How is Your Small Internet Business Accounting Going?

I tried out for several months the online Quicken program.  It is touted as being very easy to use, and in fact does have quite a lot included for the price.  Almost $40/month for the site and to process charge cards.  To date, over about 8 months, only 2 customers have trusted their credit card information to be e-maled to me to process through them.  This makes for quite a strong argument to use Paypal or a regular chopping cart site.  Customers are just too afraid of the internet procesing their charge cards.  After all, they do not know the seller, and there are truly too many frauds out there.

Quicken, while an excellent source for accounting, is also not that easy for the newbie to Accounting.  So, I signed up last November 2008 for a certified bookkeeping course.  I am moving through it well, with a current grade of 95.  It is showing me that I did not quite set up the accounting in Quicken that well.  It does take at least a little bit of know how to use.  So, I sugfgest buying a bookkeeping learning book, signing up for a course on bookkeeping, or looking for free ways here on the net to learn exactly what you are doing.  There are great tax benefits to filing taxes, paying and collecting state taxes, keeping track of inventory, and so forth.  Not just the obvious benefits of being organized either.  You will over time begin to see better ways to run the business more efficiently, as I am seeing.

For free forms you can print out and make copies of, to help you get started, (many of these you may not need), go to Entrepreneur.com/formnet.  This is what I just did.  Then make many copies of the forms depending on which ones and what you will need.  Save a master copy for upcoming years to make more copies.  Determine which forms you will actually need.  If you do not need legal papers, do not worry about them.  But DO copy the journal entry forms, inventory forms, etc.

A new idea I got from this was to print out order cards and send them with customers orders.  This allows the customer to order over the phone, which I give out my cell number for, or through the mail if they wish.  They can then pay with a money order if they want to.  Something E-bay wants to end.  Something many customers do not like.  There are about 5% of customers out there that prefer to pay only with money orders.  So, I made a sheet with my logo on it explaining how to order by phone or through the mail, and if the customer DOES use them, I do not pay E-bay fees or Paypal fees on those orders.  Definitely a benefit to me.  The only thing needed for the order cards is card stock printer paper.  You can buy this almost anywhere…..Wal-Mart, Office Supply stores, Target, etc.  I happened to already have a pack of this at home.  So all my orders going out today I have included this order card and process information sheet in them.

Accounting is important for inventory also.  Often I have sold something that is out of stock in the past.  Why?  Because I did not keep a current inventory sheet going.  Keep track of what you have when it comes in, and from the sales made, update the inventory weekly to be sure the number of available items are correct.  You WILL get a customer who wants all of what is available, and if that is 5 of something, and they wanted 10, you just dissapointed a customer.

So I know this is a daunting proposition.  For me too.  But definitely worth the time.  We learn product, sales, shipping, and yes, we need to know accounting too.  Best of Luck!!

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As a current member of Online Quickbooks Accounting, I can offer you an immediate savings when you sign up to try it for free~All I need is your name and e-mail address.  You can send it to:  bluediamondproducts@verizon.net

I promise not to use the information for anything other than to refer you to Quickbooks for the discount program so you can see how easy and affordable this method of accounting is.  No need to pay $40/hour to an accountant, as I almost did!

You can go back and enter sales receipts and other information as far back as you like.  I now also offer customers charge card payments through Quickbooks, for those uncomfortable with shopping through E-bay or using Paypal.

There is so much they offer, and it is so easy to learn we want to share this with everyone.  There is no obligation.  We send the information to Quickbooks, and they deal directly with you from there.  We no longer are involved.  Thank You for your time, and remember, accounting will increase your sales!

Accounting for Small Business – Learn How

 

General Ledger

The general ledger is the core of your company’s financial records. These constitute the central “books” of your system, and every transaction flows through the general ledger. These records remain as a permanent track of the history of all financial transactions since day one of the life of your company.

Subledgers and the General Ledger

Your accounting system will have a number of subsidiary ledgers (called subledgers) for items such as cash, accounts receivable, and accounts payable. All the entries that are entered (called posted) to these subledgers will transact through the general ledger account. For example, when a credit sale posted in the account receivable subledger turns into cash due to a payment, the transaction will be posted to the general ledger and the two (cash and accounts receivable) subledgers as well.

There are times when items will go directly to the general ledger without any subledger posting. These are primarily capital financial transactions that have no operational subledgers. These may include items such as capital contributions, loan proceeds, loan repayments (principal), and proceeds from sale of assets. These items will be linked to your balance sheet but not to your profit and loss statement.

Setting up the General Ledger

There are two main issues to understand when setting up the general ledger. One is their linkage to your financial reports, and the other is the establishment of opening balances.

