Have You Been Stung By Your Bookkeeper Ii


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Learn how to check your books to make sure they are being done correctly.

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Have You Been Stung By Your Bookkeeper Ii

  1. 1. Know YourNumbers –Know YourBusiness
  2. 2. Strong words with a powerful message If you are not an accounting professional, how do you know if your bookkeeper is providing your company with the level of expertise you desire and require?
  3. 3. CONTENTS Chapter 1 Introduction• Taking Control• Managerial Accounting – What is it? Chapter 2 The Truths About Intelligent Bookkeeping•TRUTH #1 – It Takes Nectar to Make Honey•TRUTH #2 – Turning a Swarm into a Hive•TRUTH #3 – Harvesting Your Honey into Money Chapter 3 Know How to Put This Information to Work for You•Evaluate the Effectiveness of your Financial Reports• Look for Upside Down Balance on Your Balance Sheet• Look at your Bank Reconciliation Report• Review Accounts Payable and Accounts Receivable Reporting• Checking Payroll Activity Chapter 4 About Us• Our Unique Approach to Bookkeeping • Small Business Financial Officer – SBFO • Senior Accountant • BizKeeper •About Us
  4. 4. Accuracy Partnered with Checks and Balances --------------------------------------------------------------------- ---------------------------- Out Garbage In – Garbage As --------------------------------------------------------------------- a business owner, your company is hired because you offer expertise and knowledge about a particular service or provide a valuable ---------------------------- product. You are professionals in our particular line of work. There is often the expectation that everyone else offering their expertise for hire is also a professional and therefore, knows what they are doing. They ---------------------------------------------------------------------  GOOD NEWS may believe they do, however, tax laws, state laws and local regulations are changing constantly, and not every bookkeeper stays ---------------------------- up with those changes or understand them. Since there are almost no As a business owner there are measures you can take educational requirements to be a bookkeeper, a business owner needs  to --------------------------------------------------------------------- to avoid costly bookkeeping be able to hire the right bookkeeper and monitor their work. errors. As ---------------------------- may not be your strong point, but a business owner, accounting know WHAT YOU EXPECT AT THE BOTTOM LINE. Often small business  You are in control --------------------------------------------------------------------- owners choose an inexpensive bookkeeper to save short-term costs. However, the long-term costs appears when a CPA tells the business owner they need to clean up their accounting records so they can ---------------------------- prepare your tax return? They are going to charge the business owner their rate to fix work the owner has already paid for---making an --------------------------------------------------------------------- inexpensive bookkeeper not such a bargain. ----------------------------
  5. 5. Taking Control ----------------------------------------------------------------- Okay, What’s Up with the Bee Thing— -------------------------------- logo, you will see us use BEE You may be wondering why the BEE ANALOGIES throughout this book. The word APIS is the Latin word for ----------------------------------------------------------------- ―honeybee.‖ We use the comparisons to bees, honey, nectar and hives, etc. Because bees have got a great business model. Just think about it, they are organized, store assets for the future, have contingency plans, -------------------------------- constantly monitor their inventory, adapt to their environment and everyone in the company knows their job and how they contribute to the ----------------------------------------------------------------- overall success of the organization. They do naturally what great businesses work hard to achieve and maintain. If more companies had similar business models, more companies would realize their goals andIf accounting and bookkeeping isn’t your -------------------------------- dreams. The second part of our name is BUSINESS SOLUTIONS. We positionforte, don’t worry—it’s ours. The Apis ourselves as a proactive financial advocate for our clients. As solutioncolony of Small Business FinancialOfficers (SBFO®) teamed with busy ----------------------------------------------------------------- experts we not only provide accounting and bookkeeping solutions, we also align ourselves with various highly qualified business supportBizKeepers knows how important your providers, i.e. IT, tax preparation, marketing, sales, insurance, andbusiness is to you and how important your -------------------------------- financial planners just to name a few. We understand running abooks are to your business. Whether successful business requires a variety of skills and talents, some of whichyou’re doing your booksyourself, outsourcing with a bookkeeper ----------------------------------------------------------------- are better outsourced with proven professionals in their respective fields.or looking to do so in the future—we wantto make sure that your business is gettingwhat it needs from your books so you can -----------------get what you need from your business.
