have you been stung by your bookkeeper?

Have You Been Stung by Your Bookkeeper?

And Don’t Even Know It?

By Apis Business Solutions, LLC

Know Your Numbers – Know Your Business

Strong words with a powerful messageIf you are not an accounting professional, how do you know if your bookkeeper is

providing your company with the level of expertise you desire and require?

CONTENTS

IntroductionChapter 1• Taking Control• Managerial Accounting – What is it?

The Truths About Intelligent BookkeepingChapter 2•TRUTH #1 – It Takes Nectar to Make Honey•TRUTH #2 – Turning a Swarm into a Hive•TRUTH #3 – Harvesting Your Honey into Money

Know How to Put This Information to Work for YouChapter 3

• Evaluate the Effectiveness of your Financial Reports• Look for Upside Down Balance on Your Balance Sheet• Look at your Bank Reconciliation Report• Review Accounts Payable and Accounts Receivable Reporting• Checking Payroll Activity

About UsChapter 4• Our Unique Approach to Bookkeeping• Small Business Financial Officer – SBFO• Senior Accountant• BizKeeper

•About Us

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Garbage In – Garbage OutAs a business owner, your company is hired because you offer expertise and knowledge about a particular service or provide a valuable product. You are professionals in our particular line of work. There is often the expectation that everyone else offering their expertise for hire is also a professional and therefore, knows what they are doing. They may believe they do, however, tax laws, state laws and local regulations are changing constantly, and not every bookkeeper stays up with those changes or understand them. Since there are almost no educational requirements to be a bookkeeper, a business owner needs to be able to hire the right bookkeeper and monitor their work.As a business owner, accounting may not be your strong point, but know WHAT YOU EXPECT AT THE BOTTOM LINE. Often small business owners choose an inexpensive bookkeeper to save short-term costs. However, the long-term costs appears when a CPA tells the business owner they need to clean up their accounting records so they can prepare your tax return? They are going to charge the business owner their rate to fix work the owner has already paid for---making an inexpensive bookkeeper not such a bargain.

GOOD NEWS

As a business owner there are measures you can take to avoid costly bookkeeping errors.

You are in control

Accuracy Partnered with Checks and Balances

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If accounting and bookkeeping isn’t your forte, don’t worry—it’s ours. The Apis colony of Small Business Financial Officers (SBFO®) teamed with busy BizKeepers knows how important your business is to you and how important your books are to your business. Whether you’re doing your books yourself, outsourcing with a bookkeeper or looking to do so in the future—we want to make sure that your business is getting what it needs from your books so you can get what you need from your business.

As business owners we are professionals in our particular lines of work and we expect that from those we do business with. However we are rarely experts in the fields we outsource—making it difficult to asses a service provider’s performance. We may not even know how to gauge the service we’re getting at all. Accounting and Bookkeeping is no exception.

Okay, What’s Up with the Bee Thing—You may be wondering why the BEE logo, you will see us use BEE ANALOGIES throughout this book. The word APIS is the Latin word for “honeybee.” We use the comparisons to bees, honey, nectar and hives, etc. Because bees have got a great business model. Just think about it, they are organized, store assets for the future, have contingency plans, constantly monitor their inventory, adapt to their environment and everyone in the company knows their job and how they contribute to the overall success of the organization. They do naturally what great businesses work hard to achieve and maintain. If more companies had similar business models, more companies would realize their goals and dreams. The second part of our name is BUSINESS SOLUTIONS. We position ourselves as a proactive financial advocate for our clients. As solution experts we not only provide accounting and bookkeeping solutions, we also align ourselves with various highly qualified business support providers, i.e. IT, tax preparation, marketing, sales, insurance, and financial planners just to name a few. We understand running a successful business requires a variety of skills and talents, some of which are better outsourced with proven professionals in their respective fields.

Taking Control

High Quality Accounting and Bookkeeping Professionals Offer a Service Essential to

Every Business

HEADLINE

Y?Why Is It Important?

You Can Utilize Your Financial Records Optimally by:

Your business records are an important key to your success. They tell you if your current activities are profitable. They tell you how much money you have tied up with customers who have not paid yet. They enable you to get all tax deductions possible.

