Friday, February 4, 2011

The Value of a Good Accounting System

Why do you need a good Accounting System?
  1. Accounting is the fundamental component of a business
  2. Accurate and timely information about business performance is critical to making decisions and obtaining financing
  3. Will assist in avoiding business failure
  4. Can help reduce legal and financial costs

The Value of an Accounting System
  1. What is selling the most
  2. Are the right products selling
  3. Who is buying
  4. Is the list of customers increasing or decreasing
  5. What amount of repeat business exist
  6. What is the average sale
  7. Who is selling the most
  8. What is the profit margin
  9. Is the company making money
  10. What is the debt to asset or equity ratio
  11. How is actual performance compared to budget
  12. What is the return on investment and capital
  13. How effective is the advertising
  14. Can specific channels be identified
  15. Would borrowing money be smart for expanding the business
  16. How fast is the company growing
  17. Does it make sense to invest in new equipment
  18. We is it reasonable to hire a new employee
  19. Can I afford to make an acquisition or should I sell the business

Useful Metrics
  1. Gross Revenue - Broken down by services
  2. Number of clients serviced
  3. Types of clients served - Diversity in client mix
  4. Expenses/Overhead
  5. Expense per client
  6. Net income - Net income per client
  7. How long has the business existed
  8. staff to client ratio
  9. Market segmentation

Friday, September 18, 2009

Good Bookeeping Practices

Strong bookkeeping processes and procedures are essential to any business, without them owners will not have the basis of data necessary to run, manage, and grow their business. In that light it is equally important to have a qualified bookkeeper or accountant with a solid understanding of accounting principles, financial statements, and business operations. Additional experience, qualifications, certifications are helpful but they come at a price so weigh them to the value of the expected outcomes. As a business owner determine what information you need and how strategic you consider your accounting function to be for managing and understanding your business. In my opinion accounting is of critical importance to managing a business. In small and start-up situations it can often be a wise decision to outsource such non-value added activities. Ask yourself how valuable your time is (what is your hourly bill rate for example) as the answer should empower you to make decisions for resource allocation. I tell clients to focus on what they do best and outsource other activities.
Backing up data, keeping good records, and filing are important tasks and each business should determine how often such tasks should take place. Ask yourself how much time you would want to spend re-entering data, calling vendors and creditors, and generally putting out “fires”. Many businesses do not have the time or resources to quickly re-tool if data is lost or systems are down so ensure you are prepared to handle such situations. For your bookkeeping system I strongly recommend offsite backup of data on a regular basis.
Another important resource is a qualified and experienced tax preparer. They are critically important to ensuring tax returns are prepared correctly; this would include payroll, income, and sales tax. Missing a deadline, filing incomplete data, or just not reporting correct information can be costly, both in terms of fees and charges and potential impact on client relationships should news leak. In addition, they are an extremely valuable tool in many tasks and activities that a business faces. As such, make sure to interface with them and establish parameters for the relationship. Keep track of your communication with them. They can help you grow your business and network with other professionals. They will also keep you out of trouble with the tax authorities, just make sure you do your research and get referrals.
What follows is a list of suggested activities for a good bookkeeping system
1. Print checks – establish set dates from issuing checks.
2. Direct deposit and email paystubs – to save time and money. Many employees appreciate getting their payment this way as it avoids the time of going to the bank. In addition, this is a secure way to make payments.
3. Print deposit summaries to attach to bank receipts – ensures good recordkeeping.
4. Get online access to bank accounts and credit card statements. This doesn’t mean you have to stop paper statements, but it will speed up many activities and it empowers you with better real time data on balances.
5. Pay all payroll taxes online. In some cases this may not be required; however it saves time and money. In additional, you will have a way to track activities.
6. Use bill pay through bank account – save time & money. This also provides you a valuable tool for managing your cash needs.
7. Email invoices/statements to customers – save time & money. A printed version can be filed for future reference or if a sales tax audit were to result and detail records were needed.
8. Always obtain a W-9 before allowing a subcontractor to perform work. This is good business practice and can help you avoid costly problems in the future.
9. Obtain a copy of general liability coverage when applicable. In businesses where such coverage is important this will protect you from potential liability.
10. Make up/post a schedule of tax deadlines for all taxes and forms. If you outsource this activity make sure to establish expectations with your vendor.
11. Organize pending files for payables and receivables by name
12. Organize paid invoices/check stubs and file by customer name
13. Organize paid bills/check stubs and file by vendor name. This provides a quick and easy way to access information should a dispute arise. Many companies manage expenses by type (office supplies, etc.) verses vendor. Most accounting programs provide multiple ways of reporting and managing expenses.
14. Organize personnel files by employee name for ease of access
15. Create payroll tax files for each type of tax: 941, State withholding, 940, SUI
16. Use Smead Viewable tabs for your files. This will give you the easiest view of files and allow for quick access.
17. File with newest transaction in front. This gives you the quickest access to the most relevant data.
18. Box up/store each year’s files after tax returns have been filed. Clear mark boxes and store them in a dry location.

