Accounting, Bookkeeping, and QuickBooks Tips for Small Businesses

Posts in category Erie CO CPA

Colorado Sales Tax Updates, Effective July 1, 2011

Small Business Owner at Cash Register

Ca-Ching! Great news for Colorado businesses – the State of Colorado is restoring their State Sales Tax Service Fee (aka Vendor’s Fee), effective July 1st, 2011. The State Sales Tax Service Fee will be 2.22%. According to Colorado’s Department of Revenue’s website, “the service fee may be claimed on timely filings and paid sales tax returns submitted on or after July 1st, 2011. Beginning with sales tax returns for June 2011 and 2nd quarter 2011 returns due July 20th, 2011.” In a nutshell, if you if you file and pay your sales tax returns on time, you may take this 2.22% state sales tax vendor’s fee credit.

Here’s the link to Colorado’s Department of Revenue for additional information. Colorado Department of Revenue – July 1, 2011 Sales Tax Rate Changes

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


Yes, CPA’s Can Do More than File Taxes

CPAs Can Do More Than Taxes Tax season is in full swing and small business owners have taxes on the brain. Don’t get me wrong, tax professionals are an important advisor to your business. Good tax CPA’s can help you save tax money, plan for future tax costs, and create a plan to reduce future taxes. However, did you know that CPA’s can do more than just taxes?

Let’s stop and think about your business. If you run a small business, bookkeeping is a huge part of your daily, weekly, and monthly routine. Bookkeeping is the backbone to your small business. It provides you with a trail map detailing where your business has been, where your business is today, and where your business is headed in the future. Good bookkeeping can mean the difference between a successful business and a failing business. In addition to your tax CPA, why not choose a CPA that specializes in helping small businesses with their day-to-day accounting and bookkeeping needs?

In addition to taxes and audits, here are a few other ways CPA’s can help your small business.

  • Management Consulting
    • Analyze business operations and suggest changes.
    • Help businesses make better use of their resources, thus increasing efficiency and improving profitability.
    • Pricing strategies for new products and services.
    • Develop marketing strategies and track marketing plans for profitability.
    • Create a business plan for entrepreneurs or for existing businesses wanting to roll out a new department, product, or service.
    • Setting up a business – consult on business structure and registering the business with the correct government agencies.
  • Financial Consulting
    • Create forecasts and budgets.
    • Produce financial statements – Balance Sheet, Income Statement (Profit & Loss), and Statement of Cash Flows.
    • Perform ratio analysis – watch for business financial trends, problems, and growth.
    • Teach business owners how to read and understand financial statements, budgets, forecasts, and ratio analyses.
  • Financial Analysis
    • How much revenue does my company need to generate to be able to hire an employee?
    • Would my business save money if we purchased parts from a vendor instead of manufacturing them in house?
    • Create and calculate compensation plans – commission plans for sales staff, salary and bonuses for management, salary plans for staff, etc.
    • Why does one department continually loose money every month? What can the business do differently or change to start generating a profit?
    • Tracking cash flows – how much does my business need to make payroll? How much cash does my business need to pay next month’s bills? How much cash will be left over to pay the owner?
  • Bookkeeping
    • Accounts Receivable – record payments, assist with collections, generate invoices and statements.
    • Accounts Payable – record and pay bills and track expenses.
    • Bank Reconciliations.
    • Credit card statement reconciliations.
    • Reconcile PayPal accounts.
    • General ledger clean up and review.
    • QuickBooks Consulting – QuickBooks set up, QuickBooks training, QuickBooks clean up.
    • Cloud based and/or SAAS (software as a service) bookkeeping solutions.
    • Create, set up, and organize an accounting system.
  • Payroll
    • Online payroll processing for your small business.
    • File your quarterly and annual payroll returns – 940, 941, W-2’s, W-3, and 1099’s
    • New hire reporting.
    • Post payroll figures into the accounting software.
  • Human Resources
    • Generate an employee handbook.
    • Draft and create job descriptions.
    • Calculate compensation plans.
    • Consult on employee benefit plans – retirement savings plans, health insurance, and paid time off.
    • COBRA administration.
    • Workman’s Compensation.
    • Employee management consulting.
    • Unemployment Insurance.

This by no means is a comprehensive list of things your CPA can help you and your business with. As your business grows, changes, and enters new areas contact your CPA. You might be surprised at the additional services and resources they can provide for your small business!

