ProAct Bookkeeping

Error on your Tax Return, What You Can do

Wed, 25 Aug 2021 19:38:00 GMT

If you made an error on your tax return, don’t worry—there are two easy ways to fix it:

A superseding return is an amended or corrected return filed on or before the original or extended due date. The IRS considers the changes on a superseding return to be part of your original return.

A qualified amended return is an amended return that you file after the due date of the return (including extensions) and before the earliest of several events, but most likely when the IRS contacts you with respect to an examination of the return. If you file a qualified amended return, you avoid the 20 percent accuracy-related penalty on that mistake.

When it comes to the IRS, an ounce of prevention is worth a pound of cure. If you made a mistake, fix it as soon as you know about it, which will save you penalties, increased interest accruals, and the headache of an IRS review of your return.

If you have an error in your return, please message me at shawn@shawnmaloneexcavating.com so that we can get busy making the correction.

A superseding return is an amended or corrected return filed on or before the original or extended due date. The IRS considers the changes on a superseding return to be part of your original return.

If you have an error in your return, please message me at shawn@shawnmaloneexcavating.com so that we can get busy making the correction.

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The Work Opportunity Tax Credit Rewards Your Good Deeds

Wed, 25 Aug 2021 19:37:00 GMT

And now, because of new legislation, the rules are in place for longer than usual.

If you need to hire workers in your business, this dollar-for-dollar reducer of your taxes is one to know about.

Suppose your business hires a member of a targeted group. In that case, you can claim the potentially lucrative federal Work Opportunity Tax Credit (WOTC) for some of the wages paid to the individual.

Overview of the Credit

The credit generally equals 40 percent of qualified first-year wages paid to an eligible employee , up to a maximum wage amount of $6,000. That translates into a maximum credit of $2,315-564-5664 percent x $6,000).

Of course, some employees don’t work out. The tax code recognizes that and reduces the credit rate to 25 percent of qualified first-year wages for an employee who completes at least 120 but fewer than 400 hours of service. That translates into a maximum credit of $1,315-564-5664 percent x $6,000).

Eligible Employees

To be an eligible employee, your new hire must be certified as a member of a targeted group by the applicable State Workforce Agency (SWA). You, as the employer, can either

Click here for links to the names, addresses, phone and fax numbers, and email addresses of the WOTC coordinators for each of the SWAs.

A simplified certification process is available for qualified unemployed veterans.

You can claim the WOTC only if you hire a member of a targeted group. Targeted groups include the following:

Exceptions to the General Rule on Credits

There’s a higher limit of $12,000 for first-year wages paid to a qualified veteran who is entitled to compensation for a service-connected disability and was discharged or released from the military within the past year. That translates into a maximum credit of $4,315-564-5664 percent x $12,000).

There’s an even higher limit of $14,000 for first-year wages paid to a qualified veteran who was unemployed for at least six months in the prior year. That translates into a maximum credit of $5,315-564-5664 percent x $14,000).

If a qualified veteran both has a service-connected disability and was unemployed for at least six months in the prior year, the limit for first-year wages is $24,000. That translates into a maximum credit of $9,315-564-5664 percent x $24,000). Wow!

The WOTC for a long-term family assistance recipient equals 40 percent of qualified first-year wages, up to a maximum wage amount of $10,000. That translates into a maximum credit of $4,315-564-5664 percent x $10,000).

In addition, for long-term family assistance recipients, the WOTC can be claimed for 50 percent of qualified second-year wages, up to a maximum wage amount of $10,000. That translates into a maximum second-year credit of $5,315-564-5664 percent x $10,000) and a maximum combined credit for the two years of $9,000 ($4,000 + $5,000). Another wow!

The WOTC for a qualified summer youth employee (a 16-year-old or 17-year-old who lives in an empowerment zone) equals 40 percent of first-year wages paid during any 90-day period between May 1 and September 15, up to a maximum wage amount of $3,000. That translates into a maximum credit of $1,315-564-5664 percent x $3,000).

If you would like my help with the WOTC, please don’t hesitate to reach out to me at shawn@shawnmaloneexcavating.com.

The post The Work Opportunity Tax Credit Rewards Your Good Deeds appeared first on ProAct Bookkeeping .

Internal Controls – Why Important

Wed, 25 Aug 2021 19:37:00 GMT

In accounting, a key term to know is “internal control.” Internal control is the series of processes and procedures that are performed within the organization to ensure the integrity and accuracy of the financial information and reporting of that organization. Internal control is very important to consider in order to protect the business owners, employees, vendors, investors, and other stakeholders.

In a small business, maintaining good internal control is often a challenge since staff size is smaller and resources are limited. Yet, it is essential to understand so that the business owners understand what risks they are taking every day in their businesses. A good system of internal controls can help the organization reduce the risk of fraud, safeguard against loss, and demonstrate good business practices.

Key Concepts

Segregation of duties is the first of three key concepts of internal control. It means that tasks should be assigned to different people when there is a risk that having everything assigned to one person could hide errors or even theft. For example, the person who opens the mail and receives checks should not be the same person who applies the check to the correct customer in Accounts Receivable.

Delegation of authority is the second key concept of internal control. While the owner has ultimate control, they cannot do everything. They must delegate to staff. Staff have the responsibility to maintain internal controls in their area of responsibility.

System access is the third concept of internal control. Access to documents, rooms, computers, applications, and other items should be on a need-to-know basis to reduce risk. While one person might have system access to enter a transaction, they should not also be the one to have system access to review or approve that same transaction.

Business Operations

Every aspect of the business should be considered while setting up the company’s policies and procedures. In a small business, an easy way to develop internal controls is to review each major transaction flow and implement the controls needed.

On the customer side, this includes receiving the customer order, sales contracts, shipping, invoicing, managing accounts receivables, collections, bank deposits or merchant reconciliations, and cash management. It can also include customer service, pricing, and promotional activity.

On the vendor side, the process includes adding controls for vendor selection, purchase orders, receiving, bill pay, managing accounts payable, payments, managing travel and expense accounts, and company credit cards.

Depending on the company, additional areas that need to be reviewed for internal control include inventory and supply chain management and government contracts, if any.

When hiring, the process of hiring, onboarding, training, evaluating performance, and payroll should be considered. Safety is also an important consideration.

A very large part of internal control development should focus on the information technology operations of the company. Areas include user access and controls, password management, naming conventions, physical security, disaster recovery, and network and applications development, updates, and change control. Data entry should also be considered and is best included when developing controls for the customer, vendor, and employee functions.

Additional functions that need internal control processes include treasury and financing; financial reporting, budgeting, and planning; records storage, access, retention, and destruction; asset management; and insurance.

Internal controls can be applied to small businesses as well as large organizations. It’s all about being able to feel confident that your business is operating with financial integrity, accuracy, efficiency, and a reduced risk of failure. If you have questions about how internal control applies to your business, be sure to reach out to us any time at shawn@shawnmaloneexcavating.com.

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The Nightmare of Payroll Tax Embezzlement

Wed, 25 Aug 2021 19:36:00 GMT

If you have employees in your business, this story should have your attention.

