consultant The Easy Accounting method
Tax time is near and that pile of receipts in your shoe box is only going to fade a petite more every day. Now is the time to use a straightforward system and get your home and enterprise accounting in order. You need to clean up that box before April 15th anyway, so as the saying goes, it is time to swallow the big frog first.
The Easy Accounting method
As with all prosperous ventures in life, a petite bit of work each day or each week makes the work a lot easier. The hard part is creating the habit every day or every week in order to get the job done. You eat a roast one bite at a time, so why do you try and handle a years worth of receipts on April 14th while you are hold with the Turbo Tax retain line trying to figure out why the factory didn't work. Lets start by eating last years roast now, and get started on our 2010 roast also.
The system is very simple, and the difficult part is getting population to spend the time every day. One of the paradoxes of assosication is you get more time. When you have more time you are tempted to take on more work and at some point lose your relationship with the habit that created the time. I jump up and down and scream and yell at enterprise owners when they do this. A well run enterprise is like a well designed watch. It isn't a lot of effort to make the enterprise run well when it is run well.
This is exactly the system we built for our clients. You can send us an envelope with your receipts and a check or you can follow this straightforward system.
Are you ready for this?
The three main things to do are:
1. Buy the equipment,
2. Set up the system, and
3. Start building your habits.
If all goes well tax time in the Spring of 2011 will be as straightforward as:
1. Setup Turbo Tax,
2. Fill out your information,
3. Import the data from Quicken or Quickbooks and
4. Click e-File.
1. Buy the equipment. 3-5 hours total if you go to Office Depot, less if shopping online.
First you need a computer. A mac is Ok, sadly Quickbooks is much good on the Pc for some reason, and therefore all here is associated to the Pc. If you own a business, you can get a petite Hp Pc and use it just for accounting and the costs won't be that bad even if you are a Mac shop.
The next thing you need is the software, I will admit although we aren't a "certified" Quickbooks partner but Quicken and Quickbooks are the only way to go. They easily should send me a cut.
The second thing you need is scanner. Neat Receipts used to be a requirement for our clients but the new Quicken has an attachment highlight so you can scan the copy of the important reciepts right to the Quicken line item with a right click and and a scan. The Hp 6100 series all in one printer-scanners have been tested and so have the big xerox all in one network scanners and they work fine.
Finally you need either three or twelve file folders. I like straightforward so three is plenty, and if you want more than you can use all twelve. My goal as a enterprise coach and environmentalist is to aim for a zero paper office. Less storehouse means more sufficient use of office space and less waste.
So the shopping list is easily this easy, and you probably can use what you have already if you like.
1. Small Pc 2Gb ram suggested, the scanners are slow if you get less, with Monitor and keyboard. If you can afford it and have the desk space, get a Quad Core Pc and Two 24" monitors. We like the Hp Pc's and Samsung monitors. If you are going to hire someone, get smaller monitors for easier remote access.
2. Copy of Quicken (Home Use), or Quicken Home and enterprise (Small home based business) or QuickBooks (You have an office and 1 or more employees)
3. Scanner, (suggest network ready so you can grow)
4. Three Pak of file folders.
That is all the equipment, software and materials you need to make the system work. Not too bad is it?
Set up the system. 2-3 hours
If your Pc is new, the most time may end up configuring the Pc. Quicken and Quickbooks both load reasonably quick and so do most scanner applications. After loading Quicken or Quickbooks on your Pc, start by entering your enterprise information. The only question you need to know now is "Cash" or "Accrual". If you are just starting out, reconsider choosing cash basis, you can all the time turn to accrual later. If you find you need to go the other way is a lot more difficult. One of our advisers says this, "Your books should be 'cash' basis, your filing to the Irs should be 'accrual'." Quickbooks lets you do this.
Next, it is time to join together your checking, savings and prestige cards to your Quicken or Quickbooks software so the self-acting updates are working. This greatly reduces the workload and will pay for the software within weeks. If you haven't done it, I would suggest stopping here and separating your prestige cards for home and office. I comprehend it is overkill, I have two American Express prestige Cards and two expert Cards. One each for home and one each for office. It makes life much easier when sorting receipts.
