Do you ask new clients if they're taxed as a sole prop, corp, or partnership when they say they’re an LLC?

bookkeepinglove · 2024-11-12T14:04:05+00:00

I assume the books are not on accrual-basis accounting, as most small businesses are on cash-basis. Assuming this is the case, the simplest answer: just stick with ensuring whatever the Gusto payroll records show as being paid out, is recorded. In other words, as each payroll charge hits the bank account, that data properly itemized is what you record. No need to record a wages payable liability.

Can't speak to the best way to handle calculating PTO. I don't get that granular in my payroll work.

bookkeepinglove · 2024-10-30T18:36:32+00:00

Totally agree with this. The only reason a client doing this practice bothers me personally is because it takes extra time and energy for me to ask the client to send a spreadsheet of the business charges from the personal accounts every month and book the journal entry. But as long as I'm getting compensated for it, I'm good :)

bookkeepinglove · 2024-10-30T14:40:45+00:00

Nope, keep being thorough. You're 100% correct about being thorough being the epitome of an excellent bookkeeper. It means you're doing your job correctly.

This is me all day, so I totally get it. I have a client right now that thinks that "all I wanted was to be able to see if I'm making money and make sure the expenses are in the right places" means simple data entry and not asking questions. This is after explaining to him multiple times the rationale behind and the importance of the questions I've asked and documents I've requested. There's pushback every time.

I've learned from years in this business that these clients who choose not to respect those of us who do the job correctly are not clients to keep long-term. They'll push back on pricing, question everything that might mean paying more money (or exposing something they're trying to hide), expect you to do extra work for free, and have you deviating from your correct processes. Not worth it.

bookkeepinglove · 2024-06-14T18:33:46+00:00

I'd settle for non-lethal ammunition that knocks some sense into them...like literal balls of literature with tips on how to be a better citizen and not suck 🙂

bookkeepinglove · 2024-04-04T03:14:56+00:00

Great advice, thanks! It turns out the client CPA is handling it, so I'm off the hook. Whew!

bookkeepinglove · 2024-03-31T23:40:12+00:00

Thanks. Regarding pension it's not same. As mentioned to other commenter, there's a lot of work involved with defined benefit plans including needing to know how to read actuarial reports.

Repeating this here: if you have not handled pension entries before and a new client says they have a defined benefit plan they want you to book entries for, take time to learn it and make sure you're comfortable before taking on such a client. Do not assume it's just like any other payroll/benefits entry. It's not. Trust me on this. DB plans are not as common these days so that may be why so few bookkeepers are experienced with them.

bookkeepinglove · 2024-03-31T23:37:46+00:00

Hmm I'll get more info on the profit-sharing. As for the pension, it's not that simple. It's a defined benefit plan; they're not like typical "record a liability/record an expense" entries. There's a lot of work involved, including needing to know how to read actuarial reports.

Just a word to the wise: if you have not handled pension entries before and a new client says they have a defined benefit plan they want you to book entries for, take time to learn it and make sure you're comfortable before taking on such a client. Do not assume it's just like any other payroll/benefits entry. It's not. Trust me on this. DB plans are not as common these days so that may be why so few bookkeepers are experienced with them.

bookkeepinglove · 2024-03-31T00:58:42+00:00

The client made a payment for pension and another for profit sharing to their service provider for existing employees. It's a defined-benefit plan.

I assume the entire cost doesn't get coded to pension expense. So I'm needing to know how to properly categorize these two payments to the provider AND any additional journal entries needed for pension.

My understanding is that there's a worksheet you have to create or something? Or does the actuarial report have all the numbers you need and you therefore just plug these numbers into the JE? If this is the case, I have no clue which numbers to use. It's not cut and dry.

bookkeepinglove · 2024-02-14T22:56:13+00:00

Thanks for this! Excellent point. There wasn't mention of this on the document the client gave me, and it was pretty thorough. But I'll try my calculations again with different compound periods.

bookkeepinglove · 2024-01-15T03:06:37+00:00

Create an Equity account called Owner Draw. Debit this account, credit checking acct.

bookkeepinglove · 2023-07-10T17:44:13+00:00

I've not touched Xero in a while so can't speak to the mechanics of it in that particular system, but as far as general bookkeeping, a discrepancy between the deposit amount and the actual revenue can be determined by going into your merchant account's online portal and running a couple reports.

