654	M–F, 6:30 a.m.–6:00 p.m., CT (non-peak period) M-F, 6:30 a.m.–10:00 p.m, CT (1/12/2007 – 4/27/2007) and Saturdays 6:30 a.m. – 4:00 p.m., CT (1/12/2007 – 4/27/2007)
Refund Hotline	(800) 829-1954	Automated service is available 24/7
Forms and Publications	(800) 829-3676	M–F, 7:00 a.m–10:00 p.m., local time
National Taxpayer Advocate Help Line	(877) 777-4778	M–F, 7:00 a.m.–10:00 p.m., local time
Telephone Device for the Deaf (TDD): Forms, Tax Help, TAS	(800) 829-4059	M–F, 7:00 a.m.–10:00 p.m., local time
Electronic Federal Tax Payment System	(800) 555-4477	24/7
Tax Exempt and Government Entities (TEGE) Help Line	(877) 829-5500	M–F, 7:00 a.m. – 5:30 p.m., CT
TeleTax Topics and Refund Status	(800) 829-4477	24/7
Forms 706 and 709 Help Line	(866) 699-4083	M–F, 7:00 a.m.–7:00 p.m., local time
Employer Identification Number (EIN)	(800) 829-4933	M–F, 7:00 a.m.–10:00 p.m., local time
Excise Tax and Form 2290 Help Line	(866) 699-4096	M–F, 8:00 a.m.–6:00 p.m., ET
Information Return Reporting	(866) 455-7438	M–F, 8:30 a.m.–4:30 p.m., ET
Disaster or Combat Zone Special Hotline	(866) 562-5227	M–F, 7:00 a.m.–10:00 p.m., local time

Reduce Taxable Income By Writing off Bad Debt

Mon, 05 Jan 2009 00:00:00 -0700

Remember to write off your bad debt at year end as a means of reducing your taxable income. I recommend going through all open invoices annually in January to see if there are any you don't expect to be paid on. Simply run an Accounts Receivable Aging Detail report (in QuickBooks, select Customers & Receivables from the Reports menu, and then select A/R Aging Detail) and look at all old invoices.

This only takes a couple of minutes, and if you aren't going to collect something, then it is worth writing it off and thereby reducing your taxable income - and reducing your taxes. If you think there is even a small chance you might collect on a specific invoice in the future, then don't write it off yet. It's better to keep it on the books as a means of making sure you continue to try to collect. Decreasing your tax payments is great, but not as good as increasing your profits!

Small Business Tax Calendar for January 2009

Wed, 31 Dec 2008 00:00:00 -0700

The following list of January tax dates is intended to be useful for accountants, bookkeepers and small business owners:

1/1/2009 - Stop advance credit of the Earned Income Credit for any employee not submitting a new Form W-5.
1/7/2009 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 1st and January 2nd.
1/9/2009 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 3rd and January 6th.
1/12/2009 - Employees who earned more than $20 in tips in December 2008 must report the total to their employers.
1/14/2009 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 7th and January 9th.
1/15/2009 - Individuals: Pay the final installment of your 2008 estimated tax. Use Form 1040-ES.
1/15/2009 - Farmers and fishermen: Pay your estimated tax for 2008. Use Form 1040-ES.
1/15/2009 - If you are subject to the monthly deposit rule, then deposit payroll taxes for December 2008 by January 15th.
1/16/2009 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 10th and January 13th.
1/23/2009 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 14th and January 20th.
1/28/2009 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 21st and January 23rd.
1/30/2009 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 24th and January 27th.

We will post a list of February dates for accountants, bookkeepers and small business owners to be aware of at the end of January.

Year-End Payroll To Do's

Mon, 29 Dec 2008 00:00:00 -0700

Year-end is a busy time from a payroll perspective. Following is a list of payroll-related things to remember to do:

December:

remind workers who have had major life changes (marriage, change in number of dependents, divorce) to update their withholdings by filing an updated W-4 form
verify that your employees names and social security numbers are correct (you can do so at http://www.ssa.gov/employer/ssnv.htm)
order W-2 Forms
employees who receive Advance Earned Income Credit payments are required to submit a new W-5 by year-end.

No later than February 2nd (because January 31 is a Saturday):

W-2 Forms must be delivered to employees by hand or postmarked by 2/2/09
file Form 941 (943 for agricultural employers), Employer’s Quarterly Federal Tax Return
file Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

No later than March 2nd (because February 28 is a Saturday):

file Forms W-2 (Copy A) with the Social Security Administration. You have until March 31 to file if you file electronically.

Download a Free Small Business Tax Calendar from the IRS

Mon, 22 Dec 2008 00:00:00 -0700

The IRS 2009 tax calendar for small businesses and self-employed people is filled with useful information on general business tax issues, IRS and SSA customer assistance, electronic filing and paying options, retirement plans, business publications and forms, common tax filing dates, and more. Download it from the IRS's website.

Are Office Holiday Parties Deductible?

Tue, 16 Dec 2008 00:00:00 -0700

Occasional parties for the purpose of employee welfare are fully deductible to the business. They are not subject to the 50% limit on meals and entertainment. In addition, they are considered to be de minimis fringe benefits and, therefore, are nontaxable to employees. Therefore, have an office holiday party in December, an office golf outing in the summer, or an office cocktail party to celebrate spring. Better yet, have all three. The odds are that if you can justify the expense as being good for the business, then you can probably justify the deduction as well.

IRS Sets First Quarter 2009 Interest Rates

Thu, 11 Dec 2008 00:00:00 -0700

The IRS recently announced that they are lowering interest rates by 1% effective January 1, 2009. Therefore, beginning January 1st, 2009, the interest rates will be:

5% for overpayments (4% for corporations)
5% for underpayments
7% for large corporate underpayments
2.5% for the portion of corporate overpayments that is above $10,000.

The IRS determines the rate of interest on a quarterly basis based on the federal short-term rate.

Handling Independent Contractors in QuickBooks

Wed, 10 Dec 2008 00:00:00 -0700

When setting up independent contractors in QuickBooks, set them up as vendors, not as employees. This is an important distinction. If you aren't certain whether the individual is an employee or independent contractor (and hence a vendor), see my prior blog titled "Independent Contractor or Employee?".

To set an independent contractor up as a vendor in QuickBooks, click New Vendor in the Vendor Center.

Fill in the Vendor Name and Address Info in the New Vendor window. Then move to the Additional Info tab (circled in blue below).

Check "Vendor eligible for 1099" and fill in the Tax ID in the Additional Info tab as you will need this to file their 1099 at year-end.

Are Christmas Gifts to Employees Taxable?

Sun, 07 Dec 2008 00:00:00 -0700

Many companies give small gifts to their employees at Christmas time. Gifts such as fruit baskets, entertainment tickets, and other small items are generally considered de minimis fringe benefits and are nontaxable. Cash gifts, on the other hand, are considered wages and are subject to all taxes and withholdings. In addition, gift certificates are treated as cash. Therefore, if you want to give your employees turkeys at Christmas time, give them the actual turkeys (or a certificate to pick up a turkey). Do not give them a $15 gift certificate to the grocery store.

Creating Statements in QuickBooks for All Open Transactions

Fri, 05 Dec 2008 00:00:00 -0700

One of the best ways to increase the amount of cash you have in the bank is to increase the speed at which you collect your receivables. One of the best ways to collect your receivables faster is to remind customers with overdue invoices that they owe you money. Fortunately, QuickBooks makes this very easy. I recommend creating statements in QuickBooks on a regular basis (weekly, bi-weekly, monthly - depends on your business) for all customers that have overdue invoices. Then quickly scan through the statements and decide which ones to send out. Why create statements for all customers if you will only send some of them out? Because it's so easy to do so and doing so prevents you from forgetting to send statements to some customers that should get them.

To create statements in QuickBooks for all customers that owe you money, select Create Statements from the Customers menu.

Use today's date for the Statement Date. Then choose between creating statements that only show transactions within a given period of time or creating statements that show all open transactions (most of the time you will want to include all open transactions on your statements). When including all open transactions, you can choose to exclude recent invoices, which aren't yet overdue, by selecting "Include only transactions over __ days past due date", and then filling in the number of days.

In the Select Customer section, select All Customers. Finally, select Print. If you wish to review the statements electronically, choose to print to PDF. If you prefer to look through them on paper, then print to your printer. Then, with all the statements in front of you, go through them and decide which ones to send out.

Going through this simple process on a regular basis is a quick and effective way to reduce your days sales outstanding, thereby increasing your cash.

Finally, this QuickBooks tutorial was created using QuickBooks 2009.

Small Business Tax Calendar for December 2008

Sun, 30 Nov 2008 00:00:00 -0700

The following list of December tax dates is intended to be useful for accountants, bookkeepers and small business owners:

12/1/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 22nd and November 25th.
12/3/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 26th and November 28th.
12/5/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 29th and December 2nd.
12/10/2008 - Employees who earned more than $20 in tips in November must report the total to their employers.
12/12/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between December 6th and December 9th.
12/15/2008 - The 4th installment of extimated 2008 corporate taxes is due.
12/17/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between December 10th and December 12th.
12/19/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between December 13th and December 16th.
12/24/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between December 17th and December 19th.
12/29/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between December 20th and December 23rd.
12/31/2008 - Pay taxes on vehicles first used during the month of November and file Form 2290.

We will post a similar blog post showing January dates for accountants, bookkeepers and small business owners to be aware of at the end of December.

Using the QuickBooks Customer Register Instead of Invoices

Sat, 29 Nov 2008 00:00:00 -0700

Some businesses choose to record charges to their customers in the customer register, as opposed to creating invoices. They then send statements summarizing the entries in the customer register to their customers on a regular basis. While there are some limitations of using billing statements in QuickBooks, this method of billing customers is practical for some businesses.

To access the QuickBooks Customer Register, select Enter Statement Charges on the Customers menu.

Select the customer for which you wish to add charges. You are now looking at a subset of the Accounts Receivable register showing only transactions related to the customer you chose. To create a charge for this customer, simply create it in much the same way you would enter a transaction directly into your check register. When you have entered all relevant data, click Record. In the example below, I charged Dave's Landscaping for 10 hours of consulting at $75/hour.

Instead of creating invoices for Dave's Landscaping, I could choose to record my hours weekly as I did above and then simply create a statement monthly to send to the customer (See Creating Statements in QuickBooks for One Customer).

If using the QuickBooks Customer Register instead of invoices seems to make sense for your business, then it may be. However, before choosing to use the QuickBooks Customer Register instead of invoices, make sure you carefully review the limitations of doing so.

This QuickBooks tutorial was created using QuickBooks 2009.

2009 Standard Mileage Rate

Tue, 25 Nov 2008 00:00:00 -0700

The IRS announced the 2009 standard mileage rates today. The rate for business miles driven is down slightly from the second half of 2008, but still considerably higher than the first half of 2008 and prior years. Effective July 1, 2008, the standard mileage rates are as follows:

Business usage: 55 cents per mile (was 50.5 cents per mile in first half of 2008, 58.5 in second half of 2008)
Miles driven for medical and moving purposes: 24 cents per mile (was 19 cents per mile in first half of 2008, 27 in second half of 2008)
Miles driven in service of charitable organizations: 14 cents per mile (this is unchanged).

Taxpayers cannot use the business standard mileage rates in the following situations:

after using depreciation methods under the Modified Accelerated Cost Recovery System (MACRS)
after claiming a Section 179 deduction for the automobile used
for vehicles used for hire or for more than 4 vehicles used at the same time.

Finally, taxpayers can choose to calculate the actual costs of using their vehicles instead of using the standard mileage rates.

Home Office Deductions - Rooms Method vs. Square-Footage Method

Mon, 24 Nov 2008 00:00:00 -0700

Home office deductions are normally based on the percentage of your house you use for business. For example, if you have a 2,000 square foot house and use one 200 square foot room of it for business purposes, then you can deduct 10% of relevant expenses (200/2,000). This is called the square-footage method. However, you are also allowed to base the percentage on the number of rooms in the house (the rooms method). Therefore, if you only have 5 rooms in the house, you can deduct 20% of relevant expense (1/5).

For information on what expenses can be deducted, see Home Office Deductions: Expenses That May Be Deducted. To determine whether or not you qualify for a home office deduction, see Home Office Deductions: Do You Qualify.

Creating Statements in QuickBooks for One Customer

Sun, 23 Nov 2008 00:00:00 -0700

Sending statements to customers who owe you money is an important piece of an effective cash management system. If a company isn't paying your invoices, then it's probably either a mistake or because they are having cash flow problems. If it's a mistake, then a reminder will be appreciated. If your customer is having cash flow problems, then you want to keep your invoices at the top of their list. If you don't keep requesting payment, then you will be a lower priority than those companies that do keep asking. Fortunately, QuickBooks makes it very easy to create statements.

To create a QuickBooks statement for one customer, select Create Statements from the Customers menu.

For the Statement Date, you generally want to use today's date. You then have the option of creating statements showing only transactions within a given period of time or creating a statement that reflects all open transactions. If you are including all open transactions, you can still exclude recent invoices, which aren't yet overdue, by selecting "Include only transactions over __ days past due date", and filling in the number of days.

In the Select Customer section, select One Customer and choose the customer in the drop-down list. Then click Print or E-mail, depending on whether you want to send or email the statement to your customers.

Regularly sending statements to customers who owe you money is one of the simplest and most effective ways to avoid problems with your receivables. Given how easy it is to create statements in QuickBooks, there is no excuse not to do so.

Finally, this QuickBooks tutorial was created using QuickBooks 2009.

C-corp or S-corp?

Tue, 18 Nov 2008 00:00:00 -0700

While C corporations and S corporations have a lot in common, there are some significant differences that cause them to appeal to different businesses. First, some similiarities of C-corps and S-corps:

both provide protection against liabilities
recordkeeping requirements are the same

The decision to form a business as a C-corp or an S-corp usually coes down to 3 significant differences:

Qualifications
There are no restrictions for C corporations, which can be started by individuals, corporations and foreigners. There are, however, some important restrictions for S corporations:
- maximum of 100 shareholders
- Owners must be either US citizens, green card holders or have filed personal US tax returns for the previous 2 years
- Maximum of 25% passive income (income from rents/investments)
- S-corps can have only one class of stock, though they can still have both voting and non voting stock
Taxes
While S-corps file corporate tax returns, they do not pay corporate taxes. Instead, the profits are passed through to the shareholders who pay taxes with their personal returns. C-corps, however, are subject to double taxation - first the company pays taxes and then the shareholders pay taxes on dividends received.
Long-term plans
If you plan to go public, then a C corporation is the way to go.

The decision as to whether to form a corporation as an S corporation or a C corporation usually comes down to whether or not the company qualifies to be an S corporation. If you qualify, then an S-corp is generally the best choice.

Finally, choosing the best business structure for your business is not easy. While I hope this blog entry helps you understand and consider the differences between C-corps and S-corps, I recommend seeking guidance from your accountant or attorney before making a final decision.

Limitations of Using Billing Statements in QuickBooks

Mon, 17 Nov 2008 00:00:00 -0700

Some businesses choose to bill their customers via statements instead of invoices. While this is not the best choice for most businesses, it sometimes is for businesses that bill periodically (weekly, monthly, etc.). These businesses record charges to their customers in the customer register instead of creating invoices, and then create statements summarizing the entries made in the customer register to send to their customers. Before choosing to do this, it is important to be aware of the limitations of doing so:

Sales tax, percentage discounts, payment items, and group items cannot be recorded as separate charges on a billing statement. They can be recorded as separate charges on invoices.
You can't use multiple-paragraph descriptions of products sold or services provided on statments. You can on an invoices.
Related charges can't be grouped and subtotaled on statments. They can on invoices.
Each billing statement charge can only represent one item, meaning you have to enter separate statment charges for each product or service.
You can't add messages to billing statements. You can add messages to invoices.
The statement form does not allow for custom fields.

While these limitations do not preclude statements from being the best choice for some companies to bill their customers, they do preclude statements from being the best choice for most companies.

2009 Corporate Tax Rates

Fri, 14 Nov 2008 00:00:00 -0700

The corporate tax rate schedule has been the same for a number of years and President-elect Obama has said he has no plans to change corporate tax rates. Assuming the rates don't change, 2009 corporate tax rates will remain as follows:

Taxable Income	Tax
< $50,000	15% of the taxable income
$50,000 - $75,000	$7,500 + 25% of taxable income over $30,000
$75,000 - $100,000	$13,750 + 34% of taxable income over $30,000
$100,000 - $335,000	$22,250 + 39% of taxable income over $30,000
$335,000 - $10,000,000	$113,900 + 34% of taxable income over $30,000
$10,000,000 - $15,000,000	$3,400,000 + 35% of taxable income over $30,000
$15,000,000 - $18,333,333	$5,150,000 + 38% of taxable income over $30,000
Over $18,333,333	35% of the taxable income

If the corporate tax rates do change for 2009, we will update this blog to reflect the changes.

When to Use Statements in QuickBooks

Tue, 11 Nov 2008 00:00:00 -0700

The primary reason for using statements in QuickBooks is to remind delinquent customers that they owe you money and to summarize the amount they owe. However, some businesses use statements instead of invoices.

Using QuickBooks Statements as reminders
If you bill your customers via invoices, then a statement is a great way to summarize what a certain customer who is delinquent in paying you owes. Statements look similar to invoices, but they list each transaction (invoices sent, credits given, payments received) for which there is an outstanding balance, the date of the transaction and then the total amount due. Because statements simply summarize information already in QuickBooks, they do not require any data entry. Because they are very easy to create for one or all delinquent customers, I often recommend to my customers that they create statements for all delinquent customers on a regular basis, and then quickly review them to decide which ones to send out.

See Creating Statements in QuickBooks for All Open Transactions for a step-by-step QuickBooks tutorial on creating statements in QuickBooks.

Using Statements instead of invoices in QuickBooks
Some businesses that bill periodically (weekly, monthly, etc.) choose to send statements to their customers instead of invoices. Instead of writing invoices, these businesses record charges to their customers in the customer register. Then on a regular basis they simply create statements which summarize the entries which have been made in the customer register. While this makes sense for some customers, using billing statements instead of invoices has significant limitations.

See Using the QuickBooks Customer Register Instead of Invoices for a step-by-step QuickBooks tutorial on this topic.

QuickBooks 2009 Live Community Makes Getting Help Easy

Fri, 07 Nov 2008 00:00:00 -0700

QuickBooks 2009 Live Community greatly simplifies getting help in QuickBooks. If you keep the Live Community/Help window open while you work in QuickBooks, it continually changes to suggest relevant topics to whatever it is in QuickBooks that you are currently working on. And you can choose between getting help via the standard QuickBooks Help (which is faster and easier to use than it used to be) or using Live Community to ask a question. If you choose to ask a question in Live Community, the first thing Live Community does is to check to see if your questions has already been asked and answered, in which case you can go right to the answer, as opposed to waiting for someone to answer your question.

In my opinion, Live Community is a significant reason for inexperienced QuickBooks users to consider upgrading to QuickBooks 2009. Experienced users generally don't require help very often, so Live Community will be less useful for them. However, the ease of use is likely to result in some experienced users looking into issues they previously didn't want to take the time to explore.

Choose whether or not to display Live Community in QuickBooks 2009 by checking or unchecking "Show Live Community" in the Desktop View Preference tab (Edit->Preferences->Desktop View->My Preferences).

As an Authorized QuickBooks Affiliate, Samarak is able to offer significant discounts on most QuickBooks products. If you are planning to upgrade, save money by purchasing QuickBooks from our site.

Finally, as a general rule, we recommend to our clients that they upgrade their version of QuickBooks every 2-3 years. Purchase QuickBooks now.

What Obama's Tax Policy Means For You

Wed, 05 Nov 2008 00:00:00 -0700

Now that the presidential election is over and Barack Obama has been elected to be the next President of the Unites States, it is time to look closely at President-elect Obama's economic and tax policies and think about what they really mean for you. To this end, a partial summary of President-elect Obama's tax policies follows.

How Obama's Tax Policies will affect Individuals:

cut taxes for lower and middle income families/households
- tax cuts for lower and middle income families will be made permanent
- child tax credits will be made permanent
- eliminate income tax for seniors with less than $50,000 of income
raise taxes on those with income of more than $250,000/year
- the highest tax rate would be raised to pre-2001 levels - 39.6%
increase capital gains taxes from 15% to 20%-28% & increase taxes on dividends
raise social security taxes for those with higher incomes
eliminate deductability of state and local income taxes

How Obama's Tax Policies will affect estate taxes:

make estate taxes permanent
$3.5M exemption and 45% rate

How Obama's Tax Policies will affect the AMT:

extend and index the 2007 AMT patch
no plans to reform AMT

How Obama's Tax Policies will affect corporate taxes:

corporate tax rate remains the same
make research & development credit permanent
make renewable energy production tax credit permanent
eliminate oil and gas loopholes
impose windfall profits tax on noil and gas companies

This is not an exhaustive list of Presiedent-elect Barack Obama's proposals, but it covers the big issues that affect most individuals and small companies.

QuickBooks 2009 Company Snapshot is Great

Tue, 04 Nov 2008 00:00:00 -0700

The QuickBooks 2009 feature that I am most excited about is the Company Snapshot. It doesn't really add any functionality, but it does make it really easy for a manager to quickly see key information that in the past they probably did not look at as often as they should. For this reason, I think the Company Snapshot alone is a reason to consider upgrading to QuickBooks 2009.

I trust my bookkeeper to handle the day-to-day bookkeeping for my company. However, there are a few things I always want to be on top of. I always want to know how much cash we have in the bank. I always want to know the balance of our accounts receivable and who owes us money, and when cash is tight I like to know who we owe money to. In the past I got this information from different places. I habitually look at the Chart of Accounts to see where cash stands and because it is a quick and easy way for me to see the balance on other accounts I am interested in. While I can see the AR and AP balances in the Chart of Accounts, seeing exactly who owes us money and who we owe money to required opening separate A/R and A/P reports, something I often neglected to do unless the balance in one of the accounts was unusually high. The QuickBooks Company Snapshot enables me to see all this information in one place in a very easy to see format.

The QuickBooks Company Snapshot includes five sections:

Income and Expense Trend Graph: a bar graph showing income and expenses for the period of time you select.
Reminders: you can choose what shows up in the list of Reminders that shows up in the Company Snapshot.
Account Balances: the Account Balances section is like a mini Chart of Accounts in which you can choose which accounts you want to see.
Customers Who Owe Money: a list of who owes you money, the amount and the due date. You can sort it by customer, due date, or amount due.
Vendors to Pay: a list of who you owe money to, the amount and the due date. Again, you can sort it by vendor, due date, or amount due.

Here's a picture of the QuickBooks Company Snapshot:

There are other good reasons to upgrade to QuickBooks 2009 (Live Community is the other one I'm most excited about), but the Company Snapshot is the enhancement I like the most.

As an Authorized QuickBooks Affiliate, Samarak is able to offer significant discounts on most QuickBooks products. If you are planning to upgrade, save money by purchasing QuickBooks from our site.

Finally, as a general rule, we recommend to our clients that they upgrade their version of QuickBooks every 2-3 years. Purchase QuickBooks now.

Small Business Tax Calendar for November 2008

Thu, 30 Oct 2008 00:00:00 -0600

The following list of November tax dates will be useful to accountants, bookkeepers and small business owners:

11/5/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 29th and October 31st.
11/7/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 1st and November 4th.
11/10/2008 - Employees who earned more than $20 in tips in October must report the total to their employers.
11/13/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 5th and November 7th.
11/14/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 8th and November 11th.
11/17/2008 - If you are subject to the monthly deposit rule, then deposit payroll taxes for October by November 17th.
11/19/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 12th and November 14th.
11/21/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 15th and November 18th.
11/26/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between November 19th and November 21st.

Towards the end of November we will post a similar list showing December tax dates for accountants, bookkeepers and small business owners.

QuickBooks 2009 Has Great New Features

Thu, 30 Oct 2008 00:00:00 -0600

QuickBooks 2009 has some great new features. The top six reasons Intuit touts to upgrade to QuickBooks 2009 are:

QuickBooks 2009 customers get a free, easy to create, website with fee hosting.
New Multi-user features in QuickBooks 2009.
QuickBooks 2009 includes a Company Snapshot showing you which customers owe you money, which vendors you owe money, what things you need to do today, and more.
New and easier Online Banking features.
QuickBooks 2009 includes multi-currency support.
Live Community makes getting accessing QuickBooks help easier than ever.