  6. 6. High Quality Accounting and Bookkeeping Professionals Offer a Service Essential to Every Business?YWhy Is It Important? Good business records make Your business records you look good to the bank. HEADLINE are an important key to Good business records allow your success. They tell you to accurately target you if your current immediate returns on activities are profitable. investments as well as identify They tell you how much excessive spending. money you have tied up with customers who have not paid yet. They enable you to get all You Can Utilize Your Financial tax deductions possible. Records Optimally by: You can utilize your financial records optimally by:  Having Accurate Data An Accounting and  Organizing Your Data Informatively into Managerial Bookkeeping Professional Reports Does All This and More...  Analyzing the Information and Strategizing
  7. 7. Managerial Accounting vs. Financial Accounting ----------------------------------------------------------------- Financial Accounting - ------------------------- Produces annual reports mainly for external stakeholders. ----------------------------------------------------------------- Managerial Accounting -------------------------------- The process of preparing management reports and accounts that provide accurate and timely financial ----------------------------------------------------------------- and statistical information required the business owners -------------------------------- day-to-day and short-term and management to make decisions. A Professional Bookkeeper Can ----------------------------------------------------------------- Help You Do Managerial Management accounting generates monthly or Accounting -------------------------------- weekly reports for the organization’s internal audience. These reports typically show the amount of cash, sales  “Make Strategic Decisions ----------------------------------------------------------------- revenue generated, amount of orders in hand, state of Based on Fact Not Hope.” accounts payable, outstanding debts, raw material -------------------------------- and inventory with trend charts, variance analysis and other statistics. -----------------------------------------------------------------
  8. 8. CONTENTS Chapter 1 Introduction•Taking Control•Managerial Accounting – What is it? Chapter 2 The Truths About Intelligent Bookkeeping•TRUTH #1 – It Takes Nectar to Make Honey•TRUTH #2 – Turning a Swarm into a Hive•TRUTH #3 – Harvesting Your Honey into Money Chapter 3 Know How to Put This Information to Work for You• Evaluate the Effectiveness of your Financial Reports• Look for Upside Down Balance on Your Balance Sheet• Look at your Bank Reconciliation Report• Review Accounts Payable and Accounts Receivable Reporting• Checking Payroll Activity Chapter 4 About Us• Our Unique Approach to Bookkeeping • Small Business Financial Officer – SBFO • Senior Accountant • BizKeeper • About Us
  9. 9. The Truths About Intelligent Bookkeeping The following information outlines three essential truths about accounting and bookkeeping as a management tool.
  10. 10. Truth #1 – It Takes Nectar to Make HoneyYou want your financialrecords to give youmeaningful reporting Mistakes can be costly—look at the The Truth is... following examples:capabilities. You want toaccurately target When you data isimmediate returns on Example One - complete, accurate andinvestments. You want toidentify excessive  Inaccurate or misclassified data may properly classified, costlyspending. require your CPA to clean up your mistakes like those above do accounting records—at their rates— before preparing your taxes. Accurate not happen. Knowing yourAccurate and complete and properly classified data entry gives bookkeeper is providing youdata entry is absolutely your tax preparer the tools needed to with reliable data allows you toessential to the success of maximize tax deductions and saves youyour business. money on the cost of tax preparation turn your focus to organizing the information into reporting Example Two - that will take you from spending  Incomplete and inaccurate data entry your money to managing your is misleading when pricing products and money. services allowing for decreased overall profits. Complete and accurate data entry provides you with the informationWithout nectar there is no you need to correctly price your productshoney—Without and services to cover direct and indirectcomplete, accurate andproperly classified data there is costs and make a profit.not reliable financialinformation for your company.
