5 Benefits of Outsourcing Your Accounting Function

Making the choice to turn over something as important as your accounting can be a tough decision.  We hope to explain some of the compelling reasons you might want to hire an outsourced accounting department.  These points can help you determine what’s best for you and your business.

  1. The most important benefit of having an outsourced accounting team has to do with cost savings.  Outsourcing your accounting department saves you the costs of a full-time employee’s salary, employee benefits, accounting software costs, upgrading computers, educating your in-house staff and more!  When you add it up all, you’ll quickly see that an outsourced accounting functon is a very affordable and convenient option.
  2. The second benefit of outsourcing your accounting is the elimination of the hassle of IT maintenance and upkeep.  If you have an internet connection and a fax machine or a scanner – that is all you need to submit your accounting work to us for processing.  You can forget about annual software updates, learning new technologies, and paying to train staff on your accounting system.
  3. A third benefit of an outsourced accounting department is NO sick days!  You eliminate all the hassles of having in-house accounting staff.  No employee benefits to worry about, no calling in sick, no need to worry about employees being inefficient or worse ineffective!
  4. Another benefit you might find surprising is increased security and safeguarding of your financial data.  The systems we use are built and maintained in the cloud and offer the most secure platform available.  Hosting your accounting in the cloud is actually a lot safer than housing it on an on-premise server.  A survey from the Ponemon Institute revealed that 55% of small business owners have experienced a breach of private data. While many small business owners are aware that data breaches hurt business, most don’t appear to be taking action.  You don’t need to worry about that because every software solution we employ uses state of the art security and privacy features that most private servers can’t even begin to match.
  5. A final benefit of using an outsourced accounting service provider is just having peace of mind about your financials.  When you use a team of experienced US based CPAs you are able to rest easy that your accounting is up to date and compliant with all of the latest standards in your industry.  Using an outsourced team of CPAs provides you with a much greater breadth and depth of knowledge at your disposal than if you were to spend the same or more on an uncredentialed in-house employee.

We hope you found this article to be useful in learning more about how outsourced accounting services can help free you up to do what you do best, and can give you peace of mind about your books.  You get to keep your eye on the big picture while highly trained and experienced professionals handle all the details.  If you’re interested in continuing the conversation with us and getting started on your custom action plan simply respond to this email or give us a call toll-free today at (757) 926-4109.

Congratulations to Jennifer Todd, now Certified in QuickBooks Online 2016

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Jennifer recently updated her Intuit QuickBooks certifications to include the latest version of Intuit’s Premier cloud-based accounting system QuickBooks Online!  Jennifer has been certified in QuickBooks desktop since version 99 and she also holds certifications in QuickBooks Point of Sale as well as Microsoft Office User Specialist in Excel and PowerPoint!  Contact Jennifer today to get a primer on QuickBooks and find out how the software can best be used to achieve your financial goals!  Interested in learning more about QuickBooks Online? Check out the free test drive here.  Learn more about QBO by visiting their website here! 

Checkout the New QBO App for Desktop!

Do you like QuickBooks Online version but miss some of the desktop version’s features?  Well lucky for you, now you can have both! QuickBooks Online has grown tremendously since its introduction more than a decade ago. It’s not quite as mature as the top-of-the-line desktop versions, but it’s not far behind anymore. No matter which version of QuickBooks you first used, there may be elements of Windows functionality that you miss in the online application, like:

  • The traditional file menus,
  • Keyboard shortcuts, and
  • The ability to open the software and let it stay open all day, minimizing it when you didn’t need it.

The recently released QuickBooks Online for PC and Mac App offers all of those features. It may also be faster than the browser-based version because it loads the whole application at once and keeps the pages cached. It’s free; and here’s the download link. A Hybrid Approach  

Getting started is easy:

  • You click the download link and then install the app like you would any Windows or Mac software.
  • When the download is complete, you’ll find a new shortcut icon on your desktop’s home screen.
  • Click on it, and you can either sign into an existing account or register for a new one.