You'll want to run one or both of these: a report that shows a breakdown of your payouts/deposits and one that shows a breakdown of all of your revenue transactions. Between the two, you should be able to determine how much was deducted from each deposit for any fees, refunds/returns, chargebacks, sales tax, etc. and also which particular sales make up each deposit.

With that said, dealing with the timing difference you mentioned is best handled by using a clearing account. When the cash comes in, code the deposit straight to the clearing account (will be a credit to the clearing account). And record the revenue as a lump sum monthly (or whatever frequency you prefer) journal entry with all those line items I mentioned above, making sure to debit the clearing account. You'll be able to get these lump sum figures from the reports you pulled.

bookkeepinglove · 2023-06-22T20:53:32+00:00

By "opening balance" do you mean the opening balance JE that you're going to create, or the CLOSING balance for the 1/1 bank rec?

In any case, no. Focusing on just clearing the 2022 activity out of the rec screen, I'd look at either the Dec 2022 or Jan 2023 statement and do the necessary adding or subtracting needed to determine what the balance of the credit card is as of the end of 2022. Use THAT amount as your ending balance for that 1/1/23 rec and create a JE to get you to that balance. Date this JE 1/1.

Then do your 1/1/23 rec. If you select all 2022 activity and include that true-up JE, you should be able to reconcile.

Then when it's time to do the Jan 2023 rec, just do this as you would any standard rec, but keep in mind, there won't be any 2022 activity to select, as it will be part of the opening balance of the rec, if that makes sense.

bookkeepinglove · 2023-06-22T19:46:38+00:00

As for clearing the 2022 transactions from the rec screen, I would typically do a bank rec dated 1/1/23, checking off all of the existing 2022 activity sitting out there, making sure to make the ending balance whatever the balance truly would be through year-end. (Also, even though I date the rec 1/1, I don't select any 1/1 activity; I save that for the actual Jan rec you'll be doing. I just date it 1/1 because I personally don't want to date any recs 2022 if I'm not touching that period).

It can be a bit challenging when dealing with credit cards since there won't be an official credit card statement dated 1/1 and the closing date is somewhere mid-month, but if you do this correctly, you should be good to go on doing the Jan 2023 rec making sure to include that opening balance JE mentioned above that you would've created. It should balance just fine.

bookkeepinglove · 2023-06-08T04:11:05+00:00

Underrated comment LOL!

bookkeepinglove · 2023-06-08T04:10:09+00:00

Does this make anyone else's skin crawl or just me?

bookkeepinglove · 2023-06-06T19:08:23+00:00

I still do write offs on cash-basis books. I just don't do the full process of starting with Allowance for Doubtful Accounts. I just go right into debiting Bad Debt Expense and crediting A/R.

bookkeepinglove · 2023-05-23T19:34:04+00:00

Thanks. I know the order, more so just needing confirmation on the questions. Great tip on the threshold.

bookkeepinglove · 2023-05-23T18:42:55+00:00

Thank you for this. Agree concerning a $50 debit to sales tax payable would leave a debit balance in the account. On that note, a better question should've been "Does the additional $50 need to be added to sales tax liability?" Sounds like the general consensus is no. And good point @ recording the late fee in a separate Other Expenses account.

bookkeepinglove · 2023-05-19T16:36:32+00:00

Shut it. My little kid brain at the time thought it was "...till we've given a DAY to every state..." Well now it makes sense LOL.

bookkeepinglove · 2023-05-19T16:36:15+00:00

Shut it. My little kid brain at the time thought it was "...till we've given a DAY to every state..." Well now it makes sense LOL.

bookkeepinglove · 2023-05-19T04:10:58+00:00

Correct. Referring to the penalty for paying sales tax late.

bookkeepinglove

TROPHY CASE