Good business records make you look good to the bank. Good business records allow you to accurately target immediate returns on investments as well as identify excessive spending.

You can utilize your financial records optimally by: Having Accurate Data Organizing Your Data

Informatively into Managerial Reports

Analyzing the Information and Strategizing

An Accounting and Bookkeeping Professional Does All This and More...

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A Professional Bookkeeper Can Help You Do Managerial Accounting

“Make Strategic Decisions Based on Fact Not Hope.”

Use Your Books Like the Big Guys

Financial Accounting -Produces annual reports mainly for external stakeholders.Managerial AccountingThe process of preparing management reports and accounts that provide accurate and timely financial and statistical information required the business owners and management to make day-to-day and short-term decisions.Management accounting generates monthly or weekly reports for the organization’s internal audience. These reports typically show the amount of cash, sales revenue generated, amount of orders in hand, state of accounts payable, outstanding debts, raw material and inventory with trend charts, variance analysis and other statistics.

Managerial Accounting vs. Financial Accounting

CONTENTS


The Truths About Intelligent BookkeepingChapter 2• TRUTH #1 – It Takes Nectar to Make Honey• TRUTH #2 – Turning a Swarm into a Hive• TRUTH #3 – Harvesting Your Honey into Money



About UsChapter 4• Our Unique Approach to Bookkeeping• Small Business Financial Officer – SBFO• Senior Accountant• BizKeeper• About Us

The Truths About Intelligent Bookkeeping

The following information outlines three essential truths about accounting and bookkeeping as a management tool.

The Truth is...When you data is complete, accurate and properly classified, costly mistakes like those above do not happen. Knowing your bookkeeper is providing you with reliable data allows you to turn your focus to organizing the information into reporting that will take you from spending your money to managing your money.

Mistakes can be costly—look at the following examples:

Example One - Inaccurate or misclassified data may require your CPA to clean up your accounting records—at their rates—before preparing your taxes. Accurate and properly classified data entry gives your tax preparer the tools needed to maximize tax deductions and saves you money on the cost of tax preparation

Example Two - Incomplete and inaccurate data entry is misleading when pricing products and services allowing for decreased overall profits. Complete and accurate data entry provides you with the information you need to correctly price your products and services to cover direct and indirect costs and make a profit.

You want your financial records to give you meaningful reporting capabilities. You want to accurately target immediate returns on investments. You want to identify excessive spending.

Accurate and complete data entry is absolutely essential to the success of your business.

Truth #1 – It Takes Nectar to Make Honey

Without nectar there is no honey—Without complete, accurate and properly classified data there is not reliable financial information for your company.

Bee Analogy

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Bees naturally group into nests giving them a place to bring nectar to process into honey, similar to the way any bookkeeping system provides a business with a path to enter and store data in order to turn it into useful information. A hive is what we call a honeybee community when it is being managed by beekeepers. The hive is organized to facilitate extracting honey without harming or disrupting the bees. This is our approach to BizKeeping—we organize bookkeeping systems in order to facilitate extracting financial information from your business so that your business can perform optimally.

Reports that provide you with

the information you require in

an accessible format empower

you to make sound and educated business decisions. When your bookkeeper is familiar with your industry and

your management style they are able to help you design custom reporting that gives you the snapshots you need to

effectively manage your business.

Do Your Books Accurately Represent Your Company?1. Are you charging enough to produce and deliver

your product and services?Solution: Define and group the cost of goods sold accounts on your Profit and Loss Statement so you can clearly and easily identify all related costs.2. Are you considering all business expenses when

calculating your bottom line?Solution: Define and group general expenses of doing business on your Profit and Loss Statement so you know what factor to use when calculating the cost of overhead in your pricing.3. Are you proactive and tax planning or reactive and tax paying?Solution: Know which deductions you qualify for and have your bookkeeper prepare detailed reporting for your tax professional pointing them to the information they need to capture them.