The two primary financial documents of any company are their balance sheet and the profit and loss statement, and both of these are drawn directly from the company’s general ledger. The order of how the numerical balances appear is determined by the chart of accounts , but all entries that are entered will appear. The general ledger accrues the balances that make up the line items on these reports, and the changes are reflected in the profit and loss statement as well.

The opening balances that are established on your general ledgers may not always be zero as you might assume. On the asset side, you will have all tangible assets (the value of all machinery, equipment, and inventory) that is available as well as any cash that has been invested as working capital. On the liability side, you will have any bank (or stockholder) loans that were used, as well as trade credit or lease payments that you may have secured in order to start the company. You will also increase your stockholder equity in the amount you have invested, but not loaned to, the business.

The General Ledger Creates an Audit Trail

Don’t let the word audit strike fear in your heart; I am not talking about a tax audit. Although, if you are called to respond to an outside audit for any reason, a well-maintained general ledger is essential.

But you will also want an internal trail of transaction so that you can trace any discrepancy (such as double billing or an unrecorded payment) through your own system. You must be able to find the origin of any transaction in order to verify its accuracy, and the general ledger is where you will do this.

Guide to Shopping for Small Business Loans Online

How to use the Web to find the right financing for your business By Daniel Kehrer Money — or the lack thereof — is the missing link in many a grand business plan. Startups often launch with less than they need, and struggle from Day One. And adequate financing is crucial for your business to grow and thrive. The good news is this: The Internet has made the process of finding traditional as well as alternative sources of funding easier than it once was. Funding types and sources fall into a few broad categories — either debt or equity financing from institutional or informal sources. Debt financing is a loan you pay back. Common sources include: family and friends, personal credit cards, home equity lines of credit, commercial bank loans and small business loans backed by the U.S. Small Business Administration (SBA). With equity financing, you give up pieces of your business in return for the cash. The good news is you generally don’t have to pay the money back. The bad news is that the people or institutions that put up the money — your investors — now own part of your business. Other funding or cost-sharing options include: Partnerships, joint ventures, alliances and co-branding arrangements.Business incubators don’t generally offer cash, but do provide crucial support in the form of free or reduced rent and business services. Action Steps The best contacts and resources to help you get it done    Comparison shop online for multiple financing sources There are many sources of small business loans and credit lines. To find the perfect fit and absolute best terms, you can comparison shop among many lenders. I recommend: Enter your information at BusinessFinance.com or iBank – both are Web portals that match lenders with small businesses, to find the best fit for your particular needs. Or fill out a business loan request form at BuyerZone and interested lenders will respond with loan quotes.   Shop major small-business loans providers All banks that serve small business offer business loans and commercial lines of credit. Biggies like Wells Fargo offer credit lines that you can easily apply for online, even if you’re not already a customer of the bank. I recommend: Online offerings at these banks active in serving small business: Wells Fargo, Bank of America, Washington Mutual, Wachovia, Key Bank. Or for strictly Web-based banking, try NetBank. American Express also offers credit lines to $100,000 with a short online application. There’s no collateral or minimum balance requirement.   Find venture capital sources online The best way to find venture capital financing is to first locate potential VC backers online. I recommend: Visit NVST.com, an Internet hub for the private equity and finance community. You’ll want to plug into NVST’s Capital Motion program which provides entrepreneurs with access to angel investors, venture firms, corporate venture funds and other private equity investors. Check the listings for venture capital and private equity firms at Business.com.   Check SBA-backed loans and lines of credit The U.S. Small Business Administration (SBA) has numerous loan programs for small business. But the SBA only guarantees small-business loans; it does not lend the money directly. Banks and other private lenders do that. I recommend: Lean about different SBA programs and find active SBA lenders.   Don’t overlook Small Business Investment Companies (SBICs) SBIC’s are a hidden treasure trove of small business financing. I recommend: Complete information on the program, including guidelines for entrepreneurs seeking funds and detailed listings of all operating SBICs in the country, is available in the Investment Program section of the SBA Web site. Or locate SBICs under the member listings of the National Association of Small Business Investment Companies (NASBIC). The National Association of Investment Companies (NAIC) is geared toward financing for minority-owned business.   Line up with the financing angels For those wary of a business loan, angel investors can be a good source of financing. I recommend: Angel Capital Education Foundation directory of member angel groups is available free. AngelDeals.com matches entrepreneurs with potential angels.   Look to non-traditional sources UPS – a big name in small biz shipping – is also a major small business loan provider under its UPS Capital wing, offering both business loans and lines of credit. Other finance companies specialize in credit based on your credit card receivables. I recommend: Check the case histories of how UPS Capital is helping small businesses grow and find out how to apply here. See Business.com’s listings of credit-card receivables companies. Tips & Tactics Helpful advice for making the most of this Guide Button down your business plan. A business plan is a “gotta have” piece in your financing puzzle. The plan should be realistic and cover all the bases. Avoid vague goals and pie-in-the-sky projections. The plan should document why the business needs financing, and how much is needed to reach a specified level of growth and profitability. Take a personal, financial stake in your business. If you want others to back you and your ideas, be prepared to ante up yourself. If loans are part of the mix, your personal credit profile should be in tiptop shape. Budgets and financial statements tell the tale. If your business is already operational, create some basic financials on how you are doing. Don’t worry if you aren’t looking completely gorgeous just now. Investors know that if everything were perfect, you wouldn’t be looking for money. Be prepared. Lenders are likely to ask tough questions, be skeptical of your answers and have little patience for running off at the mouth. Your best step is to be totally prepared and comfortable with your plan. Know how much you’ll need and how you’ll use it. It’s critical to estimate how much money you think you will need overall. All good lenders or investors will want to know this, as well as what you plan to do with the money.

