For Business Owners & Entrepreneurs

An ongoing series of informational entries for Business Owners.

How to save money on Tax Preparation.

March 15, 2017

It's that time again ya'll! Yep... the dreaded tax season is upon us and while many of you small business owners are scrambling to keep up already it's probably the last thing you want to do. Today I am going to talk about how to save money on your CPA fees. Well to start, if you aren't already keep your records straight and use QuickBooks or some other accounting software to organize it. Not excel... Did you know if you hand your CPA an income statement and a balance sheet at the end of the year they will charge you a WHOLE lot less than if you hand them a shoe box and bank statements? I mean you could save THOUSANDS of dollars! Did you know that many CPA firms secretly charge you extra PITA tax as a shoebox client or if you call them excessively. PITA tax is an acronym for Pain. In. The. .......well you can figure out the rest. Secondly, find someone you trust who can be honest with you and review your accounting processes and procedures. CPA firms specialize in taxes. Again CPA firms specialize in taxes. Many are now breaking into the financial planning world as well. However, accounting professionals are like attorneys, they specialize. Would you want a divorce attorney representing you for a criminal or traffic ticket? Probably not, unless they are doing it for free. Then why are you depending on a tax professional to oversee your business processes and procedures? They don't understand the day to day, and rarely understand your business, they only see the end result. You can't afford for them to take the time to truly understand your business. You need a financial accountant who specializes in the day to day transactions, management reports, and can spot inefficiencies within your accounting processes and procedures. In larger companies, these employees are called Controllers, but most small businesses can't afford to add a six figure employee like this. I have spent my career working in many different industries and have devoted my career to helping small business owners get the help they need. Please call me if you need help at (832) 887-8955. I will get your business so organized you won't know how you did it before me.

Kim Kelly

Owner

Katy QuickBook Advisors

What is the Difference between a Bookkeeper and an Accountant? 

July,12,2017

Differences between a Bookkeeper and an Accountant? Know who you are working with. Generally, a bookkeeper is a person without a college degree in accounting who performs much of the data entry tasks. This includes entering the bills from vendors, paying bills, processing payroll data, preparing sales invoices, mailing statements to customers, etc.


The accountant is likely to have a college degree with a major in accounting and takes over where the bookkeeper leaves off. The accountant will prepare adjusting entries to record expenses that occurred but are not yet entered by the bookkeeper. (Examples include interest on bank loans since the last loan payment, wages earned by employees that will be processed next week, etc.) Other adjustments to accounts include the calculation and recording of depreciation, establishing allowances for uncollectible accounts, etc.). After making the adjusting entries, the accountant prepares the company's financial statements (income statement, balance sheet, statement of cash flows.) The accountant also assists the company's management to understand the financial impact of its past and future decisions.


Generally, a bookkeeper's formal education will be less than a four-year college degree such as high school courses taken or a trade school. Accountants generally have at least a 120 or 150 credit college degree including at least 30 credits of accounting courses plus 30 credits of other business courses.


A bookkeeper is likely to be employed at a smaller company or organization and will process a large volume of routine transactions. An accountant is likely to be employed at a larger company and will be able to delegate the processing of the high-volume routine transactions to accounting clerks. In turn, the accountant will deal with more complicated transactions, will review the financial statements, and will assist management in the planning and control of the organization. 


In larger companies, Accountants are called Controllers, but most small businesses can't afford to add a full-time employee like this. I have spent my career working first as a bookkeeper and after receiving a college degree in accounting as an accountant in many different industries and have devoted my career to helping small business owners get the help they need. 


Please call me if you need help at (832) 887-8955. I will get your business so organized you won't know how you did it before me.


Kim Kelly, BBA

Katy QuickBook Advisors LLC

[email protected]

FB: www.facebook.com/katyquickbooksadvisors/

Breaking News: Hurricane Harvey Tax Relief is Here!

