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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.

Bookkeeping for Barter Transactions

We live and work in a time where money is tight for everyone. Therefore it may come as no surprise that bartering, the trading of goods & services for other goods & services, has become increasingly popular. Bartering allows a business to retain cash while still getting needed goods & services. Plus, bartering is one way to offset cash shortfalls.

In an individual setting, this might be cutting my neighbor’s lawn if he fixes my leaky pipe.  In a business setting, a roofing company might be willing to swap a roof resurfacing for new computers from a computer manufacturer. Or, an attorney might prepare a partnership agreement for an auto dealership in exchange for an automobile.  The values of the items exchanged (bartered) would be resolved between the parties.

While these arrangements might be beneficial to a business looking to grow, there are some bookkeeping, taxation, and accounting issues that need to be addressed.  A barter exchange is actually two or even three individual transactions put together.  Each of these transactions needs to be recorded at fair value on the books of the business. The value of your services would be an increase to your revenues, and the cost of goods received would be posted to an expense or asset account.

Income from bartering is taxable the year it occurred. The rules for reporting barter transactions may vary per transaction, so it is wise to consult with a professional should you have any uncertainties.

Barter clubs are popping up all over the country. Some charge membership fees, some do not.  Some might have transaction, service, or annual fees. The more sophisticated ones even have actual accounts on behalf of the membership. These would keep the tally of the difference between the value of the services given up during the year versus the value of the goods or services used.

With the increase in sophistication of these clubs and the values of the transactions that can occur, you can be sure the IRS is looking at them as well.  Don’t ignore them and I’ll trade you my tape dispenser for your stapler.

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Accounts Receivable—The Business Lifeline

Every business needs to accumulate and then collect their accounts receivable, or A/R.  The sales these A/R represent are the culmination of the business’s profitability; it’s entity.

With the advent of electronic bookkeeping, A/R tracking is relatively easy compared to the “old days” of writing everything down in a list and crossing off items when collected. Every business needs to accumulate and then collect their accounts receivable, or A/R. The sales these A/R represent are the culmination of the business process, the sale.

As businesses progress forward into electronic A/R solutions, it is important to maintain this key benefit from the more old-school ways of tracking A/R, which is the efficiency of writing down notes in one place and having access to all necessary information when the A/R is delinquent.

I suggest establishing an electronic folder using Excel or a similar program that you can reference at your fingertips when talking to a customer. It needs to have all pertinent data, including the invoice number, the amount, and the date. If you make any phone calls to discuss your A/R situation, be sure to note the contact name, date, and any resolution agreed upon.

Another way to expedite collection time is to use a lockbox at the bank.  Collections enter your account faster and time is saved in the office opening mail and then making deposits.

Lastly, be sure your business is set up to accept credit card payment. Some customers won’t deal with businesses that don’t take credit cards. In recent years, credit card companies have developed cards tailored towards small businesses, so be sure to find the credit card company that offers the most benefits to your business. Also, be sure the fee is calculated when determining your sales price.

Happy collecting!

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Accounting Solutions – Is It Time For The Cloud?

I recently attended a conference that dealt exclusively with electronic accounting solutions and the future vision of bookkeeping processes. Intuit, Sage, and the AICPA sent representatives to the conference. Each had a unique approach regarding the implementation of cloud-based accounting solutions.

By far taking the most aggressive approach, Intuit is already promoting the cloud computing side of their business in deference to desktop solutions. This is based on their belief that most businesses will be in the cloud within the next five years.

Sage and the AICPA are not being quite as aggressive in their approach towards migrating to the cloud. While the cloud is certainly in their future, Sage is still maintaining their desktop software and working towards a softer transition, believing that businesses cannot just “flip a switch” and be in the cloud. The monthly costs of cloud computing are certainly better than investing in more servers and data storage. However, Sage is taking the stance that asset costs already expended cannot be overlooked. As time goes by, rather than replacing hardware and software, Sage plans on transitioning users to the cloud.