  11. 11. TRUTH #2- It Takes Organization to Turn a Nest into a Hive -------------------------------------------------------------- Do Your Books Accurately Represent Your Company? ----------------------------------------------------------------- 1. Are you charging enough to produce and deliver your product and services? -------------------------------- Solution: Define and group the cost of goods sold accounts on -------------------------------------------clearly and easily your Profit and Loss Statement so you can identify all related costs. ----------------------------------------------------------------- 2. Are you considering all business expenses when calculating your bottom line?Bees naturally group into nests giving them -------------------------------- Solution: Define and group general expenses of doing businessa place to bring nectar to process intohoney, similar to the way any ----------------------------------------------------------------- on your Profit and Loss Statement so you know what factor tobookkeeping system provides a business use when calculating the cost of overhead in your pricing.with a path to enter and store data in orderto turn it into useful information. A hive is -------------------------------- 3. Are you proactive and tax planning or reactive and taxwhat we call a honeybee community paying?when it is being managed by beekeepers. -----------------------------------------------------------------The hive is organized to facilitate Solution: Know which deductions you qualify for and have yourextracting honey without harming or --------------------------------reporting for your tax professional bookkeeper prepare detailed pointing them to the information they need to capture them.disrupting the bees. This is our approach toBizKeeping—we organize bookkeepingsystems in order to facilitate extractingfinancial information from your business sothat your business can perform optimally.
  12. 12. More Questions About Your Records... 4. Do you know how your company is performing overall and comparatively to your industry? Solution: Rely on comprehensive financial reporting that addresses your key indicators. ------------------------------------------------------------------------------------------------- Does your financial reporting support your current and financial goals? ------------------------------------------------------------------------------------------------- 5. Are you comparing your actual financial activity to your budget? ------------------------------------------------------------------------------------------------- Solution: Utilize budget to actual reporting features within your accounting software to track 6. Are you planning for growth? ------------------------------------------------------------------------------------------------- Solution: Having consistent reporting allows you to plan for growth. Define your growth strategies using your ------------------------------------------------------------------------------------------------- historical data to help you analyze what has happened so you can plan for what needs to happen. 7. Are your financial records accurately positioning you for a future valuation and sale of your ------------------------------------------------- company? Solution: Clearly identify discretionary spending within your chart of accounts so a prospective buyer can easily see the earnings capacity of your company. The Truth is... When your data is organized into informative reports you will know the answers to these questions. Knowing your bookkeeper understands your business and your goals well enough to produce meaningful financial reports allows you to go one step further into strategizing for growth, increasing profits and building your financial future.
  13. 13. Truth #3 – It Takes a Watchful Eye to Turn Your Honey into Money Reports You Need to See At Least on a Monthly Basis Profit and Loss Statement – Summarizes the revenues, costs and expenses incurred during a specific period of time. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs.Statements of Cash Flows – is Balance Sheet – A financialconcerned with the flow of cash in and cash statement that summarizes a company’sout of the business. The statement captures assets, liabilities and shareholders’ equity at aboth the current operating results and the specific point in time. These three balanceaccompanying changes in the balance sheet segments give the business owner ansheet. It is useful in determining the short- idea as to what the company owns andterm viability of a company, particularly itsability to pay bills. Financial owes as well as the amount invested by the shareholders. ReportsBanking, Credit Card and Accounts Payable AgingLoan Reconciliations - Reports Report – Helps you determine how well you are (or aren’t) paying your accountsthat compile data and make sure everything payable. It is a great cash managementis accurate. tool. Accounts Receivable Aging Report - shows the amounts owed to the company by its customers, including the length of time the amounts have been outstanding. Typically, the aging report categorizes receivables as ―current,‖ ―30 days,‖ ―60 days,‖ ―90 days,‖ and ―120 days and over.‖ The purpose of this report is to show the business owner what receivables need to be dealt with more urgently because they have been overdue longer.