Timothy McCloskey, president and sole shareholder of Brosius, delegated financial responsibility to Kathleen Lawson, his bookkeeper and chief financial officer.

Ms. Lawson embezzled more than $800,000 from Brosius and failed to remit employee withholding taxes to the IRS for 19 quarters (4.75 years). Once Mr. McCloskey became aware of the magnitude of Ms. Lawson’s embezzlement, he knew that he could not continue to keep Brosius in business.

He discussed bankruptcy with his lawyer, but circumstances dictated winding down the affairs of the corporation as a better alternative. Mr. McCloskey began paying off creditors, other than the IRS.

He sold company inventory for $240,000 and used this money to pay off a loan to National City Bank, because he had personally guaranteed this debt.

Mr. McCloskey, as president of Brosius, signed and mailed Form 941 returns for the 19 back quarters and paid the taxes and penalties for three of those back quarters. The remaining assessments against Brosius (and soon, against Mr. McCloskey, individually) for penalties, statutory additions, accrued interest, and costs totaled $325,695.

If you own and are active in the business, you are personally responsible for making sure that the payroll taxes are paid. Neither the IRS nor the law allows excuses.

See if you can answer the following question: Are you absolutely, positively sure that your payroll tax money has been remitted to the IRS? Have you seen absolute, physical proof with your own eyes?

What, then, is the answer?

It’s simple, really. Examine your account with the IRS. You can see your payroll tax money sitting in your IRS payment account by just looking at your account.

Here’s how this works: First, it’s simple, sure, and free. You register with the IRS’s Electronic Federal Tax Payment System (EFTPS). Once registered, you can see physical proof of your tax payments in the IRS register. The register holds the last 15 or 16 months of your payments.

The EFTPS register is absolute proof. If you see the deposits in the register, you know that your in-house bookkeeper or outside payroll service properly sent the money to the IRS. If the money is missing, the register tells you so.

To check out and register for the EFTPS, click here to get to the EFTPS home page.

If you would like to discuss your payroll, please email me at shawn@shawnmaloneexcavating.com

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Help Wanted: You Have Options!

Thu, 19 Aug 2021 15:59:00 GMT

Many people have complained about the worker shortages this year. If you need additional workers in order to grow your business, here are some ideas for your consideration.

Where to Look for Workers

We may think of workers as only being employees, but there are a lot more options if you’re open-minded. Here’s a list of places to find workers of all kinds:

Options for Adding Workers/Labor

There are many ways you can increase labor in your business. The obvious is hiring employees. Beyond employees, there are many more options than you might first think:

With all of these options available, it should be a bit easier to find ways to add labor and grow your business. As always if you would like more information, please reach out to me as I am happy to help shawn@shawnmaloneexcavating.com

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Direct vs. Indirect Costs (and Why You Should Care)

Thu, 19 Aug 2021 15:57:00 GMT

If you’re a business owner who wants to continually find ways to increase your profitability, then you’ll want to learn about direct and indirect costs. Breaking out your expenses into direct and indirect categories can help you arrive at the most profitable volume of sales for your business.

Direct Expenses

Expenses that fall into the direct cost category are ones that relate directly to the items you sell. Here are some examples.

Direct expenses, unlike indirect expenses, will vary proportionally to the volume of items you sell. The more you sell, the higher your direct expenses. The less you sell, the lower your direct expenses.

In general, direct expenses should be recorded in Cost of Goods Sold. You can get your Gross Profit figure by calculating Sales less Cost of Goods Sold (or COGS). Gross Profit Margin is an important percentage to know in your business. It is computed as follows: (Sales – COGS) / Sales.

Some small service companies might not bother to break out labor into direct and indirect on the Profit and Loss statement each month, but it can be useful to break out periodically or when you are re-evaluating your pricing and profitability.

Direct expenses are important in making pricing decisions, but so are indirect expenses.

Indirect Expenses

Indirect expenses are expenses that you need to incur to run your business, but are not directly related to the items you sell. Here are some examples:

Fixed and Variable Costs

Direct and indirect costs can each be further broken down into fixed and variable costs. For example, HR expenses, education, and training will go up as you sell more and hire more workers. That makes them variable costs.

Other indirect expenses will remain flat no matter what your sales volume is, such as rent. That means they are fixed costs.

Pricing Your Items

When calculating your sales prices, use direct costs to be sure your profit margin is high enough to cover an allocation of your indirect expenses. In other words, sales price should always cover all direct costs plus a profit component, plus enough to cover indirect costs when considering the volume of your sales.

The lower your sales volume, the higher the price per item should be. A higher sales volume gives you more room to spread out your indirect costs over more sales. That leads to either higher profits, or you can lower your price to be more competitive.

If you have questions about direct and indirect costs or want help validating your pricing decisions, please feel free to reach out any time. shawn@shawnmaloneexcavating.com

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Travel Business Days Versus Personal Day

Wed, 04 Aug 2021 20:44:00 GMT

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5 Reports You Don’t Want to be Without

Tue, 06 Jul 2021 14:26:00 GMT

While we all have to keep our monthly books up to date for tax and other compliance reporting purposes, we should never stop there. Your books hold a wealth of information that you can use to run your business better. Here are five reports you should never be without.

Budget-to-Actual Profit and Loss Statement

Hopefully, you’ve already seen how powerful the Profit and Loss Statement is. Let’s take it a deeper level and add budget comparison to it. With this addition, you can plan your way toward the sales and profit figures you want. You’ll know every month whether you’re on track, ahead of the game (give yourself five stars!), or need to hustle to make it up next month.

Most accounting systems allow you to enter monthly budget numbers for your sales and expense accounts. You can enter them at the beginning of each year and adjust them throughout the year. It’s kind of like having Google Maps on a cross-country journey. You will be able to see where there is construction and traffic, so you can take another route. You can also see where there are cool places to stop, so you can take advantage of the fun. Your numbers tell a story.

Actual-to-Prior-Year Profit and Loss Statement

This is an easy report to generate, assuming you have at least two years’ worth of information in your accounting system. This report allows you to compare your business’s results for this year with how you did last year. Are you ahead? Behind? Have new products and services? New employees? New expenses?

With this comparison, you can take action based on how you would like your business to perform this year versus last year. While this report is readily available, few businesses study it to glean the insights available, so be sure to spend some time analyzing the data in this report.

Sales by Item, Customer, or Division (or All Three)

Inside every business’s sales information is a treasure trove of possibility. Where are you seeing growth, and how can you capitalize on it? Where do you see a slowdown, and can you run a promotion to juice things up?

Choose the breakout – customer, item, division, or another – that is meaningful to your business type. If possible, arrange for a searchable database so you can drill down into the detail even more. What trends do you see? What opportunities do you see?

Operations Reports

To find out more about your profitability and to get into the details of how your expenses are matching up with your sales, you need to review your operational accounting reports. The exact report will depend on the type of your business. If you are in services, you’ll need payroll reports and time sheets. If you are in retail, you’ll need inventory reports. If you are in construction, you’ll need job cost reports. And if you are in manufacturing, you’ll need cost of goods sold and other reports to evaluate assembly and production efficiency.