The AICPA’s small business division, CPA2Biz, summed up their vision of the future by showing the many ways social media and the advent of lighter and faster netbooks can be used, along with dashboards prepared by accounting and bookkeeping professionals. CPA2Biz believes this will keep business owners highly in touch with their business, even when they’re not in the office.

As this issue is in a state of flux, I advise consulting your professional to review cost benefits and detriments as they pertain to your business.  As to the speed and accuracy of getting relevant data, I say: BRING ON THE CLOUD!

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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.

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.

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.

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.

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

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

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.

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

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

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.

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

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

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.

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

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

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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3 QuickBooks Accounting Mobile Apps

Mobile apps are extremely popular today. Some are geared at pure entertainment, but many are geared at supporting simple task we do everyday. Intuit has developed several apps that do just that for Quickbooks. They work seamlessly with your QuickBooks accounting software to help facilitate financial transactions from a wide-range of touch points between you, your employees, your customers & vendors, and your financial institutions. Plus, each mobile feature offers the data security that the Intuit name is known for. Below is an overview of three of Intuit’s QuickBooks accounting apps.

ViewMyPaycheck for Mobile

ViewMyPaycheck for Mobile gives all of your employees instant access to their paystub information from their mobile phones. You no longer need to print paystubs for employees, saving you time and paper. You also don’t need to mail or email paystubs to your employees. Plus, this takes the burden off you, should your employee lose or ruin his/her physical paystub.

To sign in to ViewMyPaycheck for Mobile, an employee needs to open a web browser on his/her mobile phone, and go to, and sign in using the same user ID and password he/she would use to sign in to the ViewMyPaycheck web application on an actual computer.

ViewMyPaycheck for Mobile is available on any mobile device with a web browser.


With the GoPayment app, you can accept credit card payments on your mobile phone in just seconds. The app comes with a free credit card reader so you can swipe credit cards right on your mobile phone and get paid anytime, anywhere. Integrated with QuickBooks, this app eliminates the need to track and process credit card transactions, issue invoices, and make deposit runs to the bank. Payment information is encrypted securely, and not stored to your phone.

The app accepts Visa, Mastercard, Discover Card, and American Express. For more information and to view compatible devices, click HERE.

Quickbooks Mobile

The QuickBooks Mobile app gives you on-the-go access to all of your customer information and work history. You can manage both customers and sales from your mobile phone. The app lets you add, view, and edit customer information. It also allows you to create and view estimates, sales receipts, and invoices. Information added to QuickBooks Mobile is automatically synced with QuickBooks.

Currently, QuickBooks Mobile is available on iOS (iPhone, iPad, iPod touch) and Android devices. It is not available to users of the recently released QuickBooks for Macs 2012.

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QuickBooks 2012 Calendar: A Better View

Earlier in this blog, I discussed the importance of using a financial dashboard to help manage your day and to get a clear picture of your business’s overall health. The new calendar feature on QuickBooks 2012 offers the benefits of a financial dashboard by providing you an overview of your day’s to-do’s, while giving you access to the status of your current financial data – all in one place.

The default view of the QuickBooks 2012 calendar, available in Pro, Premier and Enterprise, has three sections:

1) The actual calendar gives you access to an automated view of your day’s to-do’s, appointments, and invoice and billing deadlines. This provides you with stronger, faster insights to help propel your business forward.  You can access the calendar from the Icon bar or from the Company menu. You can change the calendar view to weekly, daily or monthly by clicking on the calendar view.

2) The Transaction Detail Pane, located below the calendar, provides a summary of all transactions entered on a specified date. Transactions for that date are listed by transaction type. You are also able to see the amount, number, due date, and other specific information associated with each transaction. You can select the date and filter the calendar to show specific types of transactions by choosing the Transaction Type from the Show drop down list.

3) The Past Due Pane, located on the right side of the calendar, shows your past due transactions as of today, plus your to-do’s for that day. You can use the QuickBooks 2012 Calendar to add To Do activities in QuickBooks using the Add to Do icon.

