Bookkeeping Business Tips For Developing Reliable Financial Projections

Financial forecasting reminds me of the weather - you assemble your forecast at a second in day based upon the dope currently available. You allure a result and society your financial forecast. Nevertheless then, the facts changes, immediately it's raining, and you're caught without your umbrella!

Financial forecasting, unlike the weather, isn't a science on the contrary it's not pure guess grind either. It is a combination of:

awake your business;
discerning your marketplace;
setting goals; and
using daily sense.

As a affair coach, I understand that every miniature racket needs to constitute dependable financial projections at one continuance or another. Forecasting is critical during the next stages of a company's duration span:

when seeking financing
gauging the profitability of a contemporary product or supply
determining the contact of staff expansion or cutback
assessing other incident decisions

The crowded components of forecasting boil down to the succeeding five bookkeeping bag tips that for oldness I've shared with function coaching clients:

Bookkeeping Calling Gratuity #1: Audit Actual Year-To-Date Results

Start by looking at where you've been. Provided you handle an accounting programme allied QuickBooks you can print elsewhere a Income & Loss statement showing year-to-date results. Evaluation the statement for all financial transactions that occurred up to the generation of the report. Reconcile the announcement to your bank statements. (If you don't apply an accounting program or bookkeeping service, then catching the characteristic of the complete year-to-date cash receipts and total expenditures. This should identical your profit or loss.) See everyone column entity to beget confident that it makes belief - is your year-to-date revenue figure where you anticipated, or has it fallen short? Are expenses higher than expected?

Bookkeeping Matter Tip #2: Endow Goals and Involve into Your Forecast

What effect you hankering to accomplish by year's end? Cook you hankering to introduce a contemporary product or service, boost revenue on existing products or services, chop spending, accept a cutting edge employee, outsource a bookkeeping service, or start a marketing crusade that testament position the convention for the dawning of later year?

Write absent your objectives and then choose three to five which are the most determining to accomplish by the objective of the year. Finish the needed steps to consummate the objectives. Which Profit & Loss borderline items will be impacted? Adjust your forecast accordingly. For example, your mark may be to exaggeration revenue 10% by year's neb or to depart a marketing campaign first off so its benefits will be felt in the cardinal quarter of 2009.

Bookkeeping Line Tip #3: Forecast Variable Costs

Variable costs are costs that pin money in manner with revenue change. For example, you are selling bounteous widgets; therefore, your labour costs and materials costs will cumulation in relation to the revenue increase.

Using the conceit that Forecast = Projections + Predictions, combined with the scholarship that variable costs nickels in operation with revenues, forecast each month's variable costs. Forecast each contour effects separately. Glance for opportunities to shorten costs, and be aware of credible eventual influences on each cost.

Bookkeeping Career Tip #4: Forecast Constant Expenses

Fixed costs are relatively steady costs that repeated every month. Examples of fixed costs are rent, call and bookkeeping overhaul fees. Forecast the month's fixed expenses by using the identical solution used to forecast variable costs (Forecast = Projections + Predictions) and the accomplishments that fixed expenses tend to be relatively stable and engage in not modify in action with revenues. Again, forecast each border oppose separately, looking for opportunities to decrease costs, while control in belief any viable likely influences.

Bookkeeping Event Tip #5: Forecast Trap Profit

The ending system is to evaluate your forecast for entangle profit. Is the profit forecast is logical and acceptable? Whether not, re-evaluate each wrinkle thing including revenues and dash off felicitous adjustments. Also, anticipate non-operating resources and expense items, and involve them in your forecast.

Your financial projections may not be defect less at first, on the other hand we didn't con to legwork without falling down. As a complication coach I've seen others entertain a hardly any bumps along the way. However I warranty that if you displace these bookkeeping metier tips, locate your financial projections on paper and revisit them frequently, you will bring off your goals faster.

Autor: Linda A. Hunt
Linda Hunt is the co-founder of The Bookkeeper's Referral Network Inc., the place where business meets great bookkeepers. To get your copy of a free special report, The 9 Disastrous Mistakes Most Freelance Bookkeeper's Make in Business (and How You Can Avoid Them!)