Cash Reports

The last report that is essential for good business management is all about cash. There is more than one option here, and these reports can include Accounts Receivable Aging, Accounts Payable Aging, cash flow forecasting, and various cash flow reports.

If you grant customers credit, you’ll want to actively make sure that money is collected on time from clients. If customer balances get too old, action must be taken. Even if you don’t grant credit, transactions such as returns, expired credit cards, and bounced checks need special attention.

The same is true for amounts you owe to vendors, with the Accounts Payable Aging report.

If you run tight with your cash balance, you may want to have a cash flow forecasting report on hand. This report gives you good warning as to when your bank balance may dip below your needs. You can then delay vendor payments or find an infusion of cash to cover the shortfall.

With these five categories of reports, you will have dozens of opportunities to be proactive about running your business and improving your results. And if we can help you find or generate them, please reach out anytime.

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Do You Owe the Nanny Tax?

Mon, 14 Jun 2021 21:29:00 GMT

Do you have a household employee such as a nanny, a caregiver for an elderly relative who moved in with you during the pandemic, or a live-in housekeeper?

You may have hired somebody to help out during difficult circumstances caused by the COVID-19 mess.

Maybe that was a temporary arrangement, or maybe it has turned into a permanent one. In either case, the dreaded nanny tax issue may be in play.

The nanny tax refers to your duty to withhold and deposit a household employee’s share of Social Security and Medicare taxes on wages paid to the employee and also to deposit the employer’s share of those taxes.

First, let’s clarify who can potentially count as a household employee. According to IRS Publication 926, Household Employer’s Tax Guide, household employees are individuals who do household work—such as performing as a nanny, caretaker, private nurse, babysitter, housekeeper, maid, driver, or butler. Household work includes only performing services in or around your private home.

According to IRS Publication 926, a person who does household work is your employee if you control not only what work is done but also how the work is done. So, if a worker regularly comes to your home on a schedule dictated by you and is supervised by you, the worker is probably an employee.

It doesn’t matter whether the work is full time or part time, or whether you hired the worker through an agency. But if an agency supplies the worker and controls what work is done and how it’s done, the worker is not your employee.

Yard care workers, pool service guys, maids, and the like who provide services to the general public and just show up at your place periodically to go about their business are not your employees.

For 2021, the FICA tax issue arises only if you pay a household employee $2,300 or more during the year.

The nanny tax rules are complicated, and complying with them can be a time-consuming nuisance.

If you would like to discuss the nanny tax, please contact me at shawn@shawnmaloneexcavating.com

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How to Work from Home More Often

Mon, 14 Jun 2021 21:16:00 GMT

If the products and services your business sells can be sold or delivered digitally, then you’re a candidate for working from home most of the time. If you have a storefront where customers visit to purchase your products and services, you can still perform some of your business duties remotely or rely on staff to greet and serve the customers.

You may also be able to be proactive about moving more and more of your business online. Some examples include:

Meeting with Customers
The next best thing to greeting customers in person is using video-conferencing. You can easily start with FaceTime (for iPhone users). Android users have it a little tougher, but many use Facebook’s Messenger, Google’s Duo (both parties need to download the app), or imo (ditto on both parties).

If you have more complex meeting needs, software like Zoom is perfect to get you started. Hardware-wise, you’ll need a webcam, and a microphone is preferred. If you have a cell phone, you can use the mic and speakers in the headset provided.

Simply create your account at Zoom, and set up a meeting. Invite people by emailing them a link to join you. Join the meeting at the set time, and conduct your business with your customer. You can hide your webcam if you’re shy, and you can share your screen in case you want to go over a report or something else with your client. Zoom has a free account option and can be found at https://zoom.us .

And remember, if you’re a little too shy for videoconferencing, you can always conduct business with clients using the good old-fashioned telephone or email.

Sharing Documents with Customers
If you have documents to share with all of your customers, you can post them online on your website. If you have private documents, you can use portal software to securely create a private section of the portal exclusively for that client. Apps that can do this and that are not accounting-specific include Citrix ShareFile and Box.com.

You can also share documents that don’t have sensitive financial or company information with clients using Google Drive. Simply create them, then share them using the email addresses of the appropriate clients.

Receiving Client Communications
Already customers are reaching out to businesses via all of the social media platforms as well as the messaging platforms, such as Messenger and WhatsApp. Your virtual team can easily track all of these incoming messages by watching for notifications from anywhere in the world.

You might also be using an industry-specific app for customer interactions. For example, if you’re in the wellness space, MindBody apps are ubiquitous. If you’re an attorney, you’re likely using Clio.

Keeping in Touch with Your Team
You can use the same tools mentioned above to connect with your team members, but you will probably want one or two more apps – a private messaging app for when urgent things come up that need an immediate answer, and in some cases, a task management system.

Software like Slack is perfect for you to stay in touch with your team and keep communications private. It provides messaging functionality and more.

For task management, there are literally hundreds of apps to choose from. The simplest is something like Todoist, and typical small business options include software such as Asana and Monday.com.

If you want a Swiss-army-knife suite of tools that perform many of the above functions and are deeply integrated, Microsoft Teams fits the bill by providing a full collaborative platform for businesses of all sizes.

There’s No Place Like Home
We hope these apps provide you with the ability to stay in touch with your customers and your business while working from home, sweet home.

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Deduct 100% of Your Business Meals Under the New Rules

Sun, 06 Jun 2021 00:16:00 GMT

But on December 27, 2020, in an effort to help the restaurant industry due to the COVID-19 pandemic, lawmakers enacted a new, temporary 100 percent business meal deduction for calendar years 2021 and 2022.

To qualify for the 100 percent deduction, you need a restaurant to provide you with the food or beverages.

The law requires only that the restaurant provide the food and beverages. You don’t have to pay the money directly to the restaurant. For example, you qualify for the 100 percent deduction if you order a restaurant meal that’s delivered by Uber Eats or Grubhub.

Your deductible business meals must be tax code Section 162 ordinary and necessary business expenses, and they must not be subject to disallowance under tax code Section 274.

You must be present at the business meal, and you must provide the business meal to a person with whom you could reasonably expect to engage or deal with in the active conduct of your business, such as a customer, client, supplier, employee, agent, partner, or professional advisor, whether established or prospective.

Remember, to qualify for the 100 percent deduction, you need a restaurant. The IRS recently provided definitions and examples of what is and is not a restaurant.

A restaurant is “a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business’s premises.” It is not any of the following:

In general, the 50 percent limitation applies to business meals from the sources listed above.

The restaurant creates the 100 percent deduction.

If you would like to discuss your business meal activities, please contact me at shawn@shawnmaloneexcavating.com

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Helicopter View of Meals and Entertainment (2021-2022)

Sun, 06 Jun 2021 00:00:00 GMT

Have you missed partying and having business meals with your prospects, customers, and employees?

Well, get ready to start again. Soon, COVID-19 will behind us. It could be just a few short months away.