TRUTH #2- It Takes Organization to Turn a Nest into a Hive

Bee Analogy

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4. Do you know how your company is performing overall and comparatively to your industry?

Solution: Rely on comprehensive financial reporting that addresses your key indicators.

Does your financial reporting support your current and financial goals?5. Are you comparing your actual financial activity to your budget?Solution: Utilize budget to actual reporting features within your accounting software to track6. Are you planning for growth?Solution: Having consistent reporting allows you to plan for growth. Define your growth strategies using your historical data to help you analyze what has happened so you can plan for what needs to happen.7. Are your financial records accurately positioning you for a future valuation and sale of your company?Solution: Clearly identify discretionary spending within your chart of accounts so a prospective buyer can easily see the earnings capacity of your company.

More Questions About Your Records...

The Truth is...When your data is organized into informative reports you will know the answers to these questions. Knowing your bookkeeper understands your business and your goals well enough to produce meaningful financial reports allows you to go one step further into strategizing for growth, increasing profits and building your financial future.

Banking, Credit Card and Loan Reconciliations - Reports that compile data and make sure everything is accurate.

Statements of Cash Flows – is concerned with the flow of cash in and cash out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. It is useful in determining the short-term viability of a company, particularly its ability to pay bills.

Profit and Loss Statement – Summarizes the revenues, costs and expenses incurred during a specific period of time. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs.

Accounts Payable Aging Report – Helps you determine how well you are (or aren’t) paying your accounts payable. It is a great cash management tool.

Accounts Receivable Aging Report - shows the amounts owed to the company by its customers, including the length of time the amounts have been outstanding. Typically, the aging report categorizes receivables as “current,” “30 days,” “60 days,” “90 days,” and “120 days and over.” The purpose of this report is to show the business owner what receivables need to be dealt with more urgently because they have been overdue longer.

Reports You Need to See At Least on a Monthly Basis

Balance Sheet – A financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. These three balance sheet segments give the business owner an idea as to what the company owns and owes as well as the amount invested by the shareholders.

Financial

Reports

Truth #3 – It Takes a Watchful Eye to Turn Your Honey into Money

If you are not familiar with what information is provided to you within each of these reports, ask your bookkeeper. They will be able to help you understand each report and be able to help you interpret the invaluable information they contain.

Talk with your accounting and bookkeeping professional about other reporting that will assist you in managing your business. For instance, a business that bills clients for reimbursement of direct expenses will want to see an unbilled costs report. Do not be your client’s banker. Recovering costs quickly is vital to your cash flow.

You have money to spend on marketing, but none to waste. Tracking the return on your investment with marketing efforts lets you know which campaigns are bringing you the business you expect and which ones are costing you more money than they are worth.

Knowing how each department or store location is performing allows you to monitor managerial staff and the profitability of product and service lines. Grouping all information together can be misleading. When reporting easily identifies different facets of your business, you now have a tool to help you oversee your entire company with a better perspective.

You worked long and hard last November putting together a budget for this year. How successful have you been in reaching your goals? Do you need to make adjustments mid-year to your operations to better meet your anticipated profits? Comparing your anticipated goals with the realities of your business is the only way to make timely and appropriate decisions. Don’t fall into the mindset that says “We are busy, so we must be making money.”

The Truth is...When your reporting is reviewed and analyzed on a regular basis you will know the answers to these questions. Knowing your bookkeeper is providing you with useful and timely reporting supports your efforts at reaching all your financial goals.

CONTENTS






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Know How to Put This Information to Work for YouYou don’t have the time or the inclination to micro-manage your bookkeeper’s work. Reviewing the financial reporting provided by your bookkeeper and knowing what to look for are the first steps in ensuring you are working with a qualified professional. Below you will find specific steps you can take to monitor your bookkeeper’s effectiveness in their position.

On the next few pages review not only the questions you should ask whoever is doing your accounting and bookkeeping; but

also the answers you should expect.

Learn what you need to know to manage this position.

How do you know the reports are accurate?

Have you asked your bookkeeper to verify the numbers?