In my opinion, the top two reasons to upgrade to QuickBooks 2009 are the Company Snapshot and Live Community. I will post blogs about each in the next few days explainging how to use them and why I like them so much.

You can compare and/or purchase QuickBooks 2009 products on our site.

Accounting Internet Library Worth A Look

Wed, 29 Oct 2008 00:00:00 -0600

The Accounting Internet Library, put together by a retired accounting teacher - Walter Antoniotti, includes links to a vast amount of information for accounting students, teachers, and business professionals. The information is broken out into five main areas:

Help for Beginners
Advanced Accounting Courses Free Learning Materials
CPA Exam Resources, Career Information, Sites for a CPA, Scholarships, Free Accounting Software
Interesting Accounting Sites, Accounting Organizations and Blogs, Teacher Sites
Tax Sites, Tax Resources and more

If you are looking for accounting information, this is a great place to start. Check it out.

QuickBooks Tutorials: Memorized Transactions

Mon, 27 Oct 2008 00:00:00 -0600

We recently added a number of QuickBooks tutorials related to handling recurring and memorized transactions in QuickBooks. Each QuickBooks tutorial includes step-by-step instructions and screen shots.

Recently added QuickBooks tutorials include:

Check out our Quickbooks Tutorials page for QuickBooks tutorials on creating and using invoices in QuickBooks, QuickBooks classes, managing your chart of accounts in QuickBooks, and much more.

Maximum Wages Subject to Social Security Tax in 2009 Will be $106,800

Mon, 20 Oct 2008 00:00:00 -0600

The maximum amount of wages subject to social security taxes increases annually. It was $97,500 in 2007, $102,000 in 2008, and will increase to $106,800 in 2009. Over the past 10 years the maximum wages subject to social security taxes have been as follows:

1999: $72,600
2000: $76,200
2001: $80,400
2002: $84,900
2003: $87,000
2004: $87,900
2005: $90,000
2006: $94,200
2007: $97,500
2008: $102,000
2009: $106,800

The tax rates are 6.2% for FICA and 1.45% for Medicare, and there is no limit on the amount of wages which are subject to the Medicare tax.

2009 Tax Rate Tables

Mon, 20 Oct 2008 00:00:00 -0600

The IRS recently released the updated tax rate tables for calendar year 2009. The 2009 tax rate tables are as follows:

2009 Tax Rate Table for Married Individuals Filing Joint Returns and Surviving Spouses

Taxable Income	Tax
<$16,700	10% of the taxable income
$16,700 to $67,900	$1,670 + 15% of taxable income over $16,700
$67,900 to $137,050	$9,350 + 25% of taxable income over $67,900
$137,050 to $208,850	$26,637.50 + 28% of taxable income over $137,050
$208,850 to $372,950	$46,741.50 + 33% of taxable income over $208,850
Over $372,950	$100,894.50 + 35% of taxable income over $372,950

2009 Tax Rate Table for Heads of Households

Taxable Income	Tax
<$11,950	10% of the taxable income
$11,950 to $45,500	$1,195 + 15% of taxable income over $11,950
$45,500 to $117,450	$6,227.50 + 25% of taxable income over $45,500
$117,450 to $190,200	$24,215 + 28% of taxable income over $117,450
$190,200 to $372,950	$44,585 + 33% of taxable income over $190,200
Over $372,950	$104,892.50 + 35% of taxable income over $372,950

2009 Tax Rate Table for Unmarried Individuals (other than Surviving Spouses and Heads of Households)

Taxable Income	Tax
<$8,350	10% of the taxable income
$8,350 to $33,950	$835 + 15% of taxable income over $8,350
$33,950 to $82,250	$4,675 + 25% of taxable income over $33,950
$82,250 to $171,550	$16,750 + 28% of taxable income over $82,250
$171,550 to $372,950	$41,754 + 33% of taxable income over $171,550
Over $372,950	$108,216 + 35% of taxable income over $372,950

2009 Tax Rate Table for Married Individuals Filing Separate Returns

Taxable Income	Tax
<$8,350	10% of the taxable income
$8,350 to $33,950	$835 + 15% of taxable income over $8,350
$33,950 to $68,525	$4,675 + 25% of taxable income over $33,950
$68,525 to $104,425	$13,318.75 + 28% of taxable income over $68,525
$104,425 to $186,475	$23,370.75 + 33% of taxable income over $104,425
Over $186,475	$50,447.25 + 35% of taxable income over $186,475

2009 Tax Rate Table for Estates and Trusts

Taxable Income	Tax
<$2,300	15% of the taxable income
$2,300 to $5,350	$345 + 25% of taxable income over $2,300
$5,350 to $8,200	$1,107.50 + 28% of taxable income over $5,350
$8,200 to $11,150	$1,905.50 + 33% of taxable income over $8,200
Over $11,150	$2,879 + 35% of taxable income over $11,150

More information related to filing 2009 tax returns is available on the IRS web site.

IRS Announces 2009 Inflation Adjustments

Thu, 16 Oct 2008 00:00:00 -0600

The dollar amounts of many tax provisions are revised by law annually by the IRS. The major changes affecting 2009 tax returns are:

Personal and dependency tax exemptions will increase from $3,500 in 2008 to $3,650 in 2009.
The standard deduction for married couples filing jointly will increase from $10,900 in 2008 to $11,400 in 2009.
The standard deduction for singles and married individuals filing separately will increase from $5,450 in 2008 to $5,700 in 2009.
The standard deduction for heads of household will increase from $8,000 in 2008 to $8,350 in 2009.
Tax bracket thresholds will increase for each filing status.
The maximum earned income tax credit for low and moderate income workers and working families with two or more children will increase from $4,824 in 2008 to $5,028 in 2009. The income limit for the credit for joint return filers with two or more children will increase from $41,646 in 2008 to $43,415 in 2009.
The annual gift exclusion will increase from $12,000 in 2008 to $13,000 in 2009.

More information is available on the IRS web site.

Deleting Memorized Transactions

Wed, 15 Oct 2008 00:00:00 -0600

Deleting memorized transactions is easy and, if you use memorized transactions a lot, worth doing periodically. It is easier to find the memorized transactions you do use if you clear the ones you no longer use out every now and then.

To delete a memorized transaction, simply open the Memorized Transactions List by selecting Memorized Transactions List from the Lists menu.

Then select the Memorized Transaction you want to delete, click Memorized Transaction and then Delete Memorized Transaction.

Click OK to the Delete Memorized Transaction messagebox and you're done.

Editing Memorized Transactions

Fri, 10 Oct 2008 00:00:00 -0600

If you need to edit a memorized transaction, you can do so. If you are making significant changes, then it might be worth simply deleting the memorized transaction and re-entering it. However, editing the memorized transaction is easy, so both options are fine. To edit a memorized transaction, simply:

Open the Memorized Transactions List from the Lists menu.

Open the memorized transaction you want to edit by double clicking it.

Edit the transaction.
Select Memorize Bill from the Edit menu to rememorize the transaction.

Then click Replace in the Replace Memorized Transaction window.

Assuming you are simply editing the memorized transaction and do not wish to actually enter it at this time, close the transaction window without saving.

529 Plans Explained

Thu, 09 Oct 2008 00:00:00 -0600

529 Plans are educations savings plans which are designed to help families put away money for future college expenses. An explanation of the key benefits of 529 plans follows, along with answers to some common questions about 529 plans.

Benefits of 529 Plans

While deposits into 529 Plans do not count for federal tax deductions, investments in 529 Plans do grow tax-deferred and distributions which come out to pay for the beneficiary’s college costs (tuition, room & board, books) do come out federally tax free.
Some states offer tax breaks on money invested in 529 Plans, such as deductions on money invested in the plans up to a certain limit. To learn about the plan in your state, click here.
The named beneficiary can be changed without penalty, so if one of your children doesn’t go to college, you can transfer the money set aside for them to another child.
The plans are generally easy to enroll in and contribute to, and they do not require ongoing management.
There are not generally any income or age restrictions guiding who can put money into 529 Plans and who can benefit from them. If you are thinking about going back to school, set a plan up for yourself. If you don’t go, make your child or grandchild the beneficiary.

What can the money in 529 Plans be used for?

529 Plan money can be used for tuition, books, and/or room & board.
All accredited colleges and universities qualify.

What if I need the cash or none of my children go to college?

The donor can withdraw the money from their 529 Plans at any time, though withdrawals are subject to income tax (just the earnings, not the original investment on which you have already paid income taxes) and there is a 10% penalty.

What are contribution limits on 529 Plans?

Contribution limits on 529 Plans are generally quite high – over $300k per beneficiary in many plans.

Who controls the money I put into a 529 Plan for my child?

The donor, not the beneficiary, controls the funds. The named beneficiary does not generally have any rights. Therefore, you can make sure the beneficiary uses the funds in a way you approve of (such as using some money each year rather than all the money the first year, for a four-year college only, for tuition only rather than for books and room & board, etc.).

Using Memorized Transactions

Tue, 07 Oct 2008 00:00:00 -0600

There is no need to repeatedly re-enter the same information in QuickBooks for transactions you frequently make. Instead, simply create a memorized transaction which you can then use repeatedly.

If the transaction is a recurring transaction, such as a monthly rent payment, you can set it up as a recurring transaction (See "Handling Recurring Transactions in QuickBooks"). If not, then use it when you need it by entering it from the Memorized Transaction list (See "Creating Memorized Transactions in QuickBooks" to add memorized transactions to the list).

From the Lists menu, select Memorized Transactions List.

In the Memorized Transaction List window, select the memorized transaction you want by double clicking it. In this example, I will click on American Express to enter my monthly credit card bill.

Now simply enter the relevant info (Date, Amount Due, amount applicable to each account, memo, customer job, class, etc.) and Save, just as if you were entering the bill from scratch.

Creating Memorized Transactions in QuickBooks

Thu, 02 Oct 2008 00:00:00 -0600

For transactions that you frequently enter into QuickBooks, you can save time by memorizing the transaction. This way you just open the memorized transaction when you need it, and much of the information is already there. The information that changes each time you can simply leave blank.

The following example uses a memorized transaction to simplify entering your credit card bill.

First, enter the information that stays the same every time you enter your credit card bill. As you can see, I entered the accounts which credit card transactions normally fall into. However, if you assign your expenses to Classes, then you might have additional rows representing each class for each account. Then click Memorize Bill (or Memorize Invoice, Memorize Sales Receipt, etc.).

In the Memorize Transaction window, select "Don't Remind Me" as you will simply access this memorized transaction when you receive the bill. Alternatively, you could select "Remind Me" to add this transaction to your Reminders list. Click OK to memorize the transaction.

Assuming you are entering the transaction information simply to create a memorized transaction for future use, you can close the transaction window without saving.

This transaction is now available in the Memorized Transactions List, which can be accessed from the Lists menu.

IRS Sets Fourth Quarter 2008 Interest Rates

Wed, 01 Oct 2008 00:00:00 -0600

After lowering interest rates by 1% each the last two quarters, the IRS announced today that they are raising interest rates by 1% effective October 1, 2008. Therefore, beginning today the interest rates will be:

6% for overpayments (5% for corporations)
6% for underpayments
8% for large corporate underpayments
3.5% for the portion of corporate overpayments that is above $10,000.

The IRS determines the rate of interest on a quarterly basis based on the federal short-term rate.

Small Business Tax Calendar for October 2008

Fri, 26 Sep 2008 00:00:00 -0600

Following is a list of October dates that small business owners, bookkeepers and accountants should be aware of:

10/1/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 24th and September 26th.
10/3/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 27th and September 30th.
10/8/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 1st and October 3rd.
10/10/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 4th and October 7th.
10/15/2008 - If you are subject to the monthly deposit rule, then deposit payroll taxes for September by October 15th.
10/16/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 8th and October 10th.
10/17/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 11th and October 14th.
10/22/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 15th and October 17th.
10/24/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 18th and October 21st.
10/29/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 22nd and October 24th.
10/31/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between October 25th and October 28th.

At the end of October we will publish a list of November dates that small business owners, bookkeepers and accountants should be aware of.

S-corp or LLC?

Tue, 23 Sep 2008 00:00:00 -0600

S corporations and LLCs have a lot in common and therefore often appeal to the same people. Two major things S-corps and LLCs have in common are:

both provide protection against liabilities
both enable the owners to avoid double taxation as business losses and profits pass through to the owners.

The decision between an S-corp and an LLC usually comes down to two significant differences:

Employment Taxes
Owners (members) of an LLC must pay employment taxes on all profits passed through to their individual tax return. Owners of an S-corp, however, only pay taxes on the salary and wages they receive from the S corporation. If you expect to generate significant profit or your LLC is already generating a lot of profit, this difference alone can make it worth starting up as or switching to an S-corp. It is important to note, however, that owners of an S-corp are required to take a reasonable salary for the services they perform and the IRS may recategorize distributions made as salary if they don't feel the owners have done so.
It is Easier to Start and Operate an LLC than an S Corporation
It is simpler to start an LLC than it is to start an S-corp and, once operating, LLCs do not require regular corporate meetings and maintaining company minutes, both of which are required by S-corps.

If you are debating between an S-corp and an LLC, then it probably comes down to how much profit you expect to make and whether or not you can reasonably argue that some of that profit should not count as your salary. If this is the case, then consider an S-corp. If not, then it probably makes sense to go with the simpler LLC. It's not difficult to switch from an LLC to an S-corp, so it often is best to keep things simple at the beginning and then switch to an S-corp later if it makes sense to do so.

Finally, choosing the best business structure for you business is not easy. While I hope this blog entry helps you understand and consider the differences between LLCs and S-corps, I recommend seeking guidance from your accountant or attorney before making a final decision.

Handling Recurring Transactions in QuickBooks

Mon, 22 Sep 2008 00:00:00 -0600

For transactions that you regularly make, such as paying rent, you can avoid the hassle of entering the same information time and again by setting up a memorized transaction. You can then set this memorized transaction to occur on a specific schedule (daily, monthly, annually, etc.).

First, open the transaction (I will use a monthly rent payment as an example in this tutorial) you want to memorize. From the Edit menu, click Memorize Bill (or Memorize Invoice, Memorize Sales Receipt, etc.).

In the Memorize Transaction window:

Select Automatically Enter
How Often (daily, weekly, monthly) you want the bill to be entered
Next Date, which is the first date on which the transaction will be automatically entered
Number Remaining if you know. Leave this blank if you don't want to set an end date
Days in Advance to Enter, if you want the transaction entered ahead of time. I set the rent bill to be entered 10 days ahead of time because it is due on the 1st of the month, and I want to make sure I send it in in time.

Click Ok and you are all done. QuickBooks will automatically enter the transaction at the appropriate time.

Accountants Expected to See Above Average Salary Increases in 2009

Thu, 18 Sep 2008 00:00:00 -0600

According to a recent study by Hewitt Associates of 1,073 large organizations, most US workers can expect flat base pay raises in 2009 of 3.8%. However, the good news for most of the readers of this blog is that the Hewitt study found that accountants and consultants can expect higher salary increases (4.6%) than any other industry in 2009. Read the article.

QuickBooks Tutorials: Invoices and Sales Receipts

Wed, 17 Sep 2008 00:00:00 -0600

We have added quite a few QuickBooks tutorials related to working with invoices and sales receipts in QuickBooks over the last month. Each QuickBooks tutorial includes instructions, screen shots, and detailed explanations and information about those things you should think about.

The QuickBooks tutorials we recently added are:

Check out our QuickBooks Tutorials page for tutorials on other things related to QuickBooks.

When to Use Sales Receipts in QuickBooks

Mon, 15 Sep 2008 00:00:00 -0600

When you start using QuickBooks you will probably have to decide whether to use invoices or sales receipts to record your sales in QuickBooks. See our blogs titled Deciding Whether Or Not To Use Invoices in QuickBooks and About QuickBooks Sales Receipts for information on invoices and sales receipts and when it is appropriate to use each. For more information on Sales Receipts, see the following QuickBooks Tutorials:

IRS Creates Web Page for Small Businesses

Mon, 15 Sep 2008 00:00:00 -0600

The IRS recently posted a new web page with links to information on issues that small business owners (specifically those that file Schedule C) commonly face. There is information on starting a business, operating a business, business and employment taxes, IRS forms and publications, and much more. Check it out and share it with your small business clients.

When Will I Receive My Economic Stimulus Payment?

Thu, 11 Sep 2008 00:00:00 -0600

The question the IRS hears the most about the economic stimulus payments is "When will I receive it?". The answer to this question can be found on the IRS's website. Simply click on "Where's My Stimulus Payment?", enter your social security number, filing status and the number of exemptions you claimed, and click "Submit".

Adding Your Logo to Sales Receipts in QuickBooks

Tue, 09 Sep 2008 00:00:00 -0600

Adding logos to QuickBooks Sales Receipts is simple. In the Enter Sales Receipts window, click on the Customize icon to open the Basic Customization window.

Check Use Logo in the Basic Customization window.

Surf to your logo and select it. Click Ok to the messagebox that appears telling you QuickBooks will copy your image to a new location. Back in the QuickBooks Basic Customization window, you can see your logo on the invoice. Use the Layout Designer to resize or reposition your logo.

Finally, note that while the logo does not show up in the onscreen sales receipt form, it will show up when printed. You can also see it in the preview window.

IRS Simplifies Application Process for Tax-Exempt Organizations

Tue, 09 Sep 2008 00:00:00 -0600

Organizations seeking tax-exempt status used to have to go through a two step process in which they first received an advance ruling allowing them to operate as a public charity for 5 years, and then had to demonstrate that they received a substantial portion of their support from public sources in order to receive a final determination letter. However, the revised From 990, the tax return which organizations exempt from federal income tax must file, has eliminated the need for this two step process.

Those organizations which received an advance ruling but have not yet received a final determination letter will no longer need to do so. Instead, they will be allowed to use their advance ruling letter as their final determination letter.

For more information, see the IRS's website.

Hourly Rates for Bookkeepers

Mon, 08 Sep 2008 00:00:00 -0600

Hourly bookkeeper rates vary greatly. I have seen US companies advertising bookkeeping rates of $10/hour and others charging over $100/hour for bookkeeping services. However, the majority of bookkeepers charge from $40/hour to $75/hour for their services, which from my experience is what competent bookkeepers should charge. I would caution companies to question the competence of a bookkeeper charging less than $40/hour and to think twice before paying more than $75/hour for bookkeeping services.

Some bookkeepers charge by the week or month, by the number of transactions, or for specific jobs. Given that it is very difficult to assess how long a job will take for an unknown client, I strongly recommend that bookkeepers not do this unless they have worked with a client for a long time and therefore can be sure they are setting an appropriate price. Likewise, I caution companies to question the quality of work they will receive when they engage a bookkeeper for a very low rate for an unspecified amount of work.

For more information and thoughts, check out Intuit's 2007 Rates Survey and the The American Institute of Professional Bookkeeper's 5 Ways to Succeed as a Freelance Bookkeeper.

Intuit Announces QuickBooks Online for the iPhone and BlackBerry

Thu, 04 Sep 2008 00:00:00 -0600

Intuit announced last week both iPhone and BlackBerry integration with QuickBooks Online. While the majority of the more than 130,000 small businesses that use QuickBooks Online will probably not access their QuickBooks Online account from their iPhones or BlackBerries, some users are likely to do so often to view information such as:

Financial statements including Profit & Loss and Balance Sheet
Bank account balances and credit card balances
Vendor lists, customer lists, and employee lists
Accounts receivable and accounts payable reports
QuickBooks Online contact info, which works with your iPhone to send emails, make calls, and look up addresses using Google Maps

To get started using QuickBooks Online on your iPhone, go to http://www.intuitlabs.com/apps/qboe-on-iphone.

To get started using QuickBooks Online on your BlackBerry, go to http://www.intuitlabs.com/apps/qboe-on-blackberry.

Entering QuickBooks Sales Receipts (Assuming you don't want to track sales by customer)

Tue, 02 Sep 2008 00:00:00 -0600

The following instructions detail how to create sales receipts in QuickBooks ASSUMING YOU DO NOT WANT TO TRACK SALES BY CUSTOMER OR JOB. If you want to track sales by customer or job, see our QuickBooks tutorial titled Entering QuickBooks Sales Receipts (Assuming you want to track sales by customer).

If you don't want or need to track sales by individual customer, then you can create summary sales receipts which include all sales for a specific period of time (normally daily or weekly). To do so, you first create a sales summary template and then you use this template to create sales summaries.

Creating a sales summary template in QuickBooks

From the Customers menu, click Enter Sales Receipts.
Fill in the form as follows:
- Leave the Customer:Job field blank.
- If you want to track sales by the method of payment, then enter the method (cash, check, etc.). Note that if you accept multiple payment methods, then you will want to create a separate template for each method.
- Enter all the items you normally sell in the detail area
  - Leave the Quantity blank as you will fill this in when you create the idividual sales receipts
  - Fill in the Price for each item. Note that if the price changes, you will need to replace this memorized transaction with a new one.
In the Edit menu, click Memorize Sales Receipt.
In the Memorize Transaction window, enter a meaningful name for the template (ex: Weekly Sales Summary) and click OK.
Close the Enter Sales Receipts window without saving the transaction.

Using the sales summary template

From the Lists menu select Memorized Transaction List
Select the appropriate memorized transaction and click Enter Transaction.
Fill out the Sales Receipt by entering the quantity of each item sold. In the Memo field you should enter the dates the sales receipt covers. Then Save.

Creating sales summary templates in QuickBooks only takes a few minutes and it makes entering summary transactions very easy. Taking the time to set these up will save you a lot of time in the future.

Entering QuickBooks Sales Receipts (Assuming you want to track sales by customer)

Tue, 02 Sep 2008 00:00:00 -0600

The following instructions detail how to create sales receipts in QuickBooks ASSUMING YOU WANT TO TRACK SALES BY CUSTOMER OR JOB. If you don't want to track sales by customer or job, see our QuickBooks tutorial titled Entering QuickBooks Sales Receipts (Assuming you don't want to track sales by customer).

Entering sales receipts instead of invoices is the logical choice for companies that receive payment in full at the time they deliver their product or service. Sales receipts are easy to use and allow companies to track individual sales, calculate sales tax and print receipts.

To enter a sales receipt, click Enter Sales Receipts from the Customer menu.

Fill out the Sales Receipt by entering the Customer:Job, the Class (if you use QuickBooks Classes), the Date, the Payment Method, and then the items purchased and details (description, quantity, rate). Then enter a memo to your customer if you want to. Finally, check whether the sales receipt is to be printed, emailed, neither or both (depends on whether or not you want to give your customer a copy of the sales receipt and, if so, how) and then Save.

After entering the sales receipt, remember to deposit the money you received. Until you do, the money will show up in QuickBooks as Undeposited Funds. Deposit it by going to the Banking menu, selecting Make Deposits, selecting the amount in the Make Deposits window, and then saving.

Small Business Tax Calendar for September 2008

Sat, 30 Aug 2008 00:00:00 -0600

Following is a list of important September tax dates for small business owners, bookkeepers and accountants to be aware of:

9/2/2008 - Pay taxes on vehicles first used during the month of July and file Form 2290.
9/4/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 27th and August 29th.
9/5/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 30th and September 2nd.
9/10/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 3rd and September 5th.
9/12/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 6th and September 9th.
9/15/2008 - If you are subject to the monthly deposit rule, then deposit payroll taxes for August by September 15th.
9/17/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 10th and September 12th.
9/19/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 13th and September 16th.
9/24/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 17th and September 19th.
9/26/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between September 20th and September 23rd.
9/30/2008 - Pay taxes on vehicles first used during the month of August and file Form 2290.

Come late September we will publish an updated list showing October dates for accountants and bookkeepers to be aware of.

Calculating the Value of Your Business

Tue, 26 Aug 2008 00:00:00 -0600

There are a number of ways to calculate the value of your business. One way is to simply tally up the value of your company's assets. A second way is to compare your business to similar businesses that have sold recently. A third way is to simply assume your company is worth some multiple of your revenue. However, the only method I recommend using to calculate the value of your business is to calculate the value of future cash flows. A brief discussion of the different methods follows:

Calculating the value of your business by adding up the value of your assets
Adding up the value of your assets is a very simple way to calculate the value of your business. Simply add up the value of your hard assets (equipment, machinery, real estate, cash) and subtract any liabilities. The advantage of this method is that it is simple and presumably sets the minimum value of your business. You should be able to liquidate the company and get this value. The disadvantage of this method is that it doesn't assign any value to the company's future earnings potential.