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


Year-End Bookkeeping Checklist

Box of ReceiptsWow, can you believe the end of the year is quickly approaching? To help get your books in order and ready to send to your tax preparer here is a year-end bookkeeping checklist to help keep you organized. Keep in mind that every business is different. This list is meant to provide you with a general idea of items to take care of before December 31, 2010. When in doubt or if you have questions, seek guidance from a professional who knows your specific business situation.

End of Year Bookkeeping Checklist:

  1. Get Organized: Find all of the receipts for any deduction you are claiming on your tax return. For me, this involves looking in my purse, on my desk, in my car, on the kitchen counter, etc. Keep in mind that no receipt equals no deduction. The best way to stay organized during the year is to enter your transactions into an accounting software, like QuickBooks.

    After collecting all receipts, look over your personal bank statements for any business charges you paid for out of your personal account. Do the same with your business bank statement, but this time look for any personal expenses paid out of your business account. Make a list of these transactions to give to your tax preparer.

  2. Reconcile Your Bank Account(s): Bank Reconciliations are a great tool to verify all transactions have been posted into your accounting software. This ensures your general ledger bank balance (the bank balance in QuickBooks) matches your bank statement. If not, fix any mistakes you discover in the process.
  3. Invoice: Have you invoiced all of your customers for work you’ve done and products you’ve delivered/shipped for the year? If not, get caught up on those invoices.
  4. Collections: Follow up with any customers who owe you money. Send them a past due statement and/or give them a call to remind them they owe you money. Now’s a great time to collect your receivables.

    Look through your accounts receivables. Are there any receivables that you are unable to collect that need to be written off your books or sent to a collection agency?

  5. Inventory: Verify your inventory balance is correctly reported on your balance sheet. The best way to do this is to have an accurate count as of December 31st. You’ll also want to verify that your inventory is valued correctly – determine if any inventory items cost more than they’re worth and need to be written down. Remember, your tax preparer is going to need the following in order to prepare your tax return: 1. Inventory balance at the beginning of the year (January 1st); 2. The cost of inventory purchased throughout the year; 3. The amount of inventory that was sold during the year; 4. The ending inventory balance as of December 31st.
  6. Fixed Assets: These are the larger purchases you made throughout the year (i.e. equipment, automobiles, furniture, computers, etc.). Do you still have all of the fixed assets that are reported on your balance sheet? If not, record the sale or disposal of these fixed assets. Don’t forget to verify the depreciation on your fixed assets as well (if you don’t know how to do this, contact your CPA. They will be able to generate a depreciation schedule for you). Make any necessary adjustments.
  7. Expenses and Accounts Payable: Verify all of your accounts payables have been recorded in your accounting software, such as QuickBooks. Now’s a great time to make your 401(k), SEP IRA, and Simple IRA contributions, if you have not done so already.

    If you are a sole proprietor or a small business, did you know your cell phone charges and internet usage for your business is deductible on your tax return? Collect your cell phone bills & internet bills for the year and determine what percentage of your cell phone calls were for business purposes and what percentage of your internet was used for business. Make a list to give to your tax preparer.

  8. Notes Payable: Verify your notes payable (i.e. loans) amounts on your balance sheet match the statements from your banks. Are you missing any notes payables? Do you have any notes payables that you paid off during the year or debts that were forgiven? Make any necessary adjustments. Not sure how to make the adjustments? No worries, make a list to give to your tax provider or contact a CPA to help you make the necessary adjustments.
  9. Mileage: Great news, you can deduct $0.50 per mile for business miles driven in 2010. That means any trips to clients or for meetings are deductible. I keep a mini notebook in car to track all of my business mileage throughout the year (date, purpose of the trip, starting odometer reading and ending odometer reading) to ensure I have the necessary documentation to claim the mileage deduction. There are also a few apps out there that can track your mileage for you. Please note that your daily commute does not qualify for the deduction.

    The IRS also gives businesses the option to calculate the actual costs of using your vehicle (i.e. gas, maintenance, repairs, etc) rather than using the standard mileage rate. If you decide to go this route, you will need to determine the percentage of time you use your car for business and use this percentage to calculate your deduction.

