You are probably already familiar with recording income through a deposit or recording an expense. There may be times that one transaction contains both. Do you record each separately? NO. You want to record a single transaction, so that the transaction amount matches the amount hitting your bank account. This makes for better tracking and easier reconciling.
An example of when this type of transaction occurs is when you pay a vendor a monthly subscription, but you also receive a sales commission. The vendor processes one statement each month that has both pieces combined.
Expense is More Than the Income
Let’s say you’ve just started a new vendor relationship where each month you pay $100 subscription fee to utilize their online shopping platform. You are also paid a monthly commission on the sales processed through their platform. Your first month’s commission is $60. In this scenario, you will record the transaction as a net expense.
Figure 1: Enter the expense for the $100 subscription fee as normal. Before hitting Save, you will add a second line under Account Details, but since it is income, it will be a negative amount. The net between the expense and income will be the amount of the transaction ($40 in this case).
Income is More Than the Expense
We still have the monthly $100 subscription fee, but the next month commissions earned is $120. In this scenario, you will record the transaction as a net deposit.
Figure 2: Enter the deposit for the $120 commission as normal. Before hitting Save, you will add a second line under Add New Deposits, but since it is an expense, it will be a negative amount. The net between the income and expense will be the amount of the transaction ($20 in this case).
**Note: you cannot duplicate a name as both a vendor and a customer. If you expect income to regularly exceed the expense, I would recommend setting it up as a customer. If you expect to the expense to regularly exceed the income, I would recommend setting it up as a vendor.
If you’d like additional help with handling combined transactions, please comment below or CONTACT ME today!
Last month I talked about Mixing Business and Personal Funds in a previous blog, so today I’ll go over in more detail how I account for this in QuickBooks. It’s totally doable when there’s some intermingling, you just want to be sure you’re keeping receipts and identifying business versus personal items.
These examples will be done under the assumption that you have separate business accounts, but use the wrong account for purchases. If you are like me, and have a shared account for business and personal, the easiest method for segregation is to set up classes in QuickBooks for each.
Example: Business purchase made on personal account
Let’s say you inadvertently use your personal credit card to pay a vendor. In the expense module, choose your vendor as normal. I’ve set up a bank account called “Personal Funds,” which should always have a zero balance, and I’m going to proceed as I normally would with recording an expense.
Since this is not actually coming out of our business account, we’re going to have an account called “Owner Contribution.” This account is saying that you as an owner are contributing your personal money into the business. If you haven’t already set this account up, add it, with category type as Equity, and the detail type as Partner Contribution.
Notate in the description “paid with personal card.” Then we’re going to record a negative for the dollar amount. Notice how our total for the expense is zero. In one line we recognize the expense for the company, and the next line we recognize that the money came out of a personal account, which is why there will be a net zero affect to any of the banking accounts for your business.
Example: Personal purchase made on business account
Let’s say you inadvertently use your business card to pay a personal bill. Choose the vendor, and this time since it’s coming out of our business bank account, choose that account. Our account coding is simply going to be an “Owner Distribution”.
You’ll want to set that account up if you haven’t already. An owner distribution means the same as if you had paid yourself a salary and then took those funds and paid your own bills. It’s the opposite of a contribution. Category type again is going to be Equity, detail type is Partner Distribution.
You don’t necessarily need to have a description in the expense, just add the amount. This will show as coming out of the business account but will NOT hit the business profit and loss since this is a balance sheet equity account.
Example: Mix of business and personal purchase made on business account
Sometimes you may make a purchase that includes both business and personal items. Essentially, your expense entry will have both and expense line and equity line. Choose the business account, enter the expense amount for the portion that is business related. Then do Owner Distribution for the portion that is attributed to personal items.
If you’d like extra help on this topic please feel free to CONTACT ME and I can go over it in more detail with you.
Currently, FMLA requires employers with at least 50 employees to provide 12 weeks of unpaid leave after the birth of a child. Some companies take it one step further and provide a paid portion of leave, but it is typically biased towards the mother, with fathers being offered less, if any paid time off. This can translate to discrimination against women.