The first thing you’ll notice is that it still looks like QuickBooks Online – because it is. But if you look at the upper left of the screen, you’ll see what looks like a series of Windows desktop menus – because it is. But the menu options don’t match Windows desktop menus. Instead they’re designed to mirror the navigation tools in QuickBooks Online. The coolest part is that you can use either or both.  Exciting! Note: Windows that open when you click on one of these menu options can act in one of two ways – they can either replace the current window, which is the default in QuickBooks Online, or they can open in a new window.   To change the current setting, open the Window drop-down menu and check or un-check Menu Items Open New Windows. Multiple Updated Windows It’s not difficult to switch screens in the browser-based version of QuickBooks Online but it is time consuming if you need to consult two or three different pages. You find yourself switching back and forth and probably having to make notes about what you learned from the other screen(s).  Thankfully, the new QuickBooks Online for Windows App makes this process easier and faster.  Some navigation links now have a small arrow-in-a-box icon to their right, called a “Detach” icon. Click on one of those, and the item opens in a new window. Any changes you make in one window are automatically reflected in the other open windows.  What a time saver!

Click on the new Detach icon wherever it appears to open the page in a new window. This new functionality isn’t available everywhere in the app. You’ll see the Detach icons when you hover over transaction types by clicking on the + sign at the top of the screen, with the exception of Pay Checks, Single Time Activity, Weekly Timesheets, Pay Bills, and Statements. To open a transaction form in a new window, you must click directly on the icon. You can also open most reports in new windows; the new icons appear when you open a list of them. So if you’re looking at a report that you don’t want to close and you want to enter a related transaction, you’d simply click on the + sign and select the transaction type by clicking directly on the Detach icon. The new window opens; you fill out the form and save it, and you’re back at your report, where you can see the new entry in the report. If you have a transaction open and you want to consult a report, though, you’d need to select it from the Reports menu at the top, after making sure that the Menu Items Open New Windows entry in the Window menu was checked. And if you’re still a fan of keyboard shortcuts and miss them in QBO, you’ll find them active in the app.   

You can use dozens of keyboard shortcuts when you install the new QuickBooks app. Only an Option The QuickBooks Online for Windows App is totally optional; you can keep using the browser-based version if you prefer. The ability to keep the app running without signing in and out all day may appeal to you – if there’s no chance someone else could access your computer while you’re away from your desk. You may or may not experience faster performance, depending on your system configuration and the app’s other capabilities are a matter of personal preference. Let us know if you need help working with this new option – or if you have other questions about QuickBooks Online.  We are here to help!

Best Practices to Lower Your Outsourced IT Risks

Mitigating the risks of IT outsourcing

Nowadays it is common for many businesses to outsource at least one or more of their IT functions.  The goal is usually to save money and work more efficiently and effectively.  Yet if you don’t mitigate the risks involved, you could end up both losing out financially and failing to get the most from the outsourcing arrangement.

Here we suggest a few best practices to consider when outsourcing your IT functions:

  1. Consult your internal users – Ask for candid feedback about whether your organization’s technology is meeting your employees’ needs. What help from an outside provider do they really need?
  2. Consult with other organizations – Contact other organizations that have outsourced their IT functions.  Much can be learned by talking with trusted colleagues about their outsourcing experience.  Ask them how outsourcing actually helped — or hurt — them.
  3. Weigh opportunities vs. risks – Identify opportunities beyond cost savings. For example, outsourcing non-core IT functions — such as management of HR systems and supply-chain technology — could free up internal resources for projects you’ve put on the back burner but that have strategic importance. Keep in mind though, outsourcing too many non-core processes, or doing so improperly, could leave you with too little control of these functions and expose you to inefficiency or compliance risks.
  4. Refine your relationship expertise – Many business owners believe that, once they sign the deal, the contract will take care of itself.  As a result, they don’t adequately manage the relationship and often find themselves in conflict with the vendor or stuck with unsatisfactory results.  Clarify your expectations at the onset of the relationship and revisit them often by keeping the lines of communication open between you and your outsourced provider.  You may need to develop new skills, processes and metrics to ensure the service provider deliver the results expected.

