Step One: Get Organized!

If there is one thing I've learned while running a small business, it's that nothing gets accomplished without organization. While there must be room for "creative feedom" in most industries, simply being organized makes a huge difference in the every day and long term operation of the business.
When starting a business, in many cases, one begins with a great idea. A person sees a market need or comes up with what they believe to be an amazing service or product and they are ready to hit the ground running! While this drive, passion, and ambition is admirable it's imperative that this innovative businessman or woman step back and make a step by step strategic plan for the future. They have to get organized!
Whether beginning a new company or maintaining a current one, disorganization can be a huge issue.
Financial disorganization can cause the biggest problems. Here are a few simple bookkeeping tips on how to get and stay organizing and avoid finding yourself or your business in a finacial mess.

1. When it comes to bank account statements:

• Request a statement with month-end cut off date. This will save time when reconciling records with the bank statement each month.
• Do not file statements and canceled checks without reviewing them.
• Review statements immediately for unauthorized checks.

2. Cash or accrual?

• The cash accounting system is typically much easier to maintain
• The IRS allows you to use the accrual system if you have $5 million or more in sales or if you carry large inventory.

3. Keep audit trail.

• This is just a record of all your invoices and checks in numeric order.
• Be sure to never skip numbers.
• Record voids in numeric order as well, just mark them as "void". This assures that there are no gaps in your numeric system.

4. Deposit cash right away. This ensures that all income will be properly recorded.

5. Keep records stored on a computer system. It's important to frequently back-up this information and may even be a good idea to keep paper records as well.

Some of the most important things to remember, but easiest to forget, are simple, basic principles like be consistent and don't overcategorize. The best strategy is to have a structured system of staying organized from the beginning, work it into employee training, and do what you can to maintain the organization of your business.

(Some information in this blog was found at http://www.onlineorganizing.com/. See the site for more information and tips on organization!)

Internal Controls and QuickBooks

Internal controls are necessary to reduce the risk of fraud. Even employees who are honest can be tempted when they handle large sums of money on a regular basis. This is especially true it the business owner has not implemented any access controls or set up shared control over the business finances. With the additional pressure of an unstable economy, the temptation can become too great for some people if there are no controls in place – remember desperate people do desperate things.

Once the control policies and procedures are established, management should ensure that the controls are being followed.

One thing to consider when creating an internal control policy is limiting permissions for people using QuickBooks® and creating a separate user sign-on for each user. In a small business environment, bookkeeping is often performed by only one or two employees. However, it is still important to give serious consideration to the areas of the system they are allowed to access. QuickBooks® will allow you to limit or even deny a user’s access to certain areas of the system. Management should take the time to become familiar with the capabilities of QuickBooks® and to limit an employee’s access in areas that might not be appropriate. Make sure you have a policy in place that does NOT allow employees to share passwords! If you have a larger accounting staff, you should limit access by areas of responsibility among staff (i.e. A/P vs. A/P). No single person in the organization (other than the owner) should have “ADMIN” rights to everything. The issue with making someone other than the owner an administrator is that it allows them to cover their own tracks, or over-ride important control provisions.

Summer Hiring

With politics and business laws continuously changing, it’s hard to keep up with all of the federal rules and regulations for running a business. What do I have to do and what is optional? How do I handle payroll for a student intern? What paperwork should I file if I employ my own child? With summer in full swing, many of you have probably signed on new employees for part-time help. Whether it is a full-time seasonal employee, a part-time student intern, or your own family member, there are some important things to keep in mind as you hire summertime help.


Remember:

• For 100% Parent Owned Entities Employing their Children

 If the parent owns 100% of the business, the owners’ children may work any number of hours or any time of day. Children under 16 years of age are not permitted to do hazardous work, work where food is cooked, or work near flammable or hazardous materials

 100% owners hiring only immediate family are not required to pay minimum wage. BUT if they regularly employ others minimum wage must be met, even for family.

 Wages are exempt from FUTA if owners’ children are under 21.

 If the owners’ children are under 18, wages are exempt from FICA but FIT must be withheld on W-2s filed for children.

 For other employed children under the age of 18, obtain an age certificate recognized by the U.S. Department of Labor and your state Wage and Hour Division (WHD). This is to be returned to the workers at time of termination; these workers may not do hazardous work.