  10. Collect W-9’s: If you have not collected W-9’s from your vendors and/or contractors you paid $600 or more to throughout the calendar year, now’s a good time to collect those. Don’t forget your 1099’s are due on January 31st. Speaking of 1099’s now’s a good time to order your 1099’s. They can be purchased at most office supply stores (Staples & Office Max) or you can order them for free from the IRS (irs.gov).
  11. Payroll Taxes: Verify your payroll tax liabilities match your quarterly payroll returns.
  12. Double Check your Profit & Loss: After making all of the adjustments listed above, double check your P&L Statement (aka Income Statement). Do your income and expense numbers make sense? Compare your profit and loss statement against prior years and against your budget. Think long and hard to make sure there is no additional income you are missing (i.e. advertising income from your blog, any contract work you did, etc.) and no additional expense items you are missing (i.e. those missing receipts you’ll find at the bottom of your purse or in your junk drawer). Make any necessary adjustments. Remember, no receipt equals no deduction.
  13. Create a Budget for Next Year: See our previous blog entries about creating budgets:
  14. Back Up: Back up your Quickbooks file to protect you from loss of data.

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


Cash Flow Budgeting For the Small Business

Cash Flow Budget for Small BusinessCan I make payroll this month? Do I have enough cash to fund my business’ growth? How much money do I have left to pay myself? If you find yourself asking these questions, you are not alone. Cash flow is an important step to running your small business. Without cash, your company (big and small companies alike) can not last for very long. Learning to manage, budget, and track your cash flow is an important step for small business owners. It is possible for companies to report a positive income while having negative cash flow. Which is why, contrary to popular belief, cash flow troubles are usually a businesses downfall, not profitability issues.

Creating a cash flow budget, also known as a cash flow projection, is a great way to manage your small businesses cash flow. The purpose of your cash flow budget is to track and project the cash inflows and cash outflows over a specific period of time. Most businesses will track their cash flow on a monthly basis, but it is not uncommon to see daily or weekly projections. The first step is to determine how far in the future you should be forecasting. As you know from creating your Profit and Loss Budget, projecting your future sales and expenses can be tricky because of the many uncertainties and unforeseen events that exist. The general rule of thumb is to budget your business’ cash flow for 6 months in advance. This provides the business owner time to look into the future and plan for future events.

Follow the steps listed below and you will have a cash flow budget for your business in no time.

  1. Prepare a Profit and Loss Budget (also known as a Sales Forecast).
    The easiest way to do this is to use your previous year’s financial statements and budget from there. If this is the first year you are in business it will be a little trickier, but not impossible. Research your industry, your competition, and economic factors and create a profit and loss budget for your business.

  2. Forecast Your Cash Inflows
    Working from your Profit and Loss Budget, determine how much money you plan to collect each month based on your monthly invoices. Pay special attention to your billing terms. If your invoices are due in 30 days, but your customers typically take 45 days to pay, use this time frame for your cash flow budget. This means January invoices will most likely be collected in March, not in February. If you offer discounts for customers paying early and three-quarters of your customers take advantage of these discounts, make sure to use these figures on your cash flow budget. For example, a 5% discount if the invoice is paid in full in 10 days, results in a receipt amount of $95.

  3. Forecast Your Cash Outflows
    Again, working from your Profit and Loss Budget, look at your expenses and enter them on your cash flow budget. Think about other cash disbursements that might affect the months you are budgeting for as well. Figure out what expenses will be paid and when. Some items to consider are rent, payroll, leases, office supplies, insurance, fixed asset purchases, etc. Don’t include your non-cash expenses (depreciation and amortization). Even though they show up as an expense on your income statement, they are not cash outflows.

  4. Cash Inflows – Cash Outflows = Net Cash Flow
    Now you have the tools to start managing and predicting your company’s cash flow. You can predict when your cash flows will be positive and also forecast for gaps in your cash flow (cash outflows exceed your cash inflows). This allows you to plan for the future and make any necessary arrangements or adjustments before you find yourself in cash flow troubles.

Here’s a great Cash Flow Budget Template courtesy of the U.S. Small Business Administration (www.sba.gov).

Next week I will give you tips on how to effectively use your cash flow budget, things to watch for, and how to plan for future events.

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


Month End Bookkeeping Tasks

Shoebox Accounting Month End BookkeepingClosing your books every month is an important bookkeeping task that should be part of your monthly bookkeeping routine. By closing your books on a monthly basis will help you have cleaner books, be more organized, and you will have an easier time preparing your books to give to your tax preparer at the end of the year. Here is a 12 Step process to follow when you close your monthly accounting records.