DIY Bookkeeping for Home Offices and Small Business

One advantage of the introduction of the GST was initially to force you to review your finances on a quarterly basis resulting in a greater awareness of your ongoing financial position.

This has led to many small businesses utilising a computerised accounting software package such as MYOB or Quickbooks to do the hackwork and present you with the necessary reports and if required even the BAS itself.

However, owning the software does not make you a bookkeeper, and whilst the software companies have done their best to make the packages easy to use, the operator still needs a basic understanding of bookkeeping.

We’ve helped many small business owners with book-keeping, and we can help you. By outsourcing your bookkeeping needs you can free up your time to do what you do best in working your business, while we do what we do best, working on the bookkeeping side of your business.

Read More Articles

Bookkeeping Quick Tips

Here are some simple guidelines that our clients find useful:

• Keep all original receipts. Don’t keep just the debit or the credit card slip because this is not sufficient proof for the government. You must have THE ORIGINAL RECEIPT.
  
  
• Calculate your home use expenses on a different spreadsheet because for your income tax you need the total paid for the year, not just the business portion.
  
  
• Use a different bank or credit card account for your business. Even though you are a self-employed and your income tax is on the same form, you should use a different account for your business. It shows the government that you are mindful of keeping personal and business expenses separate.
  
  
• Keep your receipts month by month. Create a file for each month, so when you get home at the end of the day you can simply put all your receipts in that file. This makes recording and locating information much easier in the long run.
  
  
• Keep a mileage log. If you use your personal vehicle for business, you must keep a log. It is very important that you record the mileage that you do for the business otherwise the government may not accept your vehicle expenses. Record the date, the mileage and the client.
  
  
• A proper invoice must include:
  
  • Invoice number
  • GST and/or PST number if applicable
  • A date
  • Name and address of both vendor and customer.

Read More Article

Advantages Of Payroll Services

If your company has employees other than you, payroll is one of the most critical areas of your financial record keeping. It's also the area most commonly botched by small business owners, so get professional advice on how to properly set up and maintain your payroll system.

You might consider using a payroll service to save yourself a lot of administrative time and hassle. A payroll service ensures your government reporting and payroll tax remittances are always accurate and up-to-date. This benefit alone can be well worth the cost of the service, as late-payment penalties for payroll remittances tend to be some of the biggest and most severe penalties that the government levies.

Other advantages of using a payroll service:

The payroll service is always up to date on the tax code, whether it be changes in Canada Pension Plan rules, revised Employment Insurance guidelines or new tax rates.
The payroll service automatically handles the creation of accurate T4 slips for your employees at year-end.
With a payroll service, you can offer your employees direct deposit of their paycheque. This is a perk that most employees appreciate.

While there are many good reasons to use a payroll service, you should also be aware that such a service takes all associated government remittances out of your company account each payday, even if those remittances are not actually due for another few weeks. This can create a cash flow problem unless you are prepared for it.

Fern Gordon is the owner of The Profit Line. Making sound business decisions means having a clear picture of your financial situation in front of you at all times - yet the daily demands of running a small enterprise can be overwhelming. As a result, financial record keeping and reporting often don't get the attention they truly deserve.

The Profit Line changes all that. We are your bookkeeping partner, helping you stay on top of your finances so you can make better, more informed business decisions.

In addition to taking paperwork off your plate, we also pinpoint the key numbers critical to the performance of your specific enterprise, and make sure you have them in hand whenever you need them.

Source : The Profit Line

Bookkeeping and Accounting Basics

Bookkeeping and accounting share two basic goals:

• to keep track of your income and expenses, thereby improving your chances of making a profit
• to collect the necessary financial information about your business to file your various tax returns and local tax registration papers
  

Sounds pretty simple, doesn't it? And it can be, especially if you remind yourself of these two goals whenever you feel overwhelmed by the details of keeping your financial records. Hopefully you will also be reassured to know that there is no requirement that your records be kept in any particular way. (There is a requirement, however, that some businesses use a certain method of crediting their accounts. See " Cash vs. Accrual Accounting.") In other words, there's no official "right" way to organize your books. As long as your records accurately reflect your business's income and expenses, the IRS will find them acceptable.

The actual process of keeping your books is easy to understand when broken down into three steps.

