Tuesday, October 31, 2017

Simple Accounting Terms

There are literally thousands of accounting terms, and if you are an accountant, of course you are familiar with them all. For the rest of us, there are certain things that we should be at least a little familiar with, after all, if we handle the household budget on a monthly basis we are actually doing a little accounting of our own.

An accountant is someone who is highly skilled in recording and reporting financial transactions, possibly having to report to numerous people within the company, keeping them abreast of how it is going financially and being the one who deals with the tax collection agencies and other outside forces.

An account payable is something that sounds exactly what it is. It an amount owed to a creditor for goods and/or services. In a grocery store your account payable would be the price of a dozen eggs or a loaf of bread. In an office setting it could be the amount owed for new office furniture or the rent on the building.

An account receivable on the other hand is a claim against a debtor for the uncollected amount. As an accountant, you are looking to receive this debt at some time or another, and then it will become a balanced sheet once again. If, for whatever reason this debt can never be collected, it is considered a bad debt--it is not receivable.

Which brings us to balance. What is a balance? Well, it's a basic financial statement that shows who owes what and who has paid what up to that date. The bottom line, similarly is the financial statement that shows net income or loss from one date to another.

We all want a positive cash flow. This means that we have money and we are spending less than we are making. A cash flow, by definition is the net of cash receipts and cash disbursements relating to a particular activity during a certain period whether that period be a week, a month or a year.

A bookkeeper is sometimes referred to as an accountant, and while they do some of the same things, a bookkeeper really just, well, keeps the books. That is, they record the financial transactions of a company or business. They keep note of what goes in and what comes out in the hopes of maintaining a balanced account, and sufficient cash flow at all times.

Article Source: http://EzineArticles.com/expert/Amanda_J_Hales/1311545

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Saturday, October 28, 2017

What It Takes to Be a Successful Entrepreneur

Entrepreneurs have the potential to radically improve the world and one of the most important elements of successful entrepreneurship is loving what you do. In this video, I'll share the key habits and values that make aspiring entrepreneurs more successful.

Wednesday, October 25, 2017


The warning signs of possible theft or other criminal activity aren’t always easy to spot. Sometimes there’s no forewarning. But, internal theft is different. The warning signs are almost always right in front of us – if we’re paying attention. And given that research suggests 1 in 3 employees steal if given the opportunity, employers should pay attention. Losses due to employee theft of cash and property can be staggering. Small businesses may collapse, while the profits of large businesses take a huge hit. Consider these statistics:

  • The U.S. Chamber of Commerce estimates that employee theft costs American employers more than $50 billion dollars each year.
  • In a study conducted last year by The Chubb Group of Insurance Companies, executives of 60 percent of the companies surveyed said they expected their employees to steal money or equipment.
  • Another study conducted by The Chubb Group in 2004 found that 39 percent of private companies had employees who stole company funds, equipment, or merchandise.
  • The Association of Certified Fraud Examiner’s Report in 2016 showed the frequency of fraud is at 37.7% of small businesses, compared to 20.8% of large businesses.

Background checks, reference checks, screening tools and other hiring instruments can help but shouldn’t be used entirely. Corporate fraud is one of least often prosecuted crime offenses, meaning background checks will not identify someone with prior activity. Fraud is a crime of opportunity and the number one deterrent is the fear of being caught. Awareness and insistence on regular review of your financial reports will not only help you make management decisions, but will also more than likely be the best deterrent to fraud you could hope for.

The manager-employee relationship can make the warning signs of employee theft difficult to spot. Managers who work to build trust with their employees don’t allow themselves to question what may be in front of them. The relationship clouds their judgment and the resulting denial can be a powerful blinder.

That’s why awareness is critical. Regardless of the trust you have for your employees – question what doesn’t seem right. Start with these potential signs of potential employee theft:


1. Slow or sloppy financial reporting. Proper accounting is a critically important function for a business. Don’t accept excuses for not receiving timely financial reports that make sense. Insist on receiving comparative financial reports, cash reconciliation reports, accounts receivable reports and job costing reports. Be cognizant of changes in expenses and income, particularly payroll and recurring expenses. If your accounting team can’t provide these reports in a timely manner, get them the proper training or hire someone who can. Insist on 7×24 access to your books and that backup for expenses is easy to audit.

2. Excessive Possessiveness: Bookkeepers with nothing to hide welcome involvement in financial reporting and recognize there are multiple stakeholders receiving information from accounting in order to make proper business decisions. A bookkeeper who hoards access to QuickBooks, banking, refuses to allow a backup employee access to basic accounting functions even if they are on vacation, is a yellow flag. Note, this does NOT mean passwords should be shared. However, the business owner should have access to the administrative password for QuickBooks and all banking functions, and should be able to delegate shared accounting functions with unique usernames/passwords if that delegation provides continuity and checks/balances.

