The document provides guidance on proper bookkeeping practices including organizing paperwork into relevant sections, setting up a chart of accounts in a logical order, entering transactions regularly such as weekly, and reconciling statements monthly. It also discusses the importance of financial statements like the balance sheet and income statement, as well as bookkeeping for payroll, taxes, and following best practices like using templates and getting help when needed.

1. Bookkeeping Success! “ We need a certain delight in tending the books, like in tending a garden.” ~ Connie Harvey

2. Organization and Filing * Divide your paperwork into 4 sections : Action needed to be taken (folder - bills to pay, etc) Action taken but not yet recorded in the system Completed paperwork ready to be filed (tray) Completed paperwork filed away (big filing cabinet) Set up and label file folders : By Date – All items in Daily, Weekly or Monthly By Function – Bank Statements, receipts, etc. Alphabetically – Customers and Vendors * Credit to: Bookkeeping is not a four-letter word by Janet L. Redick

3. It’s all about balance Assets – Liabilities = Owner’s Equity Debits Credits

4. Debits and Credits Cash on Hand Bank Accounts Assets Accounts Receivable Cost of Goods Sold Expenses Owner Draw Owner Investment Loans (Liabilities) Accounts Payable Sales Income Sales Tax Payable Other Income Owner’s Equity

5. Proper Chart of Accounts In Order By type A-01 Checking (the A sset, “Checking”) A-02 Savings (the A sset, “Savings”) L-01 Sales Tax Payable (the L iability of Sales Tax) I-01 Widget Sales (the I ncome from Widget Sales) E-01 Advertising (the E xpense of Advertising)

6. Proper Chart of Accounts In Order By Number 1000 – 1999: Asset Accounts 2000 – 2999: Liability Accounts 3000 – 3999: Equity Accounts 4000 – 4999: Revenue Accounts 5000 – 5999: Cost of Goods Sold 6000 – 6999: Expense Accounts 7000 – 7999: Other Revenue 8000 – 8999: Other Expense

7. Double Entry Accounting ►It’s just the transfer from one account to another Debit “Postage Expense” Credit “Owner’s Investment” Debit “Undeposited Funds” Credit “Widget Sales” Credit “Sales Tax Payable” Debit “Checking at City Bank” Credit “Undeposited Funds” You buy stamps for the business with cash in your pocket. Today you sell 30 Widgets and charge Sales Tax, but keep the checks in the drawer until Friday. On Friday, you deposit all the checks into the First City Bank.

8. Best Practice: Match your Income And Expense Accounts to your Schedule C

9. The General Ledger Your best tool for entering transactions you don’t know what to do with, such as : Daily Sales from a cash register tape with deposits going to several accounts due to merchant card service, cash payouts, etc. Owner Investments and Draws Adjustments “The Catch All”

10. What would you do? 1/31/07 -You used a VISA card to buy gas. 2/3/07 - You used a VISA card to send flowers to your uncle’s funeral in Timbuktu. 2/5/07 - You used a VISA card to buy supplies. 2/15/07 - You receive a bill from VISA.

11. Debit Credit Checking Fuel Other Expense Supplies Debit Credit Fuel Owner’s Draw Supplies VISA Card XXXX1234 Interest Expense (if any) VISA Card XXXX1234 Checking Debit Credit Credit Card Expense Checking

12. “Best Practices” or Good Habits Enter transactions at least once a week Cash transactions Checkbook transactions Credit Card transactions, etc. Reconcile all statements once a month Checking and Saving Statements Credit Card Statements Loan Statements, etc. Back up often Think of it like watering your plants, or brushing your teeth… you do it as often as is needed to stay healthy.

13. The Financial Statements Balance Sheet Snapshot at the moment of all accounts Statement of Cash Flows Cash movements during a given time period derived from operating, investing and financing activities Profit and Loss Income and expenses during a given time period The Big Picture

14. Employees and Payroll 941 – Federal Withholding Taxes (quarterly) 941N – Nebraska Withholding Tax (quarterly) UI Connect – State Unemployment Tax (quarterly) Note: The above three taxes may need to be deposited more frequently. 940 – Federal Unemployment Tax (annually) W-2’s and 1099’s W-3 – Federal Withholding Reconciliation W3-N – Nebraska Withholding Reconciliation W-4’s Basic Forms:

15. Other Taxes Sales and Use Tax – Form 10 Monthly, Quarterly, or Annually Property Tax Semi-Annually or Annually Income Tax Schedule SE Schedule C or F Schedule A Form 1040 (or appropriate form)

16. Prompts and Automation Laminated Charts and Reminders Visual color coded instructions See examples… Pop-ups from your computer calendar, QuickBooks, Outlook, Hotmail, etc. Templates, Programs and Calculators Data input forms and reports using computer programs such as QuickBooks, Excel and Access See examples…

17. Federal Taxes: www.irs.gov Click Business, then Small Business/Self-Employed State Taxes: www.revenue.ne.gov Click Business, then choose topic. Business Knowledge Center: www.netmba.com General Information on Management and Business “ Help” on your computer program menu bar. QuickBooks has an excellent Help tool Know where to get help Or, call your CPA or your REAP Business Specialist

18. Some Pitfalls to Avoid: Remember, what goes in, must come out! Accounts Receivable Recording Customer payments incorrectly Accounts Payable Recording Checks without using “Pay Bills” Sales Tax Payable Recording Checks without using “Pay Sales Tax”

19. Tend the Books Give the Books to another to tend But don’t neglect the Books…. Or your business can’t succeed

20. “ Where you tend a rose, ~ a thistle cannot grow.” Frances Hodgson Burnett