  1. Accounts Receivable
      Verify all clients have been invoiced for work completed during the month.
      Double check your deposits and monies received have been posted to QuickBooks.
      Reconcile your Aging Accounts Receivables report against your Balance Sheet and against your General Ledger. Make any changes or adjustments to ensure all records match.
  2. Accounts Payable
      Make sure all bills have been paid.
      Double check all automatic bill payments and any recurring payments have been posted to QuickBooks (example – loan payments, monthly car insurance payments, etc).
      Post any outstanding bills to Accounts Payable so you can track what needs to be paid next month.
      Reconcile your outstanding vendor bills and vendor statements against your Accounts Payable Reports and your Balance Sheet. Make sure your records match those of your vendors. Make any adjustments or changes.
  3. Monthly Reconciliations
      Reconcile Bank Accounts – Reconcile all bank accounts using your monthly bank statements and monthly credit card merchant statements. Print and file the reconciliation reports and bank statements when finished.
      Reconcile Loan Balances and Lines of Credit – Reconcile your loan balances and lines of credit against your monthly statements. Print and file the reconciliation reports.
  4. Track your Fixed Assets
      Record your monthly depreciation.
  5. Prepaid Income and Expenses Adjustments
      Record your monthly journal entries to allocate your prepaid income and expenses.
  6. Write Off Bad Debt
      Write off any uncollectable invoices to bad debt. In QuickBooks, this can be done using a Credit Memo.
  7. Verify all Checks and Invoice Numbers are Accounted For
    Checks and Invoices are generated in numerical order. If any check numbers or invoice numbers are missing, figure out why and record the missing transactions. If they were voided or deleted, make sure you keep a record as to why they were voided and/or deleted.
  8. Review Financial Statements
    Look for any unusual balances, missing items, or mistakes. If anything looks or feels “off” look into it and figure out why the balance seems odd to you. Make any corrections or necessary adjustments.
  9. Update Budget
    Update your budget and review your budget vs. actual numbers. Determine why some budget amounts are off for the month. Feel free to adjust your budget as needed.
  10. Print and File Financial Statements and Financial Reports
  11. Close Books
    If you’re using QuickBooks, use the “Closing Date” feature. This great feature allows you to lock previous months and protect with a password. This keeps yourself and your bookkeepers from accidentally changing previous months. The “Closing Date” feature can be found under the company drop down menu. If you find any errors later on, those errors need to be corrected in the current period.
  12. Back Up
    Back up your QuickBooks, Peachtree, or other accounting software.

There you have it – 12 steps to follow to close your books at the end of each month. Adding these tasks to your monthly bookkeeping routine will help you have cleaner books, be more organized, and you’ll have an easier time preparing your books to give to your tax preparer at the end of the year.

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


Coupon – Small Business Budget

The past few weeks we have discussed the importance of having a budget, how to create a budget, and how to set up a budget in QuickBooks. Budgets can be intimidating or maybe you just don’t have the time to create your own. No worries, let me help you!

Mention this blog coupon and I will create a customized 2011 Profit & Loss Budget for your Small Business for only $300!

It gets better, order your 2011 Small Business Profit & Loss Budget by November 12, 2010 and get a $50 discount! That’s right, you can get a personalized 2011 Profit & Loss Budget for your Small Business for only $250!

You must mention this blog coupon when ordering your Small Business Profit & Loss Budget to receive this special discount. $300 Small Business Budget offer expires 12/31/2010.



Michelle Edwards, CPA
Trailhead Accounting Solutions CPA, LLC
720-295-4CPA (4272)
info (at) TrailheadAccounting (dot) com


How To Create A Budget in Quickbooks 2010

Create Small Business Budget With QuickBooksLast week we discussed the importance of a budget and the process to take when creating a budget. I know a lot of you out there use QuickBooks for your bookkeeping. This week I will teach you how to make a budget in QuickBooks 2010. It’s important to note that you need either QuickBooks Pro or above to be able to create a budget in QuickBooks. You can not enter a budget in QuickBooks Simple Start.

Follow these simple steps and you will have a QuickBooks budget.