3. Big-ticket purchases or significant change in employee spending habits or lifestyle. This isn’t about the employee who buys a new car after saving for a year. It’s about the employee who buys a new luxury car even though she’s always talking about barely having enough money to pay the bills and put food on the table. It’s about the guy who buys a new big screen TV even though he counts down the hours until he receives his paycheck so he can put gas in his car. This alone doesn’t mean your employee is stealing from you. The point is this: a significant change is a yellow flag. Use it to stop and think about what else is going on around you.

4. Change in work habits. Employees who make significant changes in their work habits, arriving significantly early or leaving significantly late, or always looks for ways to work independently or unsupervised, should cause you to wonder why. Excessive unexplained absences may indicate a substance abuse problem, moonlighting or guilt. Likewise, bookkeepers or inventory clerks who NEVER take absences may be completely honest and trustworthy, yet it also may signal someone who doesn’t want their work exposed to a substitute.

5. Problems with payroll, travel, and expense records. We all make mistakes. But accounting discrepancies should be tracked. Is there a question about hours worked versus hours paid? Did she lose a receipt? Did he forget to reconcile petty cash? Did she exceed the entertainment stipend with clients? Did he forget to itemize his expenses? Give your employee the benefit of the doubt the first time. But, if it happens again, pay attention. This is where small companies which don’t have specific accounting practices or well defined policies about travel and expenses, can get in trouble. Always have checks and balances in place when it comes to bill pay, account reconciliation, accounting software security.

6. Missing items. E-Bay and Craigslist didn’t gain all of their popularity due to garage clean outs. Ever wonder where those incredibly inexpensive “in the box” computer or hardware gadgets comes from?? If you thought you ordered 15 laptops, you probably did. Use Purchase Orders and inventory tracking and regular physical audits of your inventory to detect missing items. Avoid accidental pallets “falling off” the loading dock, multiple item shipments “damaged” or lost in shipping. One theft scheme involved unloading new merchandise while “throwing out” the “old” packing material in a trash bin so it could be picked up after hours. Problem was – it contained the new items.

7. Suspicious cars, especially cars parked near back doors or dumpsters. This seems like common sense, but how often do you drive around or look outside to see what’s going on in the more isolated areas of your workplace such as loading docks? It’s probably a matter of security to do so at shift’s end or at the end of the workday, but consider impromptu check-ins during the day or near the end of the workday.

8. Pattern of friends or family showing up, or family and friends who insist they only go through employee’s checkout line. Internal theft isn’t always a solo operation. Watch buddies who come in and only want to go through their friend’s line. If they came in for an innocent hello, they shouldn’t care about going through someone else’s line before chatting for a few minutes. If it’s a one-time situation, it’s probably nothing. But, if it becomes a regular thing, question what’s going on.

9. Change in voids, over rings, cash drawer over/shorts. Look for patterns. A pattern of shortages, especially in whole dollar amounts, may mean your employee is stealing directly from the drawer. A pattern of over rings may mean your employee is pocketing cash payments. In particular, be wary of any employee who tends to pile merchandise in front of the register while taking care of customers. The blocked register view gives an employee the opportunity to ring up less than charged or to over ring something secretively and pocket the difference.

10. Lack of Checks and Balances: Ultimately, fraud can happen by unauthorized use of the company’s cash and/or diverting receipts from clients that are due to the company. The vast majority of fraud occurs because the opportunity is there and they feel they won’t get caught. A business owner should review their procedures for documenting and controlling all cash outflows – payroll, checks, credit cards, wire transfers, bill payments and or manipulation of billing invoices. Most small businesses cannot afford an accounting team with properly designed checks and balances but being a victim is even more costly. Consider hiring a third party to review and close books on a regular basis that will help validate the financial reports, and act as another set of eyes on your accounting team.

Sunday, October 22, 2017

Five Reasons Why Businesses Should Hire Accountants

For many small-business owners, taxes are a point of stress. Changing guidelines and regulations can make the process of filing a difficult process for small-business owners, but hiring an experienced team of accountants can take the worry and stress out of tax season. Here are a few signs it's time to hire an accountant.

The Business Is Growing

All owners strive to have a growing business, but this can spell confusion come tax time. As revenue increases, tax liability increases. However, the number of deductions the business may qualify for can increase as well. An experienced team of accountants can help determine which deductions will benefit the business and make recommendations for future deductions based on the projected growth of the company.