To help you get ready, check the table below for what you can do in 2021 and 2022 as the law stands now:

If you have any questions on this chart, please contact me at shawn@shawnmaloneexcavating.com

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Re-Imaging Your Chart of Accounts

Sat, 05 Jun 2021 23:45:00 GMT

Think of your Chart of Accounts as a collection of buckets that hold dollars of items related to your business. Each bucket should be meaningful and have a purpose. For example, if you have three checking accounts, you need three buckets on your Chart of Accounts to hold the transactions for each bank account. It would not make any sense to have more or less than exactly one bucket for each checking account.

While it’s standard to have certain buckets or accounts for assets, liabilities, and equity, the number of buckets that you create for revenue and expenses can vary greatly from company to company. It makes sense to create and design your accounts for what you need for tax, accounting, and decision-making purposes in your business.

Let’s say you are a hair stylist. Do you want your revenue to be in one big bucket? That’s all that Uncle Sam requires. But for decision-making purposes, you may want to break out men’s and women’s services, or cuts versus color and other treatments, or both. In that case, you would have four revenue accounts: men’s cuts, men’s color, women’s cuts, and women’s color. This type of detail would help you see where your revenue is highest so that you can better manage your supplies as well as target your marketing to that group.

Having certain expense accounts matched to the tax requirements can reduce extra work at tax time. For example, separating travel costs – hotel and airfare – from meals and entertainment is a common one, as is keeping meals and entertainment separate.

The goal is to get your Chart of Accounts working for you. If, when you first set up your accounting system, you accepted the default Chart of Accounts, it may be time to redesign and restructure the list so it serves your needs better. Here are some additional considerations.

These questions can help you begin thinking about how your Chart of Accounts can better serve you. After all, it’s your business, your accounting system, and your Chart of Accounts.

And if we can help you through the redesign process, please let us know.

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Spice Up Work From Home

Sat, 05 Jun 2021 23:30:00 GMT

Working from home has its benefits. Yet, if you are someone who enjoys going to the office every day, chatting with co-workers in person, attending meetings that aren’t all virtual, and having a little spontaneity each week, then we’re here to help. Here are five tips to boost your WFH (working from home) environment.

Keep your day fresh, and boost your productivity and mood by using your imagination and trying the tips above.

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Fighting Cybersecurity Threats in Your Business

Sat, 13 Feb 2021 20:24:00 GMT

Social Engineering
Social engineering is when thieves try to get your employees to provide confidential information via a phone call or email. You can reduce your risk here by developing procedures and training any employees that take customer phone calls for the business. Require them to ask for identifying information such as a pin or code, or simply prevent them from giving out any information over the phone.

Passwords
Passwords are terribly inconvenient but incredibly necessary. Almost everyone is guilty of using passwords that are simply too easy to guess. Here are some password tips:

Rec eiving and Delivering Information
If you deliver or receive information, it should be done safely and securely. One way to do this is to use a customer portal such as Box or ShareFile, where the information is securely stored in the cloud. Another tool that safeguards information delivery is encrypted email.

Anti-Virus
All computer users should have anti-virus software implemented and active on their devices. Company procedures should dictate the settings as well as the brand to use.

Spam Protection for Email
Anti-spam software is also necessary to protect the device from bad links in emails. Users should be trained to detect and avoid phishing emails.

Malware Protection
Malware can be installed on your computer without your knowledge and if you are not careful. To protect against these threats, avoid file-sharing when possible, be careful when visiting unknown websites, don’t download software that you don’t recognize, and be careful with links in emails.

You may also need to protect your website from malware attacks by installing a firewall or other preventative solutions.

VPN (Virtual Private Network)
With a VPN, your internet data stays safe behind a wall of next-generation encryption and uses servers that can hide your internet traffic for maximum security. They don’t track, collect or share private data.

Software Releases
Stay current with all of your software upgrades. Upgrades can patch vulnerabilities, so you are safer with each new upgrade you install.

Data in the Cloud
Make sure any data that you have in the cloud is behind an acceptably secure technology solution. Today, this generally means files are stored with AES 256-bit encryption. You can also look for SOC1 and SOC2 certifications.

Need to Know
There are many policies that need to be developed for employees with regard to data handling. One example is providing data access to employees on a need-to-know basis. For example, an operations manager does not need the password to the payroll system, but the payroll manager does.

Reducing Business Risk
These items above are the tip of the iceberg when it comes to having good data security practices in your business. Develop an excellent set of policies, train and monitor employees, and set a great example yourself when it comes to this growing threat to your business.

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New PPP Forgiveness Rules for Past, Current, and New PPP Money

Sat, 13 Feb 2021 19:47:00 GMT

Before we go further, please note the PPP money comes to you in what appears to be a loan. We say “appears” because you typically pay back a loan.

Done right, however, the PPP loan is 100 percent forgiven. The word “loan” makes some businesses leery of this arrangement. Don’t be. The PPP monetary arrangement is a true “have your cake and eat it too” deal.

And this remarkable deal applies to your past PPP loan, the PPP loan you have outstanding, and the PPP loan you are about to get if you have not had one before. Here are the details.

Loan Proceeds Are Not Taxable
The COVID-related Tax Relief Act of 2020 reiterates that your PPP loan forgiveness amount is not taxable income to you.

Expenses Paid with Forgiven Loan Money Are Tax-Deductible
As you may remember, the IRS took the position that expenses paid with PPP loan forgiveness monies were not deductible.

Lawmakers disagreed but were unable to get the IRS to change its position. The IRS essentially told lawmakers, “If you want the expenses paid with a PPP loan to be deductible, change the law.”

And that’s precisely what lawmakers did. The COVID-related Tax Relief Act of 2020 states that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income.”

In plain English, the expenses paid with monies from a forgiven PPP loan are now tax-deductible, and this change goes back to March 27, 2020, the date the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted.

There’s more to this, of course. If you would like my help with your PPP loan or simply would like to talk about it, please contact me at shawn@shawnmaloneexcavating.com

Sincerely,
Karen Johnson

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The Importance of Customer Communication

Sun, 15 Nov 2020 23:51:00 GMT

Regardless of the type of relationship—personal, professional, or even acquaintance—communication is key. Specifically, if you want to have a healthy relationship with any individual, then it’s important to communicate clearly and fully.

Communication is particularly necessary when it comes to customers and building a successful business. It’s even more important this year since many businesses have gone through so many changes. We’ve put together this article to not only detail the importance of customer communication, but also to provide some tips to help you achieve better customer communication.

Are You Communicating Properly?
Effective communication helps to ensure your product or service meets the customer’s needs and satisfaction. By meeting these needs and satisfaction, you are (hopefully) guaranteeing repeat business. Start by figuring out what your customers are thinking and what questions they might have about your business.

Congratulate yourself if you’ve sent emails or posted notices on your website that answer the following questions:

If any of this hasn’t been clear in the last year, it could be part of a reason why business dropped off. To get it back, communicate, communicate, communicate!

And this is just pandemic-related. You may have launched new products or services, changed prices, added staff, and implemented many more actions that customers should know about.

Tips on Effective Communicating
Here are some foundational reminders about communicating in business.

Connection
Communication starts with a connection. In order to give the customer what they want, you have to connect with them. If you are able to connect on a personal level, even better. Regardless, you need to convey to the customers that they—as well as their wants and needs—are important.