The above are suggestions and may not be exhaustive, but they should give you the basis for establishing and maintaining a solid bookkeeping system.

WD 40 Uses

1. Protects silver from tarnishing.
2. Removes road tar and grime from cars.
3. Cleans and lubricates guitar strings.
4. Gives floors that 'just-waxed' sheen without making them slippery.
5. Keeps flies off cows.
6. Restores and cleans chalkboards.
7. Removes lipstick stains.
8. Loosens stubborn zippers.
9. Untangles jewelry chains.
10. Removes stains from stainless steel sinks.
11. Removes dirt and grime from the barbecue grill.
12. Keeps ceramic/terra cotta garden pots from oxidizing.
13. Removes tomato stains from clothing.
14. Keeps glass shower doors free of water spots.
15. Camouflages scratches in ceramic and marble floors.
16. Keeps scissors working smoothly.
17. Lubricates noisy door hinges on vehicles and doors in homes.
18. It removes black scuff marks from the kitchen floor! Use WD-40 for those nasty tar and scuff marks on flooring. It doesn't seem to harm the finish and you won't have to scrub nearly as hard to get them off.
Just remember to open some windows if you have a lot of marks.
19. Bug guts will eat away the finish on your car if not removed quickly! Use WD-40!
20. Gives a children's playground gym slide a shine for a super fast slide.
21. Lubricates gear shift and mower deck lever for ease of handling on riding mowers.
22. Rids kids rocking chairs and swings of squeaky noises.
23. Lubricates tracks in sticking home windows and makes them easier to open.
24. Spraying an umbrella stem makes it easier to open and close.
25. Restores and cleans padded leather dashboards in vehicles, as well as vinyl bumpers.
26. Restores and cleans roof racks on vehicles.
27. Lubricates and stops squeaks in electric fans
28. Lubricates wheel sprockets on tricycles, wagons, and bicycles for easy handling.
29. Lubricates fan belts on washers and dryers and keeps them running smoothly.
30. Keeps rust from forming on saws and saw blades, and other tools.
31. Removes splattered grease on stove.
32. Keeps bathroom mirror from fogging.
33. Lubricates prosthetic limbs.
34. Keeps pigeons off the balcony (they hate the smell).
35. Removes all traces of duct tape..
36. Folks even spray it on their arms, hands, and knees to relieve arthritis pain.
37 Florida 's favorite use is: 'cleans and removes love bugs from grills and bumpers.'
38. The favorite use in the state of New York , WD-40 protects the Statue of Liberty from the elements.
39. WD-40 attracts fish. Spray a little on live bait or lures and you will be catching the big one in no time. Also, it's a lot cheaper than the chemical attractants that are made for just that purpose.
Keep in mind though, using some chemical laced baits or lures for fishing are not allowed in some states.
40. Use it for fire ant bites. It takes the sting away immediately and stops the itch..
41. WD-40 is great for removing crayon from walls. Spray on the mark and wipe with a clean rag.
42. Also, if you've discovered that your teenage daughter has washed and dried a tube of lipstick with a load of laundry, saturate the lipstick spots with WD-40 and rewash. Presto! The lipstick is gone!
43. If you sprayed WD-40 on the distributor cap, it would displace the moisture and allow the car to start.
P. S. The basic ingredient is FISH OIL.