by Joyce M. Washington, CPA
Q: I have a client who has asked me to help him prepare financial statements. In looking at his books, they are completely a shambles. He has 7 (!) checking accounts, and not one of them can I reconcile in Quickbooks because it appears deposits were randomly recorded, or not recorded, checks were recorded with incorrect check numbers or not recorded, transfers were not recorded, etc. Soooo….. my thought, since they’ve been in QB for only 7 months, I might start from scratch and just record everything fresh. My question is, is there any way I can do this while they’re still working in QB? This job will take me a few weeks to complete, and I don’t want to tie their hands while I’m working on straightening out their financials.
A: Before I respond, I have a question for you: will this be an ongoing client where you will review their file and prepare financial statements on a monthly or quarterly basis going forward? The answer to this seemingly benign question will dictate part of how you move forward and the type of engagement you have.
In my opinion a few things need to happen.
First: train whomever is doing their data entry so that it is done correctly going forward. If they are not trained adequately, you will find yourself in the same boat in a few months. The only difference is you will have the added pressure of getting it done quickly because the client will need the year-end statements done for tax time.
Second: decide if anything in their file is salvageable. Was anything set up correctly (vendors, clients, COA)? Can you make heads or tails of any of the transactions? If not, you may need to throw in the towel and start afresh.
Third: the client can work in the file while you review historic information. If you are setting up the new file, set it up, create an accountant’s copy for yourself and send them a copy, make sure the dividing date is one where they can still work and input transactions. Keep in mind there are a few limitations for you (mostly payroll related). I’m not sure if that will create a real problem for you or not since you didnt’ mention if he had payroll transactions for you to reconcile.
Fourth: is there any reason they have SEVEN bank accounts??? If they don’t have a ready explanation, you may want to advise them to cut back on that. Even if they are all free business checking accounts, it’s costing them time & money in the long run. Trying to keep them all straight is obviously creating a problem for their staff person handling the input of deposits and processing checks and may be the source of a lot of the reconciliation/messiness of the client file.
Hope this helps,
Joyce
Post asked & answered on Quickbooks Forum
by Joyce M. Washington, CPA
Q: We have a software division that charges people monthly on subscription plans. It’s all done automatically. What’s the FASTEST way for me to manage this? I don’t really want to manually enter thousands of monthly charges into QuickBooks every month, but at the end of the year, my accountant will want detailed records. any suggestions?
We’re using authorize.net and cybersource. I can look into importing them. I can import them from the bank, but that seems to a big pain too, as QuickBooks asks me to do each one individually pretty much.
A: Look into what your choices are available regarding the various formats that you can download the information from authorize.net & cybersource. A lot of companies offer a way to export your transactions in a way that’s ready to import them directly into your QB file. It may take some effort on your part to set it up correctly on the front end but will be well worth it not to post transactions one at a time.
I use another payroll provider that allows me to do exactly what I’ve described to import the information with no problem.
If you have additional questions regarding setup, I really think you should seek the advice of your accountant. If they aren’t available or versed in this kind of set up, shoot me an email. (remind me of our forum discussion)… I’d be happy to help.
Good luck! ~Joyce
originally asked & answered on QuickBooks Forum
by Joyce M. Washington, CPA
Q: I have started a small business. How do I report (tax purposes) payments to me as the owner? Is that considered income for self-employment or is the net profit from the business used for self-employment taxes?
A: For tax purposes, if you are a sole proprietor, the net profit of the business is used to figure out your self – employment taxes. Other types of organizations have different rules, but most use the amount actually paid to you to figure self-employment tax upon. This can vary from one geographic area to another.
However, no matter what business structure you have, corporation, LLC, partnership, or sole proprietorship, you should accurately track amounts that the business pays directly to you or to others for your personal items as these are paid out. Create an equity type account, use your name & the word “draws” as the account name (example: “Joyce Washington – Draws”), record these payments in this account.
In the long run, it helps to keep better track of how your business is performing if you input the payments as they are paid. Then when it comes time to figuring out your self-employment tax, you will have everything you need to determine the tax amount in one easy location.
by Joyce M. Washington, CPA
Exporting a list of Donors and their addresses
Q: I have QB Pro 07. I am trying to find an efficient way to create a report or list that includes donors AND their addresses to export for a mail merge for a donor letter.
The main problem that I can see is that when I “modify report” in my donor report, I do not have the option of adding address columns as I can in a customer contact list. However, in a customer contact list I cannot find the filters that I need, such as “amount” and “item.”
A: Based on my assumption that you are using customers for donors, export your customer list with addresses. To do this go to chose:
- FILE-> UTILITIES -> EXPORT -> ADDRESSES TO TEXT FILE.
- In the dialogue box, select the category of names you want to export, click OK.
- In the “Save Address Date File” dialog box, select a folder & type the filename, click SAVE
FYI, your file will have a “.txt” extension. You should be able to utilize this list for the mail merge in Word or whatever word processing software you use.
Hope this helps.
by Joyce M. Washington, CPA
I have a similar blog post in December, 2008. Enjoy ~ Joyce
Excerpt: Throughout the 2008-2009 recession we have seen a rash of articles about why it’s a good time to start a business. Sometimes I feel those articles are more a matter of the writer trying to convince himself or herself that it’s a good time to start a business, than convince anyone else! After all, some people lose their jobs and then become unwilling entrepreneurs.
Still, it’s true that a recession can be a rare opportunity to start a business. One reason: competitors (especially large corporations) are distracted by their own market challenges.
That can be good for you if you are thinking of starting — or expanding — your business. It means others in the marketplace are not minding the store. It could provide just enough of an opening in the market to get a toehold to scale new heights.
If you’d like to read more – Another Reason Recessions are a Good Time to Start a Business
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by Joyce M. Washington, CPA
Before you make any phone calls, take some time to do some self-reflection. Reflect on your business and how it currently functions, what you do well and what you can do better. Then ask yourself, what functions do you want to outsource? can outsourcing help you perform some things better? and what is your budget?
Interview a few outsourcing providers just like you would if you were hiring an in-house staff person. Like choosing an in-house bookkeeper, accountant or payroll processor, ask “interview” questions. Here are
10 Questions you should ask. In addition, ask yourself if the provider’s style and available services coincide with your business’ philosophy and style. If not, you may be attempting to force a square peg into a round hole and what may have been a less expensive alternative in the beginning, may end up being a costly experiment. So choose wisely.
Quick Recap: decide to outsource; do some self-reflection on your business needs; interview a few providers (at least 2) and make a decision who your provider will be. Remember cheaper doesn’t always equal better.
Congratulations on deciding to outsource. That decision in and of itself is HUGE so give you’re some kudos for admitting that although you are a small business/solo practitioner, you can’t do it all. Believe me, as a small business owner, I can relate…
Hope this helps!
Joyce
PS. Please, keep in mind that just because you are outsourcing, you should never abdicate management…you should always keep “an eye on the store.” Your provider has a responsibility to you as a client and should take that responsibility seriously.