In today’s global economy, IT outsourcing has become — in many industries — a competitive necessity.  Whether your company is large or small, we can help you assess, negotiate and maximize the bottom-line benefits of an outsourcing arrangement. Give us a call to let us know what we can do for you.

© 2015

Thinking of Crowdfunding? Talk to a Professional First.

Considering Crowdfunding as a Means for Raising Funds? 

Have you ever thought about raising funds for your small business using online crowdfunding tools?  Crowdfunding gives entrepreneurs the ability to raise funds by attracting relatively small amounts of money from large numbers of people.  Through a provision in the Jumpstart Our Business Startups Act (JOBS Act), crowdfunding creates a means for allowing startups and small businesses to raise capital through securities offerings using the internet.   The JOBS Act permits internet-based platforms, like kickstarter, rockethub and indiegogo, to facilitate the offer and sale of securities.  In coming up with the rules, the SEC attempted to create protections for investors while enabling businesses to use crowdfunding effectively.  Click on the following link to read the SEC press release and to get a rundown of the new JOBS Act rules pertaining to crowdfunding  SEC Press Release 2015-49 .

The CPAs at Todd & Co. CPA Group understand the tax implications of raising funds through crowdfunding.  We also understand the Securities and Exchange Commission’s rules, which help small businesses gain access to capital and take advantage of more investment choices.  We can help you understand this innovative means for raising capital.  Contact us at (757) 926-4109 to find out more.

QuickBooks Tutorial – Setting Up Inventory

If you are using QuickBooks Desktop software to invoice customers or track inventory, you must have a well thought out and properly set up Item List.  Accurate, thorough item records inform your customers and help you track inventory levels correctly.

Whether you’re selling services, one-of-a-kind items or stocking dozens of the same kinds of products, you need to create records for each. When it comes time to create invoices or sales receipts, your careful work defining each type of item will:

  • Ensure that your customers receive correct descriptions and pricing,
  • Provide the information you must know about your inventory levels, and,
  • Help you make smart decisions about reordering.

You’ll start the set-up process by first making sure that your QuickBooks file is set up to track inventory.

  • Open the Edit menu and select Preferences, then Items & Inventory.
  • Click the Company Preferences tab and click in the box in front of Inventory and purchase orders are activated if there isn’t a check in the box already. Here, too, you can ask that QuickBooks warn you when there isn’t enough inventory to sell.
  • Click OK when you’re finished.
How to set preferences

Figure 1: You need to be sure that QuickBooks knows you’ll be tracking inventory before you start making sales.

To create your first item:

  • Open the Lists menu and select Item List.
  • Click the down arrow next to Item in the lower left corner of the window that opens and select New.
  • The New Item window opens.

Warning: You must be very precise when you’re creating item records in order to avoid confusing your customers and creating problems with your accounting down the road. Please call us if you want us to walk you through the first few items.

QuickBooks should display the list of options below TYPE. Since you’re going to be tracking inventory that you buy and sell, select Inventory Part. Enter a name and/or item number in the next field. This is not the text that will appear on transactions; it’s simply for you to be able to recognize each item in your own bookkeeping.

How to create an item

Figure 2: Let us work with you if you have any doubts about the data that needs to be entered in the New Item window. It must be 100 percent accurate.

In the example above, the box next to Subitem of has a check mark in it because “Light Pine” is only one of the cabinet types you sell (you can check this box and select <Add New> if you want to create a new “parent” item on the fly).  Leave the next field blank if your item doesn’t have a Part Number, and disregard UNIT OF MEASURE unless you’re using QuickBooks Premier or above.

Fill in the PURCHASE INFORMATION and SALES INFORMATION fields (or select from the lists of options). Keep in mind that the descriptive text you enter here will appear on transaction forms, though customers will never see what you’ve actually paid for items, of course (your Cost, as opposed to the Sales Price).  Also, when using items on an invoice, you always have the option to change the description to exactly what you want your customers to see.

QuickBooks should have automatically selected the COGS Account (Cost of Goods Sold), but you’ll need to specify an Income Account. Please ask us if you’re not sure, as this is a critical designation. The Preferred Vendor and Tax Code fields will display lists if you’ve already set these up.