The benefits of the new calendar feature in Quickbooks 2012 are multiple. Not only will it help manage your schedule on both a daily and weekly basis, but also it will help you more clearly identify know any overdue payments you need to track down, as well as keep you up-to-date on all your business’s pending transactions. Hopefully the QuickBooks 2012 new calendar feature will help you save time, be more organized, and revert focus from accounting details to overall business growth decisions.

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How Undeposited Funds in QuickBooks Work

An Undeposited Funds account is a holding account for customer payments that are entered as received in QuickBooks, but have not yet been deposited into your bank account. This account is frequently established during a company’s initial set-up on QuickBooks and is part of the Accounts Receivable process.

How Undeposited Funds Work

When you receive a payment, go into your QuickBooks “Receive Payments” icon and apply the payment to your customer’s invoice.  At this point, the money is automatically put into your Undeposited Funds account. When you actually deposit your money into the bank, YOU MUST update QuickBooks by going into your “Record Deposits” icon so your money is recorded as being in the bank.

When you click the “Record Deposits” icon, you will see a list of everything currently residing in your Undeposited Funds account. Simply check off everything you’re putting in the bank for that particular deposit. Then, all that’s left is to select the account you’re putting the money into using the “Deposit To” dropdown menu, and select the date of the deposit.

Common Problems and Solutions with Undeposited Funds

Problem:  Customer payments are not showing up on your bank account balance
Cause: Deposits are not being recorded in the QuickBooks bank account after they are made
Solution: Make sure to use the “Record Deposits” feature to relieve Undeposited Funds in QuickBooks after making a deposit

Problem: Undeposited Funds account shows a large balance built up over time
Cause: Not all deposits are being recorded in QuickBooks after they are made
Solution: Identify the payments not deposited in QuickBooks by looking at your bank statements, then go through and record these deposits in QuickBooks to remove them from the Undeposited Funds account

The Undeposited Funds account is there for your protection to make sure nothing disappears before it hits the bank and to make sure your financial records are always up to date. By using the Undeposited Funds account as a holding account, your accounting for customer receipts can match actual practice and simplify bank reconciliations.

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Portray Your Finances Properly And Procure The Loan

When you’re trying to get a loan, the numbers on your year-end balance sheet and income statement tell a story. Problem is, this story may not be representative of your actual financial situation, which could end up derailing your loan. This can happen for a variety of reasons that follow.

Your balance sheet offers a snapshot view of your assets and liabilities on a particular date, and may not reflect your actual fiscal year accurately. Atypical events at year-end may cause your balance sheet to look out of whack. For example, large year-end purchases will inflate both your inventory and your accounts payable, while a large sale at year-end will inflate your accounts receivable. Without knowing about a year-end event, a lender might question the stability of your business.

Another thing to watch-out for if you are trying to get a loan is accepting extended payment terms from a significant supplier at the end of your fiscal year. It could suggest that you do not have enough cash to cover your bills or that you’re not paying them on time.

Your potential lender will be looking at your Debt to Worth ratio. If your business assets are held in a separate entity, the ratio could appear too large, which makes lenders nervous. Furthermore, if your balance sheet contains assets that have significantly depreciated, the Debt to Worth ratio will look worse than it actually is – even if those assets still are valuable.

Your income statement may also cause you to appear more high-risk than you actually are. For example, acquiring a big new contract, while a good thing for your business, may cause lenders to fear that you won’t be able to fulfill the risks associated with taking on this contract, and that other customers may go neglected. Furthermore, unless you continue in subsequent years to sign equally sizable contracts, your numbers will appear to be trending downward.

Taking on one-time expenses, such as renovating your office, may also make your income statement appear to be on the decline. Also, if your business switches from cash to accrual accounting, this will heavily impact your financial statements the year the change occurs.

If you want to get a loan, you need to make sure your numbers are not misleading the lender. If any of the aforementioned scenarios apply to your business, don’t worry. The solution is usually pretty easy. Simply explain the unusual activities in the notes section of your year-end statements, thereby giving your lender an accurate picture of your business’s health.

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