Blog

As a business owner or manager, it’s essential to stay on top of your company’s financial health. Wouldn’t it be great if there was one report that could give you a high-level overview of the books so you can make smart financial decisions for the future? Well, there is! We present The Balance Sheet. (ta-da!)

While it’s not a novel idea, a balance sheet is one of the reports that are crucial to understanding. At Moose Creek Bookkeeping we have been translating accounting reports for clients for over 30 years, combined. So, if you still have questions after reading this quick article, please reach out for a free discovery call.

Balance sheets give you a clear picture of your business’s financial position at a chosen time in the past. They can help you make smart decisions about future investments, loans, or other financial activities. It can also tell you if you have enough cash on hand to meet your obligations, or if your interest rates are too high to maintain.

A balance sheet is typically divided into three sections:

Assets are what your company owns, including cash, inventory, equipment, and property. This information is helpful in assessing your company’s liquidity, as well as its ability to invest in new projects.

Liabilities are what your company owes to others, including loans, accounts payable, and taxes. This information is vital in understanding your company’s debt levels and interest rates.

Equity represents the leftover interest in the assets of your company after deducting liabilities. This information is important if you plan to attract investors.

Reading a balance sheet may seem intimidating at first, but it’s not as complicated as it looks. Here are the steps to follow:

Look at the assets section: You’ll see categories like cash, accounts receivable, inventory, and property. Add up all the assets to get your total.

Look at the liabilities section: This section lists everything your company owes, like loans and accounts payable. Add up all the Liabilities.

Look at the equity section: This section lists how much money you and any other investors have put into the company. Add it up!

Check the equation: The balance sheet equation is assets = liabilities + equity. By nature, a balance sheet should always balance. If it doesn’t, it’s likely due to missing or incorrect data. Don’t worry! This is common for many of our new clients; we are able to help right your ship.

Your company’s accounting software should make running a balance sheet report a breeze. If you need further help to understand your reports, Moose Creek Bookkeeping is here to help. We take pride in what we do and our clients benefit from it. Reach out today with any questions you might have.

Understanding Your P&L Statement

Today, we’d like to discuss how Moose Creek Bookkeeping services can help your business achieve financial understanding in 2023 and beyond. Every business owner knows how important it is to stay on top of the financials – but two important factors often get in the way of accurate bookkeeping: organization and understanding. In our previous blog posts, we talked about how Moose Creek Bookkeeping can help you maintain organization regarding paperwork, receipts, etc. Now, let’s talk about understanding the most crucial report your accounting software* can generate: Profit & Loss Statement (Aka P&L or Income Statement).

Your P&L statement is a financial report that shows your business’s revenue, costs, expenses, and profit. This information is incredibly valuable – it can help you identify areas where you can cut costs and improve your profitability. Without this information, it’s easy to make uninformed decisions that negatively impact your bottom line.

Let’s break it down. Simply speaking, your P&L is calculated as Income – Expenses = Profit. Depending on the nature of your business, this can be relatively basic, or mind-numbingly complex, and that’s why we are here to help.

Here are the basic categories you will see on a P&L

Revenue: Revenue also called the “top line” of the P&L, is the money that you’re bringing in from your sales.

Cost of Goods Sold: These are the costs that you incur when you make your products or deliver your services.

Gross margin: Gross margin tells you how much money you have left over to cover your expenses after you’ve covered the cost of the product or service you are selling.

Operating expenses: Operating expenses cover all of the expenses that you incur to keep your doors open, excluding your direct costs of goods as above.

Net profit: This is your “bottom line” that you hear so much about. You started with your revenue as your “top line” and then subtracted things as you went: direct costs, operating expenses, and so on. What’s leftover is your profit, or potentially your loss if you ended up spending more than you earned.

Now, your company might fall somewhere between the basic and the mind-numbingly complex when it comes to P&L reports, but either way, we have you covered. Most of our clients are not massive companies with CFOs and Shareholders to scrutinize the books, so we are here to take the deep dive that so many companies are missing out on. Let Moose Creek Bookkeeping guide you through the complexities of financial reports, identify potential issues and offer solutions to improve your business’s current and future financial health. Please give us a call or schedule a free discovery call.

*If you’re reading this and you currently do not utilize accounting software, please reach out so we can discuss some of our recommended platforms for your unique business.