September 6, 2017

GREAT NEWS FOR ALL EXTENSION FILERS AFFECTED BY HURRICANE HARVEY! IRS has postponed 2016 Tax Return deadline!

Individuals who reside or have a business in Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria, and Wharton Counties may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 23, 2017 and before Jan. 31, 2018, are granted additional time to file through Jan. 31, 2018. This includes taxpayers who had a valid extension to file their 2016 return that was due to run out on Oct. 16, 2017. It also includes the quarterly estimated income tax payments originally due on Sept. 15, 2017 and Jan. 16, 2018, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2017. In addition, penalties on payroll and excise tax deposits due on or after Aug. 23, 2017, and before Sept. 7, 2017, will be abated as long as the deposits were made by Sept. 7, 2017.


Here is the link to the IRS


https://www.irs.gov/newsroom/tax-relief-for-victims-of-hurricane-harvey-in-texas


Please call me if you need help at (832) 887-8955. I will get your business re- organized and help you get on the road to Harvey Recovery.


Kim Kelly, BBA

Katy QuickBook Advisors LLC

[email protected]

FB: www.facebook.com/katyquickbooksadvisors/

Accounting Terms to Know

September 19, 2017

To successfully manage your company’s bookkeeping and accounting, knowledge of terminology is a must. This is a list of common bookkeeping terms. Though it's by no means a definitive list, it covers many of the basics.


Accounts Payable – Represent unpaid supplier invoices and other bills that are owed by the business to others. Accounts payable appears on the balance sheet as a liability.


Accounts Receivable – Unpaid sales invoices and other money owed to the business from customers. Accounts receivable appears on the balance sheet as an asset.


Assets – Items of value owned by a business. They can be found on the company’s balance sheet and might include cash, accounts receivable, real estate, furniture and equipment, and vehicles.


Bad Debt – These are receivables that have been written off because the payments are unlikely ever to be paid. Sales invoices should be written off only after the payments are past due and the company has made an effort to collect the funds. Bad debt is shown as an expense.


Balance Sheet – A balance sheet shows how many assets the business owns, what the business owes and how much equity the owners have in the business as of a particular date in time.


Cash Flow – The movement of cash through the business. The Statement of Cash Flows details how cash flowed into the business and how cash was spent.


Cost of Goods Sold (COGS) – May also be referred to as Cost of Sales. COGS is the calculation of all costs involved in selling a product to customers.


Credit – The right-hand side in the double-entry method of bookkeeping. A credit either increases a liability or equity account, or decreases an asset or expense account.


Debit – The left-hand side in the double-entry method of bookkeeping. A debit either increases an asset or expense account, or decreases a liability or equity account.


Depreciation – Accounting for an asset’s decrease in worth over time due to wear and tear and daily use. Depreciation is an expense that can be used to reduce taxable income.


Double-entry – The method of bookkeeping in which all financial transactions are entered twice – once as a debit and once as a credit. All the debits and credits must be equal. If they are not, the books are out of balance and the error will need to be found.


Equity – Equity appears on the balance sheet, and it shows how much the business owner has invested into the business from personal funds (capital), and how much he or she has withdrawn from the business for personal use.


Expenses – All money spent to operate the company that is not directly related to the sale of goods or services.


General Ledger – Where all the company’s accounts are summarized.

Income Statement or Profit & Loss (P&L) – The financial statement that shows a summary of the company’s financial activity over a period of time, such as a month, quarter or year. It starts with revenue earned, subtracts cost of goods sold and expenses, and ends with net profit or loss.


Inventory – A list of items that the business buys and sells.


Liability – Liabilities are found on the balance sheet and are made up of debts that the company owes to other businesses. This includes accounts payable, credit card balances and loans.


Petty Cash – Cash kept in a safe place for the purpose of making small purchases. All money paid out is typically recorded in a petty cash book.


Revenue – All money brought into a company from selling its goods or services.


Trial Balance – A report used as a test to ensure the books are in balance before pulling together information for the financial statements and closing the books for the year.