Managers Are Too Busy for Bookkeeping

The path towards proper tax preparation depends upon accurate bookkeeping. If the enterprise is too busy or growing rapidly, an accountant can help with bookkeeping. The right firm will be able to keep track of the books so the managers and owners can devote their time to growing their client base. The more time they can spend on operations and management, the better the company can function.

Profits Aren't Increasing Along with Revenue

An increase in revenue does not automatically mean an increase in profits. Accountants do more than handle tax preparation-they examine overhead costs and look for areas of improvement. If they see a particular expense that can be eliminated or reduced, they'll advise the company.

Demanding Investors

Investors place their money in a company if they believe it will be successful, but their support is often contingent on a degree of involvement. Many investors expect the owner to provide them with professionally prepared financial statements. These statements should give the investors an idea of the company's performance, the way their contributions have impacted the business and if they can expect any returns on their investment. Unless the owner or management team is familiar with preparing these statements, the process can take a while.

The Government Requests an Audit

Audits strike fear in the hearts of many taxpayers, and when individuals are unprepared for them, it can seem like the most daunting part of being a business owner. A team of financial professionals who are familiar with the audit process can help companies navigate the process, reducing the stress associated with government audits. Best of all, they understand the tax code and will work to make sure the audit is done correctly.

When companies are starting out, they may struggle to keep up with the financial expectations required by the government. For financial professionals, the goal is to help the business be as successful as possible by reducing the strain and stress associated with bookkeeping, taxes and financial records. Owners should be able to focus on running and growing their client base, not on keeping track of expenses and overhead costs. A dedicated team of financial professionals will help operations of any size continue to grow and thrive.

Article Source: http://EzineArticles.com/expert/Andrew_Stratton/83489

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Thursday, October 19, 2017

How to Reconcile Your Accounts in QuickBooks

Whether you connect your bank accounts or do it the old fashioned way, here's how you reconcile an account in QuickBooks.

Monday, October 16, 2017

Bookkeeping Services - Let a Professional Handle Your Accounts

Many use bookkeeping services, especially if they have companies or organizations. Before using this sort of company, make sure it is reputable and follows all rules and guidelines.

Those who have bookkeeping companies help record the value, assets, liabilities, income and expenses in a ledger or journal. The individual will post entries debit and credit entries chronologically in the journal. Those who have companies or organizations usually need bookkeepers. Others decide to use individual or family bookkeepers to track the income and expenses of the family using a register.

Before, these professionals did their services using a paper and pen but now there is advance software which can help with bookkeeping. Many people either use a single entry or double entry system. A single entry system uses information found in the income and expense account while a double entry system forces the individual to post the entry twice as either a debit or a credit. An accountant on the other hand prepares the income state and balance sheet using information prepared by a bookkeeper.

There are also online booking companies, which have become very popular recently. Online bookkeeping allows your information to be kept and tabulated on the web. This will allow you to choose a bookkeeping company that does not necessarily live in your immediate area but somewhere else, as long as they have access to your paperwork and receipts regularly.

If you are a company who has a lot of mobile employees, they can scan and send receipts to the remote place and get reimbursed quickly. Also you if you have more than one office, online booking can be ideal. Most entries made are recorded and stored remotely and you can access the software anywhere in the world and check all of your entries.

If you decide to use bookkeeping services, ask your friends, professional peers or relatives if they have any recommendations. Before hiring anyone, make sure they have years of experience in the field and can provide you with references which you can call. Rates for bookkeepers can vary depending on the experience of the individual, the location of the business and the software used so make sure you use someone who is in your price range.

If you use an outside company to handle your accounts, you may save money in the end. If you are a small business, you do not need full time employees who handle your journals which mean you can save on payroll as well as overhead costs, which can free up your schedule and allow you to focus on important things instead of bookkeeping problems. You can allow professionals to handle your needs who can produce desired results efficiently and effectively.

If you choose to hire a company who specializes in bookkeeping, make sure you investigate them thoroughly to make sure they can meet your goals and expectations. Ultimately a good bookkeeping company can handle all of your bookkeeping needs and allow you time to focus on developing and running your business.

Article Source: http://EzineArticles.com/expert/Andrew_Stratton/83489

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Friday, October 13, 2017

10 Inspiring Quotes to Help You Get Through Your Day

Re-energize your day or week with these inspiring quotes from some of the world's greatest thinkers.

