SmartMoney recently listed a Top 10 list of Bookkeeping Mistakes to Avoid.  Among them are:

• Forgetting to track reimbursable expenses — All those little cash receipts for postage, parking, tolls and office supplies really add up.  If you don’t keep track of them, there’s no way you’re going to be able to deduct those expenses, or be reimbursed.
• Not reconciling the books with the bank statement each month — Reconciling isn’t sexy, like sales and marketing.  But it still needs to be done!  How else are you going catch errors and make sure you know your bank balance?
• Doing it yourself — Most small business owners simply hate bookkeeping.  Hey, if it’s not your cup of tea, outsource it! Having a competent, qualified bookkeeper can get the job done quickly and efficiently.  This will also provide you with a second set of eyes to catch errors such as invoices you forgot to send!

Find the rest of the list at http://www.smsmallbiz.com/taxes/Top_10_Bookkeeping_Mistakes_by_Small_Businesses.html

Intuit has recently launched PaymentNetwork, a new, cheaper alternative to PayPal for collecting fees from customers.  The huge draw is their low fees, only $0.50 per transaction!

Use PaymentNetwork to send or receive payments.  Sending money is free, while receiving payments costs only $0.50 per payment.  There are no monthly fees or transaction discounts, a major improvement over credit card merchant fees and PayPal fees.

Both you and your customer need to register for the service.  For this reason, Intuit PaymentNetwork is particularly well-suited to transactions with frequent customers and recurring, monthly transactions.  Even with a single, one-time transaction of a larger dollar amount, though, you could be saving quite a bit of money over a PayPal transaction.  For a single, $1,000 transaction, PayPal would charge roughly $29.30 while Intuit PaymentNetwork would charge only $0.50!

The system is extremely easy to use and helps you track the payments requested and the payments received.   Like PayPal, you don’t need to provide any bank number information to your client.

Be forewarned that you will have to wait three or more days to receive your payment.  While a similar transaction would be processed immediately with PayPal, you would still have a time lag while waiting for the transfer of funds to your bank account to be processed.

It’s certainly a great, new alternative to credit card merchant accounts and PayPal!

According to a recent study by the Kauffman Foundation, every $1,000 increase in credit card debt raises the odds that a startup will fail by 2.2%!!

Read the report for all the gory details.

So what are some better ways to get some cash to finance your new, small business?

1. If you’ve been in business for at least two years and are trying to finance business growth, you can apply for a business loan from a local bank.  You will likely be asked to put up some collateral and a personal guarantee from each business owner.
2. To increase your chances of getting funding, you could apply for an SBA loan.  With the help of your local Small Business Development Center (SBDC), you will need to fill out a lengthy loan application.  While it takes a little more work to secure a SBA loan, it is ideal for those entrepreneurs with little collateral back up a loan application.
3. Lastly, if there is equity in your home, you can draw on a Home Equity Line of Credit to fund your business.  The risks of being unable to repay this type of loan include foreclosure, however, so be very sure that you will be able to continue making payments on this loan whether your start-up starts generating revenue or not!

The latest issue of Fortune Small Business magazine featured some sobering statistics:

• 94% of small business owners are concerned about saving money.
• 51% say their revenues have decreased from last year.
• 55% say their costs have increased.
• 52% say they are making payments more slowly than in the past.

I think it’s real easy to go into a panicked cost-cutting mode when you read statistics like this.  In my experience, though, a lot of solopreneurs can experience a significant increase in cash flow just by tightening up their systems.

Invoice more carefully and more often.  It sounds simple, but the drudgery of bookkeeping often falls behind the more exciting needs of sales and client work.  But your clients aren’t going to pay you until you invoice them!  I had one coach who didn’t get around to invoicing as often as she should because it took too much time away from client work.  When we reviewed her time logs, she realized that she hadn’t invoiced some of her clients for over six months!  Her unbilled time amounted to many thousands of extra dollars!

Keep track of your receivables.  Another coach routinely got her invoices out on a monthly basis.  She prepared them in MS Word, though, and didn’t keep track of the invoices that she sent out.  Again, when we reviewed her time logs and her notes, there were some invoices over five months overdue!  In most instances, the client had simply forgotten to pay!

Monitor those automatic payments. SalesForce charges you a monthly fee.  Your internet host charges you a monthly fee.  You may have upwards of a dozen monthly payments automatically hitting your checking account or credit card each month.  Do you keep track of these?  Have they gone up since you signed up?  I had one client that had a recurring $9.95 fee on his bank account and had no idea what it was even for!  I have another client that had a monthly fee increase from $10 each month to $23 each month without any notice from the vendor!  These little charges and increases can add up to hundreds of dollars over the course of the year.  Do you know where all of your money is going??