Please call me if you need QuickBooks or Accounting help at (832) 887-8955. 


Kim Kelly, BBA

Katy QuickBook Advisors LLC

2550 Gray Falls Drive, Suite 395

Houston, TX 77094


[email protected]

FB: www.facebook.com/katyquickbooksadvisors/

Frequently Asked Questions

December 18, 2017

Written by Kim Kelly, BBA Katy Quickbooks Advisors LLC


Q: Why do I need to reconcile my bank accounts? Isn’t the information downloaded from my bank?


A: Yes, it is however reconciling your bank account is the only way to ensure your financial records are accurate. The bank financial information may have downloaded with errors or information keyed into QuickBooks may have errors. Some common data errors we find when reconciling the bank and credit card statements are customer payments duplication and banks transfers recorded incorrectly. These errors can be very costly to you. For example, if you are duplicating your customer payments, you are overstating your income. Meaning you could be overpaying your taxes. No small business owner should pay more taxes than they are legally required to. Yet many are unknowingly doing so.


Q: I have a CPA, they take care of all my bookkeeping and ensure that it is accurate when they file my taxes, right?


A: Your tax preparer or CPA is under no obligation to make an assurance of your bookkeeping records. This responsibility falls on you, the business owner. They file your taxes based on the information you provide them. Small business owners really need to understand this and have a basic understanding of their bookkeeping.


Q: What is a W-9 Form? Who fills this out anyway? Me, my customers, or my vendors?


A: The W-9 is the most misunderstood form in the business world! The best answer is basically anyone you pay i.e. Vendor/ Contractor/ ________insert name on check who is NOT a corporation. Not your customers, however your customers may ask you to fill one out in order to pay you. At the end of the year, anyone you pay $600.00 or more in a year that is NOT a corporation will receive a 1099 Form you must file with the IRS.


Kim Kelly, BBA

Katy QuickBook Advisors LLC

2550 Gray Falls Drive, Suite 395

Houston, TX 77094


[email protected]

FB: www.facebook.com/katyquickbooksadvisors/

Invoicing & Cash Flow Q.&A. For Entrepreneurs

April 4, 2018

Written by Kim Kelly, BBA Katy Quickbooks Advisors LLC


My name is Kim Kelly, founder of Katy QuickBooks Advisors. We are an exclusive QuickBooks consulting, training, and bookkeeping firm. I’m passionate about small business owners because growing up my family owned a small business. After my career as a financial controller, I set out on a mission to educate and mentor small business owners. SMB’s often lack the resources or staff that can bring business financial infrastructure and best practices into their business.


Q.) Why is it that entrepreneurs need to put thought into

defining their invoicing terms?


A.) Cash is truly the lifeblood of their operation. If entrepreneurs lack cash management skills, their business is much more likely fail. My college professor used to yell at us, CASH IS KING! It’s so incredibly true. Increases in cash flow only come from a few places. 1) Owner contributions 2) Sale of Assets 3) Accounts Receivables. Accounts receivables are your invoices and they are paid based on the terms. If you are lucky.


Q.). What are some creative options you've seen to maximize cash

planning, especially if there are costs incurred for service

delivery?


A.) The most creative options I have seen are the simplest one. Ask for payment up front or a deposit. Especially if there are costs incurred for service delivery. There are other ways to secure payment timely. For example, you could use an ACH form that states you will invoice the customer weekly, biweekly, or monthly via auto pay. Implement a contract and make sure the payment process is clear to the customer. Make paying your invoice painless to the customer. QuickBooks online offers a free email and ACH payment merchant service account. The invoices are directly emailed to the customer with a link for payment. There is a small percentage fee for credit cards. Automation then takes care of the rest. If those options don’t work for your type of business consider offering a discount or rebate for early payments. Sometime an incentive makes all the difference.


Q.)  What steps do entrepreneurs often overlook when defining

invoicing terms?