 Other children ages 14-15 are permitted to work 8 hours/day, 40 hours/week, June 1- Labor Day, between 7 a.m. – 9 p.m. if school is not in session. These limits do not apply to news carriers or children employed by a parent who is the 100% owner of the business.

 Children under 14 cannot be hired unless hired by a parent who is the sole owner.

• Pay for a holiday is optional for part-time and summer help.

• No paid vacation time is required. However, if one chooses to give paid vacation time some federal and states laws apply.

• Providing health insurance or other benefits to temporary or part-time employees is optional. If these benefits are not offered, however, it should be stated in a written benefits plan.

• A Federal W-4 should be obtained from all summer employees, including seasonal workers, part-time, and foreign students.

• One should withhold FIT (Federal Income Tax) from all summer employees unless their W-4 results in no withholding.

• FICA should be withheld from all workers, even those who receive Social Security benefits and high school students. (students under 18 working for sole-owner parents are exempt from this)

• Overtime is due for any time worked past 40 hours in the workweek, but is not required for paid time-off.

• And don’t forget that you may be eligible for 6.2% HIRE exemption from employer Social Security tax on the wages of summer help.
Be sure to read about The Roper Group’s new hires at http://bit.ly/ropernewemployees

(information contained in this article was found in the June 2010 edition of The General Ledger: The Complete Newsletter for Professional Bookkeepers)

Going GREEN

"C'mon! Everybody's Doin' it!"
Tips for summer sustainability

• Mosquitoes are a pest in the summer months, but for some, chemical filled repellents aren’t worth it either. Using garlic or planting rosemary can ward off the summertime pests. If you need to pull out the big guns look into the Mosquito Magnet.

• Dehydration can be a person’s worst enemy and the risk of becoming dehydrated is substantially increased in the summer heat. Stay hydrated by using an at home water filter and carrying your own reusable water bottle. This reduces waste and is more cost effective!

• In your daily commute, try to avoid excessively high driving speeds. Gas mileage drops rapidly above 60 mph. Also, using the cruise control can help! It’s helps you maintain a constant speed and saves gas.

• Enjoy all the delicious tastes of summer this season and boost your local economy – eat locally grown foods. Besides being a fun way to spend an afternoon, farmer’s markets are great outlets for fresh fruits and veggies!

• Change your home and office lighting to energy efficient fluorescent bulbs. Not only will this simple change help you save money, it will save energy, too! If every American home replaced just one light with an Engery Star light it would prevent 9 billion pounds of greenhouse gas emissions – equivalent to the emission of 800,000 cars!

New Tax Credits Could Help You Save

In April, the IRS starting sending postcards to small businesses to inform them of the new Small Business Health Care Tax Credit. Even though it may seem that April is ages ago, small businesses can (and should) check their eligibility and take advantage of the new legislation!


There are four main eligibility rules:

1. A qualifying employer must cover at least 50% of the cost of health care coverage for some of its worker’s based on single rate.

2. A qualifying employer must have less than 25 full-time workers (“full-time” being the key word here. Example: an employer having less than 50 part-time workers may qualify)

3. A qualifying employer must pay average annual wages below $50,000

4. Both taxable and tax-exempt firms may qualify

The credit can be claimed as part of the general business credit starting with the 2010 income tax return to be filed in 2011. If a small business meets these requirements, it may receive a credit of up to 35% for a small business’ premium costs in 2010. As of January 1, 2014, this credit increases to 50%. (remains 35% for tax-exempt employers) Also note that the credit phases out over time for firms whose average wages fall between $25,000 and $50,000 and for firms who maintain between 10 and 25 full time workers.

Tax laws are constantly changing and new legislation is forever been put into place or repealed. As a small business owner...or any business owner...it's worth it to keep up-to-date on what you qualify for and what could help you and your business!

For more information on this and other new tax legislation visit www.irs.gov.

Beating Unemployment

In the volatile world of economic ups and downs, where unemployment in the United States hit almost 11% in recent months, job search tips haven’t been hard to come by. I think I’ve seen every “tip” under the sun over the past year or so, from “Shifting from a Stay at Home Mom to a Work from Home Mom” to “Beat the Recession: Go Back to School” - not to mention all the money saving “bail out” deals from local restaurants and retail stores. Through all the riffraff there is some useful and applicable advice, however. Here is what I think are the top five tips for finding a job and surviving and thriving in unpredictable economic times:




1. “Finding a job is a full-time job.” This is probably the best advice I have heard. So many people complain and find themselves in financial binds because they can’t find work, but how hard are they really trying? If you are willing to put in 40 hours a week in an office, put at least half that amount of time into finding that office to work in!