1. Keep receipts or other acceptable records of every payment to and every expenditure from your business.
2. Summarize your income and expenditure records on some periodic basis (generally daily, weekly, or monthly).
3. Use your summaries to create financial reports that will tell you specific information about your business, such as how much monthly profit you're making or how much your business is worth at a specific point in time.
   

Whether you do your accounting by hand on ledger sheets or use accounting software, these principles are exactly the same.

Step 1: Keeping Your Receipts
Comprehensive summaries of your business's income and expenses are the heart of the accounting process. But they can't legally be created in a vacuum. Each of your business's sales and purchases must be backed by some type of record containing the amount, the date, and other relevant information about that sale. This is true whether your accounting is done by computer or on hand-posted ledgers.

From a legal point of view, your method of keeping receipts can range from slips kept in a cigar box to a sophisticated cash register hooked into a computer system. Practically, you'll want to choose a system that fits your business needs. For example, a small service business that handles only relatively few jobs may get by with a bare-bones approach. But the more sales and expenditures your business makes, the better your receipt filing system needs to be. The bottom line is to choose or adapt one to suit your needs.

Step 2: Setting Up and Posting Ledgers
A completed ledger is really nothing more than a summary of revenues, expenditures, and whatever else you're keeping track of (entered from your receipts according to category and date). Later, you'll use these summaries to answer specific financial questions about your business such as whether you're making a profit, and if so, how much.

You'll start with a blank ledger page (a sheet with lines) or, more often these days, a computer file of empty rows and columns. On some regular basis like every day, once a week, or at least once a month, you should transfer the amounts from your receipts for sales and purchases into your ledger. Called "posting," how often you do this depends on how many sales and expenditures your business makes and how detailed you want your books to be.

Generally speaking, the more sales you do, the more often you should post to your ledger. A retail store, for instance, that does hundreds of sales amounting to thousands or tens of thousands of dollars every day should probably post daily. With that volume of sales, it's important to see what's happening every day and not to fall behind with the paperwork. To do this, the busy retailer should use a cash register that totals and posts the day's sales to a computerized bookkeeping system at the push of a button. A slower business, however, or one with just a few large transactions per month, such as a small Web site design shop, dog-sitting service, or swimming pool repair company, would probably be fine if it posted weekly or even monthly.

To get started on a hand-entry system, get ledger pads from any office supply store. Alternatively, you can purchase an accounting software program that will generate its own ledgers as you enter your information. All but the tiniest new businesses are well advised to use an accounting software package to help keep their books (and micro-businesses can get by with personal finance software such as Quicken). That's because once you've entered your daily, weekly, or monthly numbers, accounting software makes preparing monthly and yearly financial reports incredibly easy.

Step 3: Creating Basic Financial Reports
Financial reports are important because they bring together several key pieces of financial information about your business. Think of it this way -- while your income ledger may tell you that your business brought in a lot of money during the year, you may have no way of knowing whether you turned a profit without measuring your income against your total expenses. And even comparing your monthly totals of income and expenses won't tell you whether your credit customers are paying fast enough to keep adequate cash flowing through your business to pay your bills on time. That's why you need financial reports: to combine data from your ledgers and sculpt it into a shape that shows you the big picture of your business.

Source : http://www.inc.com/

How can i learn bookkeeping ? - Some Basic Tips

Good bookkeeping practices are essential to keeping your business running smoothly.

Regardless of the size of your company, good bookkeeping practices are essential to keeping your business running smoothly. Accurately kept books do more than make it easy to file your annual tax returns. Banks may require you to submit a profit and loss statement or balance sheet so they can determine your credit-worthiness. A quick review of your books can show where you need to spend more or less money; who gives you the most business and who takes the longest to pay you; how much you're paying out in commissions compared to how much you're selling.

Here are some general terms that are helpful to know.

ASSETS are things that you own or are owed to you: bank accounts, inventory, loans made to other companies or individuals, company cars, etc.

LIABILITIES are things that you owe: loans, accounts payable, payroll taxes, etc.

EQUITY is net income (sales less expenses), capital stock, and owners/officers distributions.

EXPENSES are things you pay for: business meals, gas for company cars, professional services, postage, etc.