A.) Many entrepreneurs become so enthusiastic about making that sale that they forget about the cash flow factor. Or they allow customers to determine when they pay their invoice. Ask yourself, do you go to the hair salon or the barber shop and then expect to pay them when you can? Likely not. So why do we as small business owners allow customer to dictate how and when they will pay? Remember, this is your business, you define your policies on payment which include invoicing terms. 



Kim Kelly, BBA

Katy QuickBook Advisors LLC

2550 Gray Falls Drive, Suite 395

Houston, TX 77094


[email protected]

FB: www.facebook.com/katyquickbooksadvisors/

Summer Check Up Time

June 13, 2018

~ Kim Kelly, BBA Katy Quickbooks Advisors LLC


Ah, summertime! Relaxing by the pool, family vacations, or some beach time for you busy entrepreneurs. Or perhaps summer is your busy season, you have been waiting all year for the heat. Gearing up to make that money$$! Either way, summertime is a GREAT time to get your BOOKS in order and up to date. Most financial and tax professionals are ready to help you right now. Every try to find an accountant or tax professional December through April? Its like trying to FIND a UNICORN! Don't wait use this time to get organized and set up for tax time. Do you struggle with Quickbooks? Is learning how to use Quickbooks something you want to acomplish this year? Or do you have a special project you need help tackling. Quickbooks help is available, you just need to reach out.


Email me or give me a call if you need help finding someone or to talk through your bookkeeping and quickbooks problems. I'm always here for you!


Kim Kelly, BBA

Katy QuickBook Advisors LLC

2550 Gray Falls Drive, Suite 395

Houston, TX 77094

(832) 887-8955 Call me anytime!


[email protected]

FB: www.facebook.com/katyquickbooksadvisors/

New Meal Tax Law Info: IRS Issues Guidance Regarding Meals Bought During Entertaining 2018

October 19, 2018

~ Kim Kelly, BBA Katy Quickbooks Advisors LLC


The IRS recently provided transitional guidance about the deductibility of expenses for business meals that are purchased in an entertainment context. (IRS Notice 2018-76)


The Basics

Businesses can deduct ordinary and necessary expenses paid or incurred during the tax year in carrying on a trade or business. Before it was amended by the Tax Cuts and Jobs Act, the tax code generally prohibited deductions for entertainment, amusement or recreation activities. However, the tax code provided exceptions to that prohibition, so many businesses could write off some entertainment expenses.


Now the TCJA generally disallows deductions for any entertainment, amusement or recreation expenses.

In general, the tax code also disallows deductions for food and beverage expenses unless: 1) such expenses aren't lavish or extravagant under the circumstances, and 2) the taxpayer (or an employee of the taxpayer) is present when such food or beverages are consumed. In addition, a deduction for food or beverage expenses generally can't exceed 50% of the amount of the expense that otherwise would be allowable. (There are some exceptions to the 50% limit on deductibility.)


Food and Drinks at Entertainment Events

The new IRS Notice (and an accompanying information release) provide transitional guidance on the deductibility of expenses for business meals that are purchased in an entertainment context.

The TCJA didn't address the circumstances in which the provision of food and beverages might constitute entertainment. However, the legislative history of the TCJA clarifies that taxpayers generally can continue to deduct 50% of the food and beverage expenses associated with operating their trades or businesses.


The IRS Notice explains that taxpayers may deduct 50% of an otherwise allowable business meal expense if:

The expense is an ordinary and necessary expense paid or incurred during the tax year in carrying on a trade or business.

The expense isn't lavish or extravagant under the circumstances.

The taxpayer, or an employee of the taxpayer, is present while the food or beverages are being consumed.


The food and beverages are provided to current or potential business customers, clients, consultants or similar business contacts.

In the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices or receipts. The entertainment disallowance rule can't be circumvented by inflating the amount charged for food and beverages.


