Accounting, Bookkeeping, and QuickBooks Tips for Small Businesses

Posts tagged Budget

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.


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.**

    ____________________________________________________________

    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.


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