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Customers Paying Late? How to Create Statements

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Rikard & Neal QuickBooksThere are many ways to encourage delinquent customers to pay. QuickBooks Online’s statements may be effective for you.

After the year-plus you’ve just experienced, the last thing your small business needs is customers who are behind on their payments to you. You may have been giving them a break because you know that they’re struggling, too, but things have been looking up for many companies in the past few months. It’s time for you to be more proactive about calling in your debts.

There are numerous ways you can accomplish this. One of the best is to send statements in QuickBooks Online, which are detailed reminder forms that contain multiple transactions. These can be especially helpful if you’ve sent multiple invoices with no response. There are three different types you can send, depending on your needs. Here’s how you create them.

Before You Start

QuickBooks Online offers a couple of options for formatting your statements. To see these, click the gear icon in the upper right corner and select Your Company | Account and Settings. Click the Sales tab and scroll down to the Statements section. Click the pencil icon over to the far right to make any changes needed. You can:

  • List each transaction as a single line or include all of the detail lines.
  • Display an aging table at the bottom of each statement.

Click the buttons to specify your preference and then click Save and Done.

 

Three Statement Types

You can choose from among three different types of statements in QuickBooks Online: Balance Forward includes invoices with outstanding balances for a specified range of dates. Open Item statements contain information about all unpaid (open) invoices from the last 365 days. And Transaction Statements show every transaction in a date range that you specify. We’ll describe how to create them so you can decide which makes the most sense for a particular situation.

One Way to Create Statements

Like it does for many other actions, QuickBooks Online offers two ways to create statements. The first is easier. Click the New button in the upper left and select Statement (under Other). Click the down arrow in the field under Statement Type to see the three options there.

If you select Balance Forward, you’ll need to define three criteria (there will be similar options for the other two types):<.p>

  • Statement Date
  • Customer Balance Status (Open, Overdue, or All)
  • Start Date and End Date

When you’re satisfied with your statement parameters, click Apply. QuickBooks Online will display a list of the transactions that meet your criteria, along with the number of them that will be generated. Each row in the list will display the recipient’s name, email address, and balance. In the upper right corner, you’ll see the number of statements again and the total balance these customers represent.

If you want to exclude any of these customers, click in the box in front of each to unselect them and delete the checkmark. When you’re satisfied with your list, click Save, Save and send, or Save and close. If you click Save and send, a window will open containing a preview of your statements. Thumbnails of each will appear in the left pane. Click on any to see their previews. When you’re ready, you can download, print, or send them.

If you click Save or Save and close, you’ll still be able to see the statements you’ve just generated. Click the Sales tab in the toolbar, then All Sales. Click the down arrow next to Filter and open the drop-down list under Type. Select Statements, and your list will appear. You can print or send one by selecting the correct option in the Action column. If you want to dispatch multiple statements, click in the box in front of each, and then click the down arrow next to Batch actions.

Another Method

There’s an alternate way to create statements. Click the Sales tab in the toolbar, then Customers. Select any or all of the customers in the list, then click the down arrow next to Batch actions and select Create statements. QuickBooks Online will open the Create Statements window again so you can select the type and process your statements like you did using the previous method.

We don’t expect that you’ll have much trouble working with statements, though you may want to consult with us on when they’re appropriate. We can also suggest other ways to bring your accounts receivable up to date. As always, we’re available to help you maximize and streamline your use of QuickBooks Online. Keeping your financial books current and organized is one way to ensure that you don’t fall too far behind with customer payments.

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Are too many of your customers behind in their payments to you? Consider sending statements in QBO. We can show you how.

QuickBooks Online supports statements, reminder forms you can send to customers whose payments are past due.

Don’t know how many customers are past due on their payments to you? Run QuickBooks Online’s A/R Aging reports.

There are two ways to create three different types of statements in QuickBooks Online. We can help you sort it out.

Send us an e-mail or call us today at 901-685-9411 to discuss your QuickBooks accounting needs with an experienced CPA. Or, request a free consultation online.

Traveling for business again? What can you deduct?

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Traveling for business again? What can you deduct?

As we continue to come out of the COVID-19 pandemic, you may be traveling again for business. Under tax law, there are a number of rules for deducting the cost of your out-of-town business travel within the United States. These rules apply if the business conducted out of town reasonably requires an overnight stay.

Note that under the Tax Cuts and Jobs Act, employees can’t deduct their unreimbursed travel expenses through 2025 on their own tax returns. That’s because unreimbursed employee business expenses are “miscellaneous itemized deductions” that aren’t deductible through 2025.

However, self-employed individuals can continue to deduct business expenses, including away-from-home travel expenses.