A Business Checklist For Tax Day

Welcome back! We hope you have been learning a thing or two about your business accounting practices while reading our blog posts because now is the time to put all your knowledge into action – it’s time to file your taxes! We have many new clients who feel rather unprepared when springtime rolls around so we have compiled a short list of must-haves for filing your business taxes to help you get started. Here is an easy to follow checklist for tax day:

Gather all financial documents: This includes income statements, balance sheets, and expense reports.

Organize receipts: Throughout the year keep track of all receipts and invoices related to business expenses.

Review employee payroll records: Double-check that all employee payroll records are accurate and up-to-date. Prepare all required forms such as W-2 and 1099s.

Determine any deductions: Identify all deductions your business may be eligible for, such as depreciation, interest, and charitable donations.

Check for any tax law changes: Keep up-to-date with any changes to tax laws that may affect your business.

Now, that might sound like a daunting list, and we agree entirely. Luckily, here at Moose Creek Bookkeeping, we have mastered the art of accounting and guiding business owners like yourself through the muddy waters of preparing for taxes. We have helped countless companies become more organized and accurate when it comes to year-round bookkeeping, resulting in a relatively stress-free tax season.

In addition to the items listed above, there are a dizzying amount of documents necessary to file a corporation’s taxes, depending on the nature of your business and how your sole proprietorship, corporation, or LLC is set up. Although our work is different from the work done by a CPA, we are knowledgeable on exactly what paperwork your business is expected to fill out. Working alongside your CPA, we will make sure you have everything necessary to file your business taxes, avoiding any costly mistakes. Some oversights can rack up sizeable penalties including misclassifying employees, missing tax deadlines, and losing track of receipts… all of which we are here to resolve promptly and effectively.

By joining our esteemed client list, you will be able to gain accounting knowledge, while also gaining time, as we handle the nitty gritty of bookkeeping – so you can focus on your passions. Reminder, it’s never too late, or too early in the year to seek help with your books. We offer a judgment-free zone guaranteed to improve your books and your confidence in them.

When To Hire A Bookkeeper Or Accountant

If you’re reading this article, the short answer is, “now”. Let’s talk about why…

Many entrepreneurs like yourself run on self-sufficiency and a DIY mentality. Up until now, you have brought an idea or a service to market, which is no simple feat and you should be proud! As a small business owner, you are likely wearing many different hats on a daily basis. You are the CEO, scheduler, buyer, marketing director, salesperson, and janitor all rolled into one, but your least favorite hat is the accountant’s visor. While you may be very good at many of these roles, it’s easy to get overwhelmed when you’re wearing so many hats at once. Most business owners tend to push the accounting aspect of the business to the back burner because it’s so foreign and daunting to them. Your passion lies in your craft, not accounting.

We like to think of hiring a bookkeeper as purchasing insurance for your bank account. It’s never too early – or too late – to take advantage of professional guidance when it comes to your finances. We can save you time and money by making sure all the financial details are in order — from keeping track of payroll and receipts to ensuring bills get paid on time, avoiding any unchecked interest and late fees that can bring a business to its knees. We also give a high-level assessment of your company’s current and future financial health.

Here are a few cues that tell you when it’s time to hire a bookkeeper.

You’re strapped for time. We will make tedious tasks like categorizing receipts and keeping up with various taxes our priority so that you can prioritize growing your business.

You’re missing receipts. This is very common and we have developed trusted methods of keeping track of expenses in efficient and user-friendly ways.

Monthly reconciling is not your thing. Recon-what? Reconciling is a critical yet complicated part of the accounting process. If it’s done incorrectly, or not at all, issues can arise, especially at tax time. We can help you stay ahead of the game, every month.

Here are a few ways Moose Creek Bookkeeping can improve your business:

Reduced time and worry spent on accounting activities.
Improved cash flow management, which allows you to focus on growing your business.
Better financial reporting for tax purposes can lead to less tax liability for you.
You’ll know exactly where your money is at all times.

The idea of hiring a bookkeeper can be intimidating if you’re a small business owner who’s always been in charge of your own books. Or perhaps you’re great at accounting but your business is growing too fast to keep up, either way, hiring Moose Creek Bookkeeping will help you save time, make better decisions and avoid costly mistakes.

Sending Out 1099s: Don’t Miss The Deadline!

Happy New Year! January is a very important time for many of our clients because it’s time to buckle down on taxes, and they rely heavily on independent contractors. Have you paid someone, or been paid over $600 in 2022? Then, this article is for you.