The IRS guidance provides three examples. For each one, assume that the food and beverage expenses are ordinary and necessary expenses under the tax code, paid or incurred during the tax year in carrying on a trade or business and aren't lavish or extravagant. Also assume that the taxpayer and the business contact aren't engaged in a trade or business that has any relation to the entertainment activity.


Example 1. Andrew invites Bob, a business contact, to a baseball game. Andrew purchases tickets for himself and Bob to attend the game. While at the game, Andrew buys hot dogs and sodas for the two of them.

A baseball game is entertainment. Thus, Andrew can't deduct the cost of the tickets. The cost of the hot dogs and drinks, which are purchased separately from the game tickets, isn't an entertainment expense and isn't subject to the tax code disallowance. Therefore, Andrew can deduct 50% of the expenses associated with the hot dogs and drinks purchased at the game.


Example 2. Cathy invites Danielle, a business contact, to a basketball game. Cathy purchases tickets for them to attend the game in a suite, where they have access to food and beverages. The cost of the basketball game tickets, as stated on the invoice, includes the food and beverages.

A basketball game is entertainment. Therefore, Cathy can't deduct the cost of the tickets. Because the food and beverages aren't purchased separately from the game tickets, and aren't stated separately on the invoice, the cost is an entertainment expense that's disallowed.

Therefore, Cathy can't deduct any of the expenses associated with the basketball game.


Example 3. Assume the same facts as in Example 2, except the invoice for the basketball game tickets separately states the cost of the food and beverages.

As in Example 2, a basketball game is entertainment as defined by IRS regulations. So the cost of the tickets is an entertainment expense, and Cathy can't deduct that cost. However, the cost of the food and beverages, which is stated separately on the invoice for the game tickets, isn't an entertainment expense. So, Cathy can deduct 50% of the stated cost of the food and beverage expenses.



More Guidance Coming Soon

The IRS intends to publish proposed regulations on this issue in the future. Until the proposed regs are effective, taxpayers can rely on the guidance in Notice for the treatment of expenses for the business meals described in the guidance.

The IRS also plans to issue separate guidance addressing the treatment of expenses for food and beverages furnished primarily to employees on the employer's business premises. Contact your tax advisor for more information.


Email me or give me a call if you need help finding someone or to talk through your bookkeeping and quickbooks problems. I'm always here for you!


Kim Kelly, BBA

Katy QuickBook Advisors LLC

2550 Gray Falls Drive, Suite 395

Houston, TX 77094

(832) 887-8955


[email protected]

FB: www.facebook.com/katyquickbooksadvisors/

Update Quickbooks

Do I really need to update my QuickBooks?

November 28, 2018

Do I really need to update my QuickBooks?

The 2019 version of QuickBooks was released several weeks ago and it came with the usual new features that focus on streamlining the user experience. In the past few years, the newer versions of QuickBooks have also focused on better security and better reporting. And most business owners who call us looking to upgrade aren’t excited about the benefits of the new software, they instead are most concerned about the bottom-line cost of the software itself and the cost of installation. If you’re using an older version of QuickBooks, you should think about what it could cost if you don’t upgrade.

Reason #1 to move off an old version of QuickBooks - older versions are more susceptible to corruption. We work with so many clients who have corrupt QuickBooks files (symptoms include error messages, your numbers just don’t look right, system crashes). There are file repair tools but we’ve come across some files that are SO damaged the fix is very costly – way more than the software would have been to purchase.

Reason #2 to upgrade – your accounting staff can be more efficient. What a gift that would be to your employees! Better reporting in the new versions and updated features that save time.

Reason #3 to upgrade – security. Hackers are trying to exploit software all the time. Intuit’s security assessment team is constantly monitoring for threats. Staying current with your QuickBooks means you’ll get access to security updates when they’re issued. You’ll also benefit from proactive feature updates like webmail security authentication and password improvements.

Business owners - the purchase of your accounting software is not just a one-and-done deal. Software is always improving and staying on top of these upgrades and product updates could cost less in the long run. Contact us to discuss more. Inuit allows us to pass on savings discounts to our clients.