A Five Step Plan for Dumping Your Bank

December 18th, 2013

From Daily Finance:

What is the best bank for me?

December 17th, 2013

As VA I have a lot of experience with banks.  Small banks, big banks, local banks, national banks and I have to say, not all of them are created equal.  Pretty much all of them have online bill pay now, so that shouldn’t be a big draw if you are considering changing banks or opening a new business.  What you have to look at is what is included and what is extra.  Many of the big, national banks have a lot included for a small or no monthly fee.  For example, if you need a merchant account (that’s an account that allows you take credit cards and not use something like PayPal) Bank of American and Chase will waive your monthly fees.  Some banks will waive your business account fees if your mortgage is serviced by them.  My bank offers the ability to pay people and businesses by ACH (similar to direct deposit) for a low monthly fee.  My experience working with Chase in person has been great — their small business bankers really bend over backward for you, but their online banking has had issues in the past year.  National banks also offer super low payroll services.

So, what I am getting at is that you have to carefully review your choices, add up the costs, and actually talk with someone at each bank you are considering.  While choosing the wrong bank isn’t fatal mistake, it can be a costly one.  It helps to have someone to help you compare apples with apples.  Not every bank calls every service by the same name.

What information does my bookkeeper need to be efficient and effective?

April 15th, 2013

In reality, providing information your bookkeeper shouldn’t be difficult or time consuming.  A little planning goes a long way.

First, she will need access to your bank accounts.  If she isn’t a full charge bookkeeper, read only access is fine.  Read only access means she can see everything but she can make no changes.  This can be accomplished by creating a bookkeeper’s ID for your online banking, giving your bookkeeper your ID and password, or simply emailing her your bank statements every month.  I prefer the bookkeeper’s ID method.  You can restrict access and you can see when the account is being viewed.

Next, she needs access to your asset and liability information.  If you have loans or credit cards, she needs a way to access that information. Often that can be done online in the same or similar manner to bank accounts.  Statements will work here as well.  The value of your company’s assets should really be on the books and it is an area that many small businesses neglect.  If you were need to value your company tomorrow, this is very critical information.  You also need to decide how you will depreciate those assets — if you don’t know what depreciation is, your bookkeeper will be glad to explain it to you and why its useful.

A bookkeeper needs to know what kind of business entity you have, who owns it and much of it is owned by each person.  This will help her keep accurate records of the company’s equity accounts.

Finally, receipts, receipts, receipts.  This is especially true for those of you that use your business account for personal purchases.  With many of use rarely using checks anymore, receipts are that much more critical.  There are many electronic ways to keep receipts.  A receipt helps your bookkeeper know how to classify an expense and they are required for tax purposes.  Especially if you are writing off food, beverage or travel, you need to notate on each receipt who, what, where, when and why.  If a purchase is for a particular customer or job, notate that as well.  It helps with job costing.  The more data you give your bookkeeper, the more ways she can report it and help you find ways of cutting costs or managing your finances better.

Why Web Developers Should Hire a Bookkeeper

March 18th, 2013


As a web developer or designer, you are likely pretty technologically savvy as well as being fairly business minded.  You can definitely handle doing your own bookkeeping and would rather not pay someone to do something you could very easily do yourself.  I think a bookkeeper is a better bet.

Penny-wise and Pound foolish

How much do you charge for your services per hour?  Most web developers charge between $50 and $100 per hour, give or take.  Now, how much long do you spend doing your bookkeeping yourself?  You may have to time yourself for month or so to figure it out.  If you haven’t timed it, I guarantee you spend a lot more time than you think.  That’s time you could be spending making money.  Let’s say you spend two hours a month (that sound you hear is me giggling).  A bookkeeper worth her salt can probably accomplish twice as much bookkeeping in half the time.  If you pay her hourly and even if you are paying her your hourly rate, you still end up as much extra per month as you are paying her.  It is highly unlikely that her hourly rate will be the same as yours and most of us have project rates, so you do the math.

Efficiency and Quality

How often do you put off billing because you have a deadline?  Yeah, I thought so.  Do you send statements out when clients don’t pay?  Do you call clients to investigate why they haven’t paid the bill?  Yes, when you remember and have the time.  A bookkeeper means that your invoices go out regularly without you having to stop making money to do it.  Bills that go out regularly are more likely to paid on time because clients are expecting to pay their bill.  A bookkeeper has the time to follow up on unpaid invoices and send out statements (and remembers to do so).  A bookkeeper works with the books month in and month out the same way you do with websites.  She is much less likely to make errors in the bookkeeping than you are.

Happy Customers

When clients call or email with questions about a bill, do your shoulders slump and do you dread following up?  For a bookkeeper is isn’t a big deal.  We have backup with which to discuss questions and for the most part you never have to be involved.  Billing done by a bookkeeper has fewer errors anyway and if she gets you in a good system, a better description of the work done.  Both of which make for happy clients!

Tax Time

A bookkeeper will keep track of the books regularly.  Your books should be ready for your accountant’s review and preparation of your taxes a few weeks after the end of the year.  Well organized books with properly documented receipts make for a reduced tax liability and cheaper tax preparation costs.