Look for upside down balances on your Balance Sheet

Do the numbers seem reasonable? Does your bookkeeper understand your business? Review your Chart of Accounts to determine if it is tracking activity specific to

your business model or industry.Within QuickBooks it is very easy for your bookkeeper to “drill down” in a report and show you the detail for a given number. Watch out for accounts called “need to fix” or “miscellaneous”. This indicates that

your bookkeeper did not know how to classify an event and needs your clarification.

In an account name doesn’t seem right to you, ask for an explanation and the detail of activity recorded to that account.

Customize your Chart of Accounts so you track activity that is important to your bottom line.

Within QuickBooks it is very easy for your bookkeeper to “drill down” in a report and show you the details for a given number. This type of reporting lets you quickly determine if the total number is made up of the correct financial activity.

Review all reports with your bookkeeper from time to time to make sure you are both on the same track.

If you find a negative value designed by a minus sign or brackets around your accounts receivable number there is something wrong! This indicates one of two things: You owe your customers money, or... The bookkeeper has received money into your books, but has not created an

invoice to record the sales side of the transaction.This inaccurate bookkeeping practice understates your revenue to you and creates a tax reporting problem with IRS.If your accounts payable liability account is showing a debit balance something is WRONG! You have either overpaid a vendor or... You have not recorded a tax deductible expense.Either situation is NOT to your advantage.These are only a couple of irregularities that could show up.

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2

3

ANSWERSKnow How to Put This Information to Work for You

Look at your bank statement. It can tell you several things. Did you know that your bank statement can be reconciled every month and still be wrong?

4 ANSWERSAsk Yourself and Your Bookkeeper the Following Questions

Look at the un-cleared or outstanding activity sections of the reconciliation report.If you have outstanding activity that is more than a few months old this is an indicator that your accounts are not really reconciled.

Scenario A:

Your checking account is showing an un-cleared deposit in the amount of $10,000 from six months ago. How can this happen?

You lost the check from a client and it was never deposited. They haven’t told you because it is to their advantage or perhaps their bookkeeper isn’t tracking cleared checks in their system.

Scenario B:

Your checking account is showing un-cleared checks dating back several months. How can this happen?

These outstanding activities are an indication that perhaps a vendor of yours has lost your check.

Even more troubling, maybe you or your bookkeeper has inadvertently double booked an activity. Entering the same check twice in your check register can throw off your expense reporting, your accounts payable balances and the ending bank balance.

These occurrences could cause you to negotiate payment arrangements with a supplier because you don’t know that you have enough money in your account to pay their bill. Or perhaps you are putting off paying yourself.

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Make sure your bank account is truly reconciled.

When your bookkeeper is correctly reconciling your bank account you can rely on the information in your accounting software to manage your cash flow.DO NOT rely on checking your balance online – Reconcile Your Bank Accounts.

This is a very dangerous way to manage your cash flow.

It may seem effective when you have the time to manually calculate in your head what checks you know you have written and mailed to vendors and which ones are still in the drawer waiting to be sent until you make the deposit you are going to pick up from your client. But we all know this methodology doesn’t always work when we are busy and besides it takes valuable time out of your day that can be better spent.

Look at Your Accounts Payable and Accounts Receivable Reporting

5 ANSWERS

Ask Yourself and Your Bookkeeper the Following Questions

If you use QuickBooks, review the Open Invoice and Vendor Open Balance Detail reports. These reports are a very quick way for you to see if the bookkeeper has correctly recorded activity into your software. A bookkeeper can record receipt of a payment to an account in your accounts receivable module without recording an invoice for this activity. This creates a situation where you can properly record a deposit to the bank, but not record your income.Scenario C:

If you see an open payment entry on the Open Invoice Report then your revenue is not being properly recorded. Simply recording receipt of a payment creates a recordkeeping situation that appears to show you owe a client money for undelivered services or products.

Scenario D:

Similarly for accounts payable, if there is an open payment you have made and no bill to attach it to you are perhaps properly stating your bank balance, but have not recorded the expenditure.

This causes problems at tax time because you are missing deductions. You might overpay a vendor because you have no receipt of a bill going through

your system or you might not charge a client for a reimbursable expense because you have no indicator that the charge was ever incurred. Your vendor is happy because they got paid, but you have not and you don’t even know it.

