I have the most incredible bookkeeper. you have probably heard me talk about her a bunch of times, already. many of you have even asked questions and she has agreed to answer them all. Below, you will see the answers in no particular order:
When doing payroll, what are things that are constantly changing that you need to be aware of?
To ensure that your company is in compliance and good-standing, it is critical to stay up to date on changing laws, tax rates, and payment/filing deadlines.
My expenses are phone, payroll company, Google Apps, software, maybe computer equipment, wages when I have that and mileage. So why do I need a Bookkeeper?
Not only does hiring a bookkeeper ensure that you have easy access to accurate up to date financial reports, but it also frees up your time so that you are able to use your strengths and skill-set to build and grow your business rather than having to worry about day to day accounting tasks.
What is the one best practice you would advise all of us pet sitters?
Proper accounting should be a priority from the start, it is much easier to do things right the first time versus correcting mistakes down the road.
Travel expenses: Can the owner of the business use the business account to by air tickets to travel if it’s business?
Yes, according to the IRS, “travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job.” However, for these expenses to be deductible, you must be away from your tax home (the town where your business is located) for a period longer than one day’s work, and you must be away overnight. Be sure to document everything associated with your business travel expenses. Keep receipts and maintain a centralized spreadsheet of all your trips, individual line items, dates and the reason for your travel.
Sue asks: How to find a good book keeper? I’m serious. I have no clue what questions to ask to see if they know what they are doing.
Most bookkeepers will have the following basic skill set:
– Add vendors and customers to your books
– Be proficient in QuickBooks
– Reconcile bank statements and credit card statements
– Manage accounts payable and receivable
– Familiarity with financial reports
In choosing the right person to work with you’ll want to go beyond this basic list and look for someone who can provide the following:
– Extreme attention to detail
– An analytic mind aimed at handling bookkeeping discrepancies
– A keen understanding of financial accounting systems and related procedures
– Good communication skills
Use your business network for recommendations on who they use. (Bella note: That is how I found Darcy!)
Shelly asks: When interviewing a bookkeeper what questions we should be asking to know whether the person we’re speaking to is right for a petsitting business. Also, what exactly does a bookkeeper do?
A good bookkeeper will ask questions so that they are familiar with your industry and your individual business, they do not necessarily need to have previous experience in your industry.
A bookkeeper’s responsibility will vary from company to company depending on the need and demand. Typically they are responsible for some or all of an organization’s accounts, known as the general ledger. They record all transactions, post debits and credits, reconcile accounts and check for discrepancies. They also produce financial statements and other reports to help keep the owners and management team up to date on the company’s financial health.
For more on what bookkeeper’s do you can see here
Jan asks: What exactly does it mean when they do our “monthly reconcile”?
In accounting, reconcile means to compare two sets of records to make sure they are in agreement. In other words, it is the process of comparing each transaction in your financial statement with the same transaction in your accounting records.
Damiane asks: How do I not get audited?
To help your small business avoid an audit and to ensure a smooth process if you do receive an audit, the following strategies are recommended:
- Keep detailed records, the NFIB advises keeping records and receipts for at least seven years.
- Always meet deadlines, don’t give the IRS any reason to look twice, always file complete forms on-time and always make sure they are signed
- Report all income
- Accurately assess independent contractors vs employees
- Proper deductions – The IRS is strict about not mixing the personal and the professional when it comes to write-offs.
- Out of Proportion Deductions – Large deductions that reduce the amount of your taxable income may raise a flag if they are out of proportion with your income. If these deductions do occur, be sure to have detailed records to back them up.
- Excessive entertainment deductions – Tax returns including higher-than-average entertainment expenses will increase the chances of an audit. If you’re going to deduct these types of expenses, you must keep records for each write-off that includes when and where it occurred, who was in attendance, the purpose as it relates to your business, and a record of what was talked about.
Kelly asks: Should I have a monthly or quarterly bookkeeper help me? I am not very good at it & it takes me forever!
Hiring a bookkeeper frees up your time so that you are able to focus on your business. If day to day accounting is not something you are comfortable with and it is taking up too much of your time I would recommend hiring a bookkeeper to assist on a monthly basis.
Jennifer asks: what are the most common errors business owners make?
- Mixing business and personal transactions – not having separate bank accounts for personal and business activities
- Failure to file and pay sales tax – Oversight in collection and correct reporting of sales taxes can result in significant fines and penalties.
- Improperly categorizing expenses – Accurately tracking income and expenses will allow you to maximize your tax savings
- Not classifying employees correctly – misclassification of employees and independent contractors can result in overpayment of taxes
- Not using their time wisely – many business owners do not put enough value on their own time. A bookkeeper will be able to perform your daily accounting tasks faster and more efficiently, freeing up your time to focus on the business.
Those are great questions above, huh? Even better is having a bookkeeper that wants to HELP us! Imagine that? I had a bookkeeper and she had to resign due to family medical issues. Then, I went searching for another. I was terrified! I would wonder: Who would I choose? Would they understand my business? Would they know what to do? Would they do a good job? Would they pay attention to the details and keep ME on my toes?
I put it out to my personal network and got a lot of responses. I contacted a lot of people and then, I didn’t even know it, but Darcy said she had a background in that. Darcy was actually a client of my pet sitting company before she moved out of town, and we found out we had a friend in common as well. She was someone I knew in my network and that I trusted. When we interviewed on the phone I was impressed. She asked intelligent questions that made me feel like she understood what I needed and most importantly was on time and very professional with her proposal and follow up. Since then, Darcy and I have had a super relationship and I HIGHLY recommend her!
If you want a connection, let me know. You know me, I love connecting and helping people! What other questions do you have for a book keeper? Maybe we could do a PART TWO blog?