Calculating the value of your business by comparing it to similar businesses
Another simple valuation technique is to compare your business to other similar businesses which have sold. If you can find similar businesses, this can be a great method. However, finding a business that is truly similar can be very difficult. Even two businesses in the same geographic region and industry with the same revenues and profit margin could be worth different amounts to different acquiring companies based on things like the management team, the company culture, and what is actually driving profits. Therefore, if you can find a business you really think is similar, then I recommend using this method as a way to calculate the value of your business. However, I think it is important to think hard about how your company is different than the one you are comparing it to before placing much stock in the value you come up with.

Calculating the value of your business by taking a multiple of revenue
I have often heard people claim that their company is worth a certain amount based on taking a multiple of their revenues. For some industries this might provide a ballpark number, but it is at best a ballpark number. A company's real value comes from its ability to generate profits, not revenues.

Calculating the value of your business by calculating the value of future cash flows
The best way to calculate how much your business is worth is to calcualte the discounted value of future cash flows. This is the most complicated method because it means making detailed projections of revenue and expenses for future years, which inevitably means multiple assumptions. However, this method is definitely the best method of determining what your business is worth to you. You can't know what someone who acquires your business will do with it and therefore can't very well project what it is worth to them. However, you do have a good idea as to what you will do with your own business and therefore can figure out what it is worth to you. In addition, because you will be making all the assumptions, you should end up with a good gut feel as to how accurate they are, so you end up with a value and a good idea if the value is conservative, realistic or optimistic.

Finally, if possible it is great to use multiple methods to calculate the value of your business, and then to compare the different results. There is no correct answer as to what the value of your business is. Two separate entities considering purchasing your business might come up with very different offers based on different methods of valuing your business, different assumptions about what will happen in coming years and/or different plans as to what they will do with your business. In addition, companies make acquisition mistakes all the time, which underscores just how difficult it is to calculate the value of a business. For this reason, I recommend focusing first on what your business is worth to you. Once you understand this, you are in a good position to negotiate with a potential acquirer.

About QuickBooks Sales Receipts

Sun, 24 Aug 2008 00:00:00 -0600

As a general rule, it makes sense to use sales receipts in QuickBooks instead of invoices if your customers pay you at the time they receive your product or service. The reason is that because you receive payment right away, there is no need to track how much your customers owe you. In this situation, using sales receipts is an easy way to track individual sales, calculate sales tax and print receipts.

If your customers pay in advance or pay after delivery of your service or product, then use invoices in QuickBooks rather than sales receipts.

Here's a quick checklist to help you determine if sales receipts are right for your business:

if you collect payment in full when you deliver your service or product, consider using sales receipts
if you want to track your sales, consider using sales receipts
if you want/need to track sales tax collected and owed, consider using sales receipts
if you would prefer to create a weekly or daily summary of your sales instead of entering each individual sale, consider using sales receipts
if you don't accept payment in advance or allow customers to pay you after the sale, consider using sales receipts

Some examples of businesses that should consider using sales receipts are restaurants, beauty salons, dry cleaners, pet groomers and newspaper stands.

Intuit rises on 4Q results, solid 2009 guidance

Fri, 22 Aug 2008 00:00:00 -0600

Intuit Inc. shares rose Friday after the tax preparation and money management software company posted fiscal fourth-quarter results that met Wall Street expectations, and offered a full-year forecast that ...

Samarak Launches New CFO Services Website

Fri, 22 Aug 2008 00:00:00 -0600

Samarak is splitting into two companies, one of which is an internet company which helps accountants, bookkeepers and QuickBooks consultants obtain business over the web and the other of which provides CFO Services to small and medium-sized companies throughout the US. As such, we have launched a new website for the CFO Services side of Samarak and have removed the CFO Services content from www.samarak.com.

Samarak was originally founded to provide CFO services to small companies and medium-sized companies. However, our success with search engine optimization led us to pursue a business helping other accountants, bookkeepers and QuickBooks consultants obtain business over the web, and our site has changed to reflect this new business.

My passion for working with other small businesses, however, has not changed and it is for this reason that we have launched a new site dedicated to my work as a part-time CFO. Please visit our new CFO Services website.

Dave Dunn,
President, Samarak

Adding Your Logo to Your QuickBooks Invoices

Wed, 20 Aug 2008 00:00:00 -0600

Adding logos to QuickBooks invoices is quite simple. In the Create Invoices window, click on the Customize icon to open the Basic Customization window.

Check Use Logo in the Basic Customization window.

Surf to your logo and select it. Click Ok to the messagebox that appears telling you QuickBooks will copy your image to a new location. Back in the QuickBooks Basic Customization window, you can see your logo on the invoice. Use the Layout Designer to resize or reposition your logo.

IRS Releases Revised Instructions for 2008 Form 990

Wed, 20 Aug 2008 00:00:00 -0600

The newly revised instructions for the 2008 Form 990 have been posted on the IRS's website, along with three background documents which explain the new forms and instructions. The revised instructions and background documents are intended to help organizations prepare to file the revised 2008 Form 990, which was released by the IRS in December 2007 and is effective for 2008 tax years (returns filed in 2009). Links to all four documents follow:

Form 990 instructions
Background papers:

Customizing Invoices in QuickBooks

Sun, 17 Aug 2008 00:00:00 -0600

Because QuickBooks offers a great selection of template invoices, most small companies will not need to do much customizing of their chosen template invoice beyond adding their logo to it. However, those QuickBooks users that have special needs or are just very picky will find that it's not that difficult to customize QuickBooks invoices to look exactly the way they want them to.

The first thing to do is to choose which invoice template to use. From the Lists menu, select Templates.

In the Templates window, click on Templates and Edit Template.

In the Basic Customization window, click on Manage Templates.

In the Manage Templates window, click on the different templates until you find the one you want. Then click OK.

Now, back in the Basic Customization window, you are ready to edit your chosen invoice. Here you can add your logo, choose the color scheme for your invoice, change the font for specific items and choose which information shows up on your invoice.

You can also make additional customizations, such as moving fields around, though you will have to make a copy of the template first. Click on Additional Customization... and then click Make A Copy. The image below shows you some of the things you can easily add. Select Screen to add fields for your own records and Print to add fields that will show up on the copy of the invoice you will deliver to your customer.

To change the layout of the invoice, simply click on Layout Designer... from the QuickBooks Basic Customization window or the QuickBooks Additional Customization window. Then click on any of the items and drag and drop them to where you want them.

As you can see, QuickBooks invoices can easily be customized to look exactly the way you want them to.

QuickBooks Tutorials: Creating, Editing and Emailing Invoices in QuickBooks

Fri, 08 Aug 2008 00:00:00 -0600

We recently added a number of QuickBooks tutorials having to do with using invoices in QuickBooks. Each of these QuickBooks tutorials includes detailed instructions, screen shots, and explanations and discussoins of things you should think about.

The QuickBooks tutorials we recently added are:

Take a look at our QuickBooks Tutorials page for tutorials on other things related to QuickBooks.

Who Pays the Most Taxes?

Thu, 07 Aug 2008 00:00:00 -0600

Everyone knows that the more one earns, the more they pay in taxes - both in dollars and on a percentage basis. However, most people will probably be surprised to find out just how much of the total taxes collected the top earners contribute. Here's a breakdown:

top 1% of earners: account for 39.9% of all federal income taxes
top 5% of earners: account for 60.1% of all federal income taxes
top 10% of all earners: account for 70.8% of all federal income taxes
top 50% of all earners: account for 97% of all federal income taxes.

Obviously, to contribute this high a percent of total taxes collected, top earners must be making a lot more than every one else. Here's what it takes to be a top earner:

top 1% of earners: earned $388,800 or more (this group accounted for 22% of all adjusted gross income reported on returns)
top 5% of earners: earned $153,500 or more (this group accounted for 37% of all AGI)
top 10% of all earners: earned $108,900 or more (this group accounted for 71% of all AGI)

Based on this, it is easy to see that changes to the tax rates paid by top earners have a much greater impact on total taxes collected than changes to the tax rates paid by the lower 50% of earners.

Emailing Invoices to Customers from QuickBooks

Tue, 05 Aug 2008 00:00:00 -0600

You can email invoices to customers directly from QuickBooks. Your customer will receive the invoice as a pdf file attached to the email, which you can customize to say what you want. While many customers still prefer to receive invoices via standard mail, emailing invoices from QuickBooks when possible is a very efficient way to send out invoices.

To send an invoice from QuickBooks, open the invoice you want to send and click on the Send icon.

In the QuickBooks Send Invoice window, select E-mail at the top, fill in the To, From, and Subject lines, edit the E-mail Text (this is what will show up in the body of your email), Check Spelling if you want, and click Send Now.

If this is the first time you have sent an invoice from QuickBooks, you will be given the chance to register your e-mail address with QuickBooks Business Services and to sign up for QuickBooks Billing Solutions (allows you to accept credit card payments online, download online payments directly into QuickBooks, and much more) and QuickBooks Merchant Account Service. If you will send a lot if invoices via QuickBooks and/or receive a lot of payments via credit card, then it is definitely worth looking into these. If you won't do much of either, then just click "No Thanks".

Finally, you can customize the template message and subject line for invoices you email to customers in the Send Forms Company preference (from the Edit menu, select Preferences, then select Send Forms and Company Preferences).

Save Time & Money By Reducing the Frequency of Your Payroll

Mon, 04 Aug 2008 00:00:00 -0600

If you pay your employees more than once or twice a month, then you might consider doing so less often. The benefits of doing so are:

Increase your cash: paying employees less often means you are hanging on to your cash for longer.
Save money: if you use a payroll company, then you are paying them each time you run a payroll. Cutting the frequency in half won't cut the amount you pay the payroll company in half, but it might come close.
Save time: processing payroll takes time, and often about the same amount of time whether you are running payroll for a week or a month.

There are, of course, downsides to paying your employees less often:

Unhappy employees: few employees would pick one job over another based on the frequency of payroll, and most employees probably don't care once they are used to a specific system. Many employees, however, are likely to get upset if you change the system so that they are paid less frequently. A simple solution to this is to offer your employees an advance against payroll in the middle of the pay period. The advance need only equal half their take home pay, as opposed to half their actual salary, meaning that you retain some of the cash flow benefits of running payroll less frequently.
Payroll hits harder when it hits: obviously, if you pay your employees less often, then you will be paying them more money when you pay them. Therefore, it is important to set up systems to make sure you will have the money in the bank when payroll comes around.

Reducing the frequency of payroll is not a good idea for many companies. For some, however, it is an easy way to save some time and money. Therefore, it's worth considering.

Editing Invoices in QuickBooks

Fri, 01 Aug 2008 00:00:00 -0600

Editing invoices in QuickBooks is very easy. Simply find the invoice (from the Customer Center, Accounts Receivable register or a customer report such as the Customer Balance Detail report), double-click it to open it, and change the amount, description, class or whatever else as necessary. Then save the changes.

Be aware, however, that once you edit an invoice the original invoice is gone. Therefore, if you sent the invoice to a customer, they told you the amount was wrong, and now you want to edit it and send it again, make sure you have some system in place to remind you what you did (or, even better, use a credit memo to zero out the amount due and then issue a new invoice). The reason is that the hardcopy of the original invoice is out there, and if for some reason someone calls to ask you about it a year later and it no longer matches what you have in QuickBooks, you will want to know why.

Small Business Tax Calendar for August 2008

Thu, 31 Jul 2008 00:00:00 -0600

Following is a list of August dates that small business owners, bookkeepers and accountants should be aware of:

8/1/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 26th and July 29th.
8/6/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 30th and August 1st.
8/8/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 2nd and August 5th.
8/11/2008 - Employees who earned more than $20 in tips in July must report the total to their employers.
8/13/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 6th and August 8th.
8/15/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 9th and August 12th.
8/20/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 13th and August 15th.
8/22/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 16th and August 19th.
8/27/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 20th and August 22nd.
8/29/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between August 23rd and August 26th.

At the end of August we will publish a list of September dates that small business owners, bookkeepers and accountants should be aware of.

Receiving Payment Against an Invoice in QuickBooks

Tue, 29 Jul 2008 00:00:00 -0600

To record a payment received against an open invoice in QuickBooks, make sure to use the Receive Payments window. New QuickBooks users often make the mistake of recording the payment directly into the check register, which results in erroneous reports (P&L is wrong because income is counted twice - once when the invoice was created and again when the payment was received, AR reports will be incorrect) and messy books (an invoice is left open that you are no longer awaiting payment on). Therefore, if you use invoices in QuickBooks, then remember to use the Receive Payments window.

Open the Receive Payments window from the Customer menu.

In the Receive Payments window, fill out the Received From field, the Amount received, Date received, Pmt. Method and Check #. Then select the appropriate invoice to apply the payment to (QuickBooks will make a guess - change it if QuickBooks guessed wrong). Then Save.

After receiving payment, remember that it won't show up in your bank account register in QuickBooks until you deposit it (from the Banking menu, select Make Deposits).

Set Up an S Corporation to Reduce Self-Employment Taxes

Mon, 28 Jul 2008 00:00:00 -0600

Small business owners should consider whether or not it makes sense to set up an S-Corporation as a way of reducing total taxes paid. If your business currently operates as an LLC, a partnership or a sole proprietorship, then your profits are subject to self-employment taxes. As an S Corporation, only your salary is subject to self-employment taxes. Here are the details:

The first $102,000 (CY 2008 number) of salary that a person earns is subject to self-employment taxes of 15.3%. Half of this is paid by the employer and half by the employee. Of course, if you own your own business, then you are both employer and employee.
Salary in excess of $102,000 is subject to the Medicare tax rate of 2.9%. Again, half is paid by the employer and half by the employee.
If you operate as an LLC, a partnership or a sole proprietorship, then your profits are treated as salary, meaning you pay taxes per the above on all your profits.
If you operate as an S Corporation, then you only pay the above taxes on money you take as salary.

Many small businesses are started as LLCs, partnerships or sole proprietorships because of the ease of setting these businesses up. This often makes sense, but switching to an S Corporation is not that complicated, so beware of the above and make the switch when the time is right.

Finally, it is important to note that you are required to take "reasonable" compensation as salary when you operate as an S Corporation. Talk to your accountant about what constitutes "reasonable" salary for your particular situation.

Applying Credits to Invoices in QuickBooks

Fri, 25 Jul 2008 00:00:00 -0600

When a customer has a credit balance because they overpaid on a prior invoice or because you created a credit memo for some other reason, you can apply this credit balance to new invoices when you create them or when you receive payment against them. Instructions for both follow:

Applying Credit Balances to New Invoices:

Create the invoice in QuickBooks and then click Apply Credits.

In the QuickBooks Apply Credits window, select the credit(s) you wish to apply to the invoice. In the upper right QuickBooks shows you the original amount of the invoice, the credits used and the balance due. Click Done when finished.

Back on the invoice, you can now see the amount of payments applied and the balance due. Click Save & Close or Save & New.

By the way, if you don't notice the credits and therefore don't apply them, QuickBooks will remind you they are available when you save the invoice with a popup window (assuming you have not previously asked QuickBooks not to remind you).

Applying Credit Balances When You Receive Payment

If you don't apply the credits when you create the invoice in QuickBooks, you can do so when you receive payment. In the Receive Payments window, simply click on Discount & Credits.

In the QuickBooks Discount and Credits window, select the credit(s) you wish to apply to the invoice. In the upper right QuickBooks shows you the original amount of the invoice, the credits used and the balance due. Click Done when finished.

Back in the Receive Payments window, you can now see the amount of payments applied and the balance due. Click Save & Close or Save & New.

I generally recommend people apply credits as soon as they are aware of them. Therefore, if you know about them when creating the invoice, apply them when creating the invoice. If you create the credits after creating the invoice, apply them when receiving payment.

Thoughts About the Federal Minimum Wage Rate Increase

Thu, 24 Jul 2008 00:00:00 -0600

The federal minimum wage rate increased from $5.85 to $6.55 per hour today, a 12% increase. This is the second of three scheduled increases. The first increase occurred a year ago today and raised the federal minimum wage from $5.15 to $5.85 per hour. The next increase, which will raise the federal minimum wage to $7.25 per hour, takes effect on July 24, 2009. All totaled, these hikes result in a federal minimum wage rate increase of $2.10 (from $5.15 to $7.25), or 41%, in just two years. Here are a couple of thoughts about this:

The Increased Cost to Employers Will Be Passed on to Consumers
A number of articles I have read have raised the question of whether or not businesses will be forced to pass the increased cost of their labor onto the consumer. I think this question is absurd. Of course businesses will pass the increased cost on to their consumers. People run businesses to generate profits. When their costs go up, they either become more efficient or raise their prices. Businesses probably won't increase their prices today, but ultimately they will have to. That said, raising prices is not a bad thing.

Companies set prices with the goal of maximizing profits and the market determines what a company can charge for its products. The increase in the federal minimum wage rate will affect some products and services more than others, and therefore might impact which products and services generate the most profit. As a result, some businesses will be hurt and some will be helped by the raise of the federal minimum wage rate. So, there will be change. Some consumers might choose to change some of their habits. This is not a bad thing. It's just the market adjusting to a new reality (increased cost of labor).

I Want a 41% Raise Over 2 Years! But Let's keep Things in Perspective...
Most people would be delighted to see their salary increase by 41% in just 2 years. However, most people probably would not like to try to feed their families on $7.25/hour. There are very good arguments for and against the minimum wage, and a discussion of whether it is or is not a good thing is far beyond the scope of this blog. Given that there is one, however, it is interesting to compare the current minimum wage rate with past minimum wage rates. Doing this makes me think that $6.55, and even $7.25, is really not that high. The rate in 1968 was $1.60 per hour which, adjusted for inflation, is equivalent to $10.06 per hour today. The rate in 1997 was $5.15 per hour, the equivalent of $7.02 today. Finally, because the federal minimum wage rate did not change between 1997 and 2007, that 41% pay increase over 2 years was also a 41% pay increase over 12 years. Now it doesn't seem so high.

SSA Adds New Retirement Calculator to its Website

Tue, 22 Jul 2008 00:00:00 -0600

The Social Security Administration just added an easy to use retirement estimator to its website. The retirement estimator makes it easy to obtain an estimate of the monthly benefit you will receive when you retire. You simply input your name, social security number, and date and place of birth, and then input last years earnings (prior years earnings come from the Social Security database).

This retirement calculator replaces a tool the Social Security Administration used to offer which required users to input their own earnings history, which was time consuming and difficult for those people that don't keep extensive records. Those people that want to estimate their retirement benefits based on different retirement ages and earnings scenarios can easily do so with this retirement calculator by clicking on Create Additional Scenarios after getting the initial estimates.

The new retirement estimator is available on the Social Security Administration's website at http://www.ssa.gov/estimator/.

Deciding Whether Or Not To Use Invoices in QuickBooks

Mon, 21 Jul 2008 00:00:00 -0600

As a general rule, if you don't receive payment in full from your customers at the time you deliver your product or service, then you should probably use invoices. The main reason is that using invoices helps you keep track of exactly how much money your customers owe you. However, there are many other reasons to consider using invoices:

if you prepare purchase orders in QuickBooks and want to create bills from them, then you should use invoices
if you prepare estimates in QuickBooks and want to create bills from them, then you should use invoices
invoices make it easy to apply markups and discounts to item prices
invoices are the best way to keep detailed records of each sale in QuickBooks
if you use group items or payment items, then you should use invoices.

If you do receive payment at the time you deliver your product or service and none of the above apply to you, then you should probably consider using sales receipts instead of invoices. Sales receipts take a little less time since you don't have to receive payment against them, as you do with invoices. Instead, after entering sales receipts you are ready to enter your deposits.

For detailed insturctions onc reating invoices in QuickBooks, see Creating Invoices in QuickBooks.

Creating Invoices in QuickBooks

Fri, 18 Jul 2008 00:00:00 -0600

If you don't receive payment at the time you make a sale, then you should probably use invoices in QuickBooks. Doing so will make it easy to keep track of which customers owe you money and how much they owe you. Instructions for creating invoices in QuickBooks follow:

Open the invoice window by clicking on Create Invoices in the Customer menu.

Once the invoice is open in QuickBooks, do the following:

Select or add a new customer.
If you use classes, then select the appropriate class.
Fill in the date.
Fill in any special details - such as PO Number, Terms, Rep, Ship (ship date), Via (ship method), F.O.B.
If you don't see these options or want to get rid of them, you can change the template you are using and/or customize it by clicking on one of two arrows circled in blue below.
Fill in line item details (Item, Description, Qty, Rate, Amount, Class, Tax).
Select or create a customer message.
Mark if the invoice is to be printed or emailed (or both).
If you want, fill in a Memo. This is for internal use and will not show up on the invoice.
Save

We will be adding QuickBooks tutorials related to customizing invoices in QuickBooks, emailing invoices from QuickBooks, adding your logo to your QuickBooks invoices, and more soon.

Federal Minimum Wage Rate to Increase

Fri, 11 Jul 2008 00:00:00 -0600

The federal minimum wage rate will increase on July 24th from $5.85/hour to $6.55/hour. As employers are required to pay the higher of the federal and state minimum wage, only employers in states with a minimum wage lower than $6.55 will be affected by this. The federal tipped minimum wage, currently $2.13/hour, is not changing.

Information on state minimum wages is available on the US Department of Labor's website.

QuickBooks Tutorials: Historical Transactions & Writing and Printing Checks

Wed, 09 Jul 2008 00:00:00 -0600

Recently added QuickBooks tutorials on our site explain how to write and print checks in QuickBooks and how to enter historical transactions. As with the other QuickBooks tutorials on our site, these QuickBooks tutorials include specific instructions, screen shots and some thoughts.

The QuickBooks tutorials added over the last couple of weeks include:

For help with other things related to QuickBooks, check out our QuickBooks Tutorials page.

Printing Checks in QuickBooks

Mon, 07 Jul 2008 00:00:00 -0600

Note that this QuickBooks tutorial covers printing, not writing, checks. For a QuickBooks tutorial on writing checks, see Writing Checks in QuickBooks.

There are a few ways to open the Print Checks window in QuickBooks. I usually open it from the File menu. Select Print Forms and then Checks.

In the Select Checks to Print window, select the checks you want to print and then OK.

In the Print Checks window, select your printer, the type of checks you use, and Print.

QuickBooks then asks you if the checks printed correctly. If not, say they did not and then try again.

Writing Checks in QuickBooks

Thu, 03 Jul 2008 00:00:00 -0600

There are two ways to write checks in QuickBooks. Before explaining them, however, it is important to mention situations in which you do NOT want to write checks. Therefore, do not use the Write Checks window in QuickBooks or directly enter checks into the check register in the following situations:

if you have already entered a bill using the Enter Bills window (pay this bill using the QuickBooks Pay Bills window)
to pay sales tax (use the Pay Sales Tax window)
to pay employees or to pay payroll taxes and liabilities (unless you use an outside payroll company, in which case it might be fine)

The two ways to write checks in QuickBooks are via the Write Checks window and directly into the check register. QuickBooks recommends using the Write Checks window, but I generally prefer to write checks directly in the register. Instructions for both follow:

Using the Write Checks Window:

First, open the Write Checks window in QuickBooks from the Banking menu.

Select the bank account from which you wish to write the check and then enter the check details:

check # (select "To Print" if you will print the check from QuickBooks)
date
payee
amount
memo (if you print your checks from QuickBooks, then whatever you put here will show up on your check, so consider your account or invoice number)
account (assign the payment to the appropriate expense or other account)
memo (the second memo field is for your records)
customer:job (use this if you track items by customer:job)
billable (if you associated an item with a customer:job and want to bill it back to that customer, mark it billable here)
class (if you use classes, note the appropriate class here)

Using the Bank Register:

First, open the appropriate bank account register by double clicking it in your chart of accounts.

Then simply enter the check details:

date
check # (select "To Print" if you will print the check from QuickBooks)
payee
amount
account (assign the payment to the appropriate expense or other account)
memo (if you print your checks from QuickBooks, then whatever you put here will show up on your check, so consider your account or invoice number)

If you wish to enter additional details, such as another memo for your own records, customer:job or class, click on Splits. When you are done, click Record.