An open bill payment is a message to you that a bill had been entered into the system but was then deleted. Again, this is your sign that something is amiss

Is Your Payroll Activity Being Processed and Recorded?

6 ANSWERS

Make Sure Your Payroll is Properly Processed and Recorded

It is not necessary for you to become a payroll expert, but there are ways to make sure you are in compliance and that your records accurately reflect this activity.

Ask your payroll professional, whether that be your bookkeeper or an outsourced service provider for a schedule of all payroll taxes due including the tax name and corresponding tax authority, whether it is a company expense or an employee withholding, what forms are necessary and the filing requirements, and how you will see the activity reported on your books. The buck stops with you when it comes to payroll responsibilities.

We suggest you do not use a catch-all payroll expense account. Break out the different payroll expenses within your Chart of Accounts so you may easily identify all expenditures and its related costs. Employee costs may include salaries, wages, overtime, sick, vacation, and holiday pay, bonuses, commission, state and federal unemployment, matching Social Security and Medicare taxes, city tax in some cases, workers compensation insurance, benefits, uniforms, bus passes or parking, cell phone reimbursement, payroll administrative fees, and hiring expenses. Can you see how if this is all thrown in to one pot a business owner may not be able to effectively monitor these individual costs?

CONTENTS






The Beginning The Commitment The Results

Take Control – Know and Use Your Numbers

We Take the Sting Out of Accounting and

Bookkeeping

• Apis Business Solutions, LLC was started in August 2008. We developed a system of financial management specifically designed to help small business owners run their business “by the numbers”. When business owners understand the numbers of their business, they make strategic decisions based on “fact” not “hope.”

• Most business owners do not start their own business because the “love” accounting and bookkeeping, yet effectively managing their financials is essential to their initial and continued success. Organized and complete financials mean access to funding, better cash management, and better opportunity for success.

• At Apis we believe good business begins and ends with the relationship. Because we work with the financial core of the small business, trust is essential. We also know that trust is earned, it is not a given. We are prepared to work hard to earn and keep your trust.

• We believe in the following formula:

Integrity + Reliability + Competence + Transparency = TRUST

• In June 2009, we were honored to be named one of the 10 winners nationwide in Intuit/QuickBooks® “Power to Get More Done” Stimulus Grant Competition. Apis Business Solutions was chosen from more than 700 applicants from across the country because of our business model, professionalism and our willingness to give back to the community.

• In May 2011 we were honored as one of three finalists for the “Emerging Business of the Year” award sponsored by the Denver Metro Chamber. As an advocate for small business success and growth in the Denver Metro Community, we are honored to be recognized as a “Small Business Making a Difference.”

Where? Who?

What?

How?

When?

1 2 3

The Apis Story...

24

Focuses on:

Quality of Service

Clear Communication

Transparency

Advocacy Role

Managerial Accounting

Long-Term Client Relationships

Project Director to oversee every account. The focus is on personal, individual service.

Through service agreements , letters of engagement, punch lists and timelines our clients know what they can expect from us.

Through our website our clients have access to a protected portal where they can share and access important documents and information concerning their account allowing for total transparency in the work we produce.

We take a participatory role with our clients so that we are best able to help achieve and maintain financial success. We also utilize the vast resources of all members of our hive in order to find the best solutions to any given situation.

Unleashing the power of a business’ financials allows owners to make strategic decisions based on “fact” not “hope”. We transform the way in which you view your financial reports so you can use the very same financial transactions your tax preparer uses but with a focus on effectively running your business, not just how much tax you owe on the bottom line.

Professionalism

Advocacy for the Business Owner

Quality of Service

ResultsWe Stand Behind You, So You Can Stand Out!

Our Comprehensive Approach

Building trust takes time. As advocates for our clients it is our responsibility to always look for the most efficient and cost-effective way to approach each task.

Call us at 303.945.2104

Website: https://www.apisbusinesssolutions.com

Email: nbarnett@apisbusinesssolutions

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