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Online Bookkeeping Solutions Blog

The Online Bookkeeping Solutions Blog is an timely collection of interesting and helpful information for those companies who want to outsource their bookkeeping solution and utilize bookkeeping services by subscription. Outsource your bookkeeping to a cloud based solution backed by experienced CPA's.

Loan Denied? 5 Alternate Financing Options

As a business owner, one of your worst fears may be not getting the finances to keep your business running. However, being denied a loan from the bank does not mean you are out of options. In fact, following are multiple alternative financing options worth exploring to keep your business alive and thriving, as well as the benefits and drawbacks of each options.

1. Factoring

By this process, a business essentially sells its bills for cash. Accounts receivable are sold to the factor at a discount in exchange for immediate cash. Factoring combines working capital financing, credit risk protection, accounts receivable bookkeeping and collection services.

PRO:
This is a good, fast solution for a small business owner who is in need of cash. This is especially useful when the business needs money to maintain operations, but incoming cash is stuck with a client.

CON:
Factor companies that buy accounts receivables are concerned only with their money. They do not care about the business’s reputation or relationship with the client.

HELPFUL TIP:
Choose a factor company that is also considerate when dealing with clients. If you have a longstanding relationship with the factoring company, they will be far more likely to pay attention to maintaining good client relationships on your behalf

2. Lease Back Programs

If a business owns pricey equipment, it can find a lender who will buy the equipment for a lump sum and then lease it back.

PRO:
The business can still use its equipment, while increasing its cash flow.

CON:
By purchasing new equipment and then leasing it, the business ultimately ends up paying more for the equipment.

HELPFUL TIP:
If your business can write off lease payments instead of depreciating the equipment, your equipment costs may be offset by tax savings.

3. Purchase Order Financing

This is a good option for businesses that fear losing a sale because they won’t be able to fulfill a customer’s order in time. A financing agent advances money against a signed purchase order for finished goods to help fund fulfillment of the order.

PRO:
This financing option depends more on the credit standing of the business’s customer rather than its own.

CON:
The financial agents who provide the advance will likely take a cut of the profit, usually in the range of 4 percent or less.

HELPFUL TIP:
This arrangement is particularly helpful if your business is an import-export firm that must pay for raw materials upfront, but wait to get paid for finished goods.

4. Merchant Cash Advance

Some independent finance companies give merchants a lump sum upfront in exchange for a share of their future credit-card sales.

PRO:
Unlike a loan, there are no due dates or fixed payments, and it’s faster to get approved.

CON:
While there’s no traditional interest rate, providers will take a significant cut, generally 15 to 17 percent of credit-card receivables.

HELPFUL TIP:
This arrangement is best suited to retail, service, or restaurant businesses that do frequent credit card transactions.

5. Microloans

A good solution for small or midsized companies, microloans tend to be less in amount, but can run as much as $150,000. The money loaned is often enough to provide working capital for a month, which may be just enough to help the business survive.

PRO:
Microloans are granted to businesses with lower credit scores than banks accept, and don’t require as much paperwork.

CON:
Interest rates are higher than those of bank loans, generally ranging between 12 and 18 percent.

HELPFUL TIP:
Click here for 14 sites to help you get a loan for your small business.

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How to Enter Bounced Checks in QuickBooks

If your business processes enough transactions, eventually you are going to have a check that bounces, also called an NSF (Non Sufficient Funds) check. Without properly processing a bounced check, the cost to your business could be substantial. Does your business have a system configured in QuickBooks to track bounced checks? If not, you should definitely establish one. Here’s how.

Choose “Lists” then “Item List.” Click the Item drop-down arrow and select “New.” Click the Type drop-down arrow and select “Other Charge,” naming it NSF Check. Leave 0.00 in the “Amount” field and click the Tax Code drop-down arrow and select “Non.”

Next you’ll want to create an invoice to recover the amount owed to your business, plus any bank fees you want to recover. This amount can be larger than the amount your bank charged you, depending on your state’s laws. Once (if) you receive payment from the customer, use “Receive Payments” to record the transaction.

To record the bank’s charge for the NSF check, open the register and enter the amount in the Payment column and post the transaction to your bank charges expense account.

Should you try to redeposit the check? Probably not, especially if you risk incurring another charge that may be difficult to collect from your customer. Most banks only allow you to redeposit a bounced check once. As a business owner, you should request a new check or a certified check from your customer. If you’re having difficulty collecting amounts owed to you from customers, please refer to my earlier post, Systemize Your Outstanding Account Collection Process.

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How To Run Payroll Schedules In QuickBooks

As a business owner you are in the driver’s seat when it comes to setting up the payroll schedule for your employees. You can issue payroll on a weekly, bi-weekly, semi-monthly (ex. the 15th and the 30th), or even on a monthly basis. You can even have different payroll schedules for different employees (ex. salaried v. hourly employees). But it will be important to your employees to know when to expect their paycheck, and to receive it on time. Fortunately, with QuickBooks payroll schedules, this is easy to execute.

If in fact your employees are paid at different intervals, or if some are paid via direct deposit while others receive physical checks, you can streamline the need to classify each employee’s pay date and/or method by creating different payroll schedules and assigning the appropriate employees to the appropriate schedule type. How do you do this? Just follow these simple steps in QuickBooks.

  1. Go to the Home page, and click the “Pay Employees” icon. The Enter Payroll Information window opens, allowing you can to set up the pay period, check date, and which employees to pay.
  2. Select “Employees | Add Or Edit Payroll Schedules.” When the Payroll Schedule List window opens, create a new payroll schedule, and give it a name. Make sure to use descriptive names, so you know what each payroll schedule stands for. For example, maybe you name one schedule “bi-weekly, direct deposit employees”
  3. Proceed to fill in the rest of requested information for this payroll schedule, including: pay period frequency, the next pay period end date, and the next paycheck date.

Keep in mind that for tax purposes, the paycheck date is all that will be relevant. Your 941/W-2 forms use only the paycheck dates. The rest of the information in your payroll schedules is for your convenience in facilitating payroll operations.

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