Listen
Listen to your customer—and listen well. Depending on the customer’s communication, you may have to ask very specific questions in order to get them to reveal what they want or need. However, intently listening to your customers will allow you to form a better relationship with them.

Not only that, but you can get some great ideas for how to improve or create new products and services so that you fulfill even more of your customers’ wants and needs.

Understand
Now that you’re connecting and listening to your customer, make sure you understand them. If you don’t understand what they’re saying, ask them to clarify. This isn’t a guessing game, but a two-sided relationship. In order to give the customer what they want or need, you have to understand what it is they are asking for.

Transparency
Be completely transparent with your customer. You cannot earn a customer’s trust or loyalty—or repeat business—if you aren’t one hundred percent honest with them. Tell the customer exactly what you are able to do for them; don’t promise something you can’t deliver.

Deliver
Make sure you can—and do—deliver exactly what your customer is expecting from you. If you promise to deliver something, whether it’s a service, product, or result, then you need to keep your word. In doing so, you will be laying the brickwork for a successful, long-term relationship.

Communication is one of—if not—the most important skill to have when it comes to pleasing your customers. After all, happy customers will come back.

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If the SBA Made Six Loan Payments on Your Behalf, Are You Taxed?

Sat, 14 Nov 2020 22:50:00 GMT

If so, you have already benefited, or soon will benefit, from a little-known provision included in the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Congress appropriated $17 billion so that the SBA could provide a temporary loan payment subsidy to businesses with these non-disaster SBA loans. Under this provision, the SBA automatically makes six-monthly loan payments on behalf of borrowers. There is no need to file an application.

Are the SBA loan subsidies taxable income to you?

Unfortunately, the CARES Act is silent on this subject and the IRS has yet to issue any guidance on this particular loan subsidy program. In the past, the IRS advised that similar loan payments were includible in income by the taxpayer-borrower.

It’s unclear whether the IRS will follow this prior guidance.

The IRS could instead conclude that these loan subsidies are not taxable under the general welfare exclusion. The general welfare exclusion has often been used to exempt from tax SBA disaster payments made to individual taxpayers. The exclusion ordinarily does not apply to payments to business. But the IRS could make an exception due to the extraordinary nature of the COVID-19 pandemic.

It’s also possible that Congress will act to make the SBA loan payments tax-free. This could be done in a future stimulus bill.

Right now, the prudent course is to assume that the SBA loan subsidies are taxable income and plan accordingly.

If you have further questions or need my assistance, please don’t hesitate to contact me .

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Avoid Trouble – Don’t Let the IRS Set Your S Corporation Salary

Sat, 14 Nov 2020 22:38:00 GMT

If so, is your S corporation salary

Getting the S corporation salary right is important. First, if it’s too low and you get caught by the IRS, you will pay not only income taxes and self-employment taxes on the too-low amount, but also both payroll and income tax penalties that can cost plenty.

Second, in most cases, the IRS is going to expand the audit to cover three years and then add the income and penalties for those three years.

Third, after being found out, you likely are now stuck with this higher salary, defeating your original purpose of saving on self-employment taxes.

Getting to the Number
The IRS did you a big favor when it released its “Reasonable Compensation Job Aid for IRS Valuation Professionals.”

The IRS states that the job aid is not an official IRS position and that it does not represent official authority. That said, the document is a huge help because it gives you some clearly defined valuation rules of the road to follow and takes away some of the gray areas.

Market Approach
The market approach to reasonable compensation compares the S corporation’s business with others and then looks at the compensation being paid by those businesses to employees who look like you, the shareholder-employee who is likely the CEO.

The question to be answered is, how much compensation would be paid for this same position, held by a nonowner in an arm’s-length employment relationship, at a similar company?

In its job aid, the IRS states that the courts favor the market approach, but because of challenges in matching employees at comparable companies, the IRS developed other approaches.

Cost Approach
The cost approach breaks your employee activities into their components, such as management, accounting, finance, marketing, advertising, engineering, purchasing, janitorial, bookkeeping, clerking, etc.

Here’s an example of how the cost approach works to support a $71,019 salary as reasonable compensation for this S corporation owner whose corporation had $3.5 million in revenue and 19 employees:

Health Insurance
The S corporation’s payment or reimbursement of health insurance for the shareholder-employee and his or her family goes on the shareholder-employee’s W-2 and counts as compensation, but it’s not subject to payroll taxes, so it fits nicely into the payroll tax savings strategy for the S corporation owner.

Pension
The S corporation’s employer contributions on behalf of the owner-employee to a defined benefit plan, simplified employee pension (SEP) plan, or 401(k) count as compensation but don’t trigger payroll taxes. Such contributions further enable the savings on payroll taxes while adding to the dollar amount that’s considered reasonable compensation.

Planning note.
Your S corporation compensation determines the amount that your S corporation can contribute to your SEP or 401(k) retirement plan. The defined benefit plan likely allows the corporation to make a larger contribution on your behalf.

Section 199A Deduction
The S corporation’s net income that is passed through to you, the shareholder, can qualify for the 20 percent Section 199A tax deduction on your Form 1040.

If you would like my help with your S corporation salary, please don’t hesitate to contact me.

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What to Do When an Employee Is Terminated

Sat, 05 Sep 2020 00:37:00 GMT

What to Do When an Employee Is Terminated

While so many things are remote these days, you MUST get the employee’s resignation letter in writing and signed by them. If they don’t supply one, create a form they can sign that includes the reason for termination. If you initiated the termination, have the employee sign the notice of dismissal.

This is not only important for general human relations records, but it’s also important this year for any Paycheck Protection Program forgiveness documentation if the employee turned down a hire-back request. There may also be a requirement to submit the paperwork to your state’s unemployment office.

Handle legal and benefits issues.

Update the payroll system and cut the final paycheck.

Compute PTO and vacation balances due the employee. Calculate severance pay. Cut the final paycheck, incorporating those items.

Review the paycheck amounts with the employee, and ask them for a forwarding address.

Collect company property

The employee should turn over their computer equipment, including laptops, monitors, mice, keyboards, PCs, Macs, phones, beepers, printers, drives, and scanners. Don’t forget to ask for keys, business cards, name badges, security badges, gate and garage door openers, uniforms, and tools. Oh, and company cars or trucks.

Revoke computer access.

Any user accounts held in the employee’s name should be revoked. Many passwords may need to be changed. Their email address should either be forwarded to someone else who can answer the emails, updated with an autoresponder, or revoked altogether.

Voice mail and their phone extension should also be re-routed. Take the employee’s name off of any internal distribution list and remove them from the About page of your website.

Hold an exit interview.

The business owner should hold an exit interview with the employee if they are leaving voluntarily. Ask questions such as these:

Communicate this change to your staff and customers.

Let your staff know immediately after the employee leaves that they will not be coming back. Don’t go into detail about the termination; that information is private.

If the employee was involuntarily terminated, assure your staff that their jobs are safe (if they are) so they don’t ruminate or spread false rumors.

If the employee worked with customers, each customer should be notified and given the name of the new staff member that will be handling their issues.

