If you think you don’t need a bookkeeper, think again. If you’ve been considering whether or not it’s time to hire a bookkeeper, here are some things to contemplate your financial fate:

1. If you don’t really know what you’re doing but think you can figure it out. Though systems like Quicken and Quickbooks are designed to be end-user friendly, they can be confusing for the non-professional. Most of the books we’ve worked on are small business owners who came to us after not being able to figure it out and messed it up. Trust us, most of the owner’s money spent is clean up of their own mess. If you don’t know what a Chart of Accounts is or really understand why and how they are set one up, my advice would be to stay away.

2. Maybe you took some Accounting courses and actually understand what you’re doing. However, the only problem is, you’re not organized. If you’re not sure if you are considered an organized individual or not, ask yourself this; Do most of your cash receipts and bank slips end up on your night stand after you empty your pockets at the day? If you said yes, just think, you could be emptying them all onto your bookkeeper’s desk.

3. If your memory is less than perfect. If you don’t remember what you had for breakfast this morning; you’ll never remember what you paid and to whom two weeks from now when you get around to doing it yourself. Let’s face it; if you’re a one man show with a couple of employees, you are probably trying to wear too many hats as it is anyway. You just can’t. Something’s got to give and it will be your memory.

4. There is someone between you and the bill collector. This alone is worth it especially if cash flow is tight, like it is for so many small businesses. Having a bookkeeper brings you credibility as well as actually being able to stay on track with payment deadlines, cash discounts and vendor communication. You have enough phone calls and employees to motivate, leave the worry behind.

5. There is now someone between you and your accountant that understand what your accountant is saying. They have a language of their own. Bookkeepers understand the needs of your accountant, how the numbers relate to a business income tax return and the state and federal regulations you need to abide to.

6. You actually know how much money you have in the account. It’s not your on-line bank balance or ATM balance when you last took money out. Your bookkeeper will know what bills were paid and checks that went out that haven’t cleared yet. Your bank register balance is your true balance. This can save you hundreds in overdraft fees and earned trustworthiness with your vendors.

7. You just don’t have the time. Your time is valuable and if you’re small enough, in addition to any people you have, you actually have billable time. Anytime left over needs to be spent getting clients, improving productivity and creating a vision for your next goal.

As you can see, having a bookkeeper is well worth their weight in gold. You don’t have to hire someone full-time. Many freelance bookkeepers expect to work part-time hours. However, at the very least you should have someone come in to reconcile the monthly bank statements and pay some bills. You’ll want to find any mistakes early and we all make them. It’s best not to find out when you’re bringing your mess to your accountant at the end of the year. They will most likely turn around and hand it off to a bookkeeper to straighten out anyway and bill you out at a higher hourly rate than what a bookkeeper would have, had you hired one to begin with.

For more business tips, free ebooks and other sources for small businesses, please visit [http://www.rightfit4life.com]http://www.rightfit4life.com.

By Lynda Barton

When operating a business, whether online or offline, understanding financial statements is an essential skill if you are to be able to identify its strengths and weaknesses. A financial statement can offer a great deal of information about a business if you have been trained to read it properly.

Understanding financial statements is distinctly different from analyzing them, and you must have that understanding before you can operate a business properly and maintain a feel for its progress. There are several types of financial statement involved in operating a business, the principal of which are Aging Reports, Profit and Loss statements, the General Ledger and the Balance Sheet.

Each of these is important in keeping track of the financial state of a business:

The Balance Sheet

The balance sheet provides a snapshot of the assets, liabilities and equity of a business at a stated period of time, usually a stated date at the end of each financial year.

Assets: Current and Fixed

Current Assets:those that can be realized as cash or used to pay current liabilities relatively quickly, usually within one year. Examples are cash assets, bank accounts, accounts receivable, inventory and any prepaid expenses for services that will be provided within a year.

Fixed Assets:assets that cannot easily be converted to cash, such as real estate, plant and equipment, biological assets (animals and plants), certain investments and others that are amortized over an extended period.

Liabilities:

A liability is an obligation arising out of past transactions and not anticipated future transactions. Settling such obligations may involve the use of assets. Examples of liabilities are accounts payable, current and deferred tax liabilities and assets, promissory notes and payments received by customers for services yet to be provided.

Equity:

The Equity is the third part of the balance sheet, and is the amount of capital used to finance the company by owners and shareholders.