Tax season can be daunting for any business, but it’s especially important to make sure all of your 1099 forms are sent out by the January 31st deadline unless you’re hoping for a letter from the IRS. In this blog post, we will discuss the consequences of missing the deadline for sending out 1099s, how employees can be penalized, and what an employee can do if the company doesn’t send out 1099s by the deadline.

When a business pays an independent contractor over $600 they are required to report that payment to the IRS, and so is the contractor. Failure to send out 1099 documents by the deadline can result in monetary fines, interest on late payments, and possible criminal charges. At Moose Creek Bookkeeping we specialize in accounting for businesses who regularly hire 1099 independent contractors, so we are versed in the timing, accuracy, and execution of 1099 documents.

According to TurboTax, “If a business fails to issue a form by the 1099-NEC or 1099-MISC deadline, the penalty varies from $50 to $280 per form in 2022. If a business intentionally disregards the requirement to provide an accurate 1099, it’s subject to a minimum penalty of $570 per form in 2022 or 10% of the income reported on the form, with no maximum.” That sounds a little intimidating, we agree – so we are here to help.

Now, if you’re a contractor and your employer fails to send out your 1099 by the deadline, you may be in a difficult situation so it’s important to communicate with your employer if the end of January rolls around and you have yet to see your document. If you fail to report your income, the IRS can fine you 20% of the unreported income, plus the originally owed amount. Whether your employer sends out a 1099 or not, it’s up to you to report your income, even if you have to estimate to avoid any penalties.

So, as you’ve learned, the timing is everything when it comes to issuing and reporting 1099-NEC or 1099-MISC. If you are unsure about the difference between the two, or just have basic accounting questions, please reach out. We take pride in providing the most accurate books to our clients whether they are a large company with 100 independent contractors or a small company with just four W-2 employees, we can bring accuracy, clarity, and confidence to your books at tax time and beyond.

Fiscal Year vs. Calendar Year – Which to choose?

The debate of fiscal year vs calendar year is one that has been around for a long time. If you are scratching your head about whether you are using the proper calendar for accounting, congratulations! This is a “good problem to have”, as we say. Your company is growing and perhaps you are realizing that there may be a benefit to transitioning into a fiscal-year accounting system. There are pros and cons to both bookkeeping methods, and the answer of which one is better for your business largely depends on the type of business you have. But first…

What’s the difference between a fiscal year and a calendar year?

A fiscal year (FY) is a 12-month period that a company or government uses for budgeting and reporting financial activity. This period can start on any day of the year, but we often recommend choosing the last day of a quarter. It can also fall on a repeating date such as the last Friday in February.

A calendar year is the period of time between January 1 and December 31. This is the year that most people are familiar with, and it’s the year that the IRS uses for taxes.

Because a fiscal year can fall on dates of your choosing, it’s time to look at your financial activity calendar. Do you have a large spike in income at one point in the year? When does the majority of your income take place? Ideally, you want your fiscal year to end after your peak season, not smack in the middle of it. This is important and clearly evident for seasonal companies large and small such as Christmas tree farms or Target. These two business models both end their peak season in December so it makes sense to end the accounting year on Dec. 31st. Now, let’s look at a snowplow contractor who has a peak season through March in some areas – they will want to end their accounting year well past Dec. 31st and into May or June.

The benefits of using a chosen fiscal year are numerous, the largest being that you don’t have to divide your peak income period into two different tax returns. It also avoids a tax burden by helping you time when your taxes are due, rather than the standard April 15. As there are pros, there are also cons – the main one being the complexity of dealing with two different calendars. Hint: That’s where we come in. 😉

Here are some examples of companies and the fiscal years they use:

S. Federal Government: Oct. 1 to Sept. 30
Nonprofit organizations: Many use July 1 to June 30
Apple Inc.: Last business day of September.
Microsoft Corporation: End of June.

Other big-name companies that have adhered to the standard calendar year include Facebook, Google, and Amazon.

We encourage businesses to recognize their income patterns early and chose a calendar to stick to. It is possible to change your accounting year with the IRS, but some hefty paperwork is involved. At Moose Creek Bookkeeping, we specialize in helping contractors develop the correct bookkeeping practices for their business needs, this includes high-level assessments such as which accounting calendar is the best, detailed assistance with receipt management, and everything in between. Please reach out to us at any time to discuss your business activity and whether switching to a FY is the right move for your growing business.

Why Do I Need To Save My Receipts?