Follow these steps to protect your company when an employee is terminated

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Special Issue: CARES Act of 2020

Mon, 30 Mar 2020 01:02:00 GMT

I wanted to give you a short summary of the C.A.R.E.S (Coronavirus Aid, Relief and Economic Security Act) so that if your business is affected by this horrible pandemic, you may be able to get some financial help.

There are two types of disaster aid, one is the Economic Injury Disaster Loan (EIDL) and one is the Paycheck Protection Program (PPP);

Economic Injury Disaster Loan :

This aid is to be used to:

Upon verification, by the SBA (Small Business Administration) you may be eligible for up to a $10,000 advance to your loan. According to Section 1110 of this act “An applicant shall not be required to repay any amounts of an advance provided under this sub-section, even if denied a loan under 7(b)(2) of the Small Business Act.”

There is $10,000,000,000 allocated for this aid, so that means that if every business qualified for the $10,000, there would be 1,000,000 businesses that this aid would help. Since there are probably many times that many businesses in the US, TIME IS OF THE ESSENCE . If you qualify for this, please apply NOW . The funds will likely run out well before the December 31 deadline.

This loan is given and administered by the Small Business Administration

You will need to apply for the EIDL before you can apply for this aid. As of the date of this post, this program is not in full operation.

These loans will be given and administered by any bank that is an SBA lender. The SBA guarantees these loans 100%, so any default will be covered by the SBA, at no risk to your bank.

This obviously is only a short summary. Below, I am providing links to apply for the loans, as well as other informative sites.

SBA Loan Disaster Info and Application

EIDL VS PPP Comparison

Paycheck Protection Program

If there is anything that I can do to help with applications, please call me.

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Benchmarking – What Is It and How Can it Help My Business?

Wed, 04 Mar 2020 17:50:00 GMT

Thanks to technology, the bookkeeping process can give you the live data in a timely manner, but what management wants to know is what can I do with this data? What does it mean to me? What if I changed this? What would happen if I didn’t take this next step? Management needs to have reports that can provide actionable items, not just flat data.

We have a solution for you. We can help you turn financial reporting into actionable items that will help you make wise decisions for your business. ProAct Bookkeeping can help you with Industry Benchmarking . Benchmarking is the process of comparing your financial data against others in your industry. This information can be used to generate ideas for improving processes, to reduce costs, or increase profits. We can help you keep track of quick and current ratios, labor cost percentage, gross profit margin and much more. We can also check key metrics that will increase your ability to get a bank loan.

If you are interested in taking your business to the next level, give us a call to discuss how we can help you.

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Mobile Accounting! It’s Here, Now

Wed, 04 Mar 2020 16:14:00 GMT

Here are just a few examples of accounting things you can do on your phone.

Banking
Are you still trudging to the bank to make your deposits? If so, there is a better way! Simply download your bank’s mobile app, login, and look for the Make Deposit function. Get the check you want to deposit, write “For Electronic Deposit Only” on the back and endorse it. On your phone, enter the amount, then take a picture of the check. Presto! Hit Deposit and the money will be in your account in no time.

Receipts
Shoeboxes of receipts are a thing of the past. (Thank goodness, we say, as we wipe our forehead!) Send your receipts to your accountant simply by taking a picture of them and sending them via email or through a document entry system like Receipt Bank or HubDoc (the one I use). You’ll need to set this up to connect with your accounting system, but once it’s set up, it’s a real time-saver.

Accounting
Wondering how much income you made last month? Download your accounting app on your phone and login to get many of the features that you have on your computer onto your phone. You’ll need to be on a cloud system like QuickBooks Online or Xero, or possibly have a hosted desktop solution in order to have this functionality.

Payroll
There’s no need to be tied to your desk on payroll day if you can submit or approve payroll from your phone. Many payroll systems have apps you can download so you can be free of your computer.

Add-ons
There’s a mobile app for almost any add-on you might need, such as TSheets for time tracking or Square for taking payments.

Artificial Intelligence
There are even some apps where you can talk in plain English and get a plain English answer back. These apps are using artificial intelligence which is exploding in the accounting space. You can ask questions about your cash flow or check a metric that you like to follow.

Feel free to reach out to us if you’d like to find out more or get help moving some of your accounting functions to your mobile phone.

If you find yourself on the go more often than not, having constant access to your business accounts and these features will be beneficial.

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Six Tips to Grow Your Business in 2020

Wed, 04 Mar 2020 15:53:00 GMT

1. Freshen Up Your Marketing
Have you ever given your house a new coat of pain? Well, consider giving your business one, too! Not literally, of course, but by freshening up your marketing techniques, clients and prospects will see you in a new light. For example, maybe it’s time for a new logo, more customer reviews to place on your site, or a new angle on your social media posts. Finally, give that old, tired website a facelift: add some new photos, offer a colorful promotion, or add new team members. Change is good and helps keep people (and Google search algorithms) interested.

2. Enhance Your Product or Services
Nothing piques an individual’s interest like a new product! If you can, try to add a new product to your existing line. Or, if it makes more sense, simply add features to products you already offer. You have room to be creative here. Think about what your clients really want and try to give it to them.

3. Meet with a Financial Advisor
Do you have a financial advisor? Now is the time to meet with him or her and discuss your future goals. Specifically, ask about new opportunities (i.e. investments) to grow your company’s revenue. Now—the start of a new year—is the perfect time to invest in new assets, get funding for new projects or ideas, and cut any unnecessary costs. You are in control of your company’s finances, so make sure money is going where you want it and need it to go. (And if we can help, let us know!)

4. Update Your Organization Chart
Could you benefit from hiring a new employee or two? Maybe your company could prosper with the creation of a new position? It’s time to update your organization chart and see what your business needs to grow for 2020. You may discover that you need additional staff and/or a position to help things run more smoothly and effectively.

5. Excite Your Team
Don’t forget to take care of your own! Remember, without your employees, where would your business be? Could you make it by yourself, without any help from staff? Therefore, remind your workers that you care for them and that they’re appreciated. The gesture can be as big or small as you want. For example, you could add an employee perk or benefit. Or, consider doing something small yet meaningful, like a team dinner or bonding event—anything to help show your employees that they’re more than just staff.

6. Strategy, Strategy, Strategy
We’ve saved the best and most important tip for last: strategy. Remind yourself why you got into this business in the first place, as well as what your goals are and what you want to accomplish. Then, take a look at your current strategy. Will your strategy help you achieve those goals? If so, then great; you’re on the right track! But if not, then it may be time to rework that business strategy.

Think about what you need to do or change to reach those goals, and then work on incorporating them into your business plan. It could be you just need a minor tweak or two, or maybe your company requires a larger kind of shift. Either way, only you can determine whether or not your strategy is working. t’s a new year—a new decade—and change is good! Let 2020 be the year that your business really takes off and grows. Now is the best time to accomplish all of your goals, and whether you use the list above or have ideas of your own to increase revenue, remember that only you can make a successful change happen.

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Add Functionality to Your Accounting System with Apps

Wed, 04 Mar 2020 15:37:00 GMT

Popular payroll options include Intuit’s many options, Gusto, ADP, OnPay, and Patriot. Explore the different features of each app and find which one works best for you and your needs.