Tuesday, October 10, 2017

22 Tips to Prevent Bookkeeping Fraud

Maintaining a QuickBooks data file alone cannot eliminate bookkeeping fraud and embezzlement, but when its security features are used properly in conjunction with good business practices, the combination can make theft significantly more difficult and less tempting in a difficult economic environment. Prevent bookkeeping fraud and use these 22 best practices for eliminating, deterring and detecting company theft.

1. Use double entry accounting for all client receivables.
Make sure all client payments are made against invoices. Ensure the business owner or only trusted advisors have access to handling client payments or they go to a secure location and immediately deposited. Large organizations almost always require payment remittance to a secure post office instead of getting mixed with general company mail. Closely examine aging reports, maintain client contact to ensure payments have not been remitted but not credited against their account.

2. Perform Bank Reconciliations Once a Month for Each Bank and Credit Card Account.
ALWAYS use a different individual for posting payments and receivables than the person who is responsible for catching discrepancies through reconciliations. Likewise, responsibility for reconciling the credit card should lie with a person without authority to utilize the credit card. Promptly review any bank reconciliation discrepancies with the business owner(s). In particular, manually calculate “merchant fees” on credit card deposits to ensure that withdrawals batched with the credit card deposits are reasonable merchant fees and are not hidden refunds to a third party not recorded on the books.

3. Implement an Expense and Reimbursement Policy.
All credit cards should be directly billed to the employee rather than to the company. Design expense reports for each employee to turn in with original receipts with the proper coding. The policy for expenses should set a per diem limit to control the amount of cash being spent. An expense policy enables all employees and officers to know which expenses are eligible for reimbursement. Employees are subject to greater accountability for spending when they become responsible for writing the checks themselves to pay their credit card balance.

4. Limit Manual Checks.
Manual checks should be removed from the process as much as possible. Ensure bookkeepers with check creation capability do not have the ability to delete checks from the register and cannot print checks without saving them. Ensure the commercial bank account does not permit CASH debit cards or cash withdrawal and does not permit cash back on deposits. Blank checks should be kept in a secure location.

  • Missing Checks. At regular intervals, use QuickBooks reports to help review the clients’ exposure.
  • Voided/Deleted Transactions. For attempted tampering, more recent versions of QuickBooks software provide another protection. Now if someone prints a check from QuickBooks, it forces the transaction to be saved before being printed. Therefore, if a check is deleted from the system after it has been issued, it can still be found under the Reports menu, Accountant & Taxes, Voided/Deleted Transactions Report.
5. Create a Credit Card Account to Track Business Expenses.
In QuickBooks, create a Credit Card Liability type account in the Chart of Accounts for each business credit card. This will allow you to utilize Online Banking and download transactions on a daily basis to monitor the charges that are being made on the company’s behalf or uncover any potentially unauthorized transactions.

6. Ensure the Undeposited Funds Account Is Cleared; Move from Use of Clearing Accounts.
The Undeposited Funds account in QuickBooks should always be cleared to a Bank Account. You should review this account to ensure that the funds are being deposited into real corporate accounts rather than fake accounts in QuickBooks. Additionally clearing accounts can be another way to make it harder to trace transaction flows in QuickBooks.

7. Review Outstanding Checks and Deposits That Have Not Cleared the Bank and Are Aging.
Typically transactions clear a bank within 2-3 days. Aged outstanding checks or deposits should be reviewed to make sure that they are not duplicate transactions, errors or way to hide fraudulent activity such as deposits that are not real.

8. Utilize Online Banking to Match Expenses and Deposits Real-Time.
With the Online Banking feature, you can download transactions on a daily basis to stay on top of what has cleared the bank. The person cutting checks or making deposits should not be the person with access to Online Banking. Related duties can also be segregated among employees, so that one staff member enters Vendor Bills and another staff person uploads the Bills through Online Banking for payment.

9. Review Accounts Receivable Reports and Be Sure Customer Records Are Complete.
Customer collections are key to verifying that Sales recorded in QuickBooks are accurate. If collection calls are not made and the customer records are incomplete, there is no verification that the sale really occurred. Similarly, monitor the agency or person who’s duty it is to collect bad debt and implement checks and balances to ensure that debt that was previously written off was not collected later on behalf of the company and never received in the register.

10. Calculate Sales Commission on Cash Received, Not Accounts Receivable.
To help ensure that sales numbers are accurate and not inflated, commissions can be based on cash collected on Sales rather than open invoices. Sales Reps can be created in QuickBooks to track their sales and what has been collected. As an added benefit, this approach incentivizes the sales staff to help with collections.

11. Limit Permissions for People Entering the Bills So They Cannot Also Cut Checks.
Ensure that employees that are entering the bills are not the same people authorized to issue and sign checks for the company.