Fundamentally, the assets will balance the sum of the liabilities and equity. Understanding the balance sheet enables you to see how much money a company has and how much it owes others over both the short and longer terms. It can tell how the assets were paid for: either by borrowing money or from owner or shareholders’ equity, and the trained eye can judge the financial health of a business from these figures.

The Profit and Loss Statement

Also referred to as the Income Statement, this shows the profit or loss made by a business over a specified time period. Fundamentally, a simple equation would be:

Income – Costs (accrued in achieving that income) = Profit or Loss.

This is oversimplified, of course, but explains in fundamental terms what a Profit and Loss statement is. Net income is that for which all taxes and other costs have been deducted, also known as the ‘bottom line’. Among the costs to take into account are labor costs, other overheads such as power and maintenance costs, depreciation/amortization, raw materials and so on.

However, you do not have to know how to create a Profit and Loss statement in order to understand it and it use to determine whether a business is making a profit or a loss. Simply checking whether the income figure for the period is positive or negative gives an immediate idea of its performance for that period, a critical aspect of operating a business.

Understanding Aging Reports

An aging report lists the balance due by each customer, and for how long the balance has been outstanding. This will be broken down into individual debts if a customer has more than one outstanding balance. Aging reports can be used to prioritize bad debts and help you read more into your Profit and Loss statement. They can also help you analyze your outstanding debts for your Balance Sheet.

An apparent loss can be remedied by prioritizing debts according to the period they have been outstanding. Your Balance Sheet will show these as account receivable, but by analyzing your Aging Report, you will get a better idea of how much is overdue from customers and for how long.

The General Ledger

Fundamentally, the General Ledger holds a record of every financial transaction carried out by your company. The General Ledger will likely be linked to other subledgers, so that, for example, accounts receivable will be entered into an accounts receivable subledger, and when paid, the transaction will be entered into a cash ledger. Each of these entries will also appear in the consolidated General Ledger.

The General Ledger will maintain a running record of credits and debits plus a running balance. It provides an internal audit trail of all financial transaction carried out, and is the source of transactions included in the Profit and Loss statement and the Balance Sheet. In the event of discrepancies such as double billing and unpaid bills, the General Ledger will be used to trace the transactions and sums involved.

Understanding financial statements such as these is essential for anybody operating a business, large or small. Without such an understanding it will be difficult to analyze the financial health of the company, or to predict potential problems. Each of these four different forms of financial record and statement are important in provided a proper record and source of analysis of the worth and potential of a business.

There is a lot involved in operating a business. An important factor is understanding financial statements so you can assess the health of your company. More information on this topic is available on B&M Financial Management’s website http://www.bmfms.com

By Michelle R Jones

The threat of stolen identities and bank account fraud is indisputable, but very few of us actually do anything to prevent it from happening. Here are 9 very simple steps that any business can take to reduce their risk of becoming victimized.

1. Secure Mailing- Instead of using a normal mailbox at your office, mail any outgoing checks in a secured postal box at the Post Office. This eliminates the risk of a “Mail Harvester” stealing your checks and selling them to a check forging ring who will then duplicate counterfeit checks with your account information.

2. Positive Pay- Banks offer a service called Positive Pay that allows them to catch fraudulent checks when they are presented for payment. They compare the presented check information (check number, amount, and payee) against a file they receive from you with information on all of the checks that you issued. If the information doesn’t match, it sends up a red flag. This service usually has a fee associated with it but in this case, the fee could be worth it in the long run. It also helps establish a fraud prevention partnership between you and your bank.

3. Check Security- Take time to compare which check stock actually has the most security features. The average check has only three or four security features but there are some that have eight or more. Using the correct stock will ensure that you are raising enough barriers to discourage a forger.

4. Toner Grip- Toner Grip is a special chemical applied to paper that chemically bonds the laser toner to it. When attempting to lift a printed character off of the sheet with tape, the actual paper fibers will rip away. This is an add-on for many check suppliers, but well worth the cost. However, there are some check suppliers who provide Toner Grip as a standard security feature and do not charge extra for it. Do some research into your vendors to find out who offers this product and at what expense.

5. Track Check Numbers- If using preprinted checks; assign a range of numbers to the users of your check stock. Make this person accountable for any lost checks and if you discover one is missing, issue a Stop Payment on that check number immediately.

6. Secure Your Check Stock- When your checks are not in use, it is imperative that you lock up your check stock, especially if they are preprinted with the check number and account information. Check stock can be easily stolen and passed off as an authentic check. Even if your check stock is blank, it is still good practice to guard your checks. Why expose your company to Attorney fees that would result in disputing a fraudulent check claim.