Again, each app will offer different features. For example, most have timers, but only one might offer geofencing, so find the one that’s best for your business. Regardless of which one you choose to use, though, you will quickly discover how much time and energy you save without having to do time tracking manually.

Managing your cash and debt are important areas and ones that are easy to find to help you get quicker answers to your questions.

Now that it’s 2020, try working smarter, not harder. Add-on features can help! Remember, the examples listed above are just a few apps currently available. Determine what you need for your company to make better decisions, and then look around for the perfect app.

And, if we can help you implement your ideas faster, feel free to reach out to us anytime.

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10 Hot Business Trends for 2020

Sat, 11 Jan 2020 21:03:00 GMT

Trend #1: Sustaina bility
Concern for the environment has made the list of many companies’ core values. The way businesses are run can have a huge impact on the environment. While we hear a lot of stories about large companies impacting sustainability, we can also do our part as small businesses. In the accounting profession, many firms have gone paperless, transitioning from staplers, paper clips, and filing cabinets to digital storage which greatly reduces their footprint.

Trend #2: The Gig Economy
Young workers often have multiple jobs instead of the 9 to 5 jobs of their parents. This means there is more flexibility than ever before when it comes to hiring and retaining young workers. They can be employees, contractors, outsourced solutions, remote, local, part-time, full time, temporary, or permanent. Sub-trends in this area include more virtual workers and many more opportunities for veterans.

Trend #3: AI – Artifici al Intelligence
This trend is impacting the accounting profession in a big way via smart data entry, smart document fetching, and even smart bookkeeping. Marketing has also been impacted in a big way through online ads, customer service solutions, and marketing technology. In email, Google is finishing our sentences for us, and chat and other technologies are having fairly effective conversations via bots.

Trend #4: Stories
Storytelling is huge everywhere. People want to know:

Digital communication has moved from text to graphics to video as bandwidth improves. Video makes stories even easier to share. Smart companies will leverage both stories and video going forward to get their message out.

Trend #5: Diversity Expanded
The conversation is no longer about race, gender, and even sexual preference. It’s now about authenticity and being the same person at work and at home. No one is “normal.” But it takes courage to reveal our differences, especially if they are outside the “standard.” Your courage is more likely to be honored in 2020 than it has in prior years.

Trend #6: A WOW Customer Experience
We’ve moved way past the time of “infotainment,” yet the concept is parallel. As businesses, the challenge is how we can deliver an entertaining, positive, and memorable experience while producing the outcomes the client desires.

Trends #7: Drones
So far, drones have made appearances in photography, special effects at conferences, as toys, in movies, and of course, in war. I see them in use for safety reasons, going where people shouldn’t or can’t. They will become more pervasive in 2020 and there will be more rules, protocols, and court cases on their use.

Trend #8: User Interface
The move from desktop to mobile is nearly complete, with only the laggard portion of the population remaining. The move to voice is still a work in progress, and it will steadily continue to gain traction in 2020.

Trend #9: Actionable Analytics
Capturing information digitally gives businesses a huge amount of data to utilize but small businesses have barely scratched the surface of this profitable information. It’s time they started catching up, and that’s something our firm can help you with.

Trend #10: Pace of Transformation
New business models in companies like Tesla, Uber, Google, and Facebook will continue to show up at a rapid rate. The business that’s most nimble will be the one that changes the game or at least stays in it without folding.

Which trends impact your business the most? Which ones speak to you? Feel free to reach out to discuss any of these ideas with us.

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Tips for Changing or Starting a New Payroll Service

Sat, 07 Dec 2019 22:26:00 GMT

How to find and vet a payroll service: Follow these 8 steps. Yes, some may seem obvious, but even these can be forgotten or overlooked.

To monitor your payroll service providers deposits of your payroll taxes, follow these 4 steps.

What not to worry about. Late payrolls or underpaid wages. Your employees are essentially real-time auditors and will let you know.

If you need any help with selecting a payroll service or would like someone to do your payroll for you, please contact us.

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    Article reprinted with permission from AIPB

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Independent Contractor or Employee?

Thu, 05 Dec 2019 15:57:00 GMT

Your IC’s may seem to meet IC requirements but may be employees. This worker set his own hours and worked unsupervised – yet was still classified by the IRS as an employee.

The Case: M worked for a company moving its equipment to different sites, setting it up and maintaining it and training company employees to use it. He had no direct supervision and set his own hours, which varied depending on the work he had to do. He worked at a number of the company‘s sites, and was away from home more than 200 nights a year. He was not reimbursed for his travel expenses or for the cost of repairing equipment damaged in transit. M filed a Schedule C with his tax returns, claiming he was an independent contractor. The IRS changed his tax returns, treating him as an employee, and the case ended up in court.

Held: For the IRS. Although the taxpayer set his own hours and worked without supervision, his work relationship had more indications of employee status than IC status. The employer asserted control over him by requiring daily reports of his work and logs of equipment location, and dictated where he would work and work to be done at each site.
Although the taxpayer was responsible for many of his own expenses, he did not own or lease the very costly equipment essential to the work. He’d had no other employer for a number of years and had no other employers or clients during this period and the current one could terminate him at any time.

If you question whether or not an independent contract could be classified as an employee, please contact us.

Reprinted by permission by the AIPB.

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Seven Essential To-Do’s When You Get a New Customer

Wed, 20 Nov 2019 19:34:00 GMT

The following essential list of to-do’s will help ensure you not only keep your customer happy but that you KEEP them—period! Take a look; you will discover the list can apply to everyone and anyone.

A simple “thank you” goes a long way. Remember, with today’s competition, it is more important than ever to stand out. Nothing will help you stand out more than by showing appreciation to any new customers. Make sure to welcome them and thank them for choosing you/your business. This can be done in person, via card, or even email. Though, written form will likely make a lasting impression. Also, reinforce all of the benefits of choosing YOU!

If you think about it, this new customer has joined your family—let them know that! Introduce them to your staff (i.e. their new family and friends). Specifically, make sure they are acquainted with their person of contact and ensure it is a good fit by all involved parties.

During the initial meeting—orientation, if you will—give your customer all of the vital information they will need to easily navigate your business and get the most from your services. This information could include passwords to access certain areas, emails, phone numbers, a glossary of keywords, etc. If you could present this information in the form of a video, even better! Videos are much easier to understand and leave a lasting effect!

Do you have a new client kit? You should! This kit can include anything pertinent to the relationship with your new customer (i.e. relevant paperwork, files, contact information, etc.). Spice up this kit with some goodies, though! Everyone loves goodies. Make sure to properly read your customer to get a better understanding of their likes, but in general, these goodies could include candy and sweets, candles . . . You get the idea.

Whether it is Facebook, Twitter, or Instagram, almost everyone is on at least one social media platform. Connecting on social media will not only allow you to know your customer/client better but is also a great way to network with “friends” of your customer.

There will come a point when you have that first review meeting with your customer. Be sure to deliver value and explain the service you’ve performed so far. The most essential take away from this step is that your customer feels comfortable and knowledgeable. This is a perfect time to verify any information that may seem unclear or complicated; encourage questions during this meeting.

