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Bookkeeping 101


Midyear Bookkeeping Best Practices

May 9, 2019 / by Mary Kimmel posted in Small Business Advice, Chicago Far West Suburbs, Bookkeeping Services, Bookkeeping 101, Business Advice

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Now that the annual springtime flurry of activity that comes with filing your small-business tax returns has passed, you might think you can go on bookkeeping cruise control until you start processing 1099 forms next winter.

In fact, it's important to follow bookkeeping best practices throughout every season. This advice can be particularly beneficial to citizens of Procrastination Nation. Start with this: If you use contract employees or vendors, make sure they submit a W-9 form before you pay them. That way, you'll have that information on file and won't have to chase it down at 1099 time.

Here are some additional suggestions to help keep your organization's bookkeeping in order all year long.

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A Closer Look at New Pass-Through Rules Under the TCJA

November 8, 2018 / by Rick Punturo posted in Small Business Advice, North Shore Long Island, Bookkeeping Services, Bookkeeping 101, Business Advice

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One of the most important — and complicated — changes established by the new Tax Cuts and Jobs Act (TCJA) is Section 199A, which concerns the type of businesses known as "pass-through entities," also known as flow-through entities.

Basically, these businesses pass their profits on to their individual owners. That's how most small businesses work, including S corporations, partnerships and LLCs. (Sole proprietorships handle business income in a similar way using Form 1040 Schedule C and are also covered by the new rules.)

The good news is that if you own one of these businesses, you may get as much as a 20% reduction in taxes on business net income under the new rules. The calculations can be very complex, however. Several factors — including your level of income, your profession and the amount your business spends on wages and property acquired during the year — determine the actual deduction. Let's take a closer look.

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Now Is the Time to Prep Those Pesky 1099s

September 13, 2018 / by Elliot Hershik posted in Small Business Advice, Chicago Far West Suburbs, Bookkeeping Services, Bookkeeping 101, Business Advice

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For small-business owners, eternal vigilance on important documents is more important than ever. That includes those seemingly routine year-end 1099 forms.

If You Wait, It Could Be Too Late
In an ideal world business owners would keep up with their 1099s all year long, as my colleague Jeanne Richards recently suggested they do. Haven’t given 1099-prep a thought yet? Don’t worry — it’s not too late. Now that it’s September, it’s the perfect time to check the status of your records and get them in shape before the end of the year.

Periodically evaluating your records keeps you up to date on which vendors or independent contractors (IC) are above the $600 threshold that requires a 1099. That’s a threshold that is easy to meet without realizing it. You might have given someone several small projects that were each well under $600, but together meet the threshold requirement. Or perhaps you forgot about an IC you used for a project early in the year — now is the time to make sure you have the records you need.

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Read Our Tips for Better Bookkeeping on the Bill.com Blog

May 9, 2018 / by Leslie Jorgensen posted in Bookkeeping Services, Bookkeeping 101, Tips for Startups

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One of our favorite business payment solutions, Bill.com, recently asked me to share my top tips for better bookkeeping. I shared five quick tips that will help entrepreneurs start a business or take their business to the next level.

Proper bookkeeping is essential to the success of any business. Accurate, up-to-date books not only ensure compliance with tax laws, but can also offer insights into how your business is performing and highlight potential opportunities for growth. Whether you are just starting a business or are preparing for significant growth in your business, establishing proper bookkeeping procedures and leveraging cloud technology will help you build a stronger business. Learn how to use forecasting to stay on track and find out which financial reports you can’t do without in my
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Why It's Vital to Keep Personal & Business Expenses Separate

April 12, 2018 / by Laura Zimmerman posted in Small Business Advice, Chicago Far West Suburbs, Bookkeeping Services, Bookkeeping 101, Tips for Startups, Business Advice

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When starting a small business, it's important to keep your business finances separate from your personal finances — particularly when it comes to expenses.

Tempting though it might be to use your personal credit card to buy a smartphone as you launch your business, that sets a dangerous precedent. If you don't treat your personal finances and your business finances separately, the law won't, either. This is known as "piercing the corporate veil." And it could mean, among other things, that you lose the liability protection that ought to come with incorporating.

Here are some tips on how to avoid that potentially disastrous scenario.

Don't Jump the Gun
Starting a small business can be stressful and time-consuming. It's easy to fall into "just-for-now" rationalizing. You'll purchase equipment and other startup essentials from your personal checking account. And then once you get up and running, you'll file all the proper paperwork to become a corporation and open a bank account dedicated to the business. No problem, right?

