Top Quickbooks Online Reports to Run Regularly

There are numerous QuickBooks Online reports that you should be consulting at regular intervals. I believe you need these five at least every month to provide you with invaluable knowledge on the current status of your business. They are:

1. Accounts Receivable Aging Detail – Displays a list of invoices that haven’t yet been paid, divided into groups like 1-30 days past due, 31-60 days past due, etc.

2. Budget/Prior Period vs. Actuals/Current Period – Just what it sounds like: a comparison of your monthly budgeted or prior period amounts and your actual current period income and expenses.

3. Unpaid Bills – Helps you avoid missing accounts payable due dates by displaying what’s due and when.

4. Sales by Product/Service Detail. Tells you what’s selling and what’s not by displaying date, transaction type, quantity, rate, amount, and total.

5. Product/Service List – An accounting of the products and/or services you sell, with columns for price, cost, and quantity on hand.

Getting started with Quickbooks Online – Part 2

We’ve already discussed QuickBooks Online’s ability to guess how transactions should be categorized (it’s not always right, but you can change incorrect ones). It also allows you to memorize transactions that recur on a regular basis; this also saves time and improves accuracy. There’s another way the site also uses automation to help minimize keystrokes: Bank Rules. Based on your input, it will scan incoming items and classify them, so you don’t have to. This can be very helpful when you regularly import transactions that share specific attributes.

Let’s look at how this works. Click Banking in the navigation toolbar, then click Bank Rules. Once you’ve created your own rule(s), they’ll appear in a grid on this screen. For now, click New rule in the upper right corner. Basically, you’re going to tell QuickBooks Online that when specific conditions are met, as you can see in the example below, it should take the specified action(s): assign a Transaction typePayee, and/or Category. You can also have the transaction automatically added to your books.

You can create Bank Rules in QuickBooks Online that will automatically assign a Transaction typePayee, and Category to imported items that meet specific conditions.

We suggest you meet with us if you’re going to take on this task. If your business processes a lot of transactions, Bank Rules can be incredibly helpful. But set them up incorrectly, and it could take many hours to untangle the errors.

Account Registers, Chart of Accounts

In this column and the last, we’ve been working with transactions as they come into QuickBooks Online directly from your financial institutions, before they appear in your account registers. When you clicked Add after you looked at—and perhaps modified—a transaction listed under For Review on the Banking page, you sent it to that account’s register.

Notice that the site’s registers look similar to their paper counterparts; you may remember recording checks and deposits in the back of your checkbook, if you’ve been in business long enough. There are two ways to see them in QuickBooks Online. When you’re on the Banking page, look over to your right. You’ll see a link labeled Go to Register.  Click it, and you’ll be taken to that page for the account that’s currently active.

You can also open your account registers from the Chart of Accounts. We don’t talk much about this element of financial management because it’s not something you should be modifying. Nevertheless, it’s the heart of your accounting system. It consists of a comprehensive list of your company’s accounts, divided into assets, liabilities, income, expenses, and equity (along with subaccounts). Transactions are assigned to the appropriate account and recorded in the General Ledger, which is another element of accounting that we don’t discuss because you don’t have to deal with it in QuickBooks Online.

You can view your company’s Chart of Accounts in QuickBooks Online, but we recommend you don’t modify it.

Click on the Accounting tab in the navigation toolbar, then Chart of Accounts. You’ll see your individual bank accounts listed here, along with a View Register link.

A Critical Concept

Again, you won’t have to deal with the Chart of Accounts, but it’s very important that you understand how to manage downloaded transactions as you move them into your bank accounts in QuickBooks Online. Mistakes here can trigger errors in reports and taxes, as well as create general confusion. We’d be happy to get you on the right path with this critical function.

Getting started with Quickbooks Online

QuickBooks Online was built to work with transactions downloaded from your online financial institutions. Here’s how to work with them.

The ability to import transactions from financial institutions into QuickBooks Online is definitely one of the best things about the site. You may have even signed up for that very reason. By now, you’ve probably already set up at least one connection. But are you using all of the QuickBooks Online’s tools? There’s a lot you can do once you’ve imported in data from your bank or credit card provider. We’ll explore these features in this column and the next.