Welcome back! The cool Fall weather is finally arriving marking the beginning of the holiday season. As Christmas trees are already on display we are reminded that our favorite time of year is just around the corner… TAX TIME! Not your favorite, you say? Are you worried you haven’t been organized enough during the year? Well, you’re not alone. Most people dread tax time because they are unprepared. We are here to discuss the number one way you can prepare for tax time: Saving your receipts. Saving your receipts isn’t optional, it’s crucial to your business and offers peace of mind if you’re up late worrying about the dreaded IRS audits.

Year-round, Moose Creek Bookkeeping is helping companies large and small learn how to prepare for tax time and the very first lesson we teach is “save your receipts”. This is because your receipts contain critical information that might be lacking if you are only looking at a bank statement. Receipts contain the date, description of good/service, vendor, price, taxes/fees, and mode of payment. Your bank statement only shows the date, vendor, and price, which isn’t adequate, according to the IRS. You must be able to show a detailed view of all expenses to prove they were legitimate. The IRS cannot discern between a $400 Epson Printer versus a $400 Cat Tree. You will need to prove the purchase was an office expense and not a luxurious cat condo for Mr. Fluffpants.

Now, we understand keeping track of receipts is no small feat. As a small business, we use and recommend a digital receipt keeper called Hubdoc. Hubdoc has been a game-changer for all our clients who chose to use it. It does require input from you in the form of a photo or upload, but that’s where your work ends. Hubdoc reads your receipts, gathers critical information, and magically creates usable data – no more data entry! This program has saved our clients countless hours with its ease of use and friendly interface. Even our old-school, paper-saving clients have made the change to digital receipt keeping.

In addition to using a digital receipt tracker, we always recommend adhering to best practices to keep track of receipts before you need to enter them in Hubdoc. Here are some tips we offer to all our clients:

Always write a note at the top of each receipt about what the expense was for. This can also work as a reminder for future reference. Hubdoc features a ‘notes’ section for this exact reason.
Make sure the receipt contains all the necessary info. If it is lacking information, promptly make a note, to not forget.
Supply ‘receipt bags’ to employees to aid them in receipt organization and emphasize the importance of receipt retention.
Keep telling yourself that all this record-keeping will pay off in the event of an audit. All your hard work will benefit your business in the long run.

Please reach out at any time to set up a discovery call with us. We’d love to talk about how we can help your business improve its books, aid in receipt management, and give you peace of mind when it comes to accounting. At Moose Creek Bookkeeping we are dedicated to teaching you the best accounting practices, offering solid advice, and giving you the tools to build a strong financial foundation that can weather any storm that may come; including an audit.

Cash Flow Management

Welcome back to your friendly and informative Moose Creek accounting blog! We are here to share an accounting concept that seems simple on the surface, but it is actually quite complex and vital to the health and future of your business. We’re talking about Cash Flow Management.

Sounds easy, right? Well, that assumption can quickly put your business in deep water in many ways. Without the proper cash flow management plan, your company is more likely to sink than swim. If you’re confused about what cash flow and cash flow management are, stay tuned – you’re not alone. Even big name companies such as K-mart and Toys-R-Us have fallen victim to poor cash flow management. Not to worry! We are here to help.

What is Cash Flow? Simply stated is the movement of money coming in (income) and going out (expenditures). Think of it as the ebb and flow of the coastal tides where we also see large high and low tides. This fluctuation is normal however if you see a trend of too much low tide, your dealing with a negative cash flow and that can be detrimental. Cash Flow Management covers all the tracking and procedures involved with keeping an eye on your cash flow, to ensure it’s positive. We will cover some of the main issues that cause negative cash flow and how to remedy poor practices, to turn the tides on your business.

Low cash inflow is a large culprit to negative cash flow. Your customers may owe you money, but perhaps they are bad at paying on time, or you have set your payment due date too far out. This can be remedied by invoicing often, incentivizing early payment, and penalizing late payment.
Over-paying for goods and services can also affect your cash flow. Always shop for the best prices to reduce your overall outflow.
Accurately track change orders and variations quickly. With QuickBooks Online (our specialty) you are able to track and create change orders, as well as run complete cash flow reports while in the field. There is no reason to drive back to the office to create a change order, wasting precious time (and fuel).

There are a handful of other procedures and habits that can help your company succeed by creating consistent positive cash flow. Some other remedies include fancy S-curve algorithms which can tell you the future cash flow for each individual job.

At Moose Creek Bookkeeping our goal is to help you understand cash flow and how it works specifically for YOUR business, predict future income and expenses for each job, and teach you best practices and procedures for future positive cash flow. With proper cash flow management, we can predict the future health of your business as accurately as we can predict our tides. Utilizing our vast knowledge of QuickBooks Online and its incredible forecasting tools, Moose Creek Bookkeeping is able to right your ship and have you sailing into the sunset, in the black.