In her article discussing gender-neutral leave policies, Rachel Gillett (@RGillett23) points out that “studies have shown that when a company’s policy mandates that women take longer leaves than men, the same companies are more inclined to hire men over women and are less likely to promote women to high-powered positions.” If you ask me, this is detrimental to the growth and diversity that all companies need.
Personally, I did not want to ever get in a position where I had to choose between my career and starting a family, which was one huge motivating factor in working for myself.
Equal Parental Benefits: Pros
Gender-neutral leave policies help mitigate the discrimination against women by allowing them to feel secure in their decisions to take time off to bond with their babies. They no longer have to choose between promotions and raising a family. On the other hand, it alleviates fathers from feeling like they are expected to rush back to work before they are acclimated to the new challenges of the competing demands between fatherhood and work (which is something that mothers face all too often as well).
Employees will be less-stressed when returning to work if they have been provided ample time to adjust to the newness of parenthood. Being forced back to work too soon can cause resentment since parents deserve time off to bond and make memories with their children.
Equal Parental Benefits: Cons
The obvious con to offering additional time off in order to provide equal benefits, paid or unpaid, is ensuring coverage of duties while on leave. This is a great time to utilize cross-training among individuals (which is a highly-advisable process to incorporate, especially before you need the coverage). Another option is to hire temporary workers to fill in the gaps or work with an independent consultant for the interim.
Other than job coverage, you have nothing else to lose by offering gender-neutral benefits! You may think that it costs more to provide extra time off, but the cost-savings from reduced employee turnover due to more desirable benefits will likely surpass any added expense.
You’ve been running your business and have come to a crossroads where you’ve finally made the decision to hire an accountant (if you’re still on the fence about that, read up on “When to Hire an Accountant”). Congratulations! You have just made a positively impactful decision. Next, I’d advise you to do some research on different accountants you have the opportunity of working with. Take the time to meet with them and learn about their work ethics, communication styles, and expectations when working with clients.
I always want my clients to get to know my personality since it’s reflected in how I run my business, how I handle my work, and how I correspond. When I partner with a new client, this is what they can expect:
More insight into their business than they’ve ever had before.My breadth of experience and attention to detail results in greater visibility and understanding of the story behind all those numbers.
A lot will be accomplished in a lesser amount of time. Through years of self-taught trial and error, I have nailed down many highly efficient processes for completing accounting tasks. Not only am I lightning fast on the 10-key, but I can work magic in Excel and QuickBooks like nobody’s business! I even had one client who would only respond in expletives because the turn-around time was so much less than anticipated.
Work will be completed in a timely manner. Although this is contingent on my client’s providing source documents and responding to emails in a timely manner as well. Of course, things come up and a client may need some extra time to address a request, but correspondence on this is always appreciated so I can adjust my timeline accordingly (I also return the courtesy). I never want to underserve any of my clients so it’s essential for me to stay on top of my work.
They’re always invited to ask questions. My priority is for my client’s to not just hire me but for them to feel confident in the results of what I provide. I will never shy away from discussing a question or concern until my client is satisfied with their level of comfort in the matter. I also ask many questions since the more I know about their business and how it operates, the more value I can create in the long-run.
In most circumstances, the first month working together is an Evaluation Period. This not only allows me time to assess your business and services needed, but it allows for a non-commitment trial, if you will. Everyone has different ways to approach the same thing, not that any certain way is necessarily better, but is more so preferential-based. I strive to work with clients where we both feel comfortable with the dynamics of the partnership, so if either of us feels that we’re not best-suited in working together, then we can part ways with no hard feelings.
CONTACT ME today if you’re interested in meeting to see if we can work some magic together!
Today I’m going to go over pivot tables in Excel. When you have large volumes of data to analyze, pivot tables allow you to summarize and manipulate the data quickly and easily. I’ll be using a sample set of data to show you the steps to creating and modifying a pivot table.
With the use of pivot tables, you’re going to want to start with data that is organized. In this sample data, it’s organized by date, region, rep, item, units, unit cost, and total. You want to make sure that your data is in some organized fashion.
