Top five questions asked by new business owners, part five

Question #5: How much is this going to cost?

For every new client call I get one of the first things I get asked is “How much is this going to cost”? My answer is simple; the price is tailored to you exactly like our services. Each accounting project is different, and in order to give you a price, even a ballpark figure, we have to assess exactly where you are and what you need to maximize your accounting project.

Several factors drive the cost of accounting:

-The volume of bank, credit card, lines of credit and other accounts that are being tracked-for every account that is being used a reconciliation must occur to keep the books in accordance with GAAP. (The Generally Accepted Accounting Principles) http://en.wikipedia.org/wiki/Generally_Accepted_Accounting_Principles_(United_States)
-The volume of transactions in each of the aforementioned accounts that are being tracked-every item that hits the bank or credit card account must be entered (either manually or via download) and then accounted for in reconciliation. If you have very high volume accounts this will definitely take a bit of time
-The frequency with which your business requires reporting-Some small business have higher reporting needs than others in order to get an accurate picture of the accounting puzzle. If you need to see reports weekly or monthly; that will cost more than seeing reports on a quarterly basis. We recommend at least a quarterly reporting schedule for all our clients, to prevent confusion and memory loss on transactions. It’s important to evaluate both the solvency of the business and the accuracy of the bookkeeping in real time.
-The clarity of the books-Sometimes the books are very inaccurate, or may need clean up to get the project moved forward. Other times the books are very behind. These factors will drive the cost of this first phase of your accounting project up.

The good news is, we understand that budget is an issue for any business, especially the ones we cater to. We love entrepreneurs and the small business spirit that drives America. We work with each client to stay within their budget and deliver quality projects, on schedule.

We also maintain good relationships with your CPAs, and we can provide referrals to CPAs when requested. This keeps the cost of accounting lower by making the CPAs job as easy as possible, and cutting out on fixes that can become costly.

Top five questions asked by new business owners, part two

Question #2: Should I keep paper receipts?

This question comes up frequently, and it’s another one that isn’t easy to answer. The general rule of thumb is items under $50 do not require additional back up for audit purposes, but there are some exceptions to this rule.

If you have a dedicated bank account for your business (an account used solely for the purposes of business) then you should be using a debit card, or writing checks that will serve as sufficient back up for an auditor. Similarly, if you are using a credit card that is mostly for the business then transactions of all sizes will appear on the statements for that card and can be tracked by your bookkeeper and used for audit purposes.

Occasionally a business owner will pull out cash from their bank account or use personal funds to pay for items related to the business. In this case all receipts must be kept because these transactions will not hit the bank account or a credit card account that your bookkeeper tracks. In order to take a credit on these items they must be meticulously arranged so that no expenses slip through the cracks. It is always best to use the bank debit card or credit card where you can. Not only can you more easily track your expenses and income, you can also take advantage of perks and rewards (like airline miles) offered by many banks.

It is important to understand that bookkeepers and CPAs usually operate from a bank statement perspective; your accounting project will cost you more if you are providing a heap of receipts for them to go through. Receipts are generally printed on thermal paper, meaning that over time in hot cars or in bags where they rub against one another, these receipts will go blank. If you are tracking your receipts it is important to attach them to a piece of paper and copy them so you can preserve their legibility for the seven years required by the IRS. A rule of thumb is to organize your receipts by month and then by payment method (i.e. debit card, credit card, etc) to ensure that you can find a receipt should you need it down the road.

Tell your bookkeeper or CPA how you’ve been spending your money so that they can help with the receipts that you are saving. You don’t want to miss a single expense that could lower your tax burden at the end of the year.