  1. Open your QuickBooks company file.
  2. Click on the Company menu, select Planning & Budgeting from the drop-down menu, and then click on Set Up Budgets.
      If you have already created a budget in QuickBooks, your most recent budget will appear in the next window. To create a new budget, click the Create New Budget button in the top right corner of your budget window.
  3. The Create a New Budget window will appear. First, you need to select a fiscal year for your new budget. Then, you can choose whether you would like to create a Profit and Loss (i.e. Income and Expense) or a Balance Sheet Budget. Make your selection and then click Next.
  4. When creating a Profit and Loss Budget, the Additional Profit and Loss Budget Criteria window allows you to use Customer:Job or Class criteria in your budget (assuming, your company has the class tracking turned on). Make your choices, then click Next.
  5. The Choose How You Want to Create a Budget window allows you to either Create a budget from scratch or Create a budget from your previous year’s actual data. Make your selection and then click Finish.
      Create a Budget From Scratch – Lets you manually enter amounts for each account you are interested in tracking.
      Create a Budget From Previous Year’s Actual Data – This option will automatically enter monthly totals from last year for each of the accounts listed in your budget.
  6. Your Budget will appear in the next window. This window allows you to enter your monthly budget amounts for each account. QuickBooks will automatically calculate your annual budget amount for each account. When finished, click Save.
      Tips:

  • The Copy Across button will copy an amount entered in Jan across the rest of the months. Saving you the hassle of entering the same amount 12 times!
  • The Adjust Row Amounts button is a neat feature. It allows you to start at the 1st month or start at your currently selected month. Then you can adjust (increase or decrease) the monthly amounts in this row (for this account) by a dollar amount or by a percentage.
  • Beware of the Clear button. It clears your entire budget!

Congratulations, you have entered a budget in QuickBooks and are ready to track your financial progress for the year.

Related Budget Blog Entries:
Simple Steps to Creating Your Own Small Business Budget

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Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


Small Business Budgets, Made Easy

Cash Squeeze_Small Business BudgetThe 4th quarter has officially begun.  Now is a great time to start getting organized and begin planning for next year. I know, most of you cringe when you hear the word budget.  Don’t worry, they are not as bad as they sound.  Budgets are a great tool to help you plan ahead for the upcoming year.  By reviewing and planning your future expenses, you will know how many sales you need to make in order to break-even and better yet make a profit.  Let’s get started.

Creating a Budget
There are several ways to make a budget.  You can draw one up with pen and paper, use a spreadsheet program, or build it in your QuickBooks or other bookkeeping program.  Use any method that works best for you and one you’re most comfortable with.

Next, you have to determine what goes on your budget.  I use three main categories:

  • Projected Income – Be realistic. It’s better to under budget your future income rather than budget for the best year ever and then fall short as the year progresses.
    • Sales Forecasting can be tricky and is very difficult to do accurately.  Here are some things to consider when making your sales forecasts.
    • Previous years sales and trends (look at your company’s numbers along with your industry’s numbers)
    • Economic Trends (is the economy in a recession? is the economy growing? How fast is the economy growing or slowing? How is the economy impacting your specific industry?)
    • Your company’s pricing policy.
    • The estimated effect of your current and future marketing campaign, promotion, and advertising.
    • Competitors (are more competitors expected to enter the market? Brand new products in the industry affecting your sales?)
    • Other Factors (political, legal, weather, styles, trends, etc)
  • Direct Costs – These are the costs you incur to make and sell your product/service. Some examples include cost of materials, subcontractors, payroll & employment taxes (for employees who make the product and sell the product), etc.
  • Fixed and Overhead Costs – These are costs your company will incur whether or not you produce any products during the year. Examples of these costs include rent, mortgage payments, utilities, insurance, phones, etc.
  • Sample Budget

    Helpful Hits

  • Start with Expenses – That way you will know how much in sales you need to generate to cover your expenses.
  • Current Business Owner – Use previous years records to help estimate next year’s sales and expenses.
  • New Entrepreneur – Do your homework and research other companies in your industry to ensure you’re making realistic assumptions about your new business.
  • Budget for Taxes
  • Don’t Forget to Budget to Pay Yourself
  • Budget Benefits
    The main benefit to creating a budget is to able to plan ahead. You can allocate your resources to areas where they are needed most, to help keep your business headed in the right direction. Budgets also allow you to see if you are meeting your financial predictions. If not, you can see where you went wrong and make the necessary changes to improve. If you are meeting your financial predictions, you can continue to keep yourself on track and possibly discover new opportunities to capitalize on. Budgets are also a great way to control your company’s cash flow. Most importantly, budgets help you to make informed and educated business decisions.