Whether you use the Write Checks window or the check register, if you print your checks from QuickBooks, then the last step is to do so.

Entering Historical Transactions in QuickBooks is Essential

Tue, 01 Jul 2008 00:00:00 -0600

When creating a QuickBooks company file you are required to select a start date, which is the date at which QuickBooks has complete and accurate information about your company. Unless you choose a future date as your start date, you are likely to have to enter historical transactions. If you enter a past date as your QuickBooks start date, then you obviously need to enter transactions that occurred between your start date and the current date. However, even if you enter the current date as your QuickBooks start date you are generally going to have to enter historical transactions into QuickBooks because, quite simply, there are things in process which are not yet complete. For example, you may have an invoice out to a customer that has not yet been paid. If so, you will need to enter this invoice so you can receive payment against the invoice when you are paid. If you don't enter historical transactions into QuickBooks, then your account balances and reports are likely to be incorrect.

Historical transactions should be entered into QuickBooks in the order in which they occurred. In the example above, the invoice needs to be entered first, then you receive payment and then you make the deposit. In the case of bill payments, first enter the bill, then pay the bill and then verify that the check numbers showing up in QuickBooks match the actual check numbers. After entering all sales & AR transactions and bills & AP transactions, enter any bank and credit card transactions. Once this is done you should be able to reconcile your bank accounts, which is the best way to verify that you have entered everything correctly.

If you have a lot of historical transactions to enter into QuickBooks, then it might feel like a daunting task. Don't let this stop you from starting to use QuickBooks. You can use QuickBooks to manage current transactions before you have finished entering all historical transactions into QuickBooks. If you come upon a current transaction that relates to a past transaction, then it is important to enter the past transaction before entering the current one so that the transactions will be correctly linked in QuickBooks. Other historical transactions can be entered as you have time, but I recommend getting them all in as quickly as possible as your account balances and QuickBooks reports won't be accurate until they are all in.

For specific instructions on entering historical transactions into QuickBooks, see our QuickBooks tutorial titled Entering Historical Transactions in QuickBooks.

IRS Raises Standard Mileage Rate Again

Mon, 30 Jun 2008 00:00:00 -0600

The IRS raised the standard mileage rate, already the highest ever, by 8 cents for the final 6 months of 2008. Effective July 1, 2008, the standard mileage rates are as follows:

Business usage: 58.5 cents per mile (was 50.5 cents per mile)
Miles driven for medical and moving purposes: 27 cents per mile (was 19 cents per mile)
Miles driven in service of charitable organizations: 14 cents per mile (this is unchanged).

If your employees drive their own vehicles, then you are not obligated to pay the higher rate.

Small Business Tax Calendar for July 2008

Sun, 29 Jun 2008 00:00:00 -0600

Accountants, bookkeepers and small business owners should be aware of the following dates in July:

7/1/2008 - Occupational excise taxes: if you are in the business of taking wagers, then file Form 11-C to register and pay the annual tax.
7/2/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 25th and June 27th.
7/7/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 28th and July 1st.
7/9/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 2nd and July 4th.
7/10/2008 - Employees who earned more than $20 in tips in June must report the total to their employers.
7/11/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 5th and July 8th.
7/15/2008 - If you are subject to the monthly deposit rule, then deposit payroll taxes for June by July 15th.
7/16/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 9th and July 11th.
7/18/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 12th and July 15th.
7/23/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 16th and July 18th.
7/25/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 19th and July 22nd.
7/30/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between July 23rd and July 25th.
7/31/2008 - If you wish to request extension to file Forms 5500 or 5500EZ, then file form 5558.

We will publish a list of the August dates accountants and bookkeepers should be aware of at the end of July.

Entering Historical Transactions in QuickBooks

Wed, 25 Jun 2008 00:00:00 -0600

Historical transactions should be entered into QuickBooks in chronological order. For example, you can't pay a bill in QuickBooks until you have entered the bill, and you can't receive payment against an invoice until you have created the invoice. Follow the instructions below when entering historical transactions:

1) Start with bills and accounts payable transactions

enter bills
enter bill payments
record the correct check numbers in your checking account register

NOTE: it is especially important to enter AP before AR transactions if you bill some of your expenses back to customers. The reason is that you need to get these expenses in so you can add them to invoices as appropriate.

2) Enter your sales and accounts receivable transactions:

enter invoices and/or sales receipts
receive payments against invoices
record deposits of payments received
in the Pay Sales Tax window, record payments of sales taxes you have made.

3) Enter year-to-date payroll information.

4) Enter bank and other transactions
NOTE: many of your transactions should already show up in your bank register from the above entries. Be careful not to enter historical trnasactions into QuickBooks twice!

enter any bank fees or miscellaneous checks directly in the bank register or in the Write Checks window
enter any interest received or other miscellaneous deposits directly in the bank register or in the Make Deposits window
enter credit card transactions

5) Reconcile your bank account.

QuickBooks Tutorials: Purchase Orders and Paying Bills

Mon, 23 Jun 2008 00:00:00 -0600

We recently added QuickBooks tutorials dealing with purchase orders and paying bills in QuickBooks. Just like previous QuickBooks tutorials we have written, these QuickBooks tutorials include specific, easy to follow instructions, screen shots and some discussion of things you should think about. The QuickBooks tutorials we have added recently are:

A complete list of Samarak's QuickBooks Tutorials is available in the QuickBooks Center.

Enter and then Pay Bills in QuickBooks

Fri, 20 Jun 2008 00:00:00 -0600

There are two methods for paying bills in QuickBooks. The first and simplest is to enter the bill as a check, just like you do in your personal checkbook. The second and generally best method breaks the process into two parts: entering the bill and then later paying the bill. This blog deals with the latter. For a comparison of the different methods, see Entering Bills vs. Writing Checks.

The first step in this two step process is to enter a bill. You can enter the bills when you receive them, though I recommend putting them in a pile and then processing them on a regular basis, such as weekly, rather than right when you receive them. Regardless, to enter bills open the Enter Bills window from the Vendor menu.

Except for the check number, which will be assigned later, fill the bill out exactly as you would a check:

Enter the details (date, payee, amount) just as you would in your manual checkbook.
In the Ref. No. field, put the invoice number or something else that clearly identifies this bill. If you enter this reference number again in the future, QuickBooks will let you know that you have done so before, thereby prompting you to check to see if you have already paid this bill.
For Bill Due, enter the date the bill must be paid by.
If you print your checks, then fill out the account or invoice number on the Memo line so it will show up on your check.
Then assign the payment to an account.
Finally, if you track items by customer:job and/or class, fill these fields out.
Click Save & Close if you're done, Save & New to enter another bill.

Once your bills have been entered, they show up in QuickBooks as accounts payable. QuickBooks makes it easy to wait to pay them until they are due, thus enabling you to keep your cash as long as possible. When you pay them, QuickBooks debits the accounts payable account and credits cash, so it is easy to see exactly what bills you have received but not yet paid. To pay your bills, open the Pay Bills window from the Vendor menu.

In the QuickBooks Pay Bills window you can choose whether to see all bills or just those due by a certain date. Select the ones you want to pay, the payment method (check or credit card) and whether or not you will be printing them, and the payment date to print on the checks, and then click Pay Selected Bills.

If you use printed checks then the last step is to print your checks.

Entering Bills vs. Writing Checks in QuickBooks

Fri, 20 Jun 2008 00:00:00 -0600

There are two ways to manage your bill payments in QuickBooks. The simplest way is to simply enter the payment (whether by check, credit card or cash) into QuickBooks. However, the best way for most companies to manage bill payments in QuickBooks is to enter the bills and then pay them. This takes a little more time, but it is still very simple and there are some significant advantages:

it helps you keep your cash as long as possible by making it easy to pay bills when they are due, not before
it helps you to keep track of how much money you owe. Rather than looking at a pile of bills that you have yet to enter into QuickBooks or pay, you can look at an accounts payable aging report to see exactly how much you owe and when the payments are due.
if you always use the entering and paying bills method, you will find it easier to look into historical transactions.

Given the above advantages, I recommend entering and then paying bills for almost all companies. The exceptions tend to be very small companies that only get a few bills per month and that do not have cash flow issues.

For detailed instructions on using the different methods, see The One-Step process for Paying Bills in QuickBooks and Enter and then Pay Bills in QuickBooks.

Recordkeeping for Small Businesses

Thu, 19 Jun 2008 00:00:00 -0600

For the most part, the IRS does not dictate exactly what types of records businesses must keep. However, in the event you are audited you may be asked to show documents supporting your numbers. To keep it simple, I usually recommend companies keep four sets of files:

REVENUE
Your revenue files should tie back to your QuickBooks or other bookkeeping records. You should be able to quickly and easily find the backup behind every deposit that goes into your bank account. Here are a couple of examples of possible systems:

If you are a retail business and make one deposit at the close of business every day, then you might have a folder for every day or week which includes all register receipts and credit card slips attached to deposit slips. In this case, finding the backup to a specific sale made a year ago would be easy. You would just pull the file for the date the sale was made, and pull out the deposit slip with all receipts attached.
If you make just a few large sales every week or month, then you might have files for each customer in which you keep copies of invoices. If you do this, it is important to note the customers names on deposit slips. To find old records, then, you simply pull the deposit slip in question (from your banking files - see below), and then pull the appropriate invoices from your customer files.

EXPENSES
Your expense files also need to tie back to your QuickBooks or other bookkeeping records. If you set up a good system, it will easy to pull the backup for any and all debits from your checking account. Here's an easy system that will work for almost all businesses:

Keep vendor files for all your regular vendors. When you receive bills from these vendors, put them in the appropriate file. In addition, keep miscellaneous files for each letter of the alphabet. When you receive a bill from a vendor beginning with "F" and don't expect to receive other bills from this vendor, put it in "F Miscellaneous". Finally, if you keep credit card receipts, attach them to the credit card statement and file the satements with your other vendor files.

PAYROLL/EMPLOYEES
Your payroll/employee files should include 3 sets of files:

Keep files for individual employees, into which you put their W-4, I-9, benefits enrollment forms, etc.
Keep all your regular payroll reports together.
Keep your quarterly and annual payroll reports (940, 941, state tax forms, etc.) together.

BANKING:
Your banking files should include the following:

A file for all deposit slips.
A file for all check stubs.
A file for all bank statements, to which bank reconciliation reports should be attached.

Keeping records should not be complicated. Instead, keep it as simple as possible. To test whether or not your system works, simply ask yourself if you could easily find the backup for revenue and expense items on your P&L statement and the backup for deposits into or debits from your checking account. If the answer is yes, your system works.

The One-Step process for Paying Bills in QuickBooks

Wed, 18 Jun 2008 00:00:00 -0600

There are two commonly used methods for paying bills in QuickBooks. One is to simply enter the bill as a check, just as you would with your manual checkbook. The other is to enter the bill and then separately pay the bill when it comes due. This blog deals with the former. For a comparison of the two methods, see Entering Bills vs. Writing Checks.

To enter payments made via check or cash directly into QuickBooks, open the Write Checks window from the Banking menu.

Enter the check details (check #, date, payee, amount) just as you would in your manual checkbook. If you print your checks, then fill out the account or invoice number on the Memo line so it will show up on your check. Then assign the payment to an account and if you track items by customer:job and/or class, fill these fields out. And you're all done.

All done, that is, unless you print your checks from QuickBooks, in which case you still have to print your checks.

Receiving Items Against Purchase Orders

Fri, 13 Jun 2008 00:00:00 -0600

When you receive items for which you have an open purchase order, you need to mark them received in QuickBooks and enter a bill to pay for them. From the Vendors menu, select Receive Items and Enter Bill.

In the Enter Bills window, select the appropriate vendor. A window stating that open purchase orders exist for this vendor will appear. Click Yes to receive against one of the open POs.

In the Open Purchase Orders window, check the correct PO and then OK.

Now you are back in the Enter Bills window in QuickBooks. Look at the Items tab and verify:

the number of items shown is the same as the number received. If not, edit the number to match the quantity you received.
the cost on the Item tab equals the cost on the bill. If not, edit the costs to match the bill.
the Billable? box is checked if you wish to bill the cost to your customer and empty if not.

If there are additional taxes or shipping charges, click the expenses tab and enter them. Then verify that the amount due equals the amount of the bill and, assuming it does, save the bill.

Creating Purchase Orders

Wed, 11 Jun 2008 00:00:00 -0600

Before you can use purchase orders in QuickBooks, you must turn on the Inventory and Purchase Orders preference. To do so, open the QuickBooks Preferences window (from the Edit menu, select Preferences), select Items & Inventory, select Company Preferences, and check "Inventory and purchase orders are active."

From the Vendors menu, select Create Purchase Orders.

Then simply select a vendor and fill out the rest of the fields in the purchase order:

Item: select from the drop-down list or, if the item has never been purchased before, create a new item
Quantity: the number you are ordering
Rate: the cost of the item
Customer: if you track expenses by customer and job, then select the appropriate customer:job. QuickBooks will assume the amount will be billed back to the customer. If this is incorrect, you will need to clear the checkmark in the "Billable?" column of the bill you create when you receive the item and enter the bill.

Finally, save the purchase order.

Best and Worst State Tax Systems for Entrepreneurship and Small Business

Tue, 10 Jun 2008 00:00:00 -0600

The Small Business & Entrepreneurship Council recently published a report titled "Business Tax Index 2008: Best to Worst State Tax Systems for Entrepreneurship and Small Business" which ranks states according to the cost of their tax systems on entrepreneurship and small business. The ranking is based on 16 measures:

state’s top personal income tax rate
state’s top individual capital gains tax rate
state’s top corporate income tax rate
state’s top corporate capital gains tax rate
any added income tax on S-Corporations
whether or not the state imposes an alternative minimum tax on individuals
whether or not the state imposes an alternative minimum tax on corporations
whether or not the state’s personal income tax brackets are indexed for inflation
property taxes
consumption-based taxes (i.e., sales, gross receipts and excise taxes)
whether or not the state imposes a death tax
unemployment tax
whether or not the state has a tax limitation mechanism
whether or not the state imposes an Internet access tax
gas tax
diesel tax.

The "Business Tax Index" rankings follow:

South Dakota
Nevada
Wyoming
Washington
Florida
Alaska
Texas
Colorado
Alabama
Mississippi
South Carolina
Tennessee
Missouri
Ohio
Virginia
Oklahoma
Arizona
Georgia
Illinois
Michigan
Indiana
Delaware
New Mexico
Arkansas
Utah
New Hampshire
Kentucky
Pennsylvania
Louisiana
Maryland
Montana
Wisconsin
Connecticut
North Dakota
Kansas
Oregon
North Carolina
Nebraska
West Virginia
Hawaii
Idaho
Vermont
Massachusetts
New York
Rhode Island
Maine
Iowa
California
Minnesota
New Jersey
District of Columbia

For descriptions of the factors and more information, read the full report.

IRS Lowers Interest Rates

Thu, 05 Jun 2008 00:00:00 -0600

The IRS lowered interest rates on April 1st by 1%. They recently announced that they will drop interest by another 1% on July 1, 2008. The new interest rates will be:

5% for overpayments (4% for corporations)
5% for underpayments
7% for large corporate underpayments
2.5% for the portion of corporate overpayments that is above $10,000.

The IRS determines the interest rate on a quarterly basis based on the federal short-term rate.

Large Corporations Audited Less Frequently and Less Thoroughly

Tue, 03 Jun 2008 00:00:00 -0600

The IRS audit rate for US corporations with assets of more than $250 million has been steadily decreasing for many years. In addition, the IRS does not appear to be conducting audits of large corporations with the same thoroughness it has in the past. Instead, the IRS has increasingly focused its energy on smaller corporations. Given that the IRS collects a lot more per hour spent auditing from large corporations than small corporaitons, this is hard to understand. Some interesting facts:

Percent of corporations audited:
- 72% of large corporations (assets of more than $250 million) were audited in 1990
- 34% of large corporations (assets of more than $250 million) were audited in 2002
- 26% of large corporations (assets of more than $250 million) were audited in 2007
The audit intensity (# of hours/return) decreased from 1,210 hours in 2002 to 973 hours in 2007, a 20% decrease
Additional taxes resulting from audits:
- In 2005, audits of large corporations resulted in $30 billion of additional taxes
- In 2007, audits of large corporations resulted in $24 billion of additional taxes, 54% of the total from all audits
Chance of being audited in 2007 vs. 2005
- Companies with less than $5M in net asssets were about 41% more likely to be audited in 2007 than in 2005
  - Chance of being audited in 2007 was about .9%
- Companies with from $5M - $10M in net asssets were about 24% more likely to be audited in 2007 than in 2005
  - Chance of being audited in 2007 was about 2.9%
- Companies with from $10M - $50M in net asssets were about 29% more likely to be audited in 2007 than in 2005
  - Chance of being audited in 2007 was about 14.7%
- Companies with from $50M - $1000M in net asssets were about 30% less likely to be audited in 2007 than in 2005
  - Chance of being audited in 2007 was about 10.9%
- Companies with from $100M - $250M in net asssets were about 31% less likely to be audited in 2007 than in 2005
  - Chance of being audited in 2007 was about 11.5%
- Companies with more than $250M in net asssets were about 38% less likely to be audited in 2007 than in 2005
  - Chance of being audited in 2007 was about 26.3
Audit productivity:
- In 2007, each hour an agent spent auditing a small corporation uncovered an additional $682 in recommended taxes
- In 2007, each hour an agent spent auditing a large corporation uncovered an additional $7,498 in recommended taxes.

For more detailed information, read "Audits of Largest Corporations Slide to All Time Low", which is based on data from the IRS analyzed by the Transactional Records Access Clearinghouse (TRAC).

QuickBooks Tutorials: Managing Vendors

Mon, 02 Jun 2008 00:00:00 -0600

We recently added some QuickBooks tutorials dealing with managing vendors in QuickBooks. As with all the QuickBooks tutorials we create, these tutorials include detailed instructions, pictures, and some commentary on things to think about. QuickBooks tutorials recently added include:

Check out our QuickBooks Tutorials page for a complete list of tutorials provided by Samarak.

Small Business Tax Calendar for June 2008

Fri, 30 May 2008 00:00:00 -0600

A list of June dates that accountants, bookkeepers and small business owners should be aware of follows:

6/2/2008 - Pay taxes on vehicles first used during the month of April and file Form 2290.
6/4/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 28th and May 30th.
6/6/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 31st and June 3rd.
6/10/2008 - Employees who earned more than $20 in tips in May must report the total to their employers.
6/11/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 4th and June 6th.
6/13/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 7th and June 10th.
6/16/2008 - If you are subject to the monthly deposit rule, then deposit payroll taxes for May by June 16th.
6/18/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 11th and June 13th.
6/20/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 14th and June 17th.
6/25/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 18th and June 20th.
6/27/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between June 21st and June 24th.
6/30/2008 - Pay taxes on vehicles first used during the month of May and file Form 2290.

We will post a list of July dates bookkeepers and accountants should be aware of at the end of June.

Making Vendors Inactive/Active in QuickBooks

Wed, 21 May 2008 00:00:00 -0600

Some people recommend going through QuickBooks annually and marking vendors you no longer use as Inactive. The benefit of doing so is essentially to clean up your QuickBooks file. Also, inactive vendors don't show up when you are entering bills, decreasing the chance you will accidentally make a bill out to the wrong vendor. Given that it is incredibly easy to reactivate an inactive vendor, there is definitely no harm in doing this. That said, I don't generally recommend it.

The two reasons I don't generally recommend spending time marking inactive vendors as inactive are:

It's not worth the time. The potential benefit of doing so is very small and I don't think you will ever save the time from decreased errors that you spend going through your vendor list and marking vendors inactive.
Some vendors are used only every few years. If you mark them inactive, you are likely to re-enter them in the future, with perhaps a slightly different name. Therefore, marking them as inactive can actually result in making things messier.

I say I don't generally recommend spending time marking inactive vendors as inactive because sometimes I do. If you know a vendor is out of business, then take the couple seconds it takes to mark them inactive. If you want to re-enter a vendor with a slightly different name, but don't want to delete or use their old information, then mark them inactive. Therefore, mark vendors inactive on a case by case basis using common sense.

Finally, to mark a vendor inactive, open the Vendor Center and right click on the vendor you want to edit and select Make Vendor Inactive.

Editing Vendors in QuickBooks

Tue, 20 May 2008 00:00:00 -0600

Editing vendors in QuickBooks is simple. To do so, simply open the Vendor Center by clicking on the Vendor Center icon.

Then right click on the vendor you want to edit and select Edit Vendor.

Then simply make the changes you want to make and click OK.

Adding Vendors in QuickBooks

Fri, 16 May 2008 00:00:00 -0600

New vendors can be added to QuickBooks at any time. When you add a vendor to QuickBooks you have the option to add information about the vendor (contact info, account number,etc.) but you don't have to.

There are two ways to add vendors in QuickBooks. First, you can do so by selecting Add New when entering a bill or entering a payment directly into your check register.

Second, you can do so from the QuickBooks Vendor Center by clicking on New Vendor.

Fill out the Vendor Name in the New Vendor window. Unless you just created your QuickBooks company file, you can leave the Opening Balance blank. If you are in the process of setting up a new QuickBooks company file and you owe the vendor money, then enter the amount you owe. Then fill out the address information for the new vendor.

On the Additional Info tab, you can add your Account Number, a Billing Rate Level (use this if you will bill the expenses associated with this vendor back to your customers), the Vendor Type (use this if you want to categorize your vendors in a way that is meaningful to you - such as be greographic location or industry), your Payment Terms, Credit limit and Tax ID. If the vendor is eligible for a 1099, then it is important to check the "vendor eligible for 1099" box and to fill out their Tax ID and complete address information.

When you have finished entering information, click Next to add another Vendor or OK finish.

Finally, you can always edit vendors in QuickBooks. Therefore, if you don't have all the information you want to add in front of you (such as the Tax ID for a vendor eligible for a 1099), add the vendor anyway and make a note to yourself to add the additional info later. Also, don't enter more info than you need. For example, if you hand write your checks and you store your vendors address information elsewhere, then there might not be a good reason to spend time entering your vendors addresses into QuickBooks.

QuickBooks Tutorials: Adding and Using Customers & Customer Jobs

Tue, 06 May 2008 00:00:00 -0600

We recently added a number of QuickBooks tutorials related to managing customers and customers jobs in QuickBooks. Each QuickBooks tutorial includes detailed instructions and some commentary on things to think about. A list of recently added QuickBooks tutorials follows:

Check out Samarak's QuickBooks Tutorials page to find QuickBooks Tutorials on other topics.

Small Business Tax Calendar for May 2008

Wed, 30 Apr 2008 00:00:00 -0600

A list of upcoming dates and actions for accountants, bookkeepers and small business owners to be aware of follows:

5/2/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 26th and April 29th.
5/7/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 30th and May 2nd.
5/9/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 3rd and May 6th.
5/12/2008 - Employees who earned more than $20 in tips in April must report the total to their employers. 5/14/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 7th and May 9th.
5/15/2008 - If you are subject to the monthly deposit rule, then deposit payroll taxes for April by May 15th.
5/16/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 10th and May 13th.
5/21/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 14th and May 16th.
5/23/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 17th and May 20th.
5/29/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 21st and May 23rd.
5/30/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between May 24th and May 27th.

Another blog showing dates and actions that accountants and bookkeepers should be aware of in June will be published at the end of May.

Adding Customer Jobs in QuickBooks

Tue, 29 Apr 2008 00:00:00 -0600

If you do multiple jobs for the same customer, then you should consider using Customer Jobs in QuickBooks. Read Using Customer Jobs in QuickBooks for a description of customer jobs and reasons to use them. Instructions for adding jobs to customers follow.

Click on the Customer Center icon in QuickBooks.

Right click on the customer for which you want to add a job and select Add Job.

Fill out the Job Name and any additional information you want to fill out. The Address Info is inherited from the parent customer, but you can change it if you want to. You don't need to fill out anything on the Additional Info, Payment Info and Job Info tabs, but I recommend looking at them to get an idea of the kinds of things QuickBooks can help you track for customers and specific customer jobs. Click Ok to finish.

Editing Customers in QuickBooks

Fri, 25 Apr 2008 00:00:00 -0600

Editing customers and customer jobs in QuickBooks is very simple. First, open the Customer Center by clicking on the Customer Center icon in QuickBooks.