9 Red Flags to the IRS for Small Business Owners

 

NO PROFIT

Claiming business losses year after year or reporting a huge one in a single year will raise eyebrows.

 

 

 

By Justin Martin

VERY LOW REVENUES

The IRS may suspect your “business” is actually a hobby, in which case you aren’t due any deductions

A SLOPPY RETURN

In the age of TurboTax, the IRS doesn’t look kindly on handwritten business returns …

A NEAT RETURN

… but very neat forms can also trigger an audit if any sections are left blank.

UNLIKELY DEDUCTIONS

Deductions that are out of whack for your industry, such as a plumbing supply owner claiming lots of business travel, will raise a flag.

OUTSIZED DEDUCTIONS

Beware of excessive write-offs, like a business with $100,000 in sales claiming a $15,000 insurance premium

TOO MUCH FUN

High deductions for travel, car, cellphones, or entertainment suggest you might be having too much fun and trying to claim it as a business expense.

A BIG SCHEDULE C

As part of its small-business crackdown, the IRS is targeting sole proprietors. Schedule C filers with more than $100,000 in annual revenues were audited at a rate of 3.9% in 2006, up from 1.5% in 2000.

NICE ROUND NUMBERS

They’re a dead giveaway that you’re just making stuff up.

TAX WRITE-OFFS:

You should take every single write-off you’re due – and what’s available may surprise you. Here’s a classic example: Small companies frequently miscategorize the cost of business-trip hotel stays as entertainment (50% deductible) rather than lodging (100%). The feds are only too happy to hang on to this windfall.

Linda Rey (pictured at right, with sister Laura and father Frank) is co-owner of Rey Insurance, a broker based in Sleepy Hollow, N.Y. She and her partners (who also happen to be family members) hold a monthly dinner at a restaurant, which they treat as an offsite strategic planning meeting (100% deductible) rather than a business meal with a client (50%).

Even with coffee and Dunkin’ Donuts for the Friday morning meeting, she always takes the full 100% deduction, while many companies wrongly file this under meals and take half. “I pay careful attention,” says Rey. “Otherwise you end up giving a lot of money away.”

By Justin Martin

Here’s a reason to introduce your accountant to even your most junior hires: Some of them may qualify you for generous tax savings. If you employ certain types of disadvantaged workers, you may be eligible for the lucrative Work Opportunity Tax Credit (WOTC).

Congress spells out with extreme precision – and periodic updates – which workers qualify. Here are some examples: those between the ages of 18 and 39 who live in federally designated enterprise communities; ex-felons hired within one year of their release date; recently discharged veterans injured in the line of duty and out of work for six months or more.

The WOTC is tailor-made for restaurants, retailers, and other industries that use a lot of unskilled labor. Yet tax experts note that these very businesses, especially small ones, hardly ever claim it.

 

A few years back, the IRS – under congressional scrutiny for overzealousness – trimmed its collection activities. Now the pendulum has swung back. Small businesses are notoriously sloppy record keepers, say accountants, making them easy marks for the IRS.

Neil Mammen (pictured at right), founder of Tentmaker Systems, had a brush with the IRS that served as a wake-up call. In 2006 the agency contacted him about $30,000 worth of receipts. They assured him that this was not an audit … yet. They just wanted clarification.

As a typical disorganized entrepreneur, Mammen found that he was woefully underprepared. Some of the receipts in question he found stuffed in a shoebox (no kidding). For others, he had to call vendors and ask for invoices. “It was scary, a nightmare, and it ate up a lot of my time,” says Mammen.

Mammen has since found record-keeping religion. He uses a device called Neat Receipts to scan receipts directly into his PC. There he organizes them according to standard categories such as meals and office supplies. Then he backs the whole thing up in triplicate. After getting more organized, Mammen says, he was able to increase his deductions by about 20% this past year.

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LYNN MADDEN/OWNER OF BLUE DIAMOND PRODUCTS

What deductions you’re able to take is not the only consideration. It also matters when you take them. With taxes, as with so much else in business, timing is key.