    Remember, especially when starting out keep things simple. All you are doing is trying to determine how much you plan to spend, where the money will go, and how much you plan to earn for the given year. Continue to track your progress on a monthly basis, and adjust your budget as you go along. These simple steps will help you stay on track, manage your cash flow, and track your financial goals.

    Related Budget Blog Entries:
    Learn How to Create a Budget in QuickBooks 2010
    How to Create a Cash Flow Budget

    **Disclaimer: The example budget displayed above is for information and educational purposes only.  It is created using fictitious data. Everyone’s financial reporting, budgeting, and forecasting needs are different.  Please consult your financial advisor regarding your specific and individual budgeting needs.**

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    Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
    Certified QuickBooks ProAdvisor

    Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


    CPA? Accountant? Bookkeeper? What’s the Difference???

    CPAChoosing a financial advisor for your business is a big decision. I recommend finding an advisor who you are comfortable working with, a professional with at least 3-5 years of experience, has good references, and most importantly someone who is trustworthy. Sounds easy enough, but then you start looking and realize there are a lot of choices out there. What’s the difference between a Bookkeeper, an Accountant, and a CPA?

    Bookkeeper
    A bookkeeper is responsible for accurately recording and posting the daily transactions of your business. This usually includes accounts payable (entering and paying bills), accounts receivable (invoicing clients and collecting payments), and entering inventory. Occasionally bookkeepers also assist with payroll. A full-charge bookkeeper can handle the data entry as well as generate basic financial statements.

    The education level of bookkeepers vary. Some have an Associates Degree while others only have on-the-job training. With their limited accounting knowledge, bookkeepers are typically the most affordable option. They are a good option for basic data entry needs. Buyer beware, since bookkeepers do not have education requirements, it is important to find one with at least 3-5 years of experience and someone that comes with good references.

    Accountant
    An Accountant is the next step up from a Bookkeeper. In addition to the bookkeeping tasks, an accountant should be able to set up a bookkeeping/accounting system, monitor it, generate financial statements, and interpret the financial data. Many accountants will also provide tax services to their clients. However, with the new IRS rules going into place, make sure your tax accountant and tax preparer are have are registered with the IRS and have an active Tax Preparer PIN.

    Typically an accountant will have a college degree in accounting or business administration. Some will also have a Master’s Degree. Accountants will be educated in basic accounting concepts and will understand the company’s general ledger. For businesses with more complex entries and transactions, accountants make a good choice.

    CPA
    Certified Public Accountants, CPA for short, is the next level up from an accountant. CPA’s can they perform the duties of an accountant and have the ability to perform an audit. CPA’s are a great choice for your business because not only can they help with your bookkeeping but they also have the knowledge and skills to help take your business to the next level by calculating growth ratios, following growth trends, preparing a budget, tracking your progress against your projected income levels, etc. One of the best benefits to hiring a CPA is that CPA’s are required to complete continuing education courses every year, which helps to ensure they stay current on changing accounting trends and rules. CPA’s are a great resource to help you and your business with tax planning and tax preparation.

    In order to become a CPA, the accountant must pass a set of rigorous tests to ensure their knowledge and understanding of the accounting laws and regulations. CPA’s are licensed by the state in which they practice. The state boards and the AICPA set professional and ethical standards that CPA’s agree to follow. Similar to an accountant, CPA’s will hold at least a Bachelor’s Degree in accounting or business administration. With new education requirements states have put in place, many CPA’s also poses a Master’s Degree. CPA’s hold the highest level of accounting knowledge, and in return they typically charge more for their services.

    As you can see, there are several options available to help your business. Everyone’s situations and needs are different. Finding the right financial and accounting advisor takes time.  I recommend interviewing several advisors to ensure you’re making an informed and educated decision.  Asking friends, family, and neighbors for a recommendation is a great place to start.

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    Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
    Certified QuickBooks ProAdvisor

    Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


    Welcome

    Welcome to Trailhead Accounting Solutions CPA blog – CPA in Erie, CO. We look forward to bringing our clients, friends, and followers tips, thoughts, and teachings from our bookkeeping and Virtual CFO expert, Michelle Edwards, CPA.

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