To create a pivot table, go to the insert tab of the ribbon, click on Pivot Table, and then you’ll be able to select a table or range. We’re going to make sure to include the header and go all the way down to the bottom of the chart. Hit OK.
Once you scroll back to the top of your spreadsheet, you’ll see where your pivot table will be inserted. To the right, is your pivot table fields. This is where you will choose what will go into your pivot table and where. You can check next to the items if you want them included. My preference is to drag and drop the items into the sections where I want them.
I’m going to first summarize by region and drag it down into the rows section. All of that data will be categorized by Region in the rows. Let’s say I want to know how much in dollars there is per region. I’m going to take the Total and drag it into the Values section. Now I can see the dollars by region. We can also subcategorize the regions by pulling the Reps down into the rows section. Now I can see by region, by rep, the total dollars for each.
I can also move items around. Let’s say I want to move the Region into the columns. Now I show the Reps in the rows, categorized in each column by the Region.
Once you have your pivot table the way you want it set up, you can easily change the rows and columns by clicking on the down arrow. You can choose just to have a few items show, or add them all back in. You can also sort in whichever direction you want.
If you want to change the look of your pivot table, you can go to Format as Table under the home tab and to have it formatted with those colors.
Those are the basics of creating and modifying a pivot table. If you’d like me to go over a specific functionality of a pivot table in a future blog, please comment below or EMAIL ME and I’d be happy to go over it.
Today I stumbled upon a Forbes article, “When To Hire A Professional (And Which Ones To Hire First) At Your Startup.” I assumed – no, I was certain – that Accountant would land the list. Low and behold, you will find Accountant as one of only four professionals listed in this article. So, what gives? Why is hiring an accountant so critical to the success of your business?
In the article, Jesse Kolber points out that “the cost of an accountant doesn’t necessarily equate to quality, but if you don’t find a good accountant from the beginning, you could pay
dearly later on.” This statement hits a home-run in my mind, as I’ve worked with numerous clients looking to get their books straightened out – after-the-fact. Some clients may have already been in business for only a year, or they could have been in business for many years.
Typically, either the client is so overwhelmed that they continue to dodge out on even starting their catch-up work, or they end up with a fairly big financial hit, since catch-up work can be tedious and time-consuming. Catch-up projects can be prone to missing information, which equates to extra research time for both accountant and client.
Another key point is to hire a good accountant who has the breadth of experience needed to truly assist small business owners. One thing that sets me apart from some accountants is that I have a wide-range of industry experience and have been exposed to multiple facets of business operations. I often work with clients in retail who would not have known about things like sales and use tax reporting, and finding out about those types of requirements later on can cost a business owner big bucks in fines and interest.
Kolber also writes “Our first accountant loved to use fancy words and actually called me a neophyte during our initial consult… [your accountant] should articulate information clearly and thoughtfully answer your questions.” This is great advice for any business owner. Yes, you want your accountant to know their stuff, but you need to know it, too! Trying to lead your business by blind faith in others puts you in a very volatile and risky position.
When you are looking to hire an accountant, have them glance over your financials and discuss one or two things that jump out at them. Do you fully comprehend their explanation or does their accounting jargon go right over your head? My personal approach is to broadly state things in formal terms and then take the extra time to educate the client on my thought process. Sometimes we may go over the same concept multiple times, but I’m okay with that because I sincerely want my clients to have confidence in what story their financials are telling.
Don’t wait! From day one, keep your eyes open for a great accountant so you can keep your books in order from the start. If you think I might be a good fit for your company, please reach out to me for a free consultation.
Loans are an item that can easily be accounted for incorrectly. This is a common occurrence for items that affect the Balance Sheet (assets, liabilities, and equity). The majority of folks without an accounting background are more familiar with – and potential only aware of – their Profit and Loss.
The incorrect way to account for a loan is to simply expense each payment as it’s made. A loan does not qualify as a deductible business expense, however, the interest you pay on it does. It is important to set-up the loan once the funds are received and appropriately allocate the principal and interest portions of the recurring payments. Let’s go over an example using a $10,000 loan, with monthly recurring payments that include both interest and principal.