Here are some of the rules that come into play.

Transportation and meals

The actual costs of travel (for example, plane fare and cabs to the airport) are deductible for out-of-town business trips. You’re also allowed to deduct the cost of meals and lodging. Your meals are deductible even if they’re not connected to a business conversation or other business function. The Consolidated Appropriations Act includes a provision that removes the 50% limit on deducting eligible business meals for 2021 and 2022. The law allows a 100% deduction for food and beverages provided by a restaurant. Takeout and delivery meals provided by a restaurant are also fully deductible.

Keep in mind that no deduction is allowed for meal or lodging expenses that are “lavish or extravagant,” a term that’s been interpreted to mean “unreasonable.”

Personal entertainment costs on the trip aren’t deductible, but business-related costs such as those for dry cleaning, phone calls and computer rentals can be written off.

Combining business and pleasure

Some allocations may be required if the trip is a combined business/pleasure trip, for example, if you fly to a location for five days of business meetings and stay on for an additional period of vacation. Only the cost of meals, lodging, etc., incurred for the business days are deductible — not those incurred for the personal vacation days.

On the other hand, with respect to the cost of the travel itself (plane fare, etc.), if the trip is “primarily” business, the travel cost can be deducted in its entirety and no allocation is required. Conversely, if the trip is primarily personal, none of the travel costs are deductible. An important factor in determining if the trip is primarily business or personal is the amount of time spent on each (although this is not the sole factor).

If the trip doesn’t involve the actual conduct of business but is for the purpose of attending a convention, seminar, etc., the IRS may check the nature of the meetings carefully to make sure they aren’t vacations in disguise. Retain all material helpful in establishing the business or professional nature of this travel.

Other expenses

The rules for deducting the costs of a spouse who accompanies you on a business trip are very restrictive. No deduction is allowed unless the spouse is an employee of you or your company, and the spouse’s travel is also for a business purpose.

Finally, note that personal expenses you incur at home as a result of taking the trip aren’t deductible. For example, the cost of boarding a pet while you’re away isn’t deductible. Contact us at (901)685-9411 if you have questions about your small business deductions.

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The Top 3 Reasons to Outsource Your Accounting

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Coworkers team brainstorming process in modern office.Project manager wearingWhile you may think it’s better to take care of your small business accounting tasks in-house, you may be surprised to know that your business can benefit from having a professional accountant or CPA handle the job for you. Here are the top three reasons to outsource your accounting.

1. Peace of Mind

The number one reason for outsourcing your accounting is the peace of mind you will get regarding managing your accounting records. A qualified accountant or CPA on your team allows you to gain access to their professional knowledge and experience. Further, you can even choose an accountant that specializes in your unique business needs. A professional can help you keep your business records accurate and up-to-date. For example, payroll and tax documents will be maintained appropriately and submitted promptly. Timely and accurate accounting reduces your risk of penalties resulting from inaccurate record-keeping or lack of knowledge regarding aspects of accounting like tax laws and deadlines.

2. Focus on Business Development

When you enlist the services of a qualified accountant or CPA to manage your small business accounting needs, you minimize the time that you or your senior staff must spend performing or micromanaging those tasks. Freeing up your time in those areas enhances your ability to maintain a keen focus on the day-to-day tasks your business faces and any additional business needs that arise. Being able to focus your time on managing and growing your business, you improve operational efficiency. As you develop strategic goals, you can convey those to your outsourced accountant to garner their professional guidance and support when executing and realizing those goals.

3. Save Money

Many small business owners feel that handling accounting tasks in-house is more cost-effective because they can utilize existing staff. However, consider the total cost involved in hiring or training a staff member to manage your business’s accounting needs. There is also the associated time expenditure related to supervising an employee who manages the accounting. For a dedicated in-house staff member to handle the task, you must consider the additional costs of payroll, payroll taxes, and employee benefits. There is also employee turnover to consider, which, if high, could lead to additional training and expenses. By not electing to have a full-time dedicated employee handle accounting in-house, you also save on space and technology required to accommodate that individual.

For these reasons – and more such as getting timely financial advice, understanding cash flow, and maximizing your tax savings opportunities – it’s time to outsource your business’s accounting needs. What you gain far outweighs the cost.

Contact our firm to find out how we can create a package of accounting services for your small business.

For more information about our outsourced accounting services, visit our outsourced accounting website. »

To learn more about how we can become an extra hand for your small business, call us at 901-685-9411 or request a consultation through our website now.

Deducting Home Office Expenses

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Businesswoman working at the officeIf you’re one of the many people working from home this year, you may have questions about the home office tax deduction and whether you can qualify for it. Here’s a rundown of the rules.