Then in the QuickBooks Customer Center right click on the customer you want to edit and select Edit Customer:Job.

Then simply make the changes you want to make and click OK.

Using Customer Jobs in QuickBooks

Thu, 24 Apr 2008 00:00:00 -0600

If you do project-based work for your customers, then you will probably want to use customer jobs. Using job tracking allows you to analyze your financial performance by job and job type. You can easily figure out both how much money you made on a specific job and how much money you make on certain types of jobs. Customer jobs in QuickBooks are connected to customers. Therefore, you have to have a customer before you can have a customer job. However, you can have as many jobs as you want for each customer. Here are some reasons to have jobs:

Customer has multiple offices or branches for which you perform services
When you have a customer with multiple locations and billing centers, then you can use customer jobs in QuickBooks to separately record the information for each location. While you could simply create multiple customers, using customer jobs enables you to easily analyze your profitability on work done for the parent company as a whole as well as for each job.
You perform multiple services for one customer
When you perform multiple services for one customer, you can use customer jobs to analyze your profitability on each service. For example, a contractor could analyze his or her profitability on replacing a roof and redesigning a kitchen for the same customer by creating two jobs, roof and kitchen, under one customer, and then assigning the revenue and expenses associated with each actual job to the customer job in QuickBooks.
You perform different types of work and want to know how profitable you are for each one
You can use Job Types to break your business down into different categories and then analyze your profitability by category.
Using Customer Jobs enables you to track additional information about the individual projects you do for customers
You can record the Start Date, Projected End Date, and actual End Date for each job on the Job Info tab. You can set Price Levels on the Additional Info tab and can even add fields (click on Define Fields in the Additional Info tab) to track additional information about each job.

While not for every business, customer jobs are very useful for companies that do multiple jobs for the same customer and for customers that want to track their profitability for different categories of work.

Adding Customers in QuickBooks

Wed, 23 Apr 2008 00:00:00 -0600

New customers can be added to QuickBooks at any time. When you add a new customer to QuickBooks you have the option to add information about the customer (contact info, payment terms,etc.) but you are not required to do so. There are a couple of ways to get to the New Customer window in QuickBooks. First, you can do so by selecting "Add New" when creating an invoice or sales receipt.

Second, you can do so by opening up the QuickBooks Customer Center by clicking on the Customer Center icon.

Then click on New Customer & Job and select New Customer.

The first thing you need to fill out in the New Customer window is the Customer Name. Unless you just created your QuickBooks company file, you will most likely leave the Opening Balance blank. If you did just create a new QuickBooks company file and the customer owes you money, then enter the amount owed. Then fill out the address and contact info for the new customer.

The next three tabs, Additional Info, Payment Info and Job Infoallow you to add more information about each customer. For example, you can enter payment terms, credit card information, information about each customer job and more. If for no other reason, it is worth looking through the options just to give you an idea of the kinds of customer information QuickBooks can help you keep track of.

When you have finished entering information, click Next to add another customer or OK to finish. Finally, it is easy to edit customers in QuickBooks. Therefore, don't worry about adding all the information if you don't have it in front of you. Also, don't enter more information than you need. For example, if you never send out invoices or statements and you store your customers address information elsewhere, then there is no reason to spend time entering their addresses into QuickBooks.

Hire an Accountant Who Picks Up the Phone

Mon, 21 Apr 2008 00:00:00 -0600

Being able to get ahold of your accountant as you have questions is incredibly helpful. Unfortunately, many of my customers complain that they can't get ahold of their accountant when they need them. Therefore, I recommend that if you are looking for an accountant, you specifically ask how soon you can expect to hear back from your accountant when you have questions.

In addition, I recommend that when you interview some of your potential accountant's current customers (a very important part of selecting an accountant), you ask them if they ever have trouble getting ahold of their accountant. If they say they do or even hesitate before saying they don't, then interview some more accountants.

As a point of reference, my accountant often answers his own phone. When he doesn't, he normally calls back within the hour. He serves as the accountant for many of my clients as well, so I often talk to him a couple of times a week, and in 10+ years he has never failed to return one of my calls. While this level of responsiveness is not required, it sure is great to have and is certainly worth looking for. For tips on hiring an accountant, see my blog titled, appropriately, Hiring an Accountant.

QuickBooks Tutorials Added This Week: Setting Up QuickBooks Users, Managing Your Chart of Account, More

Sat, 19 Apr 2008 00:00:00 -0600

We posted five new QuickBooks tutorials this week, four of which have to do with managing the QuickBooks chart of accounts. Every QuickBooks tutorial includes a discussion of things to think about, detailed instructions and pictures illustrating exactly what we are talking about. Following is a list of the QuickBooks tutorials we posted this week:

Samarak has many more QuickBooks tutorials available on our site. Check out our QuickBooks tutorials page.

Editing Accounts in the QuickBooks Chart of Accounts

Fri, 18 Apr 2008 00:00:00 -0600

The most common reason to edit an account in the QuickBooks chart of accounts is to reorganize the chart of accounts by changing the account number or account name, or to make an account a subaccount of another account.

Start by opening the chart of accounts. Then click Account and select Edit Account.

Then make the necessary changes in the Edit Account window and click Save & Close.

Finally, a quick note on using subaccounts in QuickBooks: QuickBooks subaccounts are a great way to get more detail on a specific income, expense or balance sheet category in an organized way. However, it is important to note that if you use a lot of subaccounts, you will find that basic reports can become much harder to read. When you add a subaccount, the QuickBooks reports will show the parent account, each subaccount, and then a total for the parent account. As a result, the reports get much longer. When a company starts using lots of subaccounts, I often recommend exporting reports from QuickBooks to Excel and then modifying them for budget and other review meetings, rather than just printing the reports from QuickBooks.

Deleting Accounts from the QuickBooks Chart of Accounts

Thu, 17 Apr 2008 00:00:00 -0600

Before deleting an account from your QuickBooks Chart of Accounts, you need to be sure the account has not been used. If the account has been used in a transaction, an item or in your payroll setup, then QuickBooks won't let you delete it. If the account is in use, then you can either make it Inactive (see Making QuickBooks Accounts Inactive) or find out where it is used and make the necessary changes so that it is no longer being used.

Assuming the account is not being used, the act of deleting it from your QuickBooks Chart of Accounts is very simple. Open the chart of accounts, select the account you want to delete, click on Account and select Delete Account.

If the account is in use, a QuickBooks message will pop up telling you so, and you will have the option to cancel or to make the account inactive.

Assuming it is not in use, QuickBooks will ask you if you want to delete the account. Click OK.

Adjust Your Withholdings and Estimated Tax Payments to Avoid Penalties

Wed, 16 Apr 2008 00:00:00 -0600

Now that your 2007 tax return is final, it is time to take a look at what you are paying in for 2008 and make sure you are paying in enough to avoid penalties when you file your 2008 tax return. There are two ways to avoid penalties:

You can avoid paying penalties by paying in 90% of what you will owe in 2008.
If your AGI in 2007 was less than $150,000, you can avoid penalties by paying in 100% of your 2007 tax liability. If you 2007 AGI was greater than $150k, then you must pay in 110% of your 2007 tax liability to be sure of avoiding penalties.

Obviously, the two ways to pay money in are via withholdings and estimated tax payments. It is important to be aware that withholdings and estimated tax payments are not treated equally by the IRS. Estimates tax payments are applied only to the quarter they are paid in for. Total withholdings paid during the year are divided by four and then applied to each quarter in equal parts. This is important to consider as penalties are determined on a quarterly basis, meaning that even if you have enough in at year end, you will owe penalties if you are behind on a quarterly basis (example: if $20k is the minimum amount of federal withholdings you need to pay in for 2008, your first quarter estimated tax payment + 25% of your total 2008 federal withholdings must equal at least $5k).

Making QuickBooks Accounts Inactive

Wed, 16 Apr 2008 00:00:00 -0600

I highly recommend making QuickBooks accounts you are no longer using inactive. Doing so reduces the number of accounts available when entering data and thereby simplifies data entry. In addition, contrary to what most people think, the fewer accounts you use (within reason), the more valuable your financial reports are.

Looking at a financial report with 100 expense categories is overwhelming, but if there are only 15 expense categories, you can learn something from the report. You might ask for more detail on some of the categories, but it is generally not necessary to have separate accounts to get this extra detail. Also, it is incredibly easy to make inactive accounts active again, so there is no harm in making them inactive.

To make an account inactive, simply open your chart of accounts, select the account you want to make inactive, click Account and then Make Account Inactive (alternatively, right click on the account you want to make inactive and select Make Account Inactive).

To see inactive accounts in your chart of accounts, simply check Include inactive. The inactive accounts will then appear with an "X" to the left of them designating them as inactive.

To reactivate inactive accounts in QuickBooks, simply select the inactive account you want to activate, click Account and then Make Account Active (alternatively, right click on the account you want to make active and select Make Account Active).

Managing Your Chart of Accounts - Adding Accounts

Tue, 15 Apr 2008 00:00:00 -0600

Adding accounts to your Chart of Accounts in QuickBooks is easy. However, I strongly recommend that you only add accounts if absolutely necessary. People often add lots of accounts thinking that it will be useful to break their spending out into very specific categories. Instead, having too many accounts tends to make it harder to learn anything from your data. Therefore, I recommend thinking twice before adding accounts.

A good general rule is never to add accounts when entering bills or performing other routine tasks. Instead, only add them if you decide in a budget meeting that you need additional detail in a certain existing category. The exception to this rule is accounts that need to be added for accounting purposes, such as asset and liability accounts. To add an account, open your chart of accounts, click on Account and select New.

Choose the type of account and then click Continue. Note that QuickBooks provides helpful information about each account type in the box at the right.

There are a few things to fill out in the Add New Account form:

First, you have the option of changing the type of account. Given that you chose the type of account, you can probably just skip over this.
Second, if you number your chart of accounts, then add an appropriate number. What constitutes an appropriate number depends on how your chart of accounts is organized. My preference is to organize the chart of accounts based on type of expense, so that human resources are grouped together, sales and marketing expenses are grouped together, etc. This makes it easy to choose the proper account when entering transactions into QuickBooks.
Third, name the new account.
Fourth, decide if this will be a subaccount and, if so, of what parent account. Some organizations have as few as 3 parent expense accounts (usually HR, S&M, G&A) while others use almost no sub-accounts. Either way is fine, but it is important to keep your chart of accounts organized by following the established pattern.
Fifth, add a description and/or note if you want. I almost always leave these blank.
Sixth, if you intend to export your tax information into an income-tax preparation software tool such as Intuit's TurboTax or TurboTax Business, then assign a Tax-Line. Otherwise, you can ignore this.
Finally, click Save & Close.

Directories Now Have City Pages

Tue, 15 Apr 2008 00:00:00 -0600

Samarak has offered a directory of local bookkeepers since 2006. In 2007 we added a directory of accountants and a directory of QuickBooks experts. We also added city pages to all of the directories. The purpose of these pages is to make it easier to find local accountants, bookkeepers and QuickBooks consultants in each directory.

Easy to use, inexpensive directories are a key part of our goal of helping financial professionals, including accountants, bookkeepers, QuickBooks consultants, and part-time CFOs and controllers, obtain business over the web. If you haven't looked at our directories before, take a look and, if you are a financial professional, consider listing your company.

Setting Up QuickBooks Users

Mon, 14 Apr 2008 00:00:00 -0600

Only the QuickBooks Administrator can set up new users. The process of setting up new users is very simple, but you do need to think about what areas of QuickBooks you want the user to have access to and what functions you want them to be able to perform. Start by selecting Set Up Users from the Company menu.

Select Add User.

Fill out the new QuickBooks user's User Name and Password.

If you want the new user to have access to all areas of QuickBooks, select this option. Otherwise choose Selected areas of QuickBooks. Click Next.

If you selected All Areas of QuickBooks, click Yes to the messagebox that appears, and Finish on the screen which summarizers the user's access rights.

If you chose Selected Areas of QuickBooks, you will now have the opportunity to select the level of access you want the user to have to each area of QuickBooks. Here is a brief description of the access levels:

No access: absolutely no access to that area of QuickBooks.
Full access: the user can do everything in that area of QuickBooks accept edit and delete transactions. You will have the opportunity to allow the user to edit and delete transactions later in the setup process.
Selective access: selective access enables you to give a user access to an area of QuickBooks and then to place restrictions on the activities they can perform.

The Sales and Accounts Receivable window below is the first one you will see. Choose the level of access, click Next, and then do the same in the windows that follow.

The last screen summarizers the user's access rights. Click Finish. The new QuickBooks user is now listed in the QuickBooks User List. You can edit or delete the user at anytime, so don't worry if you aren't sure what options to select during the setup process. If you are concerned about giving a user too much access, then err on the side of giving too little access and edit the user's access rights later if necessary.

QuickBooks Tutorials Added This Week: Converting Data from Peachtree, Using the QBs Home Page, More

Sat, 12 Apr 2008 00:00:00 -0600

We posted 4 new QuickBooks tutorials this week, all of which include detailed instructions for a specific topic, pictures showing exactly what we are talking about and explanations of things to think about. A list of the QuickBooks tutorials posted this week follows:

For a list of all QuickBooks tutorials available on Samarak's website, see our QuickBooks Tutorials page.

QuickBooks Does Not Open Due to Windows Update

Fri, 11 Apr 2008 00:00:00 -0600

Some users of QuickBooks 2008 are experiencing problems opening their QuickBooks software today. The QuickBooks loading screen appears and then quickly disappears. This problem does not actually have anything to do with QuickBooks itself. Instead, it occurs after installing a Windows Update from Microsoft and is caused by a damaged component of Microsoft .NET Framework 2.0. To correct the problem, users must remove and then reinstall Microsoft .NET Framework 2.0. Detailed instructions for resolving this issue are available on Intuit's website.

Customizing the QuickBooks Home Page

Fri, 11 Apr 2008 00:00:00 -0600

The tasks and the workflow which show up on the QuickBooks Home page are meant to reflect how you use QuickBooks for your business. If they don't do so, then you can customize the QuickBooks Home page so that they will. To customize the QuickBooks Home page you must be in single-user mode.

Click the Home icon to get to the QuickBooks Home page.

In the Get Started box on the right, click Customize QuickBooks.

On the Company Preferences tab, check or uncheck the boxes to show only the tasks you want to see on your QuickBooks Home page. Also, note the list of QuickBooks features showing in the Related Preferences box. You can turn these features on or off by clicking on the blue links and then making the appropriate changes. Click OK.

Using The QuickBooks Home Page

Thu, 10 Apr 2008 00:00:00 -0600

The QuickBooks Home page lays out business tasks into logical groups with arrows showing how tasks relate to each other. You aren't required to do things in the order shown, but if you are new to QuickBooks and/or new to bookkeeping, then seeing the order will probably be helpful. Here is a picture of the QuickBooks Home page:

The tasks which show on the QuickBooks Home page are the ones you will use most often. For this reason, I recommend setting the QuickBooks Home page to show up when you open your QuickBooks company file (see Show the QuickBooks Home Page When Starting QuickBooks for instructions on doing so). If you don't have it set to show up automatically, simply click on the Home icon to display it.

Then simply click on the icon for the task you want to do. For example, to enter a bill, click the Enter Bills icon. The QuickBooks Home page also provides quick access to you bank accounts and to your credit card accounts. Simply double click on any of the accounts in the upper right hand corner of the page.

Most experienced QuickBooks users probably don't use the QuickBooks Home page. For beginners, however, it can be extremely helpful.

Maximum Wages Subject to Social Security Tax in 2009 Likely to be $106,500

Thu, 10 Apr 2008 00:00:00 -0600

The maximum amount of wages subject to social security taxes increased from $97,500 in 2007 to $102,000 in 2008, and is expected to increase to $106,500 in 2009. Here is a look at the maximum wages subject to social security taxes over the last 10 years:

1999: $72,600
2000: $76,200
2001: $80,400
2002: $84,900
2003: $87,000
2004: $87,900
2005: $90,000
2006: $94,200
2007: $97,500
2008: $102,000
2009 (projected): $106,500 (10/20/08 update: actual is $106,800. See Maximum Wages Subject to Social Security Tax in 2009 Will be $106,800)

The tax rates are 6.2% for FICA and 1.45% for Medicare, and there is no limit on the amount of wages which are subject to the Medicare tax.

Show the QuickBooks Home Page When Starting QuickBooks

Wed, 09 Apr 2008 00:00:00 -0600

You can set the QuickBooks Home page to show up when you open QuickBooks, or turn it off if you don't want to see it every time you open your QuickBooks company file. On the QuickBooks Edit menu, click Preferences.

From the list on the left, click Desktop View and select the My Preferences tab. Then check (or uncheck) "Show Home page when opening a company file".

Converting Data from Peachtree to QuickBooks

Mon, 07 Apr 2008 00:00:00 -0600

QuickBooks provides a conversion tool which enables you to directly and easily convert Peachtree data folders to QuickBooks company files. In the conversion process your Peachtree data is converted to a new QuickBooks company. Your original Peachtree data files are not changed.

The Requirements
In order to convert Peachtree files to QuickBooks company files, you must meet the following requirements:

QuickBooks 2006 or later (must be registered)
A Peachtree program (versions 2001-2007, all verticals except Quantum 2007) has to be installed on your computer.
The Peachtree files (not the Peachtree PTB backup) have to be located on your computer

Preparing Your Peachtree Files for Conversion
There are a few things QuickBooks recommends you do before starting the Peachtree-to-QuickBooks conversion process:

Backup your Peachtree data folder
For vendor and customer records, you will have to choose either the Peachtree name or the Peachtree ID. QuickBooks recommends using the name field. Either way, make the decision before starting the Peachtree-to-QuickBooks conversion process.
QuickBooks does not allow duplicate names, so it is helpful to remove duplicate names ahead of time. If you don't, QuickBooks will add numbers to the end of duplicate records to differentiate between them. You can then edit the names from within QuickBooks at a later time.
Delete unwanted Peachtree accounts

The Peachtree-to-QuickBooks Conversion Process
Follow the steps below to convert your Peachtree files to a QuickBooks company file:

Open QuickBooks
Verify you are in single-user mode. Switch to it if not.
Update to the latest release of QuickBooks or just set Automatic Update to Off (Help menu > Update QuickBooks > Options tab > set Automatic Update to No).
Close all applications running on your computer except QuickBooks.
Download the Peachtree-to-QuickBooks conversion tool
- File > Utilities > Convert > From Peachtree
- Complete the form and click Submit.
- Click Download.
Check Launch QuickBooks Conversion Tool, click Finish, and follow the onscreen instructions.

Refer to QuickBooks help for detailed information on exactly what Peachtree information gets converted (most of it does, but there are some exceptions) and information on significant differences between Peachtree and QuickBooks. Simply search on Peachtree in the QuickBooks Help Index.

Married Business Partners Don't Have to File as a Partnership

Mon, 07 Apr 2008 00:00:00 -0600

Unincorporated businesses jointly owned by married couples are normally classified as partnerships for Federal tax purposes. However, per the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) a qualified joint venture, whose only members are a married couple filing a joint return, can elect not to be treated as a partnership for Federal tax purposes in calendar year 2007 and subsequent tax years.

For more information, see Election for Husband and Wife Unincorporated Businesses on the IRS's website.

Email QuickBooks To Your Accountant Using A QuickBooks Portable Company File

Sat, 05 Apr 2008 00:00:00 -0600

The recommended method for giving your accountant access to your QuickBooks company file is via an Accountant's Copy, which allows you to continue to work in QuickBooks while your accountant makes changes to your QuickBooks file. You can then import the changes your accountant made into your company file. For information on using the Accountant's Copy, see Exchanging QuickBooks Files With Your Accountant.

In this blog, however, I am going to talk about QuickBooks Portable Company files. A QuickBooks Portable Company File is a compact version of your QuickBooks company file. Depending on the quantity of data in your file, it may even be small enough to be sent by e-mail. Because of this, the easiest way to send your company data to another person (such as your accountant) or to move your company data to another location is by first saving your company file as a portable company file. When your accountant receives the portable company file, he or she can open it to view your data or to make changes.

Be aware, however, that you cannot merge the copy of your QuickBooks file that your accountant is working in with your own copy of your QuickBooks file. Therefore, if your accountant is making changes to your data, you should not make any until you have received your file back from your accountant. If your accountant only needs to make a few changes, you might ask them to note what they are so that you can make them yourself. Finally, be aware that your accountant will need your administrator password to save your file as a portable company file so that they can send it back to you.

For specific instructions on creating and restoring QuickBooks portable company files, see Creating QuickBooks Portable Company Files and Restoring Your QuickBooks Portable Company File.

QuickBooks Tutorials Added Recently: Backing Up QuickBooks, Working With Portable Company Files and More

Fri, 04 Apr 2008 00:00:00 -0600

I added 5 QuickBooks tutorials recently, all of which deal with QuickBooks backups and portable company files. Each tutorial covers a specific topic and includes pictures and a brief discussion of things to think about. Links to these QuickBooks tutorials follow:

Check back often as QuickBooks tutorials will be added on a regular basis.

The Most Common Tax Filing Mistakes

Wed, 02 Apr 2008 00:00:00 -0600

The IRS has a list of common errors people make when preparing their tax returns on their website. Check it out at http://www.irs.gov/taxtopics/tc303.html. Some of the most common errors people make are:

Missing or incorrect social security numbers.
Entering the wrong tax from the tables.
Computation errors in calculating the earned income credit or the child and dependent care credit. Also, incorrect or missing identification numbers for child care providers.
Entering withholding and estimated tax payments on the wrong line.
Math Errors. Check your addition and your subtraction.

Mistakes can significantly delay the processing of you tax return, so take the time to review your work!

Restoring Your QuickBooks Portable Company File

Wed, 02 Apr 2008 00:00:00 -0600

Restoring a QuickBooks portable company file is similar to the process of restoring QuickBooks backup files, but even easier. The instructions below walk you the process of restoring your QuickBooks portable company file: The first thing to do is to select Open or Restore Company from the QuickBooks File menu.

Then select Restore a portable file (.QBM) and click Next.

Navigate to the correct file, select it and click Open. In the QuickBooks Restore Portable File:To Location window, click Next.

Navigate to the location in which you wish to restore the QuickBooks portable company file to. If you are getting changes back from an accountant or someone else, and therefore will be using this file as your main company file, then you may want to save it over your previous company file. Click Save.

WARNING: IF YOU WILL REPLACE YOUR CURRENT COMPANY FILE WITH THE PORTABLE COMPANY FILE, MAKE SURE YOU HAVE BACKED UP THE EXISTING FILE FIRST. YOUR EXISTING FILE WILL BE COMPLETELY REPLACED BY THE NEW FILE, MEANING ALL DATA WILL BE LOST. IF YOU OPEN THE NEW FILE AND FIND OUT YOUR ACCOUNTANT (OR BOOKKEEPER OR WHOEVER ELSE) MADE MISTAKES OR SOMEHOW DELETED SOME OF YOUR DATA, YOU WON'T BE ABLE TO GO BACK TO THE OLD FILE UNLESS YOU BACKED IT UP. The QuickBooks portable company file will be saved as a regular company file, with a .QBW extension.

Creating QuickBooks Portable Company Files

Tue, 01 Apr 2008 00:00:00 -0600

If you need to email a version of your QuickBooks company file to your accountant or to someone else, the way to do it is via a QuickBooks Portable Company File. The instructions below will guide you through the process of creating a QuickBooks portable company file: From the QuickBooks File menu select Save Copy or Backup.

In the Save File:Type window, select Portable Company File and Next.

In the Save Portable Company File As window, select the location you want to save the file to and the name of the file. The type should be QuickBooks Portable Company File (*.QBM). Click Save.

There are a few things to keep in mind when using QuickBooks portable company files:

If the person you are sending the portable company file to will be making changes, then you should not make any changes to your QuickBooks company file until you have the file back from the other person, at which point you will open the portable company file they return to you as regular QuickBooks company (.QBW) file.
If you are planning to send the file to your Accountant, you might consider using an Accountant's copy instead.
The person you give the portable company file to will need the Administrator password to return the portable company file to you.

Restoring Your QuickBooks Backup File

Mon, 31 Mar 2008 00:00:00 -0600

Restoring a QuickBooks backup file is easy. The only mistake you have to be careful not to make is to restore the wrong file. Fortunately, if you do restore the wrong QuickBooks file, you can just try again, making sure to select the most recent QuickBooks backup file. The instructions below walk you the process of restoring your QuickBooks backup file: First, select Open or Restore Company from the QuickBooks File menu.