Now, why did you say you didn’t need a bookkeeper?


What’s the difference between Bookkeeping and Accounting? Isn’t it the same thing?

March 15th, 2013

Absolutely not!  While they are related, they are not the same thing.  Your accountant can do your bookkeeping, but a bookkeeper that isn’t a CPA should not do your accounting.  In general, an accountant prepares your books for external review.  External review can be anything from your taxes (the IRS is definitely an external force) to the banker reviewing your financial statements to see if he will give you a loan.  An accountant can prepare audited financial statements, usually for said banker, and ensure that your accounting meets generally accepted accounting principles (GAAP).  A bookkeeper takes care of the day to day of keeping your financial records straight.  She puts your transactions in your accounting software, reconciles your accounts, makes journal entries for depreciation and the like.  She even prepares financial statements for internal review.  Meaning that she can give you a picture of how your company is doing.  She should also be making sure you are keeping receipts, tracking assets and liabilities and work with your accountant to provide so he can do his job as efficiently as possible.  Oh, and if you have your accountant do your bookkeeping, it is likely going to be much more expensive than if you hire a bookkeeper.

What good is a business plan? I know my business.

February 15th, 2013

As I tell my clients, not having a business plan is rather like going on vacation to Disney Land with no idea when you will go, how you will get there, how you will pay for it or where you will stay once you get there.  You might get there anyway, but you will likely spend much more money and waste a lot of time.  Hopefully you have already done your homework and decided on the vision of your business in the next three to five years.  Now to draw the map of how you will get there.

A business plan is not a static thing.  You may change your mind, update it or tweak it.  You might leave it a lone for a while and then come back to it every so often to make some changes.  The basic plan goes something like this:

I.  Company
A. Overview
B. History
C. Management Team
D. Locations and Facilities

II.  Products & Services
A. Products or Services
B. Competitors

III.  Target Market
A. Market Overview
B. Market Needs

IV.  Strategy & Implementation
A.  Marketing
B.  Milestones

V.  Financial Plan
A.   Sales Forecast
B.  Budget
C. Personnel Plan
D. Profit & Loss Statement.

You may decide not to include some of these items.  However, you should pay special attention to the description of your products or services and research your competitors.  You don’t have to list every single competitor, but you should have a general idea with whom you are competing for customers and what advantages you have over them.  Research your market, you may find that you want to target different customers than you originally thought (or than you’ve been targeting so far).

Marketing is a big part of your business plan, but you don’t have to develop a three year marketing strategy.   Things change too much year to year, or even month to month, for a really long term plan.  A one year plan is long enough to see if worked, but no so long that you won’t make use of new technology, markets and strategies.   You don’t have to spend a lot of money either, but develop a plan and stick with it long enough to determined its efficacy.  You may want to start with social media (its cheap!).  Whatever it is, plan it out.  You should also have some milestones.  You won’t complete everything all at once.  Break it into smaller bites, like eating an elephant one bite at a time, just don’t forget about them.

You may decide to leave the Financial Plan out of it.  It isn’t something I recommend, but if you aren’t comfortable enough with bookkeeping and guessing, or you don’t have a bookkeeper, it might be something to leave for later.  You should map out a general idea of what increases you want to see as a result of your marketing efforts and know your starting point.  You can always work on the financials later.

I know that’s a lot of information and a lot of work.  I didn’t say it would be easy, I just know it will be worth it.

Liquid Assets

February 14th, 2013

Resources that can be converted to cash in a relatively short period.


February 13th, 2013

The financial resources in the form of coins and currency, bank deposits and short-term investments that can be converted easily into currency and that can be used to pay for resources and obligations of a business.

Operating Profit Margin

February 12th, 2013

The ratio of operating income (sales revenue less operating expenses) to sales revenue.

Getting Paid with Xero

February 11th, 2013

The best part of an accounting/bookkeeping system is seeing the money come in.  No matter how much you might dislike bookkeeping, that part is at least a bit enjoyable.   What isn’t fun is gathering the payment information from all the various sources.  Xero has a couple of solutions for that.

First, Xero connects seamlessly with PayPal.  When you connect your PayPal account to Xero, Xero will automatically create a payment link in the email sent to your customer notifying them of your bill.  All your client has to do is click the link and the invoice can be paid.  There is no creating a separate PayPal invoice, eliminating all that duplicate work and it is not necessary to remind your client what email address you use for PayPal.

This also benefits you when that payment comes in.  PayPal will notify you of the payment, but with Xero that’s just for your to do a little happy dance in your seat.  The next time you reconcile, Xero already knows that invoice has been paid — you just have to hit OK.  No more payment entry for PayPal payments, unless you enjoy it.

That’s all very well and good, but what about payments that don’t come through PayPal?  That’s pretty simple as well.  When there is a deposit, you have the option of matching it to any outstanding invoice or INVOICES.  Xero will tell you if the transaction is in balance right there and if a client over or underpaid, you can enter that information right there.

Xero makes the fun part of bookkeeping just that much more fun!