12. Use Purchase Orders for Inventory.
A company’s purchasing department should utilize Purchase Orders in QuickBooks to show that products or services requested are approved and quantities accurately reflect the individual price paid and number of items received. Physically account for inventory and ensure that one person is responsible for physically opening and counting inventory received, and that the Packing List matches the physical count and matches the Purchase Order and matches the vendor’s invoice.

13. Implement a Physical Inventory Count Periodically.
By performing a physical inventory, your client can stay on top of their inventory asset values to ensure inventory has not been stolen or is missing. Two people should do the inventory count together, if it is not done by the owner. Implement physical security and a “check out” procedure utilizing a bar code scanner or other secure method of tracking inventory assignments to locate missing inventory.

14. Ensure Vendor Records are Complete and W9’s Are Requested from All Vendors before Payments Are Issued.
Make sure to always request a W9 from a vendor before payment is issued. The information from the W9 will be entered into the Vendor record in QuickBooks in the Vendor Center. One person should be in charge of setting up vendors and a different person assigned to enter vendor bills. Ensuring you have a W9 on file is a great way to prevent “fake vendors” from being created.

15. Have Sign-off Approval before Checks Are Issued to Vendors.
Before vendor checks are printed or sent to Online Banking for payment, management should approve and sign off and authorize which bills are to be paid.

16. Eliminate or Track and Reconcile Petty Cash.
Petty cash can be set up as a Bank type account in the Chart of Accounts. This will enable it to have its own register like any other bank account. Expenses then are properly tracked and recorded, and transfers between the Bank account to Petty Cash are monitored.

17. Set User Permissions to Limit Access According to Job Description.
Under the Company menu, choose Set up Users and Passwords, Set up Users. The User Permission levels are very different depending on whether your client is on QuickBooks Pro/Premier versus Enterprise. No matter which version you are using, you should ensure that the permissions match a documented job description. Secure passwords should be set up for each user in the QuickBooks file.

18. Don’t Share Passwords!
Many clients share passwords, especially when they don’t set up users for each staff person or need Administrator access to make changes in QuickBooks, thereby losing control of permission security and audit trails of who has made which changes. Try your best to prohibit your clients from sharing their password, keeping it on a visible post it note, or giving out in any other way. It is recommended that only the Owner or someone in upper Management controls the Administrator password to make changes requested from QuickBooks users.

19. Set a Closing Date and Password.
Under the Company menu, choose Set Closing Date. Then choose the Set Closing Date button on the Accounting Preferences screen. After month-end procedures are completed, set a Closing Date and Secure Password so that other users in the QuickBooks file cannot modify the financial data.

20. Watch for Dates Being Changed on Transactions.
If someone has access to the Closing Date Password or the Password was not set, utilize the Closing Date Exception Report, found under the Reports menu, Accountant & Taxes. This report will help you track if any transactions had any changes such as date, amount, coding, etc. since a prior period was closed.

21. Utilize the Audit Trail Report.
Under the Reports menu,Accountant & Taxes, choose Audit Trail. This report will give you insight into anything that has been changed or modified. This report helps if you find a problem or have a concern about the accuracy of data entry. Additionally, it will let you know which user of the file made the change and when.

22. Perform a Physical Count of Fixed Assets at Least Once a Year.

The Fixed Assets of a company are often ignored. As a result, these important assets can sometimes “walk” and be expensive to replace. Utilize the Fixed Asset Item List to track the Fixed Assets of the company and keep a detailed sub-ledger.

These 22 tips will help you prevent fraudulent transactions, identify and prevent company theft, and help to ensure accurate and honest bookkeeping. If you would like help implementing these tips or would like a fraud prevention and bookkeeping consultation, visit our contact page or call us at (410) 715-3657.

Saturday, October 7, 2017

How to Enter Products and Services in QuickBooks

Need to enter information about your products or services into QuickBooks? Here's how to add it, or import it from an Excel spreadsheet.

Wednesday, October 4, 2017

3 Tips to Become a Better Leader

Entrepreneur Network partner Patrick Bet-David provides tips on how to become a better leader.

Sunday, October 1, 2017

Free Bookkeeping Consultation

Meet With A Certified QuickBooks ProAdvisor

Take control of your company’s financials and set up an appointment for a free bookkeeping consultation and customized quote.

  • Meet with a certified ProAdvisor.
  • Discuss your bookkeeping needs, goals & budget.
  • Recieve a customized bookkeeping proposal and quote.
  • Absolutely no obligation and nothing to lose!

If you are serious about reducing the hassle of bookkeeping and freeing up your time & money, contact us today!