  14. 14. If you are not familiar with what information is provided to you within each of these reports, ask your bookkeeper. They will be able to help you understand each report and be able to help you interpret the invaluable information they contain. Talk with your accounting and bookkeeping professional about other reporting that will assist you in managing your business. For instance, a business that bills clients for reimbursement of direct expenses will want to see an unbilled costs report. Do not be your client’s banker. Recovering costs quickly is vital to your cash flow. You have money to spend on marketing, but none to waste. Tracking the return on your investment with marketing efforts lets you know which campaigns are bringing you the business you expect and which ones are costing you more money than they are worth. Knowing how each department or store location is performing allows you to monitor managerial staff and the profitability of product and service lines. Grouping all information together can be misleading. When reporting easily identifies different facets of your business, you now have a tool to help you oversee your entire company with a better perspective. You worked long and hard last November putting together a budget for this year. How successful have you been in reaching your goals? Do you need to make adjustments mid-year to your operations to better meet your anticipated profits? Comparing your anticipated goals with the realities of your business is the only way to make timely and appropriate decisions. Don’t fall into the mindset that says ―We are busy, so we must be making money.‖The Truth is...When your reporting is reviewed and analyzed on a regular basis you will know theanswers to these questions. Knowing your bookkeeper is providing you with useful andtimely reporting supports your efforts at reaching all your financial goals.
  15. 15. CONTENTS Chapter 1 Introduction•Taking Control•Managerial Accounting – What is it? Chapter 2 The Truths About Intelligent Bookkeeping•TRUTH #1 – It Takes Nectar to Make Honey•TRUTH #2 – Turning a Swarm into a Hive•TRUTH #3 – Harvesting Your Honey into Money Chapter 3 Know How to Put This Information to Work for You• Evaluate the Effectiveness of your Financial Reports• Look for Upside Down Balance on Your Balance Sheet• Look at your Bank Reconciliation Report• Review Accounts Payable and Accounts Receivable Reporting• Checking Payroll Activity Chapter 4 About Us• Our Unique Approach to Bookkeeping • Small Business Financial Officer – SBFO • Senior Accountant • BizKeeper • About Us
  16. 16. ------------------------------------------------------------------------------------------------- Know How to Put This------------------------------------------------------------------------------------------------- Work for You Information to----------------------------------------------------------------- You don’t have the time or the inclination to micro-manage your bookkeeper’s work. Reviewing the financial reporting provided-------------------------------- what to look for are the first by your bookkeeper and knowing steps in ensuring you are working with a qualified professional. On the next few pages----------------------------------------------------------------- Below you will find specific steps you can take to monitor your review not only the bookkeeper’s effectiveness in their position. questions you should ask -------------------------------- whoever is doing your accounting and bookkeeping; but----------------------------------------------------------------- also the answers you should--------------------  expect.----------------------------------------------------------------- Learn what you need to  know to manage this-------------------------------- position.--------------------------
  17. 17. Know How to Put This Information to Work for You  Do the numbers seem reasonable? ANSWERS  Does your bookkeeper understand your business?  Review your Chart of Accounts to determine if it is tracking activity specific to your 1 business model or industry. Within QuickBooks it is very easy for your bookkeeper to ―drill down‖ in a report and show you the detail for a given number.How do you know the  Watch out for accounts called ―need to fix‖ or ―miscellaneous‖. This indicates thatreports are accurate? your bookkeeper did not know how to classify an event and needs your clarification.  In an account name doesn’t seem right to you, ask for an explanation and the detail of activity recorded to that account.  Customize your Chart of Accounts so you track activity that is important to your bottom line.2  Within QuickBooks it is very easy for your bookkeeper to ―drill down‖ in a report and show you the details for a given number. This type of reporting lets you quicklyHave you asked your determine if the total number is made up of the correct financial activity.bookkeeper to verify  Review all reports with your bookkeeper from time to time to make sure you are both on the same track.the numbers? If you find a negative value designed by a minus sign or brackets around your accounts receivable number there is something wrong! This indicates one of two things:  You owe your customers money, or...  The bookkeeper has received money into your books, but has not created an invoice3 to record the sales side of the transaction. This inaccurate bookkeeping practice understates your revenue to you and creates aLook for upside down tax reporting problem with IRS.balances on your If your accounts payable liability account is showing a debit balance something is WRONG!Balance Sheet  You have either overpaid a vendor or...  You have not recorded a tax deductible expense. Either situation is NOT to your advantage. These are only a couple of irregularities that could show up.