7. Secure Your Signature Plate- You would never sign your name to just any document but if your signature plate is stolen, your name can be attached to anything. Take measures to protect your signature plate because essentially it is just as important as your handwritten signature.

8. Reconcile Your Bank Account- The sooner that any fraudulent activity is reported to your bank or law enforcement, the better chance you will have in court. There is also the Repeater Rule to watch out for. This is when a forged signature is used repeatedly by the same offender and goes unreported for over 30 days after the bank statement was mailed out, the bank may not be liable for the losses. Be sure to reconcile your check distributions and deposits within 10 to 20 days after receipt of your bank statements.

9. Phishing Scams- Most banks tell you that they will never call you or send a letter or email asking for your account information. Be very suspicious of any correspondence you receive that asks for your account number or personal information. If there is any question in your mind, hang up and call your bank. If it is a website that you are questioning, look at the URL. If it is a secure site the web address will begin with https:// instead of the normal http:// without the “s”.

Notify your bank immediately if your business or company becomes a victim of check fraud. You will then need to close the account, destroy any old checks, and notify outstanding payees. If the perpetrator is an employee, additional measures will need to be taken such as filing a 1099 against them.

By Greg Mathews

Greg Mathews at Specialty Graphics, Inc. provides Accounts Payable Departments with products to help simplify their jobs. To find out how he can help your Accounts Payable, visit http://www.ChecksNForms.com

The process of tax preparation can be a bit intimidating for small business owners. With a few simple steps you can avoid problems with your Tax Returns.

We have provided several basic check lists below that will assist you in your year-end preparation.

Save Receipts

Even small purchases should be tracked with receipts. While the government does not require you to keep receipts for expenses less than $75.00, you will have to know the circumstances of the expense. They will want to know where the expense came from and why you needed it for business reasons. Thus, it is much easier to keep a receipt than to remember this information or keep track of it in some other way. Get a file for receipts and put everything in their throughout the year.

Any business expense that is ordinary and necessary can be deducted from your business taxes.

General Year End Preparation

When you get close to the end of the year, there are several things you can do to lower your tax bill.

• Evaluate your cash flow situation and decide whether or not you can afford to make any purchases.
• If you are in a good cash flow situation, it may be to your advantage to purchase some things that you are going to need next year. You could stock up on supplies, pay any bills that you may have or buy new equipment

Remember the more expenses you can generate, the lower you tax burden is going to be.

Year-End Accounting Checklist

Sometimes it helps to have a checklist to follow in order to complete Year-End Tasks. Here are a few things to ask yourself when doing your Year-end financial statements.

• Does my general ledger bank balance reconcile to the bank statement?
• Are there any accounts receivables that are worthless and should be written off?
• Is the company’s inventory balance correctly stated?
• Are there inventory items that cost more than they’re worth and should be written down to their market value?
• Are there any prepaid items that need to be adjusted such as prepaid insurance?
• Have all assets been reviewed for accuracy?
• Have we recorded all of our payables?
• Are there other debts that have not been included on the books?

The last step of the year-end process is to check your sales, cost, and expense accounts. Compare to prior years to see if any increase or decrease is reasonable. If you run across significant changes, you may want to look at the general ledger for that account to ensure the entries are legitimate.

Financial Check List

• Has your life changed? Marriage, a baby, moving or a new job? You may need to change your budget to take these into consideration.
• Retirement Fund. It’s a good idea to contribute as much as you can to tax-advantage plans
• Taxes. Do any recent changes affect you?
• Evaluate your debt. What do you owe? Try to consolidate your bills. The first ones to pay off are those that carry high interest.
• Check your will. Is it up to date? Does it reflect your true wishes?
• Think about insurance. How is your insurance coverage for home or rental, for life and disability?
• What about the children? Talk about establishing an education savings account or taking advantage of a 529 college savings plan.

By Fran McCully

Fran McCully of Your Administrative Solutions specializes in bookkeeping/accounting, database and business-plan development, and human resources. Fran partners with small businesses, mirco companies, solo-preneurs and individuals. To receive your free report, “Know Your Cash Flow,” and discover additional resources from Fran McCully, Financial Strategist and Bookkeeper, please visit http://www.YourAdministrativeSolutions.com

Every day, we meet with new small business owners. They always have the same questions about their businesses. This paper is to provide some simple answers to the most common questions.