Then select Restore a backup copy (.QBB) and click Next.

Select Local Backup and click Next.

If QuickBooks doesn't automatically select the correct file, navigate to it. Click Open.

In the QuickBooks Restore Backup:To Location window, click Next.

In the Restore To window, simply verify that QuickBooks is restoring to the proper location. If not, then navigate to the correct location. Click Save.

The QuickBooks backup file will be converted to a regular company file, with a .QBW extension (or .QBA if the backup was made from an Accountant's Copy). If you are going through these instructions, then you probably know the importance of backing up QuickBooks regularly. Hopefully your most recent backup file is very recent. For information on backing up regularly, see Schedule Automatic Backups of Your QuickBooks Data and/or Backing Up Your QuickBooks Company File When Closing QuickBooks.

Small Business Tax Calendar for April 2008

Mon, 31 Mar 2008 00:00:00 -0600

A list of upcoming dates and actions that accountants, bookkeepers and small business owners should be aware of follows:

4/2/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 26th and March 28th.
4/4/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 29th and April 1st.
4/9/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 2nd and April 4th.
4/10/2008 - Employees who earned more than $20 in tips in March must report the total to their employers.
4/11/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 5th and April 8th.
4/15/2008 - Household employers who paid $1,500 or more to a household employee must file Schedule G.
4/17/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 9th and April 11th.
4/21/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 12th and April 15th.
4/23/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 16th and April 18th.
4/25/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between April 19th and April 22nd.
4/30/2008 - Deposit accumulated FUTA owed through March if it is more than $500.

A new list will be published at the end of April showing dates and actions that accountants and bookkeepers should be aware of in May.

Schedule Automatic Backups of Your QuickBooks Data

Fri, 28 Mar 2008 00:00:00 -0600

The instructions below guide you through the process of backing up QuickBooks on a regular basis, such as at a regular time and day each week. From the QuickBooks File menu select Save Copy or Backup.

Select Backup Copy and click Next.

Select Local backup and Options (assuming you haven't already done so).

Choose the folder you want to save your backup file in. I recommend saving it on a different computer than your company file is saved on. Then review the default values in the other fields and change them if necessary. Click OK.

Click Next. Select Only Schedule Future Backups and then click Next.

Click New in the QuickBooks Save Backup:When window.

See below for a list of the things you need to do in the QuickBooks Schedule Backup window.

Enter a description of your backup.
Click Browse to select the folder you want to save your QuickBooks backup file in.
If you want, select the number of backup files you want to keep. If you don't set a number, QuickBooks will save all your backups.
Click Set Password and then enter the user login information.
Set the start time, the frequency and the day of the week that you want the backup to happen.
Click OK.

The scheduled backup now appears in the Schedule Backups section. Click Finish and OK to the messagebox that appears. It is important to note that the computer QuickBooks is saved on must be on and the QuickBooks file must not be in use at the time of the scheduled backup. If you would rather schedule automatic backups when you close your QuickBooks company file, see Backing Up Your QuickBooks Company File When Closing QuickBooks.

QuickBooks Online Subscribers Can View Company Data From iPhones

Fri, 28 Mar 2008 00:00:00 -0600

In January Intuit announced Quicken for the iPhone, prompting QuickBooks Online users to ask whether or not they would be able to access their company data via the iPhone. Intuit responded. QuickBooks Online users can now access their company data from anywhere using their iPhones. To access your company data in QuickBooks Online:

Go to https://accounting.quickbooks.com/m from your iPhone.
You can check your:
- Accounts receivable and accounts payable
- Vendor, customer, and employee lists
- Bank account and credit card balances
- Balance Sheet and Profit & Loss reports

You can not currently enter data into QuickBooks Online from your iPhone. For more info, see "Accessing QuickBooks Online" from your iPhone.

Backing Up Your QuickBooks Company File When Closing QuickBooks

Tue, 25 Mar 2008 00:00:00 -0600

Intuit recommends backing up your QuickBooks file daily. Depending on the amount of data you enter, this may be more than necessary. However, there is no question that you want to back up regularly. Fortunately, creating a backup copy of your QuickBooks file is easy. First, decide if you want to backup your QuickBooks company file every time you close it or at regular intervals. Detailed information showing you how to backup your QuickBooks company file every time you close follows:

First, select Save Copy or Backup from the QuickBooks File menu.

Then Select Backup Copy and click Next.

Select Local backup and Options (assuming it's your first time).

Choose the location to save your backup file to (preferably to a different computer than the one your .qbw file is saved on) and then either accept the default values in the other fields or change them. For most QuickBooks users, the defaults are fine. Click OK.

Click Next. Select Only Schedule Future Backups and then click Next.

Select the checkbox at the the top left to automatically backup when you close your QuickBooks company file. Then select the frequency with which you want to backup.

Click Finish and then OK to the messagebox that appears. For detailed information on backing up at regular intervals, other than when you close, check back in a few days.

QuickBooks Tutorials Added This Week: Getting Started With QBs and More

Fri, 21 Mar 2008 00:00:00 -0600

I added three QuickBooks tutorials this week. Each tutorial covers a different section of the QuickBooks EasyStep Interview. All three include pictures and a brief discussion of each step involved in setting up a company in QuickBooks using the QuickBooks EasyStep Interview. Links to these QuickBooks tutorials follow:

In addition, I added the following QuickBooks tutorials over the last few weeks:

Check back often as additional QuickBooks tutorials will be added weekly.

Setting Up Your Chart Of Accounts

Fri, 21 Mar 2008 00:00:00 -0600

The third part of the QuickBooks EasyStep Interview, to be completed after Getting Started With QuickBooks and Customizing QuickBooks For Your Business, guides you through the process of setting up your chart of accounts. QuickBooks will use your answers to the next few questions in the QuickBooks EasyStep Interview to create a Chart of Accounts that will help you track and report on your business. While QuickBooks makes it easy to change and develop your Chart of Accounts on an ongoing basis, taking the time to get it as right as possible the first time will save lots of time later. Click Next to start.

Selecting January 1 as your QuickBooks start date means entering all transactions since January 1st. While this can be a hassle, entering a different date both makes things difficult at tax time and means you will not have accurate data for the whole current year in QuickBooks.

It is easy to set up bank accounts in QuickBooks, so you could just add them later. However, I strongly recommend setting them all up now so that when you are done with the QuickBooks EasyStep Interview, your QuickBooks file is as complete as possible.

Enter a bank account name that makes sense to you, such as the name of your bank and "checking" or "savings". Then enter your bank account number and when you opened the account and click Next.

Assuming you entered 1/1/XX as your QuickBooks Start Date, the statement ending date you enter will probably be 12/31 of the prior year. Fill in the ending balance and click Next.

Verify that the bank name and account number are correct and then either select Yes to enter another bank account or No and Next.

Based on your answers throughout the QuickBooks EasyStep Interview, QuickBooks will now recommend accounts for your business. You can modify your QuickBooks Chart of Accounts at any time, so you don't need to spend too much time reviewing the accounts QuickBooks selected for you. However, it is worth scrolling through them quickly to see if QuickBooks checked any accounts you know you won't use or missed any you know you will use. After doing so, click Next.

Click Finish to complete the QuickBooks EasyStep Interview.

Customizing QuickBooks For Your Business

Thu, 20 Mar 2008 00:00:00 -0600

After creating your QuickBooks company file (see Getting Started With QuickBooks), the QuickBooks EasyStep Interview will guide you through the process of customizing QuickBooks for your business. Your answers to the questions in this section will be used to customize your QuickBooks home page. Don't worry if you aren't sure about all the answers, however, as it is easy to make changes later. Click Next to begin.

If you can't put your hands on your product, then you probably sell services. QuickBooks will use your answer to figure out what else to ask you in this interview. For example, QuickBooks will give you the opportunity to set up your inventory if you sell products. After selecting one of the options, click Next.

If you sell online, QuickBooks will give you information aimed at helping you do so. Select an option and click Next.

If the person or company you sell to is the final end user of your product, then you need to charge sales tax. QuickBooks allows you to mark which items are taxable and then it calculates and tracks your sales taxes for you. Most companies should select Yes. Then click Next.

If you create estimates for your customers, then you will probably want to use QuickBooks to do so. QuickBooks estimates are easy to create and customize. Select an option and click Next.

If you aren't sure if you will use QuickBooks sales orders, then select No. You can always change this later. Click Next after selecting an option.

Cash-based businesses in which customers pay in full upfront should use sales receipts in QuickBooks. If you select Yes below, you will still be able to invoice some of your customers. If you aren't sure what to do, select Yes. Click Next.

QuickBooks statements can be used to bill customers on a regular basis and/or to remind customers of past due charges. You probably want to select Yes. Then click Next.

Whether or not you regularly send invoices to customers, I recommend selecting Yes below. QuickBooks invoices are easy to use and to customize, and the odds are you will want to send an invoice some time. Then click Next.

Selecting Yes below will enable you to track your bills in QuickBooks. You can enter the bills into QuickBooks when you receive them and then wait to pay them until they are due. Selecting Yes does not force you to do this, it just makes it possible. Click Next.

It is easy to print checks from QuickBooks. If you write more than a couple of checks a week, I highly recommend it. You can purchase QuickBooks checks with envelopes from inside of QuickBooks.

If you purchase and resell products or assemble and sell products and do not use other software to track inventory, then you probably want to select Yes, that you do want to track inventory in QuickBooks. Otherwise, select No and then Next.

If you select either of the top two options, QuickBooks will be customized to provide you with information about adding QuickBooks Merchant Services, which allows you to process credit card transactions from within QuickBooks. Make a selection and click Next.

QuickBooks has powerful time tracking features that you can use to track your own time or to track hours worked by your employees. You can then create bills and paychecks based on the hours worked. While most businesses won't use this feature, I recommend selecting Yes below and then spending a little time playing with this feature to see if it might be useful for you. Click Next.

Make a selection and click Next.

Now that you have finished telling QuickBooks about your business, it is time to set up your Chart of Accounts (income, expense and other accounts you will use to track your business).

Economic Stimulus Payment Calculator

Wed, 19 Mar 2008 00:00:00 -0600

The IRS has created an Economic Stimulus Payment Calculator to help individuals figure out whether or not they qualify for a stimulus payment and to estimate how much they will receive. To use this calculator, simply input information from your 2007 Form 1040, Form 1040EZ, or Form 1040A. It takes 5-10 minutes.

To get to the calculator, click on the following link: Economic Stimulus Payment Calculator

Getting Started With QuickBooks

Tue, 18 Mar 2008 00:00:00 -0600

When you start QuickBooks for the first time, you will see a window like the one below. Inside the No Company Open window are 3 boxes:

Create a new company
Open or restore an existing company
Open a sample file

Select Create a new company to get to the QuickBooks EasyStep Interview, which will guide you through the process of setting your company up in QuickBooks.

Select Start Interview to create a new QuickBooks company file.

The first screen you come to requires you to enter your company name. While nothing else is required on this form and it is easy to get back to the form later, I recommend filling out as much as you can. Then click Next.

QuickBooks will use your industry selection throughout the interview to recommend features that will work best for your business. After selecting your industry, click Next.

Select the proper type of business for your company, which QuickBooks will use to create the proper accounts and to assign tax form lines to those accounts, and then click Next.

Select the first month of your fiscal year (normally January, but not always). If you aren't sure, select January and make a note to verify with your accountant. If it turns out that January is incorrect, you can change it later. Click Next.

Setting a password is optional. QuickBooks recommends you create one, but if you keep your QuickBooks file on your own computer, will be the only one using it, and wouldn't be that upset if someone saw your financial data (after stealing your computer or accessing it without your permission), then you can leave it blank. If you save your file on a network and/or if there will multiple users, then I definitely recommend setting a password for your QuickBooks file. Click Next.

You are now ready to create your QuickBooks company file.

While you are only about one fifth of the way through the QuickBooks EasyStep Interview, after creating the file you are able to leave the interview and pick up later where you left off. Regarding naming your QuickBooks file, I recommend something very simple such as your company name. Save your QuickBooks file wherever you want (laptop or desktop, as opposed to a network, is fine), but make sure you have a backup system in place.

The Difference Between Tax Credits and Tax Deductions

Tue, 18 Mar 2008 00:00:00 -0600

I am often asked about the difference between tax credits and tax deductions. The difference is very significant. Definitions of both terms follow:

Tax Credit: tax credits are dollar for dollar reductions of the total amount you owe the IRS.
Tax Deductions: tax deductions reduce your gross income, allowing you to obtain your adjusted gross income, which is used to calculate your tax liability.

Depending on your tax rate, a tax credit can be worth 2 to 5 or more times a tax deduction. Consider the following example:

Suppose you earned $75,000 last year and had $20,000 in deductions (for state and local taxes paid, mortgage interest, charitable gifts, etc.), resulting in $55,000 in taxable income. Then suppose that this results in taxes due of $7,500 (actually depends on your individual circumstances - single, married filing jointly, etc.). Now, let's suppose first that you discovered an additional $1,000 deduction and then that you discovered an additional $1,000 tax credit.

Additional $1,000 tax deduction: this would reduce your taxable income to $54,000 and the taxes you owe to about $7,300. Therefore, this $1,000 deduction reduced the amount you owe the IRS by $200.

additional $1,000 tax credit: since the credit comes directly off the amount you owe the IRS, it reduces the amount you owe the IRS from $7,500 to $6,500.

As is obvious from the above example, the difference between tax credits and tax deductions is very significant.

Interesting Facts From the 2007 IRS Data Book

Fri, 14 Mar 2008 00:00:00 -0600

Every year the IRS releases a data book summarizing its activities for the year. The 2007 IRS Data Book, which covers the period from 10/1/06 to 9/30/07, was released today. Some interesting numbers:

$2.4 trillion - the approximate amount the IRS collected
235 million - the number of returns the IRS processed
114 million - the number of individuals receiving tax refunds
$248.6 billion - total refunds individuals received
40 cents - the amount the IRS spent to collect $100 of tax revenue (the lowest ever)
1.4 million - the number of individual returns examined by the IRS
33.2 million - the number of toll free calls received by the IRS
215 million - the number of visits on the IRS web site

An electronic version of the 2007 IRS Data Book is available on the IRS website.

Frequent Flyer Miles are Not Taxable

Thu, 13 Mar 2008 00:00:00 -0600

People frequently ask whether or not the receipt of frequent flyer miles represent taxable income. The answer is that frequent flyer miles are not taxable. In 2002, after much debate, the IRS announced that the value of frequent flyer miles is not taxable and that if this rule changes, it will not be applied retroactively.

QuickBooks Tutorial: Changing Your Fiscal Year

Wed, 12 Mar 2008 00:00:00 -0600

To change your fiscal year (sometimes called financial year) in QuickBooks, select Company Information from the QuickBooks Company menu.

Then select the correct Fiscal Year in the lower left-hand corner of the Company Information form by selecting the month your fiscal year starts.

2008 Tax Rebates: Special Cases

Mon, 10 Mar 2008 00:00:00 -0600

For general information on the 2008 Economic Stimulus Package, see my prior blogs: Bush Signs Economic Stimulus Package; Most People Will Receive Tax Rebates and 2008 Economic Stimulus Package Benefits Business as Well as Individuals. Additional information on some special cases follows:

2007 Income Higher Than Normal
If your 2007 income was too high for you to qualify for a refund, but you expect your 2008 income to be lower, don't fret. You won't get a refund, but you will be eligible for a refund when you file for 2008.
Children Born in 2008
Your tax refund will be based on the number of children you have in 2007. However, you will receive a $300 credit for children born in 2008 when you file your 2008 tax return.
Spouse Died in 2007
Because you can file a joint return for 2007, you can qualify for a $1,200 rebate, the maximum amount a couple can receive. Because excess rebates don't have to be paid back, you can keep the money even though you are technically single in 2008.
Child Turned 17 in 2008
Because your child was 16 years old in 2007, you can get the rebate. Because excess rebates don't have to be returned, the fact that your child turned 17 in 2008 is irrelevant.

As additional information about the rebates becomes available, I will do my best to report on it in this blog.

Exchanging QuickBooks Files With Your Accountant

Thu, 06 Mar 2008 00:00:00 -0700

If you want your accountant to make adjustments to your books, but cannot give up access to QuickBooks while your accountant is making the changes, then create and give your accountant an Accountant's Copy of your QuickBooks file. After your accountant has made all necessary adjustments, you can import them into your current QuickBooks company file. There are some limitations to what you can do while your accountant has the Accountant's Copy, but they aren't likely to prevent you from being productive.

Creating the Accountant's Copy

open your QuickBooks company file

from the File menu, select Accountant's Copy > Client Activities > Create Accountant's Copy

Next

fill in the Dividing Date (your accountant can work on stuff before the Dividing Date, you can work on stuff after the Dividing Date)

Next

save the file

give the file, which will have a .QBX extension, to your accountant.

your accountant will convert the .QBX file to a .QBA file (Accountant's Copy working file) and make necessary adjustments

your accountant then exports the changes to a .QBY file (Accountant's changes file)

Importing Your Accountant's Changes

Accountant's Copy changes must be imported by the QuickBooks Administrator, who must be in single-user mode

from the File menu, select Accountant's Copy > Client Activities > Import Accountant's Changes

locate the Accountant's changes file (.QBY) and click Open

review the changes and, assuming you wish to accept them, click Import

Limitations to what you can do while your accountant has the Accountant's Copy

you cannot add, edit or delete transactions in the historical period (on or before the dividing date)

you cannot add, edit, delete or merge accounts in the historical period

you cannot add, delete or merge lists in the historical period

you cannot reconcile your accounts

While your accountant is working with the Accountant's Copy, you will see "Accountant's Changes Pending" in the QuickBooks title bar. This will go away when you either import or cancel your accountant's changes.

IRS Announces Interest Rates to Drop Effective April 1, 2008

Tue, 04 Mar 2008 00:00:00 -0700

The IRS just announced that interest rates will drop by 1% on April 1, 2008 to:

6% for overpayments (5% for corporations)
6% for underpayments
8% for large corporate underpayments
3.5% for the portion of corporate overpayments that is above $10,000.

The IRS determines the interest rate on a quarterly basis based on the federal short-term rate.

2008 Standard Mileage Rate is Highest Ever

Tue, 04 Mar 2008 00:00:00 -0700

The 2008 standard mileage rate, which is used to calculate the deductible cost per mile of driving an automobile for business purposes, is the highest it has ever been. The standard rates, which went into effect on January 1, 2008, are as follows:

business miles driven: 50.5 cents per mile
miles driven for medical and moving purposes: 19 cents per mile
miles driven in service of charitable organizations: 14 cents per mile

Taxpayers cannot use the business standard mileage rates in the following situations:

after using depreciation methods under the Modified Accelerated Cost Recovery System (MACRS)
after claiming a Section 179 deduction for the automobile used
for vehicles used for hire or for more than 4 vehicles used at the same time.

Stimulus Payments Will Start Going Out in May

Sun, 02 Mar 2008 00:00:00 -0700

Most taxpayers won't have to do anything extra to receive their economic stimulus payments, which will begin going out in May. "If you are eligible for a payment, all you have to do is file a 2007 tax return and the IRS will do the rest," said Acting IRS Commissioner Linda Stiff. Payments to over 130 million taxpayers will go out through the spring and summer.

Those taxpayers who selected direct deposit on their 2007 tax return will receive their stimulus payments via direct deposit as well. Those taxpayers who haven't filed yet should be aware that the quickest way to get the stimulus payments and to get regular refunds is via direct deposit. For more information on the stimulus payments, see my prior blogs: Bush Signs Economic Stimulus Package; Most People Will Receive Tax Rebates and 2008 Economic Stimulus Package Benefits Business as Well as Individuals.

Intuit Announces QuickBooks Online Basic

Fri, 29 Feb 2008 00:00:00 -0700

Intuit just released a version of QuickBooks Online that will cost only $9.95/per month. Business owners purchasing QuickBooks Online will have two plans to choose from: QuickBooks Online Basic and QuickBooks Online Plus. Details of the two plans follows:

QuickBooks Online Basic

Basic features for simple businesses
$9.95/month (no discounts available for Accountants and Non-Profits)
1 user + accountant
Payroll: $19.95/month
Accept credit cards: additional cost

QuickBooks Online Plus

More features for more complex businesses
$34.95/month (discounts available for Accountants and Non-Profits)
3 users + accountant
Payroll: $19.95/month
Accept credit cards: additional cost
Discounts available on additional companies

Existing users of QuickBooks Online will not see any changes to their current plans. They will not be able to downgrade to QuickBooks Online Basic, but given that QuickBooks Online is (in my opinion, anyway) a great product at a great price, this is not likely to upset many current users. Instead, the low price of QuickBooks Online Basic is likely to significantly increase the overall number of QuickBooks Online subscribers. For more information and/or to purchase QuickBooks Online, check out Intuit's QuickBooks Online website.

Small Business Tax Calendar for March 2008

Fri, 29 Feb 2008 00:00:00 -0700

A list of upcoming dates and actions that accountants, bookkeepers and small business owners should be aware of follows:

3/3/2008 - Fishermen & Farmers: your 2007 income tax return (Form 1040) is due, along with any taxes you owe.
3/5/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between February 27th and February 29th.
3/7/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 1st and March 4th.
3/10/2008 - Employees who earned more than $20 in tips in February must report the total to their employers.
3/12/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 5th and March 7th.
3/14/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 8th and March 11th.
3/17/2008 - Electing Large Partnerships:� K-1s must be distributed to partners.
3/19/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 12th and March 14th.
3/21/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 15th and March 18th.
3/26/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 19th and March 21st.
3/28/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between March 22nd and March 25th.
3/31/2008 - If you file Forms W-2, W-2G, 1098, 1099, and 8027 electronically, the due date is March 31st.

A new list will be published at the end of each month showing dates and actions to be aware of in the following month.

IRS Likely to Loosen the Rules on Employer Provided Cell Phones

Wed, 27 Feb 2008 00:00:00 -0700

Congress is pressuring the IRS to ease the rules which currently require employees to keep detailed records of the business usage of their cell phones. In brief:

The current rules: workers are currently required to document the time and place of calls and the specific business purpose.

What's changing: given that so many people have plans with unlimited minutes, lawmakers are suggesting that it does not make sense for the IRS to require employers to make their employees keep track of this information. Instead, they claim that cell phones should be treated the same way desk phones and personal computers are treated, meaning that documenting the time, place and business purpose of calls would no longer be necessary.

If the IRS does not change the rules on their own, then Congress is likely to initiate legislation that will do so.

QuickBooks Tutorial: Using Classes

Tue, 26 Feb 2008 00:00:00 -0700

QuickBooks classes enable you to classify all income and expense transactions. You can do so by department, location, type of business, partner or associate, or anything else that is useful and meaningful to you. You can then run reports in which you break your business down into the classes you have created.

This blog post is about using QuickBooks classes. If you are looking for a QuickBooks class, we recommend Webucator.

Example of Using QuickBooks Classes
Suppose you have a consulting business with offices in Dallas and Denver. You could create a class for each office and then assign every transaction to either Dallas or Denver. You could then run reports showing all income and expenses by office, so you could see exactly how profitable each office is.

Turning on Class Tracking

From the Edit menu, select Preferences
Select Accounting (on the left), and then Company Preferences tab
Select Use Class Tracking
OK

Adding Classes in QuickBooks

From the Lists menu, select Class List
Click On Class and then New
Fill in the Class Name
OK

Assign Classes to Transactions

Simply remember to fill in the Class when entering transactions in QuickBooks.

See my previous blog titled QuickBooks Classes for more information about using classes in QuickBooks.

Some Farmers and Fishermen Get an Extra Week to File 2007 Returns

Mon, 25 Feb 2008 00:00:00 -0700

Farmers and fishermen who file Form 1040 returns electronically with Form 4136 (Credit for Federal Tax Paid on Fuels) have to wait until March 3rd to e-file Form 4136, which has been revised to reflect changes related to the Leaking Underground Storage Tank tax (part of the Tax Technical Corrections Act of 2007, which was enacted December 29, 2007).

Normally, farmers and fishermen who file Form 1040 do not have to make estimated tax payments if they file their return and pay taxes due by March 1st (March 3rd this year since March 1st is a Saturday). This year, however, farmers and fishermen who attach form 4136 and who e-file do not have to file and pay taxes due until March 10th. This delay does not apply to those farmers and fishermen who are not e-filing and/or who are not attaching Form 4136.