Employees

Unfortunately, home office expenses incurred while working as an employee are not currently deductible. The reason: the Tax Cuts and Jobs Act temporarily suspended the itemized deduction for unreimbursed employee business expenses (and various other miscellaneous expenses). Unless lawmakers make a change, the deduction won’t become available again until 2026.

Self-Employed Individuals

The news is better if you are self-employed. You will be eligible for a home office deduction provided you can satisfy certain requirements. If you do, you can deduct all direct expenses and part of the indirect expenses involved in working from home. The deduction is generally limited to income from the business, and excess expenses may be carried over to the next year.

Direct expenses are costs that apply only to your home office. The cost of painting your home office is an example of a direct expense. Indirect expenses include expenses such as rent, mortgage interest, real estate taxes, maintenance, and homeowners insurance. You can deduct only the business portion of your indirect expenses. These expenses are typically allocated between business and personal use based on square footage.

IRS Requirements

To qualify, a home office — a room or another separately identifiable space — generally has to be used regularly and exclusively for business purposes. The home office also must be (1) your principal place of business; (2) a place where you meet patients, clients, or customers; (3) a separate unattached structure that you use in connection with your business; or (4) a space within your residence that you regularly use to store inventory or product samples in connection with the business, if the residence is the only fixed location of your business (in this situation, the space doesn’t have to be used exclusively for storage).

You don’t necessarily have to spend most of your work hours in your home office for it to meet the principal place of business requirement. A home office can qualify if you use it for administrative or management activities and it is the only fixed location where you conduct those activities. Some examples of administrative or management activities include: billing customers, clients, or patients; keeping books and records; ordering supplies; setting up appointments; forwarding orders or writing reports.

Simplified Option

If you prefer not to keep track of your expenses, there’s a simplified method that allows qualifying taxpayers to deduct $5 for each square foot of office space, up to a maximum of 300 square feet. When the simplified method is used, qualified mortgage interest and property taxes are separately deductible as itemized deductions.

Your tax professional can help you determine whether you qualify for a deduction and what you may need to do to take advantage of it.

Send us an e-mail or call us today at 901-685-9411 or 870-739-8664 to discuss your business needs with an experienced CPA

Common (and Costly) Payroll Errors and How to Avoid Making Them

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PAYROLL Businessman working Financial accounting conceptPayroll is one of the most important aspects of any business, but it’s one that, when running smoothly, business owners don’t tend to think about; however, when there’s a payroll glitch, it jumps to the forefront of an owner’s mind. Here are several payroll mistakes that can cost you a bundle and how to avoid them in your business.

1. Misclassifying employees

How you classify employees when you hire them impacts how you and your employees are taxed. If you hire an office staffer to answer phones and file paperwork for an hourly wage, that is a non-exempt employee. Alternatively, if you employ an individual as a salaried Head of Operations, they are exempt. The main difference is that non-exempt employees are eligible to receive overtime pay; exempt employees are not.

There is also a distinction between employee, freelancer, and contractor. An employee receives a regular wage, while freelancers and contractors are typically paid per project. Misclassifying employees may not seem like a big deal at first, but in time, the IRS will find out, and your business will end up paying the taxes due, the associated fines, and of course, the interest on the past-due taxes.

To avoid this issue, understand the classifications and the capacity in which you hire your employees. To classify employees, be sure to use IRS definitions. For example, the IRS defines independent contractors this way: “the general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”

2. Miscalculating pay

There are many payroll aspects to consider, such as overtime, commissions, deductions, paid time off (PTO), and more. When it comes to calculating pay, payroll admins should keep in mind that different policies apply to each state, and that must also be considered. For example, the federal overtime law dictates that overtime wages (pay for hours worked over 40 hours in a workweek) are paid at 1.5 times the employee’s regular hourly rate. However, some states have different policies regarding overtime. For example, in Alaska, California, Colorado, and Nevada, overtime is also based on hours worked in a day. As a general rule, a business should comply with the more generous law for the employee.

In addition to overtime pay miscalculations, poor time tracking capabilities also contribute to miscalculated pay. To avoid an issue miscalculating pay, be sure to know your state’s guidelines on overtime pay. Further, be sure that your company has a reliable tracking system for keeping up with employee hours so that pay, overtime, and other payroll aspects like PTO are correctly recorded and calculated. This process will significantly reduce the chance of payroll overpayment or underpayment mistakes that could become costly payroll corrections.

3. Missing deadlines

One of the most damaging payroll mistakes for a business is missing payroll tax deadlines. Missed deadlines can cost thousands of dollars in penalties, and in extreme cases, a company’s business license can be suspended.