Scott Kelley (pictured at right) is a co-founder of Service Center Metals, which uses expensive equipment. Writing off such major purchases usually takes years and must be done in accordance with depreciation schedules laid out by the IRS. With the help of a canny accountant, the company has found ways to accelerate various deductions, allowing it to get more money more quickly. All told, accelerated deduction yields hundreds of thousands of dollars to Service Center Metals each year.

“From the very beginning, we’ve tried to align our growth strategy with tax strategy,” says Kelley. “Get money back quickly, use it to fund expansion and buy better equipment, make more money.”

Vehicle deductions can be particularly tricky. Many owners wind up driving blind, say experts, unaware of how much money they’re losing through poor tax planning.

Not so Dennis Verkest (pictured at right) the owner of A Chimney Sweep & More. Verkest travels great distances to service his clients he has, logging more than 15,000 miles a year in his Ford F-150 pickup.

Because his pickup is fairly new (2004 model year), conventional wisdom holds that Verkest should take the normal deductions. For a car or light truck, you get a write-off that changes from $3,060 in year one to $1,775 in the fourth year and onward until you’ve depreciated the purchase price. You can also deduct the cost of insurance, repairs, and – critically – gasoline.

But Verkest chose option two: standard mileage. You can’t depreciate the cost of the car or write-off gas. Instead, you take a simple deduction based on how many miles you drive. For 2008 it’s 50.5 cents a mile, up from 48.5 cents in 2007. By choosing the mileage rate, his CPA figures, Verkest will be able to increase his write-off by as much as $750 over the normal deduction. “I’ll do anything to keep more money in my pocket,” Verkest says.

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• ConvertTube – ConvertTube is an online video converter that you can use to download YouTube video clips in various formats. Without any registration, you just have to copy and paste the video URL, pick between the available formats (mpg, mov, 3gp, flv, mp4 or audio-only-mp3), click convert, and download the file. Completely web-based and free to use. http://converttube.com/

 

• FLVtoMP3 -  FLVtoMP3 is a free video conversion system that you can use to convert any FLV file to MP3 audio format. Just paste the URL of the video into the box, or upload it directly from your computer (up to 100MB), and click OK. After a matter of seconds, your new audio file will be ready for you to download. Free to use. http://www.flv2mp3.com/

 

• Vixy – Vixy is a free web video converter that lets you convert FLV videos to other formats. After you paste the URL of the video (be it YouTube URL or a link to the video file), all you need to do will be to select the output format among AVI, MOV, MP4, 3GP and MP3, click OK, and wait for the video to be converted. You can then download on your machine, without any registration. Free. http://www.vixy.net/

 

• SoyBe – SoyBe is a YouTube downloading service that lets you provide a URL and get the video converted in various video and audio formats. After you paste the URL, you can decide whether to convert the video in AVI, MOV, MP4, MPEG and MP3-audio-only format, and click the convert button to process and download your new file. Free to use. http://www.soybe.com/

 

• ListenToYouTube – ListenToYouTube is a free web application that you can use to extract an MP3 file from any YouTube video. To get your audio file, just grab the URL of the video you need, paste it into the box and click go. After a while, your MP3 will be ready for you to download. Free to use, no registration required. http://listentoyoutube.com/

 

• MovietoMP3 – MovietoMP3 is an online service that enables you to get an MP3 file out of any video hosted on a sharing site. Supporting YouTube, MegaVideo, Dailymotion, Metacafe, Veoh, Myspace, Google Video, and more services, it easily lets you convert any video to an audio-only MP3 file, just by pasting its URL and clicking a button. MovietoMP3 is free to use and does not require any sign up procedure. http://movietomp3.com/

 

• Media Converter – Media Converter is a free file conversion system that you can use to convert any file to any format. You can use to convert videos from major sharing sites, URL, or even from your hard drive to any video/audio format (MP3, WMA, AVI, MOV, MP4) and more. It also lets you customize settings as codecs, quality, size, resolution and more. Free to use, no registration required for files up to 100MB. http://mediaconverter.org/

 

• CatchVideo – CatchVideo is a free service that anyone can use to download and convert YouTube videos. Just paste the URL of the video into the box, select the output format between mpg, mov, mp4, 3gp, flv, audio-only-Mp3 and wav, and click convert. The video will then be processed, and ready for you to download. Free to use, no registration needed. http://catchvideo.net/

 

• Mux – Mux is a free video conversion tool, that you can use to convert videos online. You can convert any video from video sharing sites like YouTube, or any video that has a public URL(Avi, Mov, Wmv, Mpg…), into other major formats. All you need to do is paste the URL, select the output format, and wait until your video is converted. Free to use, no registration needed. http://mux.am/

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