If you feel you don’t have the time to attend to the monthly invoicing and receivables, outsource!  If you don’t feel you have the expertise or the attention to detail needed to keep on top of monthly expenses, outsource!  Some of the many reasons for outsourcing your bookkeeping include:

• Professional attention to detail, watching where your money is going
• Less of your time spent on the books, leaving more time for sales and client work
• Improved cash flow — getting all of your billable time billed and all of your invoices collected.
• Greater accuracy in your business numbers, helping you make better business decisions
• Lower taxes — your records will be ready-to-go for tax time and you’ll know you’ve captured all possible business deductions

Did you know that Intuit’s Billing Manager allows for free onling invoicing, with no client limit or monthly invoice limit?  Of course, they’re trying to sell you their Merchant Services, which will allow your clients to pay their invoice by credit card.  But you don’t have to use their Merchant Services to use the Billing Manager — your clients will still be able to pay by paper check or however they’ve paid in the past.  If you’re looking for a simple way to get some professional invoices out to your clients, you should check it out:

https://billingmanager.intuit.com/billing/welcome.url

5t4xjhz9u7

Mogum Mom — a really cool site for working moms — is giving readers a chance to win 250 custom greeting cards, just for subscribing to their blog.  Check it out: Mogul Mom

5t4xjhz9u7

Are you interested in taking your accounting online, but not sure which service to use?  There are some interesting alternatives out there:

WorkingPoint – This service is billed as accounting software PLUS contact management software.  A huge plus for WorkingPoint is that your first user is free forever.  They also have a fairly robust Contact Management feature that maintains contact details, sales history and outstanding balances.  There is no convenient way to do monthly bank reconciliations, however, a feature that I’d really like to see.  If you want to add a second user, the cost is only $10/month.

Clarity Accounting – This system is only $10/month, with a 20% discount for paying annually. Some cool features of this system are multi-currency support, the ability to download your bank and credit card statements directly into the program, unlimited invoicing, and the ability to have multiple users at the same base price.

Outright – This new service has a great appeal for very small businesses because it’s extremely simple to use and it’s free.  Be careful, though, as the same features that make it easy to use also makes it less robust than the other options.  You can record money in and money out, but there’s no reconciliation feature … how else are you going to know whether your numbers are right?!?

And, for $10/month, there’s always QuickBooks Online Basic.  This version doesn’t have all the bells and whistles of the “Plus” package, but it will keep your books balanced and allow you to track all of your income and expenses easily and inexpensively.

Not sure which one to use?  All three allow for a free trial period.  Just be sure to not sacrifice quality for the sake of free software.  The peace of mind that you get from reconciling your bank statement is worth $120 dollars a year … isn’t it??

There are no hard and fast rules, but there are some general guidelines out there for how long you should keep your biz records:

1 Year — Duplicate deposit slips, Purchase orders, Correspondence with customers & vendors

3 Years — Cancelled checks, Paid vendor invoices, Expired insurance policies, Employee payroll records

6 Years — Sales records & invoices, Bank statements, Auto mileage logs, Travel & entertainment records, Employment tax records

Forever — Copies of tax returns, Tax/legal correspondence, Contracts/leases, Real estate records, Corporate minutes & stock records

Generally, retention guidelines are the same for computerized records as for paper copies.  But it’s important that you can retrieve what you need and that the IRS can access those records.  In other words, your computerized records need to be upgraded if they’re in an obsolete format.  And always remember to keep off-site backups!!

Nothing strikes terror in the heart of the small biz owner quite like finding a letter in the mailbox from the IRS! In an effort to help you avoid that unpleasant scenario, here are some common pitfalls to avoid if you don’t want the IRS as your new pen pal!

• Include all your income on your tax return! If you received a Form 1099-MISC from anyone, be sure this income is on the return, in the right place, or you will receive a notice.  Even if you did not receive a 1099 for work you did, you are required to report the income.  The IRS receives copies of 1099s from the payers and these are checked against the income you report.
• If you made quarterly estimated tax payments, double-check the amount and the dates the taxes were paid.  Forgetting to include a payment is common, especially the payment made in January for the fourth quarter.  Remember the first payment of the year is sent in April, followed by June and September payments and concluding with the January payment for the fourth quarter of the preceding year.
• If you underestimated the amount of your taxes and are unable to pay the full amount, be sure to file the return on time anyway.  You can request to pay the remainder in 120 days or with an installment agreement.

A few minutes of extra time reviewing your return will pay off in peace of mind and help you stay off the IRS radar screen!

It would be a perfect world if everyone we worked with could be trusted 100 percent, but being too trusting can lead to employee theft or fraud.  There are some simple steps you can take to protect your business:

1. Use a password!  Your QuickBooks or other accounting software should have an Administrator password at a minimum.  Even better, set up a separate user account for each person accessing the software and have everyone set their own password.
2. Review your books! Even if you’re not a “numbers person,” you should learn enough about reading a Profit-&-Loss report and a Balance Sheet to be able to know if something is amiss.  There are seminars offered at your local SBDC or community college if you need to learn how to read these basic reports.
3. Make your bookkeeper take a vacation!  At least once a year, make your bookkeeper take a week off at the end of a month.  Let someone else close the month and reconcile the accounts.  You never know what you might find!  If you don’t feel comfortable doing the reconciliations and reviews, hire your tax preparer or a Virtual Bookkeeper for the assignment.
4. Get a stamp!  Purchase a “For Deposit Only” stamp for your business account and stamp all incoming customer checks with it.  This can prevent someone else from cashing your customer’s check.
5. Open your statements!  You, the business owner, should be the one to open the bank statements.  Always make sure you receive them unopened.  Then review them for any unusual payees or amounts.
6. Lock up your checks!  Don’t leave blank checks laying around.  Make sure you keep track of voided checks, too.  Then, be sure to keep track of check numbers and investigate any missing checks.

These simple tips can help you sleep better at night and help prevent the theft or fraud that could seriously damage your business.