IRS Cautions Taxpayers to be Aware of Email and Telephone Scams

Sat, 23 Feb 2008 00:00:00 -0700

The IRS has warned taxpayers about several scams, the goal of which is generally to trick people into giving away personal and financial information, including social security numbers, bank account numbers and credit card numbers. The scammers then use these numbers to commit identity theft, incuding applying for new loans or credit cards, running up charges on existing credit cards and emptying victim's bank accounts. As it can take years to straighten things out after one's identity has been stolen, accountants should consider informing their clients of some of the common scams that the IRS is aware of:

Rebate Phone Call
Someone claiming to work for the IRS calls and informs people that they can receive a rebate by filing early. If the individual called is interested, the caller then claims to need the person's bank account information in order to set them up for direct deposits.
- The IRS does not require people to use direct deposit and, for those who do, the IRS does not gather bank account informaiton over the phone.
Refund Email
Scammers send emails to people, purportedly coming from the IRS, stating that the individual is eligible for a specific tax refund, which they can get by clicking on a link in the email and then filling out some personal information on the website they are taken to.
- The only way to apply for a refund is to file a tax return. Also, there is only one official IRS website: www.irs.gov.
Audit Email
Scammers send emails to people, purportedly coming from the IRS, stating that the individual will be audited. The individual is then instructed to click on links and complete forms, including personal information that the scammers can use to commit identity theft.
- The IRS does not send emails of this nature to taxpayers.
Changes to Tax Law Email
Scammers email accountants, "Treasury" managers and businesses instructing them to download information on various tax law changes by clicking on a number of links. The IRS believes that by clicking on these links, the user downloads malware (software designed to infiltrate or damage a computer without the owner's consent) which could be used to find passwords or other information on the user's computer.
- The links do not take users to legitimate IRS web addresses. IRS web pages begin with www.irs.gov.
Paper Check Phone Call
Scammers claiming to be IRS employees call individuals and state that the individual has not cashed a check from the IRS, and that because it hasn't been cashed, the IRS needs to verify the person's bank account number.
- The IRS does not ask for bank account information over the phone and does not follow up on uncashed checks.

When people receive emails supposedly coming from the IRS which they believe might be scams, they can forward the email to phishing@irs.gov.

2008 Economic Stimulus Package Benefits Business as Well as Individuals

Fri, 22 Feb 2008 00:00:00 -0700

The 2008 Economic Stimulus Act, noted mostly for the stimulus payments it provides to individuals (see Bush Signs Economic Stimulus Package; Most People Will Receive Tax Rebates), provides two important incentives to businesses:

50 Percent Special Depreciation Allowance
Businesses will be able to depreciate 50% of the adjusted basis of certain qualified assets during the year the asset is placed in service. To qualify, the asset must be placed in service in calendar year 2008.
Section 179 Expensing
Businesses will be able to expense up to $250,000 worth of section 179 property purchased in 2008, as opposed to just $128,000 had the 2008 Economic Stimulus Act not been passed. However, the $250,000 amount is reduced if the business places more than $800,000 of section 179 property into place in 2008.

QuickBooks Tip: Speed Up QuickBooks

Thu, 21 Feb 2008 00:00:00 -0700

If you find that it often takes a long time to load and open your QuickBooks company file, then consider the following tips aimed at optimizing QuickBooks performance:

Close all windows before exiting QuickBooks
Before closing QuickBooks, make sure that you have closed all QuickBooks windows (from the QuickBooks Window menu, select "Close All"). If you don't do this, then the next time you open your QuickBooks file, QuickBooks will open all the windows you left open .
If you work with multiple QuickBooks files, then close the QuickBooks file before closing QuickBooks
Before closing QuickBooks, close the QuickBooks file you are currently working in (the QuickBooks File menu, select "Close Company/Logoff"). Then close QuickBooks. The next time you open QuickBooks you will find that it opens very quickly to the "No Company Open" window, from which you can select the file you wish to work in.
Run QuickBooks from your hard drive
Keeping your QuickBooks file on a CD-ROM or flash drive has the advantage of making it easier to use from multiple computers. However, it is much slower than when your QuickBooks file is saved on your hard drive.
Make sure your workstations meet or exceed QuickBooks minimum system requirements
QuickBooks systems requirements are different for different versions of QuickBooks. You can find information on the system requirements for different versions of QuickBooks on Intuit's website by following the links below:

Debt Forgiven in 2007 Might Not Count as Taxable Income

Tue, 19 Feb 2008 00:00:00 -0700

The Mortgage Forgiveness Debt Relief Act of 2007, signed into law by president Bush on December 20, 2007, enables homeowners to refinance their mortgages without paying taxes on debt forgiven in the process. Information about this Act follows:

What is the current law guiding mortgage forgiveness? Under the current law, if your house declines in value and your bank forgives a portion of your total mortgage, the amount forgiven counts as taxable income.
What does the The Mortgage Forgiveness Debt Relief Act of 2007 do? This Act enables homeowners to refinance their mortgages without paying taxes on debt that is forgiven. The goal of this Act is to make it easier and more affordable for people to refinance their homes and thereby lower their mortgage payments.
What years is the new law in effect for? The Act applies to all debt forgiven in calendar years 2007, 2008 and 2009.
Does the Mortgage Forgiveness Debt Relief Act of 2007 apply to second homes? No. Only debt forgiven on your principal residence can be excluded.
Is there a cap on the value of the loan the Act applies to? The balance of your loan must be less than $2 million ($1 million for a married person filing a separate return) in order to take advantage of this Act.
How do I claim this tax relief? To claim this tax relief, simply attach Form 982 to your federal tax return.
Why don't I see anything about this in my tax preparation software or on IRS forms? Because the Mortgage Forgiveness Debt Relief Act of 2007 was not enacted until late December, reporting procedures for this change in law were not able to be incorporated in tax prep software or in IRS forms.
How will I know if my debt was reduced or eliminated and by how much? You will receive a Form 1099-C stating the amount forgiven and the fair market value of the property given up through foreclosure from your lender.

Bush Signs Economic Stimulus Package; Most People Will Receive Tax Rebates

Wed, 13 Feb 2008 00:00:00 -0700

President Bush signed the economic stimulus package into law today, meaning about 130 million Americans will receive tax rebates. Information about the rebates follows:

You have to file a return to get a rebate check. Most Americans file returns anyway, but approximately 10-20 million Americans (lower income tax payers, social security recipients, recipients of verterans' benefits) don't normally have to file.
Stimulus payments will begin to go out in May. They will be sent separately from your regular refund.
Rebates will not count as taxable income. If you owe back taxes, however, the IRS will apply the rebate to the back taxes.
How big will your tax refund be?
- Individuals with adjusted gross income (AGI) up to $75k are eligible to receive up to $600.
- Married couples filing jointly with adjusted gross income up to $150k are eligible to receive up to $1,200.
- If you have children, you will receive an additional $300 for each child (no limit on the number of children).
- Individuals with AGI of more than $75k and married couples filing jointly with AGI of more than $150k can estimate rebates by calculating their potential rebate ($600/adult + $300/child) and then subtracting $50 for every $1,000 over the limit ($75k for individuals, $150k for married couples filing jointly).
- Workers who earn too little to pay income taxes but have income of at least $3,000 (including social security and certain veterans' and railroad retirement benefits) are eligible for rebates of $300 ($600 for married couples filing jointly).
If you already filed, you don't need to do anything else to get your rebate.
Assuming you will owe taxes in 2008, the tax rebate is not a gift. It is essentially an advance on your 2009 refund. If you won't owe any taxes in 2008, then for you this is free money.

Small Business Tax Calendar for February 2008

Sat, 09 Feb 2008 00:00:00 -0700

A list of upcoming dates and actions that accountants, bookkeepers and small business owners should be aware of follows:

2/1/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 26th and January 29th.
2/6/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 30th and February 1st.
2/8/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between February 2nd and February 5th.
2/11/2008 - If you deposited all required payments on time, then file Forms 940, 941, 943, 944, and/or 945.
2/13/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between February 6th and February 8th.
2/15/2008 - Obtain a new W-4 form from employees who claimed "exempt" during calendar year 2007.
2/16/2008 - If you have employees who claimed exemption from withholding last year but have not yet submitted a new W-4, then you must begin withholding income taxes from them.
2/21/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between February 13th and February 15th.
2/22/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between February 16th and February 19th.
2/27/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between February 20th and February 22nd.
2/28/2008 - Information returns (Forms W-2G, 1098, and 1099) for certain payments made during calendar year 2007 are due.
2/29/2008 - If you are a large food or beverage establishment, then file Form 8027.

A new list will be published at the end of each month showing dates and actions to be aware of in the following month.

Small Business Tax Calendar for January 2008

Sat, 09 Feb 2008 00:00:00 -0700

A list of upcoming dates and actions that accountants, bookkeepers and small business owners should be aware of follows:

1/1/2008 - Stop the advance credit of the Earned Income Credit for employee who have not submitted a new Form W-5.
1/4/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made on January 1st.
1/9/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 2nd and January 4th.
1/10/2008 - Employees who earned tips: File Form 4070 to report to employer earnings of more than $20 in tips.
1/11/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 5th and January 8th.
1/15/2008 - If you are subject to the monthly deposit rule, then deposit payroll taxes for December 2007 by January 15th.
1/16/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 9th and January 11th.
1/18/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 12th and January 15th.
1/24/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 16th and January 18th.
1/25/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 19th and January 22nd.
1/30/2008 - If you are subject to the semiweekly deposit rule, then deposit payroll taxes for payments made between January 23rd and January 25th.
1/31/2008 - Deliver Forms 1098, 1099 and W-2G to recipients for certain payments made during calendar year 2007.

A new list will be published at the end of each month showing dates and actions to be aware of in the following month.

Home Office Deductions: Expenses That May Be Deducted

Mon, 04 Feb 2008 00:00:00 -0700

If you use part of your home for business, then you might qualify for a home office deduction. For some questions designed to help you determine if you qualify, see my previous blog titled Home Office Deductions: Do You Qualify. If you do qualify, then you may deduct portions of the following home expenses:

real estate taxes
mortgage interest
rent
utilities
insurance
painting and repairs
security system
depreciation

To calculate the amount you can deduct, either:

divide the square footage of your office space by the square footage of your house to obtain the percent of your house which your office space accounts for, and then multiply this percent by your expenses, or
if the rooms in your house are all approximately equal in size, then simply divide the number of rooms used for your business by the number of rooms in your house.

Finally, more information can be found in Publication 587, Business Use of Your Home.

Remember to Close Your Books in QuickBooks

Sat, 02 Feb 2008 00:00:00 -0700

I always recommend to clients that they close their books in QuickBooks as soon as they have finished entering regular bills and invoices from the prior year. Many clients are resistant to doing so claiming that they trust their bookkeeper and therefore don't have any reason to do so. The primary reason to set a closing date in QuickBooks, however, has nothing to do with trust.

The primary reason to close your books in QuickBooks is to prevent mistakes. It is very easy to accidentally enter an invoice or a bill dated last year. In fact, January is the time we are most prone to doing so because we aren't used to the new year yet. Therefore, consider closing your books early using a password that all QuickBooks users at your company know. That way they can enter things in the prior year, but because they will be prompted for the password before doing so, they won't do so accidentally.

QuickBooks Tutorial: Closing the Books

Accrue Revenue and Expenses In QuickBooks at Year-End

Sat, 02 Feb 2008 00:00:00 -0700

Accrual based businesses generally need to make a number of adjustments before closing their books at year-end. Different businesses make different decisions as to exactly what to accrue, but whenever an expense is incurred in one year for which the benefit won't be received until the next year, or revenue is received in one year for products or services that won't be delivered until the next year, then one should consider whether or not to make an accrual adjustment. Some things to consider:

Payroll: if your pay period crosses the year, then you probably want to accrue those payroll expenses actually incurred through the end of the year.
Insurance: insurance expenses are often paid annually or semi-annually, so it is common for businesses to incur expenses for insurance in one year for which the actual benefit won't be received until the following year.
Rent: rent is often paid ahead of time. If you enter a bill in QuickBooks dated January 1 and pay this bill in December, than no adjusting entry is necessary. However, if you simply pay for rent via a check, then an adjusting entry may be necessary.
Subscriptions: subscriptions are often paid annually, so adjusting entries may be worth considering. However, only consider an adjusting entry if the expense is high enough to justfiy the time. It makes no difference what year a $30 magazine subscription shows up in.
Revenue: revenue items requiring adjusting entries vary greatly for different businesses. Consider service fees such as an annual support payment for a software product or annual fees for snowplowing or a lawn service.

Making adjusting entries in QuickBooks is simple:

From the Company tab, select "Make General Journal Entries..."
Set the date as the last day of the year.
Select the appropriate expense or revenue account and then enter the correct amount as a credit or debit per the below:
- for expenses already paid but not yet incurred, enter the amount as a credit.
- for expenses not paid but already incurred (assuming you have not already entered a bill in QuickBooks), enter the amount as a debit.
- for revenue already received but not yet earned, enter the amount as a debit.
- for revenue already earned but not yet received (assuming you have not already entered an invoice in QuickBooks), enter the amount as a credit.
Select either Deferred Revenue or Deferred Expense on the second line of the journal entry.
After saving, you must reverse the entry effective the first day of the following year. QuickBooks makes this easy:
- simply go back into the entry (do so by clicking "Previous") and click "Reverse"
- save and you are done.

I hope this is useful with respect to thinking about adjusting entries you might make for your business. You should check with your accountant to see exactly what types of entries apply to your business.

Create and Use a Temporary Distribution Account in QuickBooks

Sat, 02 Feb 2008 00:00:00 -0700

When quickly entering a pile of bills or reconciling a bank account, it can be very frustrating to come across an unknown bill or transaction. How do you enter it into QuickBooks if you don't know what it is? Instead of stopping what you are doing and hunting down someone who knows, assign it to a "temporary distribution" account.

A "temporary distribution" account is an account created specifically for transactions that, for one reason or another, can't immediately be assigned to another account. At year end the temporary distribution account should have a $0 balance. During the year, my temporary distribution account almost never has a $0 balance. In addition to the scenarios above, I use it when paying my credit card bill and sometimes payroll. Then, when I have the necessary information to breakdown these payments to all the correct accounts, I edit these transactions in QuickBooks to assign the expenses to the proper accounts.

The best thing about a temporary distribution account, however, is not that it simplifies entering transactions. The best thing is that it reduces errors. Knowing you can assign something to this account gets rid of the temptation to guess which account something belongs in, or to put it in an account with the intention of changing it later, which you might forget to do.

I recommend numbering the temporary distribution account as 9999 and categorizing it as an Other Expense. This way it will show up at the bottom of your P&L and will be hard to miss when looking at your numbers, thereby reminding you to assign any unassigned transactions before closing out the year. Also, create a todo for yourself to go into QuickBooks at least quarterly to assign any unassigned transactions. If you wait until the end of the year, it might be hard to remember what your question was.

Home Office Deductions: Do You Qualify

Sat, 02 Feb 2008 00:00:00 -0700

If you use a portion of your home for business, then you might qualify for a home office deduction. The following questions are designed to help you figure out if you qualify:

Do you use a specific area of your home exclusively or regularly for business? If you have not designated a specific area of your home as your work area, then you do not qualify. Some examples:
- You work long hours at home every night on your laptop on the couch in your living room. You do not qualify for a home office deduction.
- You have an office in your home used only for business. You may qualify for a home office deduction.
- You have a spare bedroom in your house which doubles as your office and as a guestroom. You may qualify for a home office deduction. The fact that the room is not used exclusively for business means you are in a gray area, but if the room is used regularly for business and rarely as a guest room, then you can probably get away with claiming it. Ask your accountant what he or she thinks.
Why do you work at home? Is it for your own benefit or for your employer's benefit? The IRS requires that the use of your home for business be for the convenience of the employer. Some examples:
- You have a fully functional workplace at your company's office, but prefer to work at home sometimes and your employer allows you to do so as long as you get your work done. Since your choice to work at home is for your own convenience, not your employer's, you do not qualify for a home office deduction.
- You work for an international business and manage employee's around the world, and need to be on email and/or participate in conference calls at odd hours. Therefore, your employer expects you to do some regular work from home. Since this work is for your employer's convenience, you may qualify for a home office deduction.
Does your employer pay you rent for your office space? If so, then you do not qualify for a home office deduction.
Are you using the office in your home for business? Simply having an office in your home in which you conduct your personal business does not qualify you for a home office deduction. The space must be used for clear business purposes. Some examples:
- Using your office space for investment activities, even though you are seeking profits, does not qualify you for a home office deduction.
- Using your office space for hobbies does not qualify you for a home office deduction.

Finally, you can read more about these requirements in publication 587, Business Use of Your Home.

Independent Contractor or Employee?

Sat, 02 Feb 2008 00:00:00 -0700

Many small businesses (large businesses, too) struggle with the question of whether an individual can be treated as an independent contractor or needs to be treated as an employee. The general rule is that if the employer has the right (whether or not they exercise such right) to control and direct the individual, both with respect to the actual work that is to be done and the details and means of how the work is to be done, then the individual is an employee. If the general rule alone does not make it clear whether an individual is an employee or an independent contractor, then consider the following twenty factors, which have been developed based on an examination of cases and rulings considering whether an individual is an employee:

1. INSTRUCTIONS. If the employer has the right to specify when, where and how the individual is to work, then the individual is generally an employee.

2. TRAINING. If the employer provides training to the worker, then the worker is generally an employee.

3. INTEGRATION. The more the worker's services are integrated into the general operations of the business, the more likely it is that the individual is an employee.

4. SERVICES RENDERED PERSONALLY. If the Services must be performed by the individual, then the assumption is that the employer is interested in the methods used to complete the work, indicating that the worker is an employee and not an independent contractor.

5. HIRING, SUPERVISING, AND PAYING ASSISTANTS. If the employer hires, supervises and/or pays assistants that report to the individual in question, then that shows control over how the individual completes the work, implying the individual is an employee. If the individual hires, supervisors and/or pays their own assistants, then that implies the individual is an independent contractor.

6. CONTINUING RELATIONSHIP. If the worker continually or repeatedly works for the employer, then he or she may be an employee.

7. SET HOURS OF WORK. When the employer sets the hours of work for the individual, the employer is demonstrating control, which indicates and employer-employee relationship.

8. FULL TIME REQUIRED. Independent contractors are free to work for as many employers as they choose. Substantially full time work for one employer indicates an employee-employer relationship.

9. DOING WORK ON EMPLOYER'S PREMISES. Requiring the individual to work at the employer's office demonstrates control, implying an employee-employer relationship.

10. ORDER OR SEQUENCE SET. Establishing a set order in which the individual must complete work demonstrates control, indicating the individual might be an employee.

11. ORAL OR WRITTEN REPORTS. Requiring regular reports indicates a degree of control.

12. PAYMENT BY HOUR, WEEK, MONTH. Payment by the hour, week, or month indicates an employer-employee relationship. Payment for a specific job or amount of work indicates that the individual is an independent contractor.

13. PAYMENT OF BUSINESS AND/OR TRAVELING EXPENSES. Reimbursing the individual for business or traveling expenses indicates an employee-employee relationship.

14. FURNISHING OF TOOLS AND MATERIALS. When the employer provides the necessary tools, materials and other equipment, an employer-employee relationship is indicated.

15. SIGNIFICANT INVESTMENT. If the worker invests in his or her own office space, that factor tends to indicate that the individual is an independent contractor.

16. REALIZATION OF PROFIT OR LOSS. If a worker has the opportunity to make a profit and runs the risk of losing money, then the worker is probably an independent contractor.

17. WORKING FOR MORE THAN ONE FIRM AT A TIME. Individuals that work for multiple employers are likely to be independent contractors.

18. MAKING SERVICE AVAILABLE TO GENERAL PUBLIC. When an individual offers his or her services to the general public on a regular basis, then he or she is probably an independent contractor.

19. RIGHT TO DISCHARGE. If an individual cannot be fired, provided their work meets contract specifications, then they are likely to be considered an independent contractor.

20. RIGHT TO TERMINATE. Employees can terminate their own employment at any time, but independent contractors generally cannot do so until their contracted work is complete without incurring liability.

Hiring an Accountant

Sat, 02 Feb 2008 00:00:00 -0700

There are many things to consider before hiring an accountant. Would you rather hire an independent accountant or a large accounting firm? Will you ask your accountant for business advice or just ask them to file your taxes? Will you ask them to help you clean up your QuickBooks file or is it not important to you that your accountant is even familiar with QuickBooks? When hiring an accountant, I recommend that you:

Find an accountant with the right experience for your business
Accounting rules are numerous and can be complex. You will benefit from working with someone who is familiar with the types of issues you are likely to face. Ask potential accountants if they have worked with other businesses in your industry and of your size. If you operate in multiple states or have international subsidiaries, ask potential accountants if they have experience with these things.
Hire an accountant that will get back to you quickly
The best way to find out whether or not a potential accountant will be responsive is to ask to talk to some of the accountant's customers. If you can't do this, note how quickly they get back to you when you are interviewing them.
Think about what you want from your accountant
Some accountants love thinking about their clients' businesses and can provide great business advice. Others are great from a tax perspective, but don't make an effort to understand their clients' businesses. Think about what you want and ask potential accountants what they like to do. If you want your accountant to function as a business consultant, then tell them about your business in your first meeting. You should be able to tell by the questions they ask and the comments they make if they will add value as a consultant.
Verify that your potential accountant is familiar with your accounting system
Odds are that if you use QuickBooks, you want an accountant that is comfortable with QuickBooks. If you use Peachtree, you want an accountant that is familiar with Peachtree. If you aren't sure if this is important to you, then it probably is. If you are very experienced with bookkeeping and accounting, then this might not be an issue for you.
Think about the pros and cons of large and small accounting firms
Large accounting firms offer the advantage of having a large group of accountants with a wide variety of specialties. If your company faces many complex accounting issues, then a large firm might make sense. On the other hand, you are likely to get more attention from your accountant and to get to know your accountant if you work with a small firm.
Ask for references
Checking references for your accountant is just as important as checking references for potential employees. It only takes a minute and you can get a lot of valuable information.

New Blog for Small Businesses to Focus on Finance, Operations, HR, QuickBooks, Excel, etc.

Fri, 11 Jan 2008 00:00:00 -0700

We recently decided to add blogs to our site as a means of addressing some of the issues our customers deal with on a regular basis. Since our customers are financial professionals serving mostly small and medium sized businesses, you can expect blogs about the finance, operations and human resources issues that most small businesses deal with. In addition, I am a long-time user of QuickBooks and Microsoft Excel, so you will see a lot of blogs about how to do things in QuickBooks, why and how QuickBooks can make your life easier, how to view and manipulate your QuickBooks data in Excel, and the like.

A little about me and changes to www.samarak.com

I managed the finance, operations and human resources of a small international software company for over 10 years. Over the last four years I have worked as a part-time CFO for many small businesses. I have worked with companies on a monthly basis over a period of years and have done large and small consulting projects. As a part-time CFO, I developed and analyzed numerous business plans, developed financial models, developed operating systems to assist with monitoring and executing corporate goals, created and instituted measurement systems to track implementation of corporate strategies and I created operational systems to maximize the efficiency of employees.

I obtained almost all my CFO consulting work via my website. If you search in Google or Yahoo! for "part-time CFO", "CFO Services", "CFO for Hire" or even "Bookkeeping Services" and "Bookkeeping", you will see that www.samarak.com shows up at or near the top. As a result, I receive regular calls from other part-time CFOs and from bookkeepers looking for work.

About a year ago I realized that my website presented a very interesting potential business. If you have visited www.samarak.com before, you will notice that it has changed a lot. It will continue to change and improve. My intent is that www.samarak.com will become a valuable resource for financial professionals, providing lots of information and unparalleled services and opportunities to help accountants, bookkeepers and part-time CFOs and controllers obtain business over the web.

If there are specific topics you would like me to blog about, please let me know.

Only the Big Numbers Add Up

Fri, 11 Jan 2008 00:00:00 -0700

One of the first things I do when I get involved with a business is to figure out what their major sources of revenue and expenses are. I do this in two ways. First, I talk to management to find out what things they consider to be important to the business. Second, I spend a couple hours going through their QuickBooks file.