Creating a General Ledger Account
If you haven’t already, you will want to create a new General Ledger account for the loan. To do so, click on the gear icon in the upper right-hand corner, then on Chart of Accounts. You can also use the left-hand menu, clicking on Transactions, then Chart of Accounts. Click New. Category Type will be Long Term Liabilities (if the loan repayment is further than a year out, otherwise choose Other Current Liabilities). We will name it Loan Payable for this example. Click Save and Close.
Setting Up the Loan
The most likely scenario when obtaining a loan is to receive the funds (by cash, check, ACH, etc.). This is a simple entry. Simply record a deposit (more detail on deposits HERE), choosing the lender as the “Received From”, which you’ll want to have set up as a Vendor (more detail on Vendors HERE). The Account will be Loan Payable that we set up earlier and the amount will be the principal portion of the loan. Let’s assume for simplicity’s sake that we are only dealing with principal and interest on this loan. Save the deposit.
Making Loan Payments
For this example, we will pay the loan by check (more information on entering bills and then bill payments HERE). Our Payee will be the lender. For the Accounts, it will be broken out between principal and interest. For our example, the payment total is $500 with $350 being interest. The remaining $150 will go against the Loan Payable, reducing the balance that is outstanding.
**Efficiency tip: Use your loan amortization schedule to set up ALL the bills once your loan is funded. You can set each one up with the appropriate date in the future and allocate the principal and interest for each according to the schedule. When you make each payment, you simple do a bill payment for the full payment amount.
Loans may not always be a straight-forward as this example, so if you’d like assistance setting up and accounting for a more complex loan, please contact me and I’d be happy to lend a hand!
I recently was working with a client who was not regularly reconciling their bank accounts. It was very apparent, even though they are a small not-for-profit with minimal transactions, just how important it is to complete monthly bank recons. If you don’t do these yourself, or you simply don’t do them in a timely manner, read on! You just may realize what a priority it should be for your business.
The blindingly obvious reason that my client needed to be doing their monthly bank recons was to identify a recurring posting error: duplicate deposits. A common error was occurring where customer payments were being posted through the “Receive Payment” module and through the “Record Deposits” module. I discuss this situation in a previous blog: QuickBooks & Common Deposit Mistakes. The takeaway from this is that a bank recon would have shown left-over deposits in QuickBooks that don’t match up with the bank. A little research would show the duplication and corrections could be made.
Reason for timeliness: You may over-assume how much cash you have on hand if you’re only looking at your accounting records and not comparing with the bank. This could lead to cash-flow problems but can be mitigated if corrections for posting errors are done as soon as possible.
Bank recons will identify transactions that did not get posted. This could arise from simple oversights or could be an indication that communication from a third party was not received. No matter the reason, it’s critical to become aware of items still needing to be posted.
Reason for timeliness: Again, you may over-assume how much cash you have on hand by not comparing bank transactions to ones posted. A large transaction clearing the bank for more than you actually have will not only create a cash flow problem but will likely result in overdraft fees or rejection by the bank. Catching these transactions early reduces the risk of spending more than you have.
This ties in with missed transactions. If you are not reconciling your bank account, how would you ever know if an employee was embezzling funds? This type of fraud often involves masking the situation, but if an employee knows that the bank recon is not done, the embezzlement becomes that much easier. It may be difficult, if not impossible, to connect unposted transactions with fraud months or years after it occurs.
Another common occurrence of fraud is unauthorized charges. Most banks will have a specific time frame in which you can get reimbursed for these charges and if you miss that window, you’re simply out of luck!
Reason for timeliness: Even if you only commit to reviewing your bank statement, time is of the essence! The more recent the date, the easier it will be to distinguish legitimate charges from potentially fraudulent ones. Memory will play a big part in why timeliness is so important. As always, go a step further than simple review and do a bank recon.