To avoid this critical error, use the IRS Calendar Connector to help you remember your tax deadlines. However, if you miss a tax deadline, contact the tax agency immediately because late payment penalties pile up quickly. The quicker you get in touch with the IRS, the lesser penalty you will have to pay.

4. Messy recordkeeping

What is the word a small business owner least likes to hear? There are likely a few, but “audit” has to be right at the top of the list. The anxiety that term induces should be reason enough to keep accurate, complete payroll records that are well-organized. The price you pay for not doing that could be fines, penalties, and a plethora of costly payroll-related tax issues. For example, if you accidentally file W-2 forms late, you will pay between $50 and $260 in fines depending upon how late the W-2s are filed.

The same goes for late-filed 1099 forms or any other tax-related documentation. The fines vary. For example, if you do not provide a contract employee with a 1099 form, that’s a $250 fine.

To avoid this issue, keep accurate, complete, up-to-date payroll records for all employees. Mind your paperwork like W-2 forms, timesheets, 1099 forms, and pay records. Also, be sure to retain employee records for the four-year minimum that the IRS requires after an employee leaves your company. FYI: The SBA recommends retaining payroll records for six years.

5. Missed tax forms

An extension of point four above targets the end-of-year task that some payroll admins dread – preparing and sending all the necessary tax forms to all employees, whether they are full-time (W-2), part-time (W-2), or independent contractors (1099). Remember, form 1099 is required to be sent to an independent contractor who earned $600 or more during a tax year.

To avoid this issue, make sure tax rates are in order, payroll is correctly calculated, and all forms are correctly filled out and sent to employees promptly.

Payroll-related tax issues are avoidable. Take time to speak to your trusted tax preparer or CPA today so that you avoid these mistakes and keep your business running as it should.

To learn more about how we can become an extra hand for your small business, call us at 901-685-9411 or request a consultation through our website now.

5 Benefits of Hiring an Accountant for Your Business

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Running a small business is demanding, and there’s not always time to manage every task well. If you’re letting some tasks slip through the cracks, or if you want to prevent that from happening, it’s time to consider hiring an accountant. Here’s how your business will benefit if you do:

1. You will save time.

Your number one asset as a small business owner is time. Saving as much time as you can by streamlining tasks, assigning the right employee to the job, and working efficiently are all ways business owners can manage and save time. If you’re currently managing all the accounting and payroll tasks for your company, you might be feeling the pressure of getting everything accomplished. For example, you may need to learn a new accounting software program to keep records, but you likely don’t have time to do that. Leaving bookkeeping, payroll, and other general accounting tasks to a professional saves time and dramatically reduces the likelihood of costly errors.

2. You will save money.

Understandably, you want to cut costs as a business owner. After all, that’s what intelligent owners do – minimize expenses and maximize profits. However, if you think hiring an accountant is just another added expense, think again. It may seem like you’re saving money by doing your accounting at first, but in the long run, an accountant can save your business money in a big way. They can reduce the risk of costly tax errors, provide sound advice on business decisions, and advise you on the most cost-effective choices for running your business. 3. You will gain valuable advice.

An accountant’s advice doesn’t end at how to manage your taxes or payroll. Any business decision you make as an owner involves finances. If you’re hiring new employees, launching a new product, or expanding your operations, you need to know the projected cost, any additional tax ramifications, and your potential return on investment. Your accountant can help with all of that and more, which puts you in the ideal position to make the best decision for your business.

4. You will get business plan support.

This is crucial for new startups or anyone in the early stages of starting a business. Accountants draw on their experience to help business owners understand how much money they should be making in their particular business and project out over those first few crucial years to know what to expect. That information is beneficial when putting together the financial portion of your business plan because it helps you set realistic goals regarding expenses and cash flow.

5. You will reap sound financial advice.

Your accountant is a financial expert. Unless you are as well, they know more than you do about making the most of your dollar. Choose an accountant with experience working with clients in the same business you’re in so that they will know the ins and outs of what you do and what to expect. This is particularly important when it’s time to make significant financial decisions. Your accountant can draw on their experience and help you minimize risk and get a better outcome than if you made uninformed financial decisions.

Remember, rely on the experts to help you with aspects of your business that mean the most, like finances. With a qualified accountant on your team, you’ll garner these benefits and more by freeing your time up for what’s most important – running your business – your stress level with decrease. The chance of errors in vital areas of your business like taxes and payroll will be significantly reduced, and your business will run smoother.

Send us an e-mail or call us today at 901-685-9411 to discuss your business needs with an experienced CPA. Or, request a free consultation online.