Test the scanner to make sure the accounting software will talk to the scanner.
Here is the process as we run it for our clients first, and my household second.
Start the habits. 1-2 hours per week, 8 added hours at the end of the year to do all including taxes if you follow this.
The first step in production the system easy to use is to turn every seller and every bill possible to online or electronic. Sending your invoices via e-mail, and accepting Ach (electronic) payments from your clients reduces your paperwork clutter right off the bat.
The next step relates to prestige card receipts. Every time you buy something, write the tax code or buyer line right on the top. For instance every time I have a sales meal, I write Meals 50% at the top. If I have a staff meal, then I write Meals 100% on top. If I stop at some big box store and buy parts for a buyer I write Cogs-Customer Name.
As a enterprise owner or employer there are some basic accounting concepts you need to understand. Cogs or cost of goods sold is one of those concepts and knowing the legal inequity between 50% meals and 100% meals is another. The list easily isn't that long, and most are pretty unavoidable like car fuel and maintenance. A petite institution and it becomes second nature. If you want to make things like fuel easy, get a fuel only prestige card for each enterprise car and that item is self-acting too.
At the end of each day or the starting of each day whichever you choose, all of the receipts go into an envelope that is mailed out to us each Friday, for you, pick one day each week to schedule one hour or so to get these receipts entered. All of your checks go in this envelope too. The three folders are for the current month and the past two months receipts.
When you sit down here is the checklist for the receipt box each week. If you have a very small business, you can try monthly but my palpate is no-one can originate a "monthly" habit since bills are due on a separate day of the week each month.
1. Run all bank updates
2. Compare all receipts to the bank download and accept.
3. Any receipts that aren't downloaded go back in envelope for next week
4. Any receipts that have a opportunity of being returned or are of high value are scanned and attached to the Quickbooks entry line.
5. All receipts go to the portfolio for the month
6. If it is a new month, all receipts are shredded and the portfolio moved to the front for the current month. If you haven't returned it in 90days you probably won't, and it it is important you have a scanned copy anyway.
7. Pay all bills due that week, print anyone checks are needed and try to get those vendors on electronic payments.
8. Deposit all checks received the same day entered.*
If you do a high volume of prestige cards or large checks you will need to originate an inventory for "undeposited funds". When you take a prestige card or large check, there could be five days or more before you easily can spend the money. The best way to stay out of issue here is to use the undeposited funds inventory to track the money until it easily clears your account.
That is it. If you want to see how your enterprise is doing take a quick look at both "Cash" and "Accrual" reports. You need to know both to understand what your enterprise is doing. If you don't know how to read the reports, pay for a consultant or accountant to spend a few hours helping you out. The stuff isn't that hard if you'll take a petite time to learn how to read it. Knowing how to read your reports might save your business.
As your enterprise grows, this system can be taught to some pretty basic employees. As long as you keep track of the weekly reports, you will notice if anyone is doing funny enterprise with your money just like you notice the receipts that don't match. Every enterprise owner should keep an eye on their books. Like I said, I have noticed employees charging gas for their personal cars when no one else did. I also noticed that one laborer was using a lot more wire than other employees, and found him on a Sunday doing a "side job" with our wire.
For your home bookkeeping the system is about the same, but we run it monthly. The first Saturday is our "financial day". Working or not we spend that night getting it done and looking at our month past, and month present. You will be surprised what you find. We found my two favorite self serve restaurants were adding a dollar and rounding up to the next higher dollar. For example, if I bought a .21 Pizza, my prestige card would be expensed .00. Sorry folks, I don't tip when I order at the counter and bus my own table. Getting expensed an additional one buck and turn without every knowing it isn't cool.
Recently we realized that any vendors we used who asked us to use PayPal were charging a "surcharge". Unlike quarterly prestige cards that prohibit the practice, PayPal doesn't and even has a line for it. As a enterprise owner I like it, as a buyer sorry, we'll use Amex and I'll take the miles. You just never know what you will find.
When you look at this process it looks like accounting can be handled by a teenager. The truth is with the right set up, a teenager can do your accounting, just keep an eye on the books or you might end up spending a bunch of money on iTunes.
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