First Steps

If you’re a new subscriber, you may not have established these critical links yet. It’s an easy process. Start by clicking the Banking link in the left vertical navigation pane. In the upper right corner, click Add Account and enter the name of your financial institution if it’s not pictured. Then follow the instructions you’re given on the screen. These can vary depending on the bank or credit card provider, but you’re always at least asked to enter the username and password that you use to log into each online.

Need help with this? Let us know.

Viewing Your Transactions

Once you’ve made a successful connection, you’ll be returned to the Bank and Credit Cards page. You should see a card-shaped graphic at the top of the screen for each account you’ve linked. Click on one. The table that opens is not your account register. The view here defaults to For Review, which refers to transactions you’ve downloaded. The All tab should also be highlighted; we’ll get to Recognized transactions later.

When you first download transactions into QuickBooks Online, before you’ve done anything with them, many will appear under For Review.

There’s a lot going on here, so don’t be surprised if you’re confused. Review each transaction by clicking on it. QuickBooks Online will have guessed at how it should be categorized, but you can change this by opening the list in the category field and selecting the correct one. It’s critical that you get this right since it will have an impact on reports and income taxes. If you need to Split it between multiple categories, click on that button found to the right.

If the transaction is Billable, check that box and choose a customer from the drop-down list. If you don’t see this box, click the gear icon in the upper right and select Account and Settings | Expenses. Check to see that Make Expenses and Items Billable is turned On (click on Off, then check the appropriate box to turn it on).

Next, determine how you want to process the transaction by clicking on one of the three buttons at the top of the transaction box. Do you want to accept it and Add it to that account’s register? Do you want QuickBooks Online to Find (a) Match for it (like a payment that matches an invoice, for example)? Or, do you want to Transfer it to another account? Once you’ve made one of these three selections, the transactions that you’ve added or matched will move under the In QuickBooks tab (where you can still Undo them) and will be available in the account’s register.

Other Options

You can save time by using QuickBooks Online’s Batch Actions tool.

Say you run across some duplicate or personal transactions that you don’t want to appear in the current account’s register. Check the box in front of each, then click the arrow in the Batch Actions box. Select Exclude Selected. They’ll then be available under the Excluded tab. You can also Accept or Modify multiple transactions simultaneously by using this tool.

So far, you’ve been viewing All your transactions. Click on Recognized to the right of it. These are transactions that are already familiar to QuickBooks Online because they’ve appeared before and/or have been matched, or because you’ve created Bank Rules for them (we’ll address that concept next month). You’ll need to address these the same way you did the transactions in the For Review section; you can either Add or Transfer them.

If you’re new to QuickBooks Online, this may all sound pretty complicated. It can be at first. But once you’ve worked with downloaded transactions for a while, you’ll understand the flow much better. If you’re not clear on the process from the start, it can lead to trouble. Contact us at your convenience. We’d be happy to sit down with you and go through it all using your own company’s data; the familiarity may help.

Phone Apps to Help With Your Business

Here are a few apps that can simplify your collaboration and tracking and even improve your productivity:

Pocket – getpocket.com

There is so much information to take in every day, it’s hard to get it all read when you first see it. How many times have you tried to find that article later with no success?

Pocket makes it easy to save all the articles, pictures and videos you find online so you can look at them later. It works on mobile or desktop systems and it’s free. Pocket will also strip out the ads, sidebars, and other stuff from the page to leave you just the text, images, and videos. Once you’re done, it’s a simple tap to archive, save or share.

Wunderlist – wunderlist.com
Whether you and your team have a list of tasks to accomplish or you’re planning a business trip, Wunderlist is effective at keeping it all straight and up-to-date.

You can create as many task lists as you need and share them with up to 25 collaborators. Lists are live online, so when something gets completed, everyone knows.

Toggl – toggl.com

Time is money, in business. So, effective time tracking is good for business. Whether you bill by the hour or are testing efficiency by logging time spent to complete tasks, Toggl helps you track every second with a single click – it even includes idle detection.

Buy a business or start your own?