1. What can I claim as a business expense?

Operating a business is similar to going on a safari to Africa. If I asked you “How much did the safari cost?” you would simply add up the receipts for the trip and tell me the cost. As a new small business owner, you are in an adventure of business. Any expense that you pay in order to be on your adventure can be claimed as a business expense.

The most common and straight forward expenses are those of advertising, office supplies, professional fees, insurance, freight, postage, meals and bank fees. These are straight forward because they are typical business expenses and don’t require a lot of interpretation or calculation. You simply add up the receipts and you have the total expense.

Other expenses such as office rent, automobile, and wages are all acceptable expenses but are usually a bit more complicated to determine. These areas have various rules that apply that all business owners should know early in their adventure.

2. What do I need to retain to prove my business expenses?

So going back to the example of the safari adventure in Africa, if you were asked to show that you actually were on the trip, you would probably pull out things like plane tickets, hotel bills and meal receipts. Anyone could see from the addresses on the bills, the dates and the descriptions that you were in Africa, you spent money and a general time frame for the trip. This would provide good evidence of your trip to Africa. The same principles hold true for your adventure in business.

One thing that is hard to remember, even for seasoned business people, is to get the proper receipt for each and every business transaction. Many business people know the feeling of walking out of a restaurant or driving away from a gas pump and realizing that they didn’t get the receipt that they need. In that moment, the business owner has converted a business expense to a personal expense.

The general rule of thumb in this area is that you need to get a receipt that shows the actual description of the items that were purchased. The receipt produced out of a debit or credit card processing machine that only shows the total amount in not going to cut it with a CRA auditor. Neither will the Visa or MasterCard statements showing a company name and an amount. In short, you need to get a receipt that shows the paper, pencils, gas or hamburger that was purchased to allow you to do your business.

3. How does office rent work in a new business?

While you are traveling around Africa, you are going to need to have a place back home to store your belongings while you are traveling. Some people might put this all in a storage unit and pay rent. Others will put their belongs into a friend’s house and pay rent. Others might simply lock the front door of their house and continue to pay the rent or mortgage payments. This location, though, will be where you return when the trip is finished.

New business owners need this same type of space when they start their businesses. Most people will use some space in their homes. This space will usually be a den, converted bedroom or part of the basement. The Canadian tax system has a system to recognize the costs associated with this space.

The very general rule is that you will be able to recognize a portion of your home expenses as office rent in your business. The first step is to calculate the total costs associated with your home. This should include the mortgage interest, rent, the condo fees, the home insurance, the utilities, property tax and maintenance costs. Once you have these numbers, you calculate the total amount of space used in the house for the business. This amount in then divided by the total space available in the house. The ending result is the percentage of home expenses that can be claimed as office rent. For most of the businesses we deal with, the percentage amount is usually 10 to 15%.

4. How do automobile expenses work in a new business?

Pretend that you decide to take your compact car to Africa on your safari. If you were asked “How much did you spend on auto expenses on your trip?” you would probably come up with a total for the gas, the repairs and the maintenance while the vehicle was physically in Africa. You wouldn’t add in the expenses of gas and repairs in Canada as these would not be costs associated with the Africa trip. Business auto expenses work in a similar manner to this.

Automobile expenses are very complicated for business owners. We won’t try to explain all of it here. The important thing to remember is that you need to keep a lot of information in order to properly record the auto costs. You need to keep good records of how much you drive for business and how much you drive for personal. You also need to keep all of your gas and maintenance receipts. These receipts need to be the one from the gas pump or from the cashier. You cannot rely on your credit card statements to provide the evidence for these purchases. This then gives you the basic information that your accountant can use to calculate the auto expense for you.

The next step in the calculation is to identify those expenses that are business expenses and those expenses that are personal expenses. This is similar to our Africa metaphor in that you need to figure out how much of the overall costs for the auto are for business only. This is done be determining the total kilometres driven for business and the total kilometres driven for pleasure. These numbers are then used to determine what percentage of the total automobile costs can be claimed for business.

The other question that most new business owners ask is “What is a business trip”. This is fairly easy for a new business owner as most of them operate out of their home. Thus, a business trip is any time that you leave the house to deal with a business matter. This can include traveling to meet with clients, getting supplies, depositing money in the bank or traveling to other cities to attend conferences. The amount of the mileage is basically from the garage of the house to the parking stall at the destination and back.

5. Do I need a business bank account for my new business?

If we did do a trip to Africa, it would be easier and simpler if you had one bank account for the trip only. If there were any questions about what you spent on the trip, you could simply go to the bank account and get a lot of the details that you would need. This is similar to your adventure in business.

Our suggestion is that you have a separate bank account that is used to record the deposits and the expenses for your business adventure. If you operate under a name other than your personal name, you will need a business account. This will probably require you to register a trade name at your provincial registry office. The separate bank account makes it much easier for your accountant to identify business only transactions. This ensures better accuracy.

6. What is a business meal?

On your African safari, you would include in your total costs all of the meals that you had while on the trip. You might also include those meals that you had before you left where you met with others to plan and organize the trip. You might also include a few meals after the African safari if they are a result of the trip. These might include meetings with a book publisher who is interested in your travel book or maybe meeting with an investor to review the results of the trip. In short, any of the meals that were required in order to plan or organize the trip can be claimed as an expense of the trip.

Sometimes it appears as though some small business owners go into business to simply claim all of their meals. They claim every meal they have as business meals whether the meal is at a restaurant, at home or in a field with the family. This is not very prudent.

So what can you claim as a business meal? Well, a business meal typically occurs in a restaurant. It usually involves two or more people although there is an exception. The reason for the meal is to allow the individuals involved to discuss topics related to the business. Typically, one person is trying to convince another person of a position or plan of action to follow to generate more sales.

There are some business meals that don’t meet the description in the above paragraph but still qualify as a business meal. These are meals that business people have when they travel outside of their municipality or town. They are designed to compensate the traveling business person for the fact that they cannot eat at home and are forced to eat at restaurants.

So like a trip to Africa, your adventure in business has a cost. In order to properly report these costs, you have to be able to split out the business costs from personal costs and report them properly. If you do this, you will then have the information that your accountant can use to properly report your small business income to the tax authorities.

By Gerald E Hunt

Gerald Hunt B.Sc. MBA is a small business accountant. He is the owner of the Padgett Business Services franchise in Southeast Calgary and Okotoks. Padgett Business Services? provides bookkeeping, accounting and tax services to small owner operated businesses. Sign up for the Small Biz Builder Newsletter for informative tax and accounting tips at http://www.smallbizcalgary.com

Are you writing a business or marketing plan? If so, consider enlisting the expertise of accountants. Accounting is a critical aspect in making business or marketing plans. Preparing financial statements and projections require extreme care because these records are vital in persuading prospect investors about the viability of a business or marketing strategy. While most aspects of a business plan are qualitative in nature, numbers definitely provide a descriptive picture of a business more than words can.

Writing a business plan is never a simple thing

Templates do not always provide the right elements to create successful plans because although templates might enable shortcuts, they are not always comprehensive and tailored to meet varying needs. Accountants can help you write financial statements that are based on the unique qualities of your business. Remember each business is unique, having unique requirements and circumstances. There are accounts unique and exclusive to your company, which may not be found in templates. You can’t afford to miss those details.

It’s a must to present numbers that make sense

The accounting overview and financial planning sections of a business plan have to be well constructed and structured. Projections must be done with a clear understanding of future trends, but all estimates must be rooted or based in part on the past performance of the business, if applicable. Numbers must be plotted based on a conservative point of view. Accountants can help ensure that these sections are professionally tailored and perfected which will enable greater success with investors.

Show good accounting and financial management skills

Showing proof you or your team possess exceptional skills in accounting particularly financial management is critical. Like many entrepreneurs, you might lack an accounting background and do not have the time to study in full details the subjects in question. Whilst you can gain basic knowledge in accounting, you’re going to need to hire experts in the field, specifically accountants, to maintain the financial integrity of your business and for you to focus on directing the business. It’s counterproductive in the long-term to be the accountant and at the same time the owner of the business.

Sound business plan – blueprint for business success

Skills in accountancy are vital in making informed decisions, record keeping, and discovery of inefficiencies in financial management practices and other aspects of business. A business plan which is carefully and professionally written can ensure desirable results.

Accountants possess the experience and skills required for helping you come up with a plan that’s financially sound and attractive.

KDA Accountants are one of Ireland’s leading accountancy firms and are a progressive firm of chartered Dublin Accountants & Registered Auditors. KDA are leading Tax Accountants in Dublin and provide a number of sources such as handling auditing, payroll,liquidation, taxation and outsourcing accounts.

By Tony Kilcoyne

For more information please visit http://www.kdaaccountants.ie/