Bookkeeping Services for Small Business | QuickBooks Expertise | Located in Woodhaven, MI. Serving Downriver and Metro Detroit
Accuracy and integrity. Your back-office partner for the success of your business.
QuickBooks Bookkeeping Services:
- Categorize and separate accounts by activity – Chart of Accounts – To give Clients a customized, easily understood list
- Complex and difficult reconciliations for Business compliance
- Error correction and reclassification of transactions
- Inventory clean-up; practical processes and procedures
- Matching transactions to eliminate duplicate entries and overstatements/understatements of Accounts
- Multi-year (more involved) QuickBooks clean-up, maintenance and set-up
Downriver, Michigan Bookkeeping Expertise
After nearly a decade of handling books and records for many businesses in the Downriver, Michigan area, I made three observations that businesses should use as a check as part of a process to ensure accurate and complete records.
This is not meant to imply that accounting or bookkeeping in Downriver, Michigan or Michigan (for that matter) is somehow unique. This is simply based on my observations and the checks I’ve included as part of EAS’s process.
I also included suggestions and tips (The Fix).
Gross Income Accuracy
If you have a business that uses a Customer Relationship Management (CRM) APP or tool (most businesses do), listen up.
Ensuring that top-line revenue is fairly-stated and accurate is a must. If a CRM tool introduces duplicate Sales transactions in the accounting platform, taxable income (and tax liability) could be overstated.
The Issue
Businesses and (their Bookkeepers) need to be careful of how the CRM integrates with their accounting platform (QuickBooks, Xero, etc.) My experience has been that syncing the CRM with an accounting platform introduces duplicate sales (Invoice) entries into the accounting platform that need be corrected.
Undeposited Funds (or the renamed temporary Asset Account) is overstated and Sales are overstated.
The Fix
Sales in the accounting platform and Sales in the CRM need to be reconciled, taking into consideration if the business involves/is: 1. cash or accrual basis, 2. credit card payments received, net of fees that need to be adjusted and 3. any other adjustments (involving loans, for example, taken against credit card payments) that need to be done to correct Sales.
Business-related Transactions Made with Personal Funds
A common occurrence with new businesses. Owners often finance business transactions using personal credit cards or bank accounts. The idea here is that this is a temporary situation where the owner is starting a business and using their money to avoid expensive loans or exchanging equity for financing.
As long as these transactions are necessary, customary and reasonable, they should be included in the books and records of the company. If these are not included, the omission will distort the performance (Profit & Loss) and financial picture (Balance Sheet) of the company.
The Issue
Personal credit cards, bank accounts or any other personal funding sources, Should Not be (permanently) connected to the company’s accounting platform.
If there are a lot of these transactions, the trick is to minimize the number and extent of manual journal entries to get these into the books/records.
The Fix
This could involve a temporary connection to download all transactions in the bank feed, filtering these transactions for those that are business-related, posting them and then deleting the account.
Loan Transactions to and from Owners and the Company
These are also common. But these transactions should be tested to see if they can survive scrutiny, if they’re ever challenged. Before classifying these as loans, test them.
Not completely a Bookkeeping issue – the elements of what constitutes a loan and what does not is based on the tax code. This is often the case as accounting, advisory, bookkeeping and tax issues and problems are interrelated.
The Issue
Is the potential loan evidenced by a promissory note agreement between the company and the owner? Does it list a “market rate of interest,” as part of the agreement? A market rate is one which is comparable to a prevailing rate between unrelated parties. In other words, it can’t be a rate that is substantially below what the owner (or company) would be expected to pay if they secured a loan from an unrelated lender.
Lastly, and probably most important, does the note spell out the payment schedule and has the debtor performed – made payments against the loan?
The Fix
Classify the loan based on the evidence and circumstances. If the loan is ever challenged and fails scrutiny, the principal can be reclassified as income and the debtor can be liable for interest and penalties.
Bookkeeping is Fundamental
Bookkeeping may not be sexy – it requires establishing charts of accounts, classifying transactions, reconciling accounts, and adjusting entries. But, bookkeeping is fundamentally important. Without good records and accounting, you literally cannot trust your financials. What are you going to use for a Tax Return if you “cut corners” on having solid records? Pretty risky.
In addition, if you’re looking to boost the company’s profitability or cash flow, you can’t properly diagnose the issue/problem or attempt to apply possible solutions without having baseline-level accuracy and complete records. Financial ratios that many Fractional CFO’s use to diagnose problems can be misleading (at best) or wrong (at worst) if they’re applied to incomplete or erroneous data.
I’ve helped clients understand the importance of using QuickBooks workflow processes and the problems that are created when these processes are bypassed or used in ways, not intended. I’ve resolved erroneous or duplicate entries and corrected books/records for many Clients to preserve their historical data without starting from scratch with a new file.
Accounting vs. Bookkeeping – Is this distinction relevant? Business Owners need both
Accounting is about applying principles and rules, bookkeeping is about the mechanics. Accounting is not bookkeeping and vice versa. So what? Clients don’t care – they’re not going to draw a distinction between the two and why should they? They have problems to solve and they expect that an outsourced Accountant (or Bookkeeper) has the experience and expertise to solve whatever problem the Client has. And, the Client is correct.
But, in reality, to assume that Accountants are (also) highly proficient Bookkeepers (or vice versa) can be flawed. It’s like saying, “I’m a great Formula-1 Race Car Driver, but I know nothing about Cars.” Outsourced professionals need expertise in both accounting and bookkeeping. Even highly proficient Bookkeepers can create problems for a business’s financial records if they’re not familiar with the proper accounting treatment or how to apply (correct) principles for many transactions they are likely to encounter. This does not even include more complex transactions requiring research.
For the Client, if you’re planning to outsource your accounting/bookkeeping work, ask questions and check the would-be Accountant’s or Bookkeeper’s profiles and reviews (on Facebook, Google, or LinkedIn).
Having and maintaining good records (that tie to your source data) is the fundamental basis toward understanding how your business is performing. Accurate and relevant data also enables you to make better quality decisions. Without an accurate data and record baseline, you’ll be guessing at best and throwing salt over your left shoulder for luck. Save your salt for cooking.
Knowing the Financial/Tax implications (before doing the transaction) is a good thing
As mentioned, bookkeeping is about the mechanics – doing the transaction. But what good is that if your Bookkeeper lacks the foresight and understanding to advise Clients on the accounting and tax implications of certain transactions before they’re executed? Should you elect a Section 179 deduction for some equipment and write the entire purchase price off or take the depreciation deductions over time if the business is expected to perform better or worse in out-years?
As the Client, you may not care or want to defer to the judgement of your Bookkeeper on what to do. But, ask yourself – how well does my Bookkeeper understand my business so that I’m comfortable that the best decision(s) will be made?
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Additional Services
Accounting Services
Financial Accounting and Reporting + Managerial Accounting.
Financial Accounting for compliance – To assist internal and external users with clear and concise Charts of Accounts, and Financial Statements. Managerial Accounting for internal users to improve decision making and planning.
Business Advisory Services
Business Advisory Services – Goal and target setting – Plans and roadmaps to achieve various measures of success.
Strategic planning, financial management, operating efficiency, risk management, growth strategies, tax planning and performance improvements to achieve goals and targets.
Tax Services
Tax Services – 3 broad categories – Tax Planning, Preparation and debt Resolution.
Three categories of Tax Solutions. Tax preparation in coordination with bookkeeping to ensure accuracy. Tax planning – Deferral or mitigation of tax liability. Tax resolution – Activities that address tax debt.