If you’ve never reconciled your bank accounts and are overwhelmed at the idea of doing so, please reach out to me to discuss getting your recons caught-up. Bank recons are my absolute favorite (yes, I’m not kidding!) and I can get through them quickly and accurately. Once they are caught-up, I can train you on the process and I guarantee it won’t feel so daunting going forward. All you need is a clean start and the confidence from having learning a tried-and-true process.
You may have caught on by now that the main purpose of my blog is to provide my readers with little tidbits on accounting, QuickBooks, and Excel. I’d also like to use my blog so that readers can get to know me better, whether it be current clients, prospective clients, colleagues, or anyone else! I want you to know the person behind the blog because, although numbers are my livelihood and career passion, they are not the only thing that makes me the enthusiastic accountant that I am. Read on to learn how I fill my time outside of work hours.
I have always had a love of learning! “Teacher’s pet” was not a foreign name to me growing up and that love of learning has never subsided. I am currently enrolled in my MBA at the University of Nevada, Reno. My favorite TV channel currently is the Weather Channel, with shows like “Weather Gone Viral” and “Strangest Weather on Earth.” I also enjoy watching documentaries and love getting caught up in a good book based on historical events. One of my favorite recently read books is The Worst Hard Time by Timothy Egan, which depicts the mid-West during the great dust bowl of the 1930’s. Did you know that’s where the term “dirty 30’s” comes from? Neither had I!
The learning item rolled into reading, but reading definitely deserves its own category here. There’s really nothing better than laying out in the sunshine with a charming storyline and getting lost in fact or fiction. Growing up, my mom and I would read all day long during the summer and we called it our “Reading PowWow.” Cheesy, right? 😉
I often start and never finish many different crafts, but sometimes I make something pretty neat! One hobby I have is scrapbooking. It’s one of my few creative outlets and I sure wish I spent more time doing it….maybe once my MBA is done I can get back to it. Then there’s coloring – who hasn’t gotten into that craze?! Ahhhh, so relaxing!
Home Improvement Projects
My first home was a condo in the Sacramento area, and it was in great condition but stuck in the 80’s. I’m very fortunate to have a General Contractor dad, as he not only helps me with every project, but teaches me the basics with each time. Now that I own a beautiful home in Reno, my previously learned skills are being put to the test. Where my memory fails me, my wonderful boyfriend steps in, and my dad is just a call away if we get in over our heads. Our current project is simple but daunting… painting the entire bottom floor of our house. The previous owner painted not only the walls, but the ceiling also, a golden yellow – YELLOW!! That’s just too much. Time to upgrade to a pretty flannel grey 😊
Yes, let’s get the cliché out of the way – I love hiking! There are tons of trails in the Reno/Tahoe area that I need to explore and there are so many breath-taking views to be seen. Last year we bought a kayak and paddleboard which we took out regularly to Boca Reservoir and the lake in Truckee. I figured I would be horrible at paddle boarding since I’m not very sports-savvy, but to my surprise, I never once feel off the entire summer! I can’t wait to go this year. I also did Tough Mudder in 2012, when I was heavy into doing CrossFit. I skipped a few obstacles and suffered through the crazy Truckee altitude, and it was torturous but exhilarating. I hope to do it again someday!
I have a bit of on obsession with shopping, but I’ve learned to reign that in lately (my wallet is relieved!). I also have a reputation for my savings techniques – you know, the coupons, the sales, the whole she-bang! I love getting a good deal and stockpiling when I can. Target is for sure my go-to for anything non-perishable and I combine coupons, sales, my RedCard discount, and cartwheel savings to score some stellar deals.
The only children I have so far are my four-legged ones. I have adopte
d 3 myself – one female cat Jill (she’s very sweet), one male cat Jonas (he’s an A-hole), and one senior male mastiff-mix Rocky (the biggest, sweetest lovebug). My boyfriend adds his senior female golden retriever (also a big love, but also the size of a small horse!). I cannot image our household without all our animals, as they bring us so much of both stress and joy.
Well, I know I’ve probably left out some other leisures of mine but this at least gives you a little insight as to what I like aside from accounting. I would love to hear about your favorite past-times so comment with them below – maybe we have some in common!