Starting a business from scratch can be overwhelming for first-time entrepreneurs. If you have a great business idea and are ready to work hard to build it from the ground up, then you may wish to start your own business. But if you want to hit the ground running and avoid some of the common start-up pitfalls, then buying an existing business or a successful franchise may be a better option for you.

Starting your own business

Benefits

  • Complete freedom to design and manage the business according to your vision.
  • Not bound by anyone else’s rules, history or assets.
  • Opportunity to carve out a new niche in the market.
  • Can be less expensive than buying a successful business.

Challenges

  • Can take time to become profitable.
  • There is no guarantee of business success and a high rate of failure for new businesses.
  • Can be more difficult to get financing because lenders or investors are taking a risk with your idea.

Buying an existing business or franchise

Benefits

  • Benefit from the work that has already been done on building a brand. developing customer relationships, developing business processes and acquiring assets.
  • Can start bringing in profits more quickly.
  • Can be easier to get financing because the business model is proven.

Challenges

  • The upfront investment is often higher than if you were starting your own business.
  • The previous owner and/or franchisor’s business model and way of doing business may not be a perfect match with what you envision.

Starting a new business – why having an accounting professional is essential

Here are some facts:

There are 1.2 million small businesses across Canada

1 out of 2 fail within the first 5 years of business due to poor financial management

89% of small businesses say they are more successful because of working with an accountant

How can an accounting professional help:

  • Setting new business goals each year;
  • Tax Planning;
  • Cash Flow Analysis;
  • Ability and training to make more informed business decisions;
  • Provide analysis for areas of improvement;
  • Succession Planning; and
  • Profitability analysis.

Please come to see us for a free consultation.

Starting a New Business – Best Practices and Tips

Starting a new business can be daunting.  Do not be shy about seeking out the advice of experts, networking with other entrepreneurs and hiring employees to help you run the business. Follow these tips to avoid some of the pitfalls that can lead to small business failure.

  • Develop a good marketing and business plan that takes into account customer needs, competition, pricing and promotional strategies. Follow this link to find out how to write a business plan and access templates, sample business plans, market research information, and statistics. – Business planning
  • Find research reports and statistics on small business and entrepreneurship in Canada – Research and Statistics
  • Have a good working knowledge of business law or hire a lawyer.
  • Understand your business finances, such as cash flow and handling credit with a good accounting program such as QuickBooks Online.  Our office can help you with this.
  • Keep a good inventory of your products or services and your existing customers.
  • Supervise, train and motivate your employees.
  • Make sure you have the experience, expertise, and talent to run your business.
  • Plan every part of your business from start to finish.
  • Know your market and define how much of it you will be able to capture.
  • Make sure you are offering a product that is unique and competitive or at a lower cost than that of your competitors.
  • Don’t under-estimate your expenses and over-estimate your revenue.
  • Make sure you have some cash reserves or a line of credit to help you get through slow periods.

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QuickBooks Online – Advantages of Cloud Based Accounting

QuickBooks Online (“QBO”) has many features and advantages that many desktop-based programs do not offer.  If you are interested in using the program, our Firm can offer our clients up to 40% off the monthly price.  Please contact our office for further details. 

Some advantages that QuickBooks Online offers over a traditional desktop accounting program are:

·    You can easily access data across multiple platforms (PC or Mac, mobile)

·    There is no need to transfer data files since everyone logs in to the same account to access
live data

·    All data is hosted, backed up and secured by Intuit’s servers (no backups needed)

·    Attaching supporting documents directly to each entry allows for greater collaboration and centralization of information

·    You can automatically create invoices and send them to clients, including delayed customer charges for unbilled time and costs

·    Logins, third-party activity, and list changes can be monitored using the Audit Log

·    Reports can be emailed automatically to anyone (including those who are not using QuickBooks Online) using a scheduled frequency

·    You can further organize data with both Class and Location tracking

·    Bank and credit card transactions are automatically downloaded if you connect your bank or credit card account using online banking credentials

·    Third-party apps sync to QuickBooks Online behind the scenes (i.e., without you having to actually open QuickBooks Online) since the apps sync to Intuit’s always-accessible server

·    Post to multiple Accounts Receivable and Accounts Payable lines in a single journal entry

·    Track inventory using the first in first out (FIFO) method. 