REVENUE is money you earn from the sale of services or product, or from interest earned on a bank account, investment, or a lease or loan of your equipment or property.

COST OF SALES is any expense directly related to earning revenue: product purchases, freight or delivery, sales tax expense, etc.

One of the most valuable resources you can have for a small business is a public accountant. Even if you only take your books in at tax time, having someone to give you specific advice and answer your bookkeeping questions is important. Find an accountant whom you like and trust. If you're having difficulty finding one on your own, talk to other people with similar businesses for recommendations.

Here are some helpful hints that should make good bookkeeping an easy task.

1. Get organized! Good organization is essential to good bookkeeping. In fact, when you come right down to it, bookkeeping is organizing. There are only four general categories of records you need to keep: bills (accounts payable or A/P), customer invoices (accounts receivable or A/R), payroll (time sheets and pay records), and human resources (employee information not directly related to payroll). File all records for these categories neatly in a system that works for you. Done well and consistently, even shoe boxes work! Even better are expandable, alphabetic file folders. Keep one folder for A/P and one for A/R. If your business is too large for that, invest in file cabinets - anything from small portable cases to floor-to-ceiling lateral files. Get something that fits your volume and your budget. Use a different color file folder for each category of record, and it will be that much easier to keep things organized.
   
   
2. Get an accounting software program, if you can fit it in your budget. This is one place where having an accountant can be very helpful. Ask your accountant to help you select the best program for your needs. An accounting program will collate information you input and present it in helpful reports almost instantly, so you don't have to hunt through your check register or deposit log for the information. Some of these reports can help you pinpoint problem areas, like deadbeat customers or inventory that's not moving, or will help to show employee shrinkage or overtime policy abuse. With a good program, you can get customized reports that will tell you almost anything you want to know. If software is out of the question, you can keep track of everything in a computer spreadsheet or good old traditional ledger books. Even if you have monthly services from your accountant, it's a good idea to keep track of everything on your own. That way, if you need some information in the middle of the month, you'll have it at your fingertips, instead of having to spend a lot of time searching. Keep one spreadsheet/ledger for A/P and one for A/R. If you pay all of your bills every month, your ledger for A/P can simply be your check register, as long as you . . .
   
   
3. keep detailed records of all payments and deposits. As soon as you write a check, write down when it was written, to whom, for what, and how much it was for. Most accounting programs have a check writing feature, and all of this information will automatically be recorded. If you don't have software that will do this, invest in a business desk set checkbook. The checks have large stubs on which you can write down all of the important information. Record as much detail as possible for your deposits, including if they were cash or credit card, and what kind of credit card.
   
   
4. Keep your check register reconciled to your latest bank statement. If a check or deposit doesn't clear the bank within a couple of months, contact the bank or the payee to find out why. If necessary, stop payment, void and re-issue uncleared checks.
   
   
5. Schedule a day of the week for paying bills and for reviewing unpaid customer invoices. Paying bills on time saves you money by avoiding late charges, and some vendors may give you a discount if you pay by a certain time. Don't let your customers lag too far behind in paying their bills. Send out monthly reminders, and set up a policy for when you will send a bill to a collection agency.
   
   
6. If you are a retail seller subject to sales tax, keep detailed records of sales so that you don't collect or pay sales tax on non-taxable items. In many states, labor and freight are non-taxable. If you sell to a tax-exempt entity, make sure that you get a copy of their exemption certificate. Keep those in a separate file, preferably with a list showing each customer's name and exemption number.
   
   
7. Make sure you are in compliance with record-keeping standards. There are some things that you only need to keep for three years, like individual copies of time sheets. Others need to be kept for much longer. For example, all records pertaining to a worker's compensation claim need to be kept forever. Regulations and recommendations change periodically, so (everyone together now) ask your accountant.
   
   
8. There are several companies out there that give continuing education seminars on a range of business topics, from human resource management, to communication skills, to effective accounts payable practice . . . just about anything you can imagine. Go to some seminars. Think about what you want to learn ahead of time, and ask questions that are relevant to your business. Oddly enough, meeting other people who also have lots of questions can be a real confidence builder. You'll know you aren't alone.
   