  18. 18. Ask Yourself and Your Bookkeeper the Following Questions 4 ANSWERSLook at your bankstatement. It can tell Look at the un-cleared or outstanding activity sections of the reconciliationyou several things. report. If you have outstanding activity that is more than a few months old this is anDid you know that indicator that your accounts are not really reconciled.your bank statement Scenario A:can be reconciledevery month and still Your checking account is showing an un-cleared deposit in the amount of $10,000 from sixbe wrong? months ago. How can this happen? You lost the check from a client and it was never deposited. They haven’t told you because it is to their advantage or perhaps their bookkeeper isn’t tracking cleared checks in their system. Scenario B: Your checking account is showing un-cleared checks dating back several months. How can this happen? These outstanding activities are an indication that perhaps a vendor of yours has lost your check. Even more troubling, maybe you or your bookkeeper has inadvertently double booked an activity. Entering the same check twice in your check register can throw off your expense reporting, your accounts payable balances and the ending bank balance. These occurrences could cause you to negotiate payment arrangements with a supplier because you don’t know that you have enough money in your account to pay their bill. Or perhaps you are putting off paying yourself.
  19. 19. ----------------------------------------------------------------- When your bookkeeper is correctly reconciling your bank account you can rely on the information in your accounting software to manage your cash flow.------------------------------------------------------ DO NOT rely on checking your balance online – Reconcile Your----------------------------------------------------------------- Bank Accounts.-------------------------------- manage your cash flow. This is a very dangerous way to----------------------------------------------------------------- It may seem effective when you have the time to manually calculate in your head what checks you know you have written-------------------------------- ones are still in the drawer and mailed to vendors and which waiting to be sent until you make the deposit you are going to----------------------------------------------------------------- pick up from your client. But we all know this methodology doesn’t always work when we are busy and besides it takes-------------------------------- can be better spent. valuable time out of your day that--------------------------------------------------------------------------------------------------
  20. 20. Ask Yourself and Your Bookkeeper the Following Questions ANSWERS5 If you use QuickBooks, review the Open Invoice and Vendor Open Balance DetailLook at Your Accounts reports. These reports are a very quick way for you to see if the bookkeeper has correctly recorded activity into your software. A bookkeeper can record receipt of aPayable and payment to an account in your accounts receivable module without recording anAccounts Receivable invoice for this activity. This creates a situation where you can properly record a depositReporting to the bank, but not record your income. Scenario C: If you see an open payment entry on the Open Invoice Report then your revenue is not being properly recorded. Simply recording receipt of a payment creates a recordkeeping situation that appears to show you owe a client money for undelivered services or products. Scenario D: Similarly for accounts payable, if there is an open payment you have made and no bill to attach it to you are perhaps properly stating your bank balance, but have not recorded the expenditure.  This causes problems at tax time because you are missing deductions.  You might overpay a vendor because you have no receipt of a bill going through your system or you might not charge a client for a reimbursable expense because you have no indicator that the charge was ever incurred. Your vendor is happy because they got paid, but you have not and you don’t even know it.  An open bill payment is a message to you that a bill had been entered into the system but was then deleted. Again, this is your sign that something is amiss
  21. 21. Make Sure Your Payroll is Properly Processed and Recorded ANSWERS6 It is not necessary for you to become a payroll expert, but there are ways toIs Your Payroll Activity make sure you are in compliance and that your records accurately reflectBeing Processed and this activity.Recorded? Ask your payroll professional, whether that be your bookkeeper or an outsourced service provider for a schedule of all payroll taxes due including the tax name and corresponding tax authority, whether it is a company expense or an employee withholding, what forms are necessary and the filing requirements, and how you will see the activity reported on your books. The buck stops with you when it comes to payroll responsibilities. We suggest you do not use a catch-all payroll expense account. Break out the different payroll expenses within your Chart of Accounts so you may easily identify all expenditures and its related costs. Employee costs may include salaries, wages, overtime, sick, vacation, and holiday pay, bonuses, commission, state and federal unemployment, matching Social Security and Medicare taxes, city tax in some cases, workers compensation insurance, benefits, uniforms, bus passes or parking, cell phone reimbursement, payroll administrative fees, and hiring expenses. Can you see how if this is all thrown in to one pot a business owner may not be able to effectively monitor these individual costs?
