At Systems Six, we recognize that feelings of stress and being overwhelmed are commonplace for many small business owners during tax season, which is why we want to equip you with principles to simplify your tax prep. On a micro level, your taxes are impacted by daily transactions: running payroll, writing invoices, paying vendors — each of which look back upon actions previously done. Zooming out to a macro level, the same data needed to execute your taxes will also be needed in the future if your business gets audited, you need financing, or are looking to sell. When new seasons of business or big decisions come knocking, we want you to be prepared. Here are three tips our expert bookkeepers recommend to simplify your tax prep and serve your goals on micro and macro levels:
1. Use proper digital record keeping systems
The foundation of your tax prep is the same systems you use to accomplish tasks like payroll and paying bills; they must be organized and accessible. We recommend using online, cloud-based tools. Our team advocates for Quickbooks to be your central online hub through which all other platforms connect. Using other platforms like Bill.com for bills, Ally for receipts, and Sharefile for shared documents will complement Quickbooks and assist in managing an efficient and accurate paperless accounting system. Finally, Gusto, a time-tracking and payroll system, is recommended by our team. At the end of the year, Gusto will send W-2’s to each of your employees digitally. By using these systems, your books will be ready for a tax preparing CPA to effortlessly step in and carry out your taxes without needing to spend hours digging for correct information.
2. Maintain bookkeeping hygiene
Using a simplified, cloud-based system for the foundation of your tax prep is essential; however, it can be easy for your books to become messy without upkeeping these systems. We recommend performing weekly and monthly upkeep tasks to ensure that your files stay organized, your receipts are all accounted for, and your books remain clean. Staying on top of these day-to-day tasks will aid in preparing your business for tax season. Ignoring the stack of receipts throughout the year will only lead to panic when your CPA comes knocking.
3. Reconcile your Quickbooks account
Reconciling your books is an easy task, yet it makes a profound impact when it comes to having truthful and accurate books. Comparing your books with your bank statement brings accountability to your work. Quickbooks is a phenomenal online tool, but the IRS begins with your source documents and builds from the ground up to validate your books. Therefore, reconciliation is essential to the promotion of transparency and accuracy with your bookkeeping.
Tax prep doesn’t have to be overwhelming, but it requires organized, daily bookkeeping practices to ensure accurate data. By using digital platforms, maintaining the hygiene of those platforms, and reconciling those platforms with source documents, your company will have significantly simplified the preparation process.
It’s storytime on the blog this week! Do either of these tales sound familiar to you?
Flash Drives and Checkbooks
The advisors at Neighborhood Financial were losing their minds and perhaps more alarmingly, their valuable time.
It was the last Friday of the business month and, as was becoming far too common, financial advisors/business partners Jake and Lisa were scrambling to make sure their individual income accounts and their joint business account were correctly balanced.
As with most financial firms, bookkeeping needs at Neighborhood Financial were complicated. Along with individual income streams and expenses, the