   
9. Take advantage of the many resources that are available. On-line forums exist for almost any topic. The business section of your local bookstore should have plenty of books for small businesses, or you can check materials out from the library. The Internal Revenue Service has a variety of publications for the small business owner, free of charge, available on their website. Also, the United States Small Business Administration can point you to a wealth of information. There is probably a national association for your type of business. The annual dues may seem high, but the industry specific information that you can get from them may well be worth it. This list could go on and on, but it would still end with this: when in doubt (one more time!), ask your accountant.
   

As you get more accustomed to keeping your books organized and accurate, you'll be better able to determine what information is really important, e.g. what receipts to keep, and how much detail to enter in your ledgers. You'll save time and money because you'll be getting your bills paid on time, and you'll be able to collect more money from your clients because you'll know how much they owe you, all without having to dig through all of the paperwork on your desk.

Source : http://www.essortment.com/

Bookkeeping Tips

Bookkeeping is a major challenge for many small businesses. We are good at our core business, but may not know much about the bookkeeping side, or don't enjoy keeping the books, or don't have time to keep the books.

Whether you are keeping your business' books yourself, or are hiring a bookkeeper to take care of them, here are some tips to help tame your paper monster, and save you some money, too.

1. Every week, take 15 minutes to file your receipts. This can be a simple as stuffing them all into one file, or sorting them by category. Do what works best for you, but do it. Having all your receipts in one place means that you won't lose them. A little bit of effort over the year will ensure that tax time is not a stressful time and you get all your deductions.
   
   
2. If your home phone is also your business phone, take the time each month to go through your phone bill with a highlighter and highlight all of your long distance business calls. You get to write off a portion of your basic phone charges if you work from home, but this is a small amount, even over the course of a year. Your long distance charges must be separated out. Highlight them and make an abbreviated note about who the call is to, if it is not obvious. Many small businesses lose this as a business write off because at the end of the year they can't remember which calls were for business, and your bookkeeper won't write off any of them, because there is no way for her to tell which calls were for business.
   
   
3. Take the time to staple receipts and bills that are more than one page long together. This will save you and your bookkeeper time at the end of the year.
   
   
4. Keep a file pouch in your vehicle or in your briefcase for receipts. Throw your receipts in the pouch as you get them. Don't stuff them into your pockets, purse, console, briefcase, or glove compartment. When it comes time to do your books, finding your receipts should not be a treasure hunt.

Read More Article...

Announcing: The “Best of the Best” Business Opportunity!

What is the “Best of the Best”? You might be surprised to learn that of all the possible business opportunities available today, a Bookkeeping and Accounting practice is considered by some to be one of the best. In fact, Paul and Sarah Edwards, authors of “The Best Home Businesses for the 21st Century,” rate a bookkeeping service as the “Best of the Best” home-based businesses. Below is a list of things that I think make an accounting and tax service such a great opportunity.

1. It’s Mandated By Government — Every business needs some form of bookkeeping — whether it’s a one-person operation or the business has thousands of employees.
2. A Great Income — A person can expect to earn more than $30 per hour — sometimes as high as $75 per hour. The average client billing will be $300 per month and require six to eight hours a month to complete.
3. Inexpensive to start— For less than $1,000 a person can purchase everything they will need to get the business underway. Those that already have a computer have the biggest part of the investment taken care of.
4. No Special Equipment Needed — Other than a computer, printer, inexpensive calculator, and fax machine, there’s no special equipment that’s necessary.
5. Work Anywhere — Using today’s technology you can have clients anywhere in the world.
6. It’s Easy — Accounting/Bookkeeping software has become easier to use. The most popular software on the market today is QuickBooks Pro (less than $250).
7. No Outside Office Required — You need only a small area of your home for your office. It can even be in the corner of a bedroom.
8. No Zoning Hassles — There’s no traffic in and out of your home, so zoning laws are never a consideration.
9. Keep Your Present Job — You can build a part-time business while working full-time at another job.
10. Work When You Want — You can perform the work during the day or night. It’s a great business to work around a busy schedule.
11. No Inventory — You don’t have to purchase or maintain inventory.
    

Maybe you feel like you’ve gone as far as you can go in your current career. Perhaps you’re a homemaker who wants to build a business out of her home. For thousands, an Accounting and Tax service could be the perfect business for you. How can I say this? There are thousands of people just like you who have found personal and professional satisfaction by owning a bookkeeping and accounting practice.