Retainage and How it Works

Welcome back to our blog! This month we wanted to talk to you about a topic that comes up frequently when discussing best accounting practices. As many of our clients are contractors, we are often approached with the biggest accounting head-scratcher in the industry: Retainage. Although a simple concept, proper record keeping can be tricky without the right knowledge.

Retainage is the amount of money withheld from a contractor by a customer which is paid upon completion of the job. During multi-phase construction jobs where payments are made incrementally, a percentage will be retained on each invoice. This practice dates back decades and was implemented to protect customers as a pseudo “reverse security deposit”. You, like your clients, expect each job to be completed on time and to standards laid out in any contract. It is a way to ensure that jobs are finished to satisfaction and protects the customer against unfinished or unsatisfactory work.

Retainage amount typically ranges from 5% – 10%, meaning it can also cut into your profit margin and upfront costs. Since it is usually standard practice in the construction industry, it’s important that you understand it and know how to account for it properly from day one.

Laws regarding retainage and prompt payment vary by state so the first step is to become educated about your state policies. This will help you negotiate the strongest contract possible. Become familiar with mechanic lien laws in your state as well, as these can help you collect retainage fees that go unpaid.

At Moose Creek we are knowledgeable when it comes to retainage accounting. It can be quite the feat to set up QuickBooks Online for retainage properly without the right guidance, but Quickbooks Online is one of the best accounting platforms for tracking retainage. Common sense says that the retainage amount should be entered into the accounts receivable column; this is a very common (and sometimes costly) mistake. Quickbooks Online has a host of customizable features and accounts that can be added to meet your specific company needs. As a contractor, you may benefit from applying retainage to your subcontractors as well. We can assist in retainage accounting when you are the customer or the contractor. Please reach out any time so we can discuss your company’s accounting needs. We treat every client with respect and we will never make you feel bad for past accounting mistakes you have made. We learn by our errors and Moose Creek is ready to help get you back on track with confidence in your books.

QuickBooks Online: Our Expertise at your Fingertips

Is your business ready to take the next step in records keeping? Bring your accountant on the road and on-site with QuickBooks Online. Featuring cloud-based software (SaaS), QuickBooks Online allows up to 25 remote users, features a user-friendly mobile app, and seamlessly pairs with many applications such as PayPal, Square, American Express, Knowify, Buildertrend and CoConstruct, just to name a few.

Here at Moose Creek Bookkeeping, we specialize in helping small to medium-sized businesses get set up properly with QuickBooks Online. With over 15 years of combined experience, we know all the ins and outs of both QuickBooks Desktop and Online. Our clients that have migrated from the Desktop version to the Online version are incredibly happy with the power it gives them in the field. When using online version, you can manage estimates, change orders, payroll, payments & billing, from anywhere! All you need is an internet connection.

Many of our clients have been comfortable using their “old way” of record keeping yet their business is growing and they are hoping to improve their record keeping, invoicing and customer connections with a new and updated method.

A common issue we see with our clients is that they feel they can learn their accounting software as they go. This is not advisable, especially when dealing with job costing and similar variable professions such as contractors, and landscapers. There are several ways to perform job costing with QuickBooks Online, let us show you how to set it up properly from day one, to prevent any errors. Two other helpful features for contractors are being able to track employee time by project as well as sending out recurring invoice emails. QuickBooks Online is a treasure trove of awesome features, that when used correctly can streamline your entire career.

Our goal when helping clients is to reduce the amount of time they spend on tracking expenses, organizing receipts, and entering data. We want our clients to be able to focus on their craft and increase revenue.

Moose Creek Bookkeeping is ready and able to guide you through the best accounting practices, keeping accurate records, preparing for taxes and understanding your bottom line, all with mobile QuickBooks Online, the best in the field.

Older Posts

Blog

What Does A Balance Sheet Tell You?

Understanding Your P&L Statement

A Business Checklist For Tax Day

When To Hire A Bookkeeper Or Accountant

Sending Out 1099s: Don’t Miss The Deadline!

Fiscal Year vs. Calendar Year – Which to choose?

Why Do I Need To Save My Receipts?

Cash Flow Management

Retainage and How it Works

QuickBooks Online: Our Expertise at your Fingertips

What Does A Balance Sheet Tell You?