Income Tax Update: Income Sprinkling – Tax on Split Income (TOSI)

On December 13, 2017, the Department of Finance released revised draft legislative proposals on income sprinkling.  The new rules were passed into law on June 21, 2018, with only a few minor modifications to the December proposals, and are effective January 1, 2019.

The government’s objective is to eliminate the tax benefits of income splitting where the recipient of the income (a related family member) has not made a sufficient contribution to the family business.

The TOSI rules will potentially apply to essentially any income amounts, dividends and capital gains that are considered “split income.” This generally includes the following:

  • Dividends and shareholder benefits from a private company;
  • Income received from a partnership or trust where the income was derived from a related business or the rental of property in certain cases;
  • Income on certain debt obligations (e.g., interest); and
  • Income or gains from the disposition of certain property disposed of after 2017.

However, the rules provide a number of exclusions as follows:

  1. Exclusion from TOSI for adult individuals (18 years or older) who contributes labour to a related business on a regular, continuous and substantial basis (Excluded Business). This can be proven on a factual basis or by meeting a threshold if the family member has worked at least 20 hours a week on average in 5 years at any time in the past, any dividends they receive now or in the future from the family business will generally not be subject to TOSI.

 

  1. Exclusion from TOSI for individuals over the age of 24 who have a significant equity investment in a corporation, other than a corporation that carries on a services business or is a professional corporation (Excluded Shares). This means that the individual must hold shares that represent at least 10% of the votes and value of the company (these shares can be separate from the excluded shares of the company). In addition to this requirement, the exclusion only applies to shares of corporations where less than 90% of the business income of the corporation is from the provision of services, and where 90% or more of all the income of the corporation is not derived directly or indirectly from one or more other related businesses of the individual (outside of the corporation). Also, excluded shares also do not include shares of a professional corporation.

 

  1. Exclusion from TOSI for individuals over the age of 24 that meet a reasonable returns test. This reasonable return will consider several factors including the work performed for the business. The other factors include the property contributed by the individual to the business, the risks assumed by the individual in respect of the business, the historical payments that have been made to the person in the past for their contributions, and other relevant factors.

Other relevant factors:

  • Generally, TOSI will not apply to capital gains that qualify for the Lifetime Capital Gains Exemption. This will enable families to continue to plan to use the Lifetime Capital Gains Exemption.
  • Removal of aunts, uncles, nieces, and nephews from the specified individual definition for purposes of TOSI.
  • No application of TOSI to compound income (i.e. income earned from the investment of income previously subject to TOSI).
  • TOSI will not apply to income received by an individual from a related business if the individual’s spouse made the contributions to the business and is at least 65 years old in the year the amounts are received.
  • The beneficiaries of a deceased individual’s estate can avoid the TOSI rules based on the contributions of the deceased individual.
  • The income derived from property acquired because of a marriage breakdown will be exempt from the TOSI rules.

Estate Planning Essentials

Estate Planning is the process of creating a plan to distribute assets –  a plan to take care of the people and things important to you – during your life or upon your death. An Estate Plan should also include contingency arrangements for the possibility that you may not be able to make decisions at some point in your life, for example, because of a severe injury or medical condition.

Why is it important:

·       will help ensure that your dependents and beneficiaries have income and assets for their ongoing needs. The loss of your income means that some planning may be needed to determine how it can be replaced. You likely wish your dependents to maintain normal spending patterns without substantially altering their lifestyle when you are no longer there to contribute.

·       to minimize family disputes. By planning ahead, you can anticipate issues and discuss the reasoning behind your decisions with family members ahead of time. An Estate Plan enables you to convey your wishes about how you wish your affairs to be administered. Including guardians for your children. If you do not convey your wishes, others, such as the government, courts and those you may not trust may be able to make decisions that you would not agree with.

·       helps minimize costs and taxes so that as much property as possible is passed to your heirs, rather than being eroded by administrative fees and taxation.

·       peace of mind in having an estate plan in place. There is a certain satisfaction that comes from putting one’s affairs in order.

What is involved in the estate planning process:

  1. Determine your objectives
  2. Understand your current financial status
  3. Consider strategies and tools
  4. Develop Plan
  5. Implement plan
  6. Keep it current