My goal is to figure out which things are worth paying attention to and, equally important, which aren't. When talking to management, I ask them how they spend their time, which products or customers they consider to be most profitable, what they think their biggest expenses are, what expenses most directly impact their revenue, what they think could be done to increase revenue and profit and where they think they could save money. My goal with management is to learn as much as I can about the business and management's perception of the business.

After talking to management I like to spend some time reviewing the companies QuickBooks file. I prefer looking at their QuickBooks file to looking at reports as I want to look at the data behind the reports. My goal here is to get a firm grasp of how the company really spends and makes money. I then compare what really happens with management's perceptions. Usually there are some significant differences.

After talking to management and reviewing the company's QuickBooks file, I am usually able to identify the items I think are worth spending time on. In most cases, the biggest surprise management gets when they see my list is how small it is. The reason is simple: only the big numbers add up. This isn't to say that small numbers don't matter (if you might be able to save $100/month on your phone bill, have someone look into it), it's just that management should not be spending much time on the smaller numbers, and management certainly should not be talking about the small numbers when discussing the company's strategy and goals.

Instead, management needs to define the things that have a significant impact on the success of the business. They need to figure out how to make projections for these things and then need to figure out how to measure them. Finally, management needs to establish a process for regularly measuring these things, analyzing and discussing differences between projections and actuals, and then figuring out whether to adjust projections to reflect what is actually happening or adjust business processes to attain the desired results. This process does not need to be overly complicated, but even a simple process accomplishing all these things takes a fair amount of time. Because of this, it is extremely important not to waste time on insignificant things.

QuickBooks Tutorial: Marking Vendors as Eligible for 1099

Tue, 08 Jan 2008 00:00:00 -0700

QuickBooks makes it easy to note which vendors are eligible for 1099s. Taking the time to do so will save you a lot of time at year end. To mark a vendor as being eligible for a 1099 in QuickBooks, simply:

Go to the Vendor Center (Vendors:Vendor Center)
Select a vendor
Click on "Edit Vendor"
Select "Additional Info" tab
Check "Vendor eligible for 1099"
OK

QuickBooks has two 1099 reports (1099 Summary & 1099 Detail). They can be found in the Vendors & Payables section of the Reports menu.

Time to Issue 1099s

Mon, 07 Jan 2008 00:00:00 -0700

January 31st is the deadline to give annual information statements (Form 1099) to recipients of certian types of payments you made during 2007. Payments covered include:

Abandonment (1099-A)
Accelerated death benefits (1099-LTC)
Agriculture payments (1099-G)
Annuities (1099-R)
Attorneys, fees and gross proceeds (1099-MISC)
Auto reimbursements: Nonemployee (1099-MISC)
Awards: Nonemployee (1099-MISC)
Barter exchange income (1099-B)
Bonuses: Nonemployee (1099-MISC)
Broker transactions (1099-B)
Cancellation of debt (1099-C)
Capital gain distributions (1099-DIV)
Car expense: Nonemployee (1099-MISC)
Charitable gift annuities (1099-R)
Commissions: Nonemployee (1099-MISC)
Commodities transactions (1099-B)
Compensation: Nonemployee (1099-MISC)
Crop insurance proceeds (1099-MISC)
Damages (1099-MISC)
Death benefits (1099-R)
Death benefits:Accelerated (1099-LTC)
Debt cancellation (1099-C)
Direct rollovers (1099-R)
Direct sales of consumer products for resale (1099-MISC)
Directors fees (1099-MISC)
Discharge of indebtedness (1099-C)
Dividends (1099-DIV)
Education IRA distributions (1099-R)
Excess deferrals, excess contributions, distributions of (1099-R)
Fees: Nonemployee (1099-MISC)
Fishing boat crew members proceeds (1099-MISC)
Fish purchases for cash (1099-MISC)
Foreclosures (1099-A)
404(k) dividend (1099-DIV)
Golden parachute: Nonemployee (1099-MISC)
Grants, taxable (1099-G)
Health care services (1099-MISC)
Income tax refunds, state and local (1099-G)
Indian gaming profits paid to tribal members (1099-MISC)
Interest income (1099-INT)
IRA distributions (1099-R)
Life insurance contract distributions (1099-R, 1099-LTC)
Liquidation, distributions in (1099-DIV)
Loans, distribution from pension plan (1099-R)
Long-term care benefits (1099-LTC)
Medical savings accounts: Distributions (1099-MSA)
Medicare+Choice Medical Savings Accounts: Distributions (1099-MSA)
Medical services (1099-MISC)
Mileage: Nonemployee (1099-MISC)
Military retirement (1099-R)
Nonemployee compensation (1099-MISC)
Nonqualified plan distribution: Beneficiaries (1099-R)
Original issue discount (OID) (1099-OID)
Patronage dividends (1099-PATR)
Pensions (1099-R)
Prizes: Nonemployee (1099-MISC)
Profit-sharing plan (1099-R)
PS 58 costs (1099-R)
Punitive damages (1099-MISC)
Qualified plan distributions (1099-R)
Qualified state tuition program payments (1099-G)
Real estate transactions (1099-S)
Recharacterized IRA contributions (1099-R)
Refunds, state and local tax (1099-G)
Rents (1099-MISC)
Retirement (1099-R)
Roth conversion IRA distributions (1099-R)
Roth IRA distributions (1099-R)
Royalties (1099-MISC)
Timber, pay-as-cut contract (1099-S)
Sales: Real estate (1099-S)
Sales: Securities (1099-B)
Section 1035 exchange (1099-R)
SEP distributions (1099-R)
SIMPLE distributions (1099-R)
Substitute payments in lieu of dividends or tax-exempt interest (1099-MISC)
Tax refunds, state and local (1099-G)
Unemployment benefits (1099-G)
Vacation allowance: Nonemployee (1099-MISC)

This is not a complete list of payments, so the absence of a payment from this list does not indicate that the payment is not reportable. For more information, check out the IRS's website.

QuickBooks Tutorial: Closing the Books

Sun, 06 Jan 2008 00:00:00 -0700

Closing the books in QuickBooks is easy and worth doing. To do so:

From the Edit menu, select Preferences
Select Accounting, Company Preferences
Fill in the Closing Date (see Remember to Close Your Books in QuickBooks for a blog about when to do so)
Set Password
OK

Intuit Announces Quicken for the iPhone

Fri, 28 Dec 2007 00:00:00 -0700

Intuit recently announced that they will be offering an online version of Quicken for the iPhone and other mobile devices. Quicken for mobile devices will be released in January 2008 for the iPhone. It will be optimized for other mobile devices, including Blackberry devices, later on. The product is aimed at younger audiences and will cost $3/month. It is expected to be officially announced at Macworld Expo in January.

Let Your Employees Know What They Cost

Mon, 24 Dec 2007 00:00:00 -0700

Employees cost significantly more than what they receive in salary. If you offer generous benefits, then they probably cost much more. Making your employees aware of this is a simple way to make them feel more valuable.

Consider an employee with an annual salary of $30,000 who receives full individual health insurance. After you add in health insurance (assume $300/month for 12 months), social security/FICA (6.2% of the first $97,500 in 2007), unemployment (6.2% of the first $7,000), medicare (1.45%) and worker's compensation (big range, but assume just 1%), the employee actually costs you approximately $36,629.

Most people don't think about what they cost their employers beyond their salary. When they find out, however, they tend to feel good about it. And since you are already spending the money, you might as well let your employees know about it. Of course, the greater the benefits you offer with respect to salaries, the more you have to gain from sharing this information. For this reason, many not-for-profits should consider sharing this information with their employees.

This information is mostly available (benefits may be the exception) from your payroll company and it can be shared via a simple spreadsheet. Therefore, making this information available is easy to do. I have recommended this to multiple companies in the past and those that have done it once have done it again every year thereafter.

Get QuickBooks in Order in December

Wed, 19 Dec 2007 00:00:00 -0700

Spending some time reviewing and correcting your books in December makes it a lot easier to close them in early January and helps insure you get off to a good start in the new year. Here are some things to do:

Reconcile bank accounts
- Make sure all bank statements are reconciled. If there are old unreconciled items, look into them to see if they can be deleted.
Review the trial balance
- Look for revenue that shows up in the debit column and expenses that show up in the credit column.
Count inventory
- How closely you count your inventory depends on the type of business you have. However, it is good practice to at least make sure the numbers in QuickBooks approximate what you have on hand.
Examine accounts receivable
- Are there invoices out that you don't expect to receive payment on? If so, you might want to write them off.
Examine accounts payable
- Are there payables on the books that shouldn't be there? If so, clean them up.
Compare profit and loss statements to prior years
- QuickBooks makes comparing financial statements from consecutive years very easy. Take the time to do it and look at accounts that have changed significantly. Do the changes make sense or is something showing up in the wrong account?
Make sure payroll ties out
- Does the total payroll on your books match the total on your payroll reports? If not, you may have accidentally recorded payroll taxes as payroll or vice versa.
Inventory your assets
- Do you still use all the assets on your books? If not, write off those you no longer have or use.
Get rid of any extra expense accounts
- Review your chart of accounts for unused or duplicate accounts. Having too many accounts makes it hard to assign expenses to the right accounts in QuickBooks and to gather useful information from your financials. It is good practice to review your accounts annually and inactivate those accounts you aren't using.
Assign temporary expenses
- If you don't currently use a temporary expense account, I recommended starting to. Set it up in QuickBooks as an "Other Expense" with account number 9999 so that it shows up all the way at the bottom and is hard to ignore. Use it throughout the year as a placeholder when you aren't sure what account to use for a specific item. At year end, go through the items still in this account and assign them to their proper accounts.

Spending some time cleaning up your QuickBooks file a few times a year is apt to save many day-to-day hassles. Not only does it serve to get things in order, it is an opportunity to think through the processes you have in place and to become more familiar with the numbers behind your business.

Evaluate Your Profitability By Client

Wed, 19 Dec 2007 00:00:00 -0700

We generally know who are biggest customers are and which customers pay us the most money. It is much more difficult, however, to know who our most profitable customers are. The end of the year is a good time to evaluate your customers and figure out which ones have earned you the most profit during the year. Because it is often difficult to break costs down on a customer-by-customer basis, using your financial data to determine which customers were the most profitable might be difficult or even futile. All the same, the financial data is the place to start.

QuickBooks (and most other accounting software) allows you to assign costs to customers and even to specific customer jobs. If you are doing this, review the resulting data first. If not, consider whether you should start doing it so you will have better data next year. Another thing to do is to ask your employees. Consider putting together a simple survey of general questions about how they spent their time, whether or not some customers require more time than others, if so, which customers and types of customers take the most and least time, etc. This will help you ascertain which customers took the most time and caused the most headaches and also which took the least time and were the most pleasurable to work with. Since employees are a major expense, this will also help you figure out which customers generated the most profit.

Next, look at your top five expense accounts and think about how they relate to your products and services and whether or not some customers drive more of these expenses than others. Finally, think about the costs associated with acquiring customers. Do certain types of customers cost more to acquire than others? If so, does the business you are getting from these customers justify the added expense? A thorough understanding of how much it costs to acquire different types of customers is certainly a part of measuring the real lifetime profit from a specific customer.

Going through these exercises is likely to result in some useful information. Equally important, it should give you some great ideas as to things you should measure in the coming year. If you do this annually, you will eventually know exactly which customers you want and which you don't.

QuickBooks Classes

Mon, 17 Dec 2007 00:00:00 -0700

QuickBooks classes enable you to essentially break your business down into a number of smaller businesses and look at complete profit & loss statements for each business. For example, you could break your business down by industry, location, product or service, or anything else that is meaningful for your particular business. This is a powerful feature of QuickBooks and one that I often recommend clients use.

This blog post is about using QuickBooks classes. If you are looking for a QuickBooks class, we recommend Webucator.

An Example of a Good Use of QuickBooks Classes
A business with multiple locations could set up a separate class for each location, enabling the business to evaluate each location as a separate business. This is a great use of QuickBooks classes because revenue and most expenses would probably be fairly easy to associate with a specific location, meaning that the numbers would be very meaningful. Expenses that aren't associated with a specific location, such as management salaries and benefits, could either be split out between the different locations or left unassigned.

An Example of a Bad Use of QuickBooks Classes
A restaurant owner curious to compare profits resulting from appetizers vs. dinners could create classes for each. While they might be able to develop a simple system to track revenue from each, it would probably be very hard to break out expenses (ingredients, rent, employee time) between the two, and therefore to obtain a meaningful profit & loss for each class.

Choosing what to Use QuickBooks Classes for It is not easy to change your classes, so I recommend thinking carefully about how you would like to break down your business before beginning to use QuickBooks classes. The first thing to think about is how you would like to break your business down. Ask yourself what you get from breaking your business down in this way and make sure it is something you will use. Second, think about whether or not revenue and expense transactions can easily be broken down in this way.

How to Set Up and Use QuickBooks Classes:
Select "Use class tracking" in the Accounting Preferences window to add a class field to invoices, bills and other transactions. Go to the Lists menu, choose Class List and then New to add classes. Then simply fill out the class field when entering transactions in QuickBooks.

Conclusion
I consider classes to be one of the greatest features of QuickBooks. However, they don't apply to every business and should not be used haphazardly. Finally, if you can't think of what to use them for, then you probably don't need to use them. And truly finally, if you don't need the Class feature to break your business down along certain lines, then there are some other cool things you can do it. A topic for another blog.

[4/5] Intuit Products AnswerWorks ActiveX Control Buffer Overflow

Sat, 15 Dec 2007 00:00:00 -0700

Description : Parvez Anwar has discovered a vulnerability in various Intuit products, which can be exploited by malicious people to compromise a user's system. via Secunia

Eighty-six percent of companies say an increased tax incentive would...

Sat, 15 Dec 2007 00:00:00 -0700

"Canadian companies are telling us they think the R&D tax incentive program is a positive one for R&D in Canada"

Eighty-six percent of respondents to a survey by KPMG LLP say that increased Scientific Research and Experimental Development tax incentives would influence their company's decisions regarding supporting ... via Canada NewsWire

Intuit Senior Vice President Exercises Options for 30,000 Shares, Sells Stock

Sat, 15 Dec 2007 00:00:00 -0700

A senior vice president of financial software company Intuit Inc. exercised options for 30,000 shares of common stock, according to a Securities and Exchange Commission filing. via Canadian Business Magazine

Most CFOs predict short-term stability

Sat, 15 Dec 2007 00:00:00 -0700

A national survey of 221 chief financial officers and senior comptrollers conducted by Grant Thornton LLP shows two-thirds said the U.S. economy will remain the same or improve for the remainder of 2007, while ... via Bizjournals

Intuit Buys Homestead for $170 Million

Sat, 15 Dec 2007 00:00:00 -0700

Intuit Inc. said Monday that it's buying Homestead Technologies Inc. for $170 million in a deal that will provide the financial management software maker with more online tools to sell to small businesses. via Forbes

Hiring a Bookkeeper? Here are Some Questions to Ask to Assess Their Knowledge of QuickBooks, Excel and General Bookkeeping

Thu, 13 Dec 2007 00:00:00 -0700

I have used various of the questions below when interviewing bookkeepers and controllers and have found them to be very useful for assessing a person's knowledge of QuickBooks, Excel and general accounting/bookkeeping.

General accounting knowledge:

Explain the differences between assets and expenses.
- If a person stumbles, then they don't understand basic accounting and you don't want them in charge of your bookkeeping.
Explain the differences between purchasing a computer and a travel expense, with respect to profitability, cash flow and general accounting.
- An experienced bookkeeper will undestand depreciation and easily talk about this.

QuickBooks:

Walk through the process of invoicing and collecting from a customer in QuickBooks
- An experienced user of QuickBooks will mention creating an invoice, receiving payment and making a deposit, QuickBooks aging reports and QuickBooks pre-written collection letters.
How would you use QuickBooks to track or manage employees time?
- QuickBooks has some nifty time tracking features. Some experienced QuickBooks users might never have had the opportunity to use them, but if someone can readily explain how they are used, that is a great sign.
Scenario: you are coming into a company that has always done everything by hand and you are tasked with setting them up with QuickBooks. How many expense accounts would you create and why.
- I ask this because I want to see if they understand the business reasons for having multiple expense accounts. Many businesses create way too many accounts, creating lots of headaches and making it difficult to make sense of their financial numbers

Excel:

Scenario: you have a spreadsheet with information on 1,000 homes. One of the columns lists the color of each home. How would you figure out how many of the homes are blue?
- There are lots of ways to accomplish this and a reasonably experienced Excel user should be able to come up with at least one way immediately.
Gage familiarity with some key functions (subtotal, sort, filter).

General Business Knowledge:

You have a friend who is considering purchasing a company and she asks you to look at the numbers and let her know what you think. What do you do?
- There is no right answer to this question. I usually let people talk for a few minutes to see if they have ideas as to what to look for and to listen to them think out loud.

Pay Your Bills on a Regular Schedule

Thu, 13 Dec 2007 00:00:00 -0700

Some companies pay their bills the day they get to them and others let them pile up until the pile starts to fall over before digging in. Companies that pay right away never face late payments and are ahead of the game. Companies that wait as long as possible keep their cash longer and don't get distracted by bills on a daily basis. Is one better than the other? Is either good? I don't think so.

While paying bills is a necessary part of every business, it is certainly not strategic. Therefore, a good goal to have with respect to paying bills is to create a bill paying process that uses as few resources (time, energy) as possible. I think both paying bills too often and too infrequently result in a waste of time and energy.

Paying one bill takes at least 5-10 minutes, probably more, and is distracting. You have to open QuickBooks, open the QuickBooks Enter Bills window, enter the bill, close the QuickBooks Enter Bills window, open the QuickBooks Pay Bills window, make the payment, close the QuickBooks Pay Bills window, take out a check and put it in the printer, print the check, etc. Paying 50 bills should only take about an hour. Given this, paying bills weekly is clearly more efficient than paying bills every day.

Letting bills pile up can result in less time actually paying bills, but if they pile up too long, then you have to deal with late payments, extra mail in the form of statements and notices letting you know you are late, and time dealing with creditors. I recommend paying bills once a week (for small businesses - obviously large businesses have departments paying bills all the time). I also recommend doing it on the same day each week. That way you won't forget, you can tell vendors exactly when they can expect to get paid, and you should never have to deal with late payments.

Setting up a regular schedule for paying bills can save an enormous amount of time and energy. It is simple things like this that can make the difference between an efficient and an inefficient business.

Use Your Website to Obtain New Customers

Thu, 13 Dec 2007 00:00:00 -0700

Many companies spent time and money building websites over the last few years only to find they did not acquire any new business as a result of their new website. Consequently, they have given up on the Web as a source of new business at exactly the time when they should be focused on it. Because the age of a website is an important factor for search engine optimization (SEO), many of these essentially abandoned websites could come up very well in searches with a little bit of effort. For this reason, if you are sitting on a website that you haven't really thought about in years, I recommend starting to think about it again.

The first thing you should do is to identify keywords people might use in a search engine to find services you provide. For example, if your business is providing QuickBooks services to companies in Boise, Idaho, then you might consider "Boise QuickBooks". Then do a search on this term in any major search engine and see what comes up. Look at the sites and ask yourself if there is any reason the companies that show up should show up ahead of your site. If there isn't, then it is time to think about how to get your site to show up.

The easiest and first thing to do to optimize your site for search engines is to rewrite your text to use your keywords repeatedly (in the example above, use "Boise QuickBooks" repeatedly). The next, and most important, thing is to find other related sites that are willing to link to your site using your keywords. For some keywords, simply doing this will be enough. If it's not, at least you have made a good start and will be in a good position to do more if you so choose.

Finally, if you aren't getting new customers through your website, then you might be missing out on an opportunity. Using search engine optimization (SEO), it is possible to drive potential customers to your website, and thereby grow your business. I don't think every company should spend time or money on SEO, but I think almost every company should at least think about it and whether or not it will be important for them over the long run.

SEO is Important for Small Companies

Thu, 13 Dec 2007 00:00:00 -0700

Customers are increasingly choosing and buying products and services over the Web, and their search usually starts on one of the major search engines. Despite this, few small companies have put significant effort into search engine optimization (SEO). As a result, SEO offers both a tremendous opportunity for companies to acquire new business and a significant risk to those that don't pay attention to it.

This opportunity is the greatest for those that can sell products or deliver services to non-local customers, as the potential market for these companies is tremendous, but it is also significant for companies that do business only locally. For years the Yellow Pages have served as a primary source of new customers for many small, local businesses. As more and more people go to search engines before the Yellow Pages, showing up at the top for searches like "Tampa Accountant" and "Reno Bookkeeper" becomes increasingly important.

Many companies mistakenly think that because they haven't gained business from their website yet, they never will. However, it is important to remember that the Internet is still very young, and its impact on people's buying habits is just beginning. Companies that act quickly have the opportunity to come up at the top for organic searches for their products and, consequently, to gain business over the web. Interestingly, however, the real benefit might not be the business you gain in the next few months. The real benefit might be the business you gain over the next ten years.

Because the Internet has largely replaced the Yellow Pages for me, I think of the past value of the Yellow Pages to a company as a good, quick indicator of the future value of search engines, and thus of the importance of SEO for companies. Therefore, if the Yellow Pages have been a good source of business for your company, then I recommend you develop an SEO plan for you company's website.

Should You Hire a Part-Time CFO or Controller?

Thu, 13 Dec 2007 00:00:00 -0700

Many small businesses suffer from the lack of strategic financial input. The questions below will help you determine if your company would benefit from CFO Services. If you answer "No" to any of these questions, then it's likely that you are missing out on valuable and easy to obtain information that could help you make better business decisions, and/or that your business is suffering from inefficient financial and administrative processes.

Strategic
- Is the information you need to make business decisions readily available?
- If you wish to look at information in a new way, is it easy to generate reports to do so?
- Do your year-end numbers closely resemble your projected year-end numbers?
- Do you know what the most and least profitable aspects of your business are?
Revenue
- Can you list your biggest customers?
- Do you know what percent of your revenue your biggest customers account for?
- Do you know who your most profitable customers are?
- Do you know who your least profitable customers are?
Expenses
- Can you list your top five expenses?
- Do you know how much your major expenses have changed in the last year?
- Are you able to accurately budget for your major expenses?
- Do you have a firm grasp of how your expenses relate to your revenue?
Cash Flow
- Do you know how much cash you have in the bank?
- Do you know how much cash you are likely to have in three months, six months, one year?
- Do you know what percent of your receivables you will collect and when you will collect them?
- Do you have a good system for managing your debt?
- Do you know exactly what your debt is costing you?
Organization/Administration
- Is your bill paying process smooth and efficient (you should be able to process 20 to 30 bills in an hour)?
- Is your invoicing and collections process smooth and efficient?
- Do most of your customers pay on time?
- Do you use accounting software to manage your business and not just to provide data to your accountant?

Know whether Your Revenue is Coming From Existing Customers or New Customers

Thu, 13 Dec 2007 00:00:00 -0700

Knowing whether your revenue went up or down is important, but it's equally important to understand why. There are many things to consider when thinking about why, such as whether the overall market for your product went up or down. If worldwide sales for your product went up 50% and your sales went up just 20%, then you should consider whether or not 20% growth is really a good thing.

Another thing to consider, and generally an easy thing to measure, is who your revenue comes from. I recommend breaking out your revenue into at least the following two categories: revenue from existing customers and revenue from new customers. Let's think about each category:

Revenue from existing customers: providing great products and services is generally the key to keeping revenue coming from current customers. By looking at revenue from existing customers alone you can get an idea as to how happy your customers are. Is the amount of business you get from existing customers growing or shrinking? Obviously, different businesses will have different expectations and goals with respect to business from existing customers, but all businesses will benefit from a clear understanding of whether or not their existing customers are sticking with them, and therefore it is important to look at them alone.

Revenue from new customers: effective marketing and sales efforts are the key to getting business from new customers. In a sense, new business should be thought of as an independent business. The revenue and profits received from new business need to justify the cost of getting the new business. By looking at revenue from new business alone, a company can get a clear understanding as to whether or not this is the case.

By regularly measuring the revenue and expenses associated with new business, you can make sure your investments are worthwhile and quickly realize when a change in strategy is called for. Likewise, clearly understanding revenue trends from existing customers is vital to keeping your finger on the pulse of customer satisfaction.