2. Be tenacious! The word tenacious is defined as being persistent in maintaining, adhering to, or seeking something valued or desired. Let’s break this down. In this situation, what is the value or desired item? Money (typically). How does one make money (typically)? By having a job and/or career. So, be persistent in seeking your job and/or career! While you don’t want to be described as pushy or desperate, any employer should feel that in your mind, THAT job is the most important one (regardless of how many for which you are currently applying). If you email a resume and receive no response within 24 hours, call for a polite follow-up; after a day or two has passed, hand deliver a resume and cover letter; if you are lucky enough to receive an interview, send a “thank you” note/email or call to say “thank you”. Be tenacious! Be persistent! Be polite! Stand out!

3. Be personal, not computerized. Everything in our lives has shifted to technology. We are (for all intents and purposes) an internet-based, tech savvy, “I have no idea what I’d do without my Smartphone” society and while that is wonderful for the most part, no electronic interaction will ever be as meaningful as face-to-face human interaction. Make the effort to hand deliver a resume - you never know when you might bump into someone important that has 5 extra minutes to spare. Customize your cover letter and resume to the targeted employer – don’t use a “one size fits all” mentality. In an interview, be prepared, but not overly rehearsed – you shouldn’t sound like you’re reading cue cards from across the room.

4. Do SOMETHING! People always say “Well, something is better than nothing,” and it’s absolutely true! While you look for the perfect opportunity, take this time to volunteer at a local organization. This gives you something productive to do while you continue to look for a job, not the mention the people you would be helping and the networking you can do. And there’s a chance that the volunteer position could turn into a paid position over time. Another aspect of “doing something” is taking a job when you get it. Most high-end executives would never consider ‘flipping burgers’ or filing papers, but if you’ve been laid off and need to support yourself and/or a family, nothing is too menial.

5. STAY POSITIVE!!! This is probably the most important and most difficult of all. In life, we can choose to wallow in our own self pity or we can choose to pull ourselves together and get on with our lives. If you’ve got to find a job, I highly suggest the latter of the two. In my opinion, nothing is more important than keeping a good attitude about your situation. In fact, being positive is the single most important skill you possess! Negativity fosters apathy – both of which do nothing but hold a person back.

QuickBooks Tip: Class Tracking

To track income and expenses by any significant segment of your business, use the class tracking feature in QuickBooks. You can use class tracking for non-profits to track grants and restricted and unrestricted funds. You can also use class tracking to tracking multiple locations or divisions of a company. If you are doing business with the government, you could use class tracking to track fixed priced jobs vs. cost plus jobs, vs. overhead.

To turn on class tracking:

• Go to the Edit menu and click on preferences, then Accounting preference.
• Click on the company preference tab, the select the Use Class Tracking box.
• Click OK

If you are using QuickBooks payroll, you can assign a class code to each employee. If it is important to assign employee time to multiple classes, you will need to change a preference:

• Go to the Edit menu and click on preferences, then Payroll & Employees preference.
• Click on the company preference tab, then select the Job Costing and Class Tracking for Payroll Expenses and Assign One Class per Earnings Item
• Click OK

This will allow you to enter a class code for each item on an employee's paycheck. If you are using the QuickBooks time tracking feature (Edit, Preferences, Time & Expenses, then click on Yes to "Do you track time?"), you can further break down time by job and class code.

Once your preferences are in place, create the class codes you want to track (go to the List menu, click on Class List, click on Class at the bottom, and New, then enter a name for the class and click on next or OK). To properly use the class codes, be sure to enter the appropriate class code on every invoice, sales receipt, deposit, bill, check, journal entry, etc. that you create.

To create a report, Go to the Reports menu, then Company & Financial, then Profit and Loss by Class. Select the dates you want to include. If a column appears on the report called "Unclassified," these are income or expenses that have not been assigned a class code. Double click on the item and assign the appropriate code to have that income or expense appear in the correct column.

Note: You can also create a budget by class, if desired.