QuickBooks should have pre-selected your Asset Account which is the “Inventory” account set up to “hold” in stock items available for sale. If you want to be alerted when your inventory level for this item has fallen to a specific number (Min) so you can reorder up to the point you specify in the Max field, enter those numbers there (the Inventory to Reorder option must be turned on in Edit | Preferences | Reminders).

If you already have this item in stock, enter the number under On Hand. QuickBooks will automatically calculate Average Cost of inventory items when the items are used on vendor bills, purchase orders (P.O.s) and checks.  Your inventory items will not be correct if you do not consistently use your items when ordering inventory.  A common error we often see customers make is to post payments for inventory in QuickBooks by simply using the Cost of Goods Sold account or a “Purchases” expense account instead of using the “Items” tab on the bill, credit card charge or check.  When this happens, your quantities get depleted upon sale, but are never increased when purchased.  The moral here is ALWAYS use the items tab on an inventory purchase transaction.

Click OK when you’ve completed all of the fields. This item will now appear in your Item List, and will be available to use in transactions. When you want to create, edit, delete, etc. any of your items, simply open the same menu you opened in the first step here (Lists | Item List | Item).

The Item Menu

Figure 3: The Item menu, found in the lower left corner of the Item List.

Because Inventory Part records are so critical to accurate sales and purchase transactions you must use exceptional care in building them.  Give us a call for a two-hour in-person tutorial.  We can work remotely via teleconference and face-to-face for locals.

Make Better Business Choices – Analyzing Break-Even Points

 

Analyze your break-even point (B/E Point) to make better business choices.  Sounds simple enough right?  Read on for a little basic guidance on this fundamental business tool.

Break-even analyses are an important and useful tool in business financial management. You can use  break-even analysis to help evaluate:

  • Starting a new business,
  • Expanding current operations,
  • Developing a new product line or service offering,
  • Contemplating an acquisition,
  • Downsizing operations, or
  •  Approaching banks and other potential lenders,

When we talk about “break-even”  we simply mean the point at which costs equal income – no profit, no loss.   In other words, it’s a determination of how much income you need to cover all of your costs.BEPoint1

Why calculate break-even?

  • The break-even point an excellent starting point for finding out where the business is and where it can go.
  • It’s the first step in planning future growth.
  • It shows how much sales volume is needed to cover fixed and variable expenses so it’s an excellent budget tool.
  • Once a company has reached break-even, all gross profit beyond that point goes directly to improving the bottom line, growing and prospering.

 

How to CalculateHow to calculate a break-even point:

Break-even is relatively easy to understand and use. First, review the annual financial statement in order to figure out fixed and variable expenses. Variable expenses are the cost of goods or services sold and other costs of sales, such as direct labor and sales commissions.  They are called variable expenses because the quantity of products (produced/ordered/sold or – in the case of services – hours worked) causes the expenses to either decrease or increase with volume.  You must know your unit selling price and the variable costs associated with each unit sold (production or acquisition costs) to  be able to compute the gross profit percentage.  You will also need to know your fixed costs.  Fixed costs are those expenses that are not affected by production such as rents, insurance, telecommunications, and fixed salaries.  Once you know all the variables (unit selling price, variable and fixed costs) the rest is just plain-old arithmetic.  You will divide your fixed costs by your gross profit percentage to arrive at the break-even point. For example, if you have fixed costs of $10,000 and your gross profit percentage is 25%, your breakeven point is sales of $40,000 ($10,000 ÷ 25% = $40,000).  You would have to sell $40,000 worth of products or services in order to cover all of your costs and not be in the red or black.

There are, of course, some costs that are, or seem to be, part fixed and part variable.  Management will have to use good business judgment to split these items into reasonable proportions.

There are certain limitations for the use of break-even analysis. It ignores the importance of cash flow and makes the assumption that fixed and variable expenses will stay within the parameters used to calculate the break-even. Again, sound business assessment will overcome these shortcomings.

Call us – we would be happy to assist you with calculating your business’s break-even point to help you with budgeting and evaluating your profit structure.

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