  22. 22. CONTENTS Chapter 1 Introduction•Taking Control•Managerial Accounting – What is it? Chapter 2 The Truths About Intelligent Bookkeeping•TRUTH #1 – It Takes Nectar to Make Honey•TRUTH #2 – Turning a Swarm into a Hive•TRUTH #3 – Harvesting Your Honey into Money Chapter 3 Know How to Put This Information to Work for You• Evaluate the Effectiveness of your Financial Reports• Look for Upside Down Balance on Your Balance Sheet• Look at your Bank Reconciliation Report• Review Accounts Payable and Accounts Receivable Reporting• Checking Payroll Activity Chapter 4 About Us• Our Unique Approach to Bookkeeping • Small Business Financial Officer – SBFO • Senior Accountant • BizKeeper • About Us
  23. 23. The Apis Story... We Take the Sting Out of Accounting and Bookkeeping Take Control – Know and Use Your Numbers 1 2 3 The Beginning The Commitment The Results • Apis Business Solutions, LLC was started • At Apis we believe good business • In June 2009, we were honored to in August 2008. We developed a begins and ends with the be named one of the 10 winners system of financial management relationship. Because we work with nationwide in Intuit/QuickBooks® specifically designed to help small the financial core of the small ―Power to Get More Done‖ business owners run their business ―by business, trust is essential. We also Stimulus Grant Competition. Apis the numbers‖. When business owners know that trust is earned, it is not a Business Solutions was chosen from understand the numbers of their business, they make strategic given. We are prepared to work more than 700 applicants from decisions based on ―fact‖ not ―hope.‖ hard to earn and keep your trust. across the country because of our • We believe in the following business model, professionalism • Most business owners do not start their own business because the ―love‖ formula: and our willingness to give back to accounting and bookkeeping, yet the community. effectively managing their financials is Integrity + Reliability + • In May 2011 we were honored as essential to their initial and continued Where? Who? success. Organized and complete Competence + one of three finalists for the ―Emerging Business of the Year‖ financials mean access to Transparency = TRUST award sponsored by the Denver funding, better cash management, and better opportunity When? Metro Chamber. As an advocate What? for success. for small business success and growth in the Denver Metro How? Community, we are honored to be recognized as a ―Small Business Making a Difference.‖
  24. 24. Our Comprehensive ApproachFocuses on: Advocacy for the Results We Stand Behind You, So You Can Stand Out! Business Owner Long-Term Professionalism Client Relationships Managerial Building trust Accounting takes time. As advocates  Unleashing the for our clients Advocacy Role power of a business’ it is our Quality of Service financials allows owners to make responsibility to always  We take a strategic decisions look for the Transparency participatory role based on ―fact‖ not ―hope‖. We most efficient with our clients so and cost- transform the way in that we are best effective way which you view your Clear  Through our website able to help financial reports so to approach Communication our clients have achieve and you can use the each task. access to a maintain financial very same financial protected portal success. We also transactions your  Through service where they can share utilize the vast tax preparer uses Quality of agreements , and access resources of all but with a focus on Service letters of important documents effectively running members of our engagement, and information your business, not punch lists and concerning their hive in order to  Project Director to just how much tax oversee every timelines our account allowing for find the best you owe on the account. The focus is clients know total transparency in solutions to any bottom line. on personal, what they can the work we given situation. individual service. expect from us. produce. 24
  25. 25. For More Information about Apis Business Solutions, LLC Call us at 303.945.2104 Website: https://www.apisbusinesssolutions.com Email: nbarnett@apisbusinesssolutions