The best way to drum up more business is word of mouth. You can ask immediately or want until your relationship has blossomed and become strong. Asking for a referral or a review (or both!) is completely acceptable and a good business practice.

Incorporating these seven items into your new customer onboarding process will get your relationship off to a great start. By showing your customers they are important, you stand a better chance of securing their future business and attracting even more potential customers.

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Get Organized with This 32-Item Year-End Close Checklist

Wed, 20 Nov 2019 19:18:00 GMT

Start 2020 with a bang and this year-end checklist, and feel free to reach out if we can help with anything.

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Using Custom Fields in Your Accounting Software

Fri, 25 Oct 2019 15:26:00 GMT

Custom fields in your accounting software are data fields that you can define yourself. They are typically associated with customers, vendors, employees, and items, and they can help you store and categorize additional information about these stakeholders and your products and services in your business.

An example custom field that can be associated with customers is their anniversary date with you. You could also decide to store their birthday, their spouse’s name, their favorite color, or their shoe size.

Custom fields add functionality to your accounting system. Here are a few examples of practical uses for custom fields:

Some software allows you to choose the type of custom field you want to add. In some cases, this allows for cleaner data as the data can be limited to a certain type or certain values upon entry. Here are the most common types:

Custom fields allow you to meet your company’s unique needs over and above what the software provides by default. It’s a great way to make your data more meaningful. If you have some ideas for custom fields in your accounting software and want help setting them up, feel free to give us a call anytime.

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Protecting Client’s Credit Card Numbers

Mon, 07 Oct 2019 12:57:00 GMT

Every business that has an account with a merchant services vendor is required to follow PCI (Payment Card Industry) compliance when collecting and storing credit card data. There are many different levels of compliance depending on the technology you use to capture and store credit card data. These levels depend on whether you use a point of sale terminal, the customer hands you their card, orders are entered through an online shopping cart, or a combination.

In all cases, there are several no-no’s that you’ll want to share with your staff to make sure they are properly trained:

If you need to use credit card authorization forms in your business, you’ll need to consider the proper collection of these forms as well as the proper storage. Storing a credit card outside any system requires you to follow further PCI compliance steps.

It’s not a surprise that so many credit cards get hacked each year. It’s inconvenient to customers and vendors when their credit card gets compromised, and much of this can be prevented through proactive and safe measures. Respect your customers and help them keep their credit card data safe.

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With fake bills being mailed to businesses these days, think about controls you can put into place to reduce the risk

Mon, 30 Sep 2019 15:30:00 GMT

Avoiding Accounts Payable Errors: What to Watch Out for

When you pay a bill in your business, are you 100 percent comfortable that the bill payment is correct and justified? Is there ever a chance that that bill is fake or fraudulent? What about duplicates? With so many fake bills being mailed to businesses these days, it makes sense to think about controls you can put into place to reduce the risk that you might write a check out of your hard-earned profits that should never be written.

Accounts Payable Controls

In the accounting profession, the term “internal controls” refers to processes, procedures, and automations you can put into place to reduce errors. In accounts payable, there is a specific subset of rules and controls you can put into place to reduce risk in this area. Here are just a few ideas.

All bills should be approved by the appropriate level of staff in your business. Sometimes a bill gets approved that is fake or shouldn’t be approved, especially in areas where the approver doesn’t have technical knowledge of what they are buying. Be sure to read the fine print on the bill and make sure you know what you are paying for.

2. Segregation of duties

The person who pays the bill should be different from the person who submitted the bill. These people should be different from the one who signs the check. This reduces employee fraud.

A packing slip or other confirmation of receipt of the goods or services should be matched to the invoice, line item by line item.

A prudent step is to check an invoice’s math, at least for reasonableness.

If a vendor emails their bill as well as mails a hard copy, controls should be put in place (usually automated) to avoid duplicate payments on the same bill.

If there are a significant number of transactions between you and a vendor, an accounts payable reconciliation should be performed each month via a statement.

Most systems provide a missing check numbers report that you can use to make sure all checks are accounted for.

A bank reconciliation is a sure way to see exactly what checks cleared your bank account.

Coding each transaction to the correct expense account, inventory, asset, or cost of goods sold account is an essential part of the process.

Each month, a review of the balances in your expense accounts as well as a disbursements ledger review for reasonableness can provide added peace of mind.

Requiring purchase orders is another control you can add to your process. Purchase orders should be matched to packing slips and invoices before payment or approvals are made.

The more you get to know the numbers in your business, the greater chance you’ll have of accurate accounts payable handling.

And if you’d like to discuss your accounts payable function with us and how it can be improved, we’re happy for you to reach out any time.

The post With fake bills being mailed to businesses these days, think about controls you can put into place to reduce the risk appeared first on ProAct Bookkeeping .

Does Your Business Have a Safety Net?

Wed, 25 Sep 2019 21:46:00 GMT

Checking your cash balance is a daily function you should be on top of. Yet there is another often-overlooked responsibility that many business owners don’t spend enough time on, and that is managing your future cash, especially in light of unplanned situations. Looking ahead helps reduce your business risk and allows you more time to correct any upcoming dip in your cash balance.

Having enough cash is akin to having a safety net for your business. It can sometimes even mean the difference between staying in business and going out of business. To plan how much you might need for your safety net, you can use a few different methodologies.

One way to plan your safety net is to prepare for the worst-case scenario. How long would your cash hold out if no revenue were to come in but all expenses kept going out? Some questions you might ask:

Another way to plan your safety net is to do what the average business does: acquire the amount of cash you need for two to three months’ worth of operations and keep it on hand. Alternately, you can make a plan to liquidate that much cash on a very fast basis and only put your plan in place if it’s needed.

An easy way to get these numbers is to look at your bank statements in conjunction with your average accounts receivable and accounts payable balances. If that’s all Greek to you, no worries. Feel free to contact us and we can help you figure out a safety net number that you’ll feel comfortable with and that will keep your business risk low.

Once you have a safety net in place, you’ll gain peace of mind for your business. It’s one step in an overall disaster preparedness plan that you can make for your business.

The post Does Your Business Have a Safety Net? appeared first on ProAct Bookkeeping .

QBO Hack – How to Record a Retainer or Deposit

Wed, 14 Aug 2019 04:20:00 GMT

The post QBO Hack – How to Record a Retainer or Deposit appeared first on ProAct Bookkeeping .

Don’t Let a Dishonest Employee Take Your Money

Wed, 14 Aug 2019 04:16:00 GMT

The post Don’t Let a Dishonest Employee Take Your Money appeared first on ProAct Bookkeeping .

Do I Really Need to Keep All Those Receipts?

Wed, 14 Aug 2019 04:02:00 GMT

The post Do I Really Need to Keep All Those Receipts? appeared first on ProAct Bookkeeping .

QuickBooks Online Hack – Receiving Payments

Wed, 14 Aug 2019 01:10:00 GMT

The post QuickBooks Online Hack – Receiving Payments appeared first on ProAct Bookkeeping .

Is it Time to Hire a Bookkeeper?

Wed, 14 Aug 2019 00:45:00 GMT

The post Is it Time to Hire a Bookkeeper? appeared first on ProAct Bookkeeping .