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Around this time, every year, I spot trends among my small business clients. Of course, there are those who are always late to the tax party. This year I'm seeing something a little different and I think it's being driven by the SAS (service as software) trend in accounting.

Bookkeeping is automatic! 

 I get it, bank downloads, data just falling into place. I see the TV ads and all of the new bookkeeping cloud-based software. It looks awesomely easy, and really, compared to what was only a few years ago, it is. What it is not, is bookkeeping.

If it were as easy at that, we'd all still be using Excel workbooks to track our financial data. But we don't, and the reason is that it's really hard to find mistakes. So now we have wonderfully user friendly accounting software out there at a great price. However, if you don't know where the "pieces" go, you've got a bowl of number soup.

Will accounting ever be completely automated? Probably not. Why? Because sometimes when you go to the pub, you've there to have a beer alone and sometimes you're taking out a client. You're the only one who knows (or perhaps your assistant). Those are the details that create an accurate picture of your company from an accounting perspective. Without it, it's digital goulash.

On the Way Out

2016 may be days away from its last gasp but for accounting professionals, we're just about to start our deep dig and clean up of the outgoing year. Even if you're stressed about not having your act together in 2016, it's not too late. Bookkeepers like myself have the month of January to get 2016 tidy and together for CPA's and Enrolled Agents to file taxes.

Take a deep breath and give a bookkeeper a call and look forward to facing 2017 a little more organized. You can do it, let me help!

And What Did Your Accountant Say?

Chances are, you came away from your tax preparation meeting with your enrolled agent or CPA with an accounting "to do" list. Some of the items on your list might be:

• Categorize reimbursable and reimbursed expenses.
• Separate meals when you're traveling from client entertainment meals.
• Track loans to and from LLC members.
• Do an inventory count
• Create "classes" to track different kinds of clients

Getting the detail you missed in the previous year is one of the best changes you can make in your accounting system. The thing is though, it's the fourth month into the year already! Unless you've already locked in your first quarter financials, you can still make some changes before you close Q1 2015.

You probably don't need to toss out your entire bookkeeping system, even if it may seem pretty flawed right now. If your accountant gave you journal entries to make, do those right away. That should get your basic balances in order.

Some easy clean-up tasks include making old vendors and customers inactive so you don't have to scroll through them when you're searching. While you're at it, do the same thing for any service items you might not be using or any accounts in your chart of accounts.

Do some Spring cleaning now and run some monthly financial reports to find errors before they become bigger messes. You'll be happy you did when April 2016 rolls around.
 

The Year is Ending...Again

For those with a fiscal year end of December 31, it's the time to start thinking about what you need to take care of before you ring in the new year. Here are some basic steps to get you going:

• Make sure that you have all your bills entered into Payables and you're in agreement with the vendor statements you get. It's important to know on December 31st what you have paid for in advance (like half of a cell phone bill) and what you still owe.

• Get your Receivables in order too. Print statements and get them out to your clients as soon as possible so that they know what they owe as well. It's much easier to get the time to compare notes before everyone is on holiday vacation.

• Do you need to spend down some cash on new equipment before the year's end?

• Do you have any trust accounts (tenant deposits or deposits on your services)? Now's the time to make sure your totals are where they should be.

• Do you want to move to a new accounting system or do you want to create a new company file in your current accounting system. Now is the time to explore and plan for that.

Any in-depth questions, feel free to contact me. Happy Thanksgiving everyone!

Taking Inventory

I rarely come up against more differing opinions regarding accounting practices than when I talk about inventory.

Just yesterday I met with a prospective client who purchases parts which are drop-shipped and assembled at a manufacturer. Not a crazy idea. A smart financial choice it would seem. If I were to look at the books for this company, though I wouldn't actually see any of this activity. Why? All the inventory related activity is done outside of Quickbooks.

To use an ERM system or any kind of a external database for working with your inventory may be a sound decision for some businesses. Nevertheless, one should be able to look at your Profit and Loss Balance Sheet and see where your inventory assets are at any moment in time. Are they in transit to your warehouse? Are they paid for in advance but won't ship for two months? You may be able to tell me the answer to these questions by looking at your external database. What happens though if 3 years from now you are looking for financing or a buyer is doing due diligence. They want to see the past 5 years of activity. How much money did you have tied up in inventory at any one point? Pretty much any of the information they are going to be looking for is not going to be showing up in your financial reports.

The main reason companies can end up in this bind is because they build a system that is operation oriented instead of financially oriented. It is in fact possible to build a system that satisfies both needs but only if an accounting professional is part of conversation from the start. I've spent a lot of time trying to pull financial information out of a database that was built to track customer activity or shipping of inventory. It's all well and good that the folks on the operations side of things get to keep doing things in a way that makes sense to them, but at what cost?

Quickbooks is a very robust software. Add on some apps, some software designed to integrate like Salesforce or Wasp Inventory and it's stellar. It's simply not necessary to give up accurate financial reporting to gain operating ease. When operations and accounting are talking, it's a beautiful thing.

Drop by again as I further unravel some of the issues that concern today's small business. Thanks for reading and feel free to email me with any topics you'd like covered in future posts.

Sunday-Sun-Day-Blog-Day

Just taking a moment to drop in and say hi to all of my small biz friends.

The economy is looking up just the tiniest bit but what I hear people talking about is still:
Cash Flow
Downsizing or Stabilizing
New Markets

The post-holiday slump can be challenging for any small business. Hang in, keep networking and remember to take care of yourself as well as your business. In the small biz world, if you don't take care of both equally, watch out! No room for a tired owner or business.

As always, I'd love suggestions for blog posts. Suggest away...

Special Help for Creative Folks and Others

That title is a bit tongue in cheek, but it is true. There's often something like the fear of a dentist when it comes to dealing with numbers for some folks. Especially the "right brained" ones.

Being creative or operating a bit on the "fringe" or out the the box doesn't mean that your financial life needs to be disorganized. Bookkeeping isn't that scarey. it's about organizing information more than math. Today's bookkeeping software does most of the math. You just need a little help in learning the way things need to fit together to file your taxes and see where your money is going.

I seem to have (nearly) infinite patience for wading through your paperwork and holding your hand through getting your year end stuff in order. I'm happy that I can provide that service to those who find it intimidating or frustrating.

Don't wait any longer! I'm here to help.