Read More Article...

Bookkeeping and Accounting Basics

Bookkeeping and accounting share two basic goals:

• to keep track of your income and expenses, thereby improving your chances of making a profit
• to collect the necessary financial information about your business to file your various tax returns and local tax registration papers
  

Sounds pretty simple, doesn't it? And it can be, especially if you remind yourself of these two goals whenever you feel overwhelmed by the details of keeping your financial records. Hopefully you will also be reassured to know that there is no requirement that your records be kept in any particular way. (There is a requirement, however, that some businesses use a certain method of crediting their accounts. See " Cash vs. Accrual Accounting.") In other words, there's no official "right" way to organize your books. As long as your records accurately reflect your business's income and expenses, the IRS will find them acceptable.

The actual process of keeping your books is easy to understand when broken down into three steps.

1. Keep receipts or other acceptable records of every payment to and every expenditure from your business.
2. Summarize your income and expenditure records on some periodic basis (generally daily, weekly, or monthly).
3. Use your summaries to create financial reports that will tell you specific information about your business, such as how much monthly profit you're making or how much your business is worth at a specific point in time.
   

Whether you do your accounting by hand on ledger sheets or use accounting software, these principles are exactly the same.

Step 1: Keeping Your Receipts
Comprehensive summaries of your business's income and expenses are the heart of the accounting process. But they can't legally be created in a vacuum. Each of your business's sales and purchases must be backed by some type of record containing the amount, the date, and other relevant information about that sale. This is true whether your accounting is done by computer or on hand-posted ledgers.

From a legal point of view, your method of keeping receipts can range from slips kept in a cigar box to a sophisticated cash register hooked into a computer system. Practically, you'll want to choose a system that fits your business needs. For example, a small service business that handles only relatively few jobs may get by with a bare-bones approach. But the more sales and expenditures your business makes, the better your receipt filing system needs to be. The bottom line is to choose or adapt one to suit your needs.

Step 2: Setting Up and Posting Ledgers
A completed ledger is really nothing more than a summary of revenues, expenditures, and whatever else you're keeping track of (entered from your receipts according to category and date). Later, you'll use these summaries to answer specific financial questions about your business such as whether you're making a profit, and if so, how much.

You'll start with a blank ledger page (a sheet with lines) or, more often these days, a computer file of empty rows and columns. On some regular basis like every day, once a week, or at least once a month, you should transfer the amounts from your receipts for sales and purchases into your ledger. Called "posting," how often you do this depends on how many sales and expenditures your business makes and how detailed you want your books to be.

Generally speaking, the more sales you do, the more often you should post to your ledger. A retail store, for instance, that does hundreds of sales amounting to thousands or tens of thousands of dollars every day should probably post daily. With that volume of sales, it's important to see what's happening every day and not to fall behind with the paperwork. To do this, the busy retailer should use a cash register that totals and posts the day's sales to a computerized bookkeeping system at the push of a button. A slower business, however, or one with just a few large transactions per month, such as a small Web site design shop, dog-sitting service, or swimming pool repair company, would probably be fine if it posted weekly or even monthly.

To get started on a hand-entry system, get ledger pads from any office supply store. Alternatively, you can purchase an accounting software program that will generate its own ledgers as you enter your information. All but the tiniest new businesses are well advised to use an accounting software package to help keep their books (and micro-businesses can get by with personal finance software such as Quicken). That's because once you've entered your daily, weekly, or monthly numbers, accounting software makes preparing monthly and yearly financial reports incredibly easy.

Step 3: Creating Basic Financial Reports
Financial reports are important because they bring together several key pieces of financial information about your business. Think of it this way -- while your income ledger may tell you that your business brought in a lot of money during the year, you may have no way of knowing whether you turned a profit without measuring your income against your total expenses. And even comparing your monthly totals of income and expenses won't tell you whether your credit customers are paying fast enough to keep adequate cash flowing through your business to pay your bills on time. That's why you need financial reports: to combine data from your ledgers and sculpt it into a shape that shows you the big picture of your business.

Source : http://www.inc.com/