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Time-Saving Tax Preparation Tips to Close out the Year

December 28, 2017 / by Lori Coleman posted in Small Business Advice, South Shore, MA, Bookkeeping Services, Providence, RI, Bookkeeping 101, Business Advice

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Staring down tax-related deadlines can be the stuff of nightmares if you haven't prepared in advance. Taking a few simple steps sooner rather than later will make life a little easier for your small business this coming tax season.

Here are our essential time-saving tax preparation tips to close out 2017:

  1. Clean up your vendor records. Confirm that you have W-9 forms on file for all vendors. Plus, merge duplicate vendors and deem as "inactive" any vendors that have gone unused for two years.

  2. Collect W-9s. Each time you take on a new vendor, be sure to collect a W-9 form to determine eligibility for 1099 status. In fact, make submission of a W-9 a requirement before issuing the first check — you'll find vendors will comply faster. When requesting W-9s manually, don't use email (which is notoriously non-secure). Rather, use a tool like Track1099, which allows you to request, obtain and store W-9s securely.
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3 Ways to Survive the January 1099 Blizzard

December 12, 2017 / by Jeanne Richards posted in Small Business Advice, Bookkeeping Services, Bookkeeping 101, Business Advice

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Note: This blog first appeared in AccountingWEB.

A lot of people assume April is the most stressful time to be an accountant. But if you specialize in accounting for small- to medium-sized businesses, January can be just as bad.

Come January, your clients have barely closed their books for the year, and they have to scramble to distribute their 1099 forms by the end-of-month deadline. And if your clients are scrambling, that means you're scrambling.

Here's a trio of tips to help you protect your sanity when filing that flurry of 1099s.

1. Get Clients to Focus on 1099s All Year Long
The 1099 season was bad enough when clients had a cushion between the filing deadline for distributing 1099s to vendors and the filing deadline for the IRS. Starting in 2016, though, employers had to submit 1099s for "non-employee compensation" (a.k.a. "box 7") not only to their independent contractors but also to the IRS by the same deadline, January 31. That's eliminated any margin for error.

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Midyear Tax Preparation Tips

June 29, 2017 / by Mary Kimmel posted in Chicago Far West Suburbs, Bookkeeping 101

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Depending on how they're structured, different businesses have different tax-filing requirements at different times of the year. But regardless of the type of business you have, taking the following steps at midyear will help ensure you're ready come tax time.

Keep Up to Date on Your IRS Forms
Many small businesses rely on a network of "service providers" — e.g. accountants, electricians, contract laborers — in addition to full-time employees. If you pay an unincorporated service provider more than $600 during the year, you must provide them with a 1099 form at the end of the year. It is good practice to have all new service providers fill out a W-9 form before paying their first bill. Take the time now to make sure you have a W-9 form for each service provider. If the service provider is a corporation, then there's no need to send a 1099, with one exception: All attorneys (paid more than $600) need a 1099 whether they're incorporated or not.

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Project Accounting for Creative Companies

June 6, 2017 / by Michael Oberther posted in NYC - Midtown, Bookkeeping 101

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There’s a poisonous idea that revenue is the most critical goal in business. I disagree revenue is a critical goal in the very early days of a new business but revenue cannot become profit unless you become efficient. When growing a small business, efficiency is the difference between success and failure.

In creative firms where the work is on a project-to-project basis, seeing where you can become efficient is a unique challenge. Each project is a little bit different — it’s not like you’re churning out the same widget over and over. You need to take a different approach.

Step 1: Your rates
Each element of your work has a different value. If you are a social media expert there is a different rate for setting up a Twitter account versus creating a compelling Facebook post. Setting up a Twitter account is important but it requires far less knowledge than writing for a specific audience, understanding the correct hashtags to use, and knowing what images get the best click-through rates.
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Cash or Accrual Accounting: Which Is Best for Your Business?

June 1, 2017 / by Jane Lvovskiy posted in South Carolina, Brooklyn - Staten Island, Bookkeeping 101

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Before you can answer the question posed above, you need to understand the difference between the two types of accounting.

Essentially, cash accounting is just what it sounds like — a pay-as-you-go approach that documents your payables and receivables in real time, more or less. With accrual accounting, there's a lag between the time you receive your "accounts payable" goods or services and the time you actually pay for them; the same is true on the "accounts receivable" side of the ledger.

As long as it all comes out in the wash, does it matter which one you use? The answer often comes down to timing — and to IRS regulations.

Opt for Cash Accounting
Let's say you have a modest nail salon and follow the standard calendar tax year (Jan. 1 – Dec. 31) for your financial reporting. Most of your work consists of manicures or pedicures that cost relatively little, and your customers pay in full each time. You reorder supplies and replace equipment on a regular basis.

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