Bookkeeping Success!

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 inDaily, 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 Credits Debits Assets – Liabilities = Owner’s Equity

4. Assets Bank Accounts Accounts Receivable Buildings/Land Equipment, Vehicles, etc Inventory Pre-paid Expenses Debits and Credits • Liabilities • Loans • Credit Cards • Accounts Payable • Sales Tax Payable • Payroll Liabilities • Gift Certificates Sold • Rent Deposits Held • Equity (Shareholders)

5. Something to Remember: • Assets, Liabilities and Equity are part of the Balance Sheet and are normally on the top of the list in the Chart of Accounts and have a register when you double-click. • Income, COGS, and Expensesare a part of the Profit & Loss Statement and are normally on the bottom of the list in the Chart of Accounts and have a quick reportwhen you double-click. Note: Before electronic bookkeeping, there were many journals to post to.

6. Double Entry Accounting • Q: What does that mean? • A: Posting Debits and Credits to the Balance Sheet and/or the Profit & Loss Statement. • Note: The Balance Sheet is for Reality, and the Profit & Loss is for Reporting

7. Double Entry Accounting►QuickBooks does it for you behind the scenes: • In an Invoice: DebitCredit Accounts Receivable Sales Sales Tax Payable Cost of Goods Sold Inventory Asset • In a Sales Receipt: DebitCredit Undeposited Funds Sales/Sales Tax Payable Cost of Goods Sold Inventory Asset

8. Double Entry Accounting con’t…►QuickBooks does it for you behind the scenes: • In the Enter Bills: DebitCredit Inventory Asset Accounts Payable Expenses • In the Payroll: DebitCredit Payroll Expenses Checking Payroll Liabilities

9. Some Pitfalls to Avoid: • Accounts Receivable • Recording payments without using “Receive Payment” • Accounts Payable • Recording Checks without using “Pay Bills” • Sales Tax Payable • Recording Checks without using “Pay Sales Tax” • Payroll Taxes Payable • Recording Payments without using “Pay Payroll Liabilities” No more “widows and orphans”!

10. The General Ledger “The Catch All” • 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

11. The Financial Statements The Big Picture • 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

12. “Best Practices” or Good Habits Think of it like watering your plants, or brushing your teeth… you do it as often as is needed to stay healthy. • 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

13. Another Good Thing To Do: Map your Chart of Accounts to your Tax Form (Schedule C, 1065, 1120 or 1120S) Tax-Line Mapping is in the “Edit Account” window. *Opening Balance Equity should come to $0.00

14. Employees and Payroll Basic Forms: • 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

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. Know where to get help Or, call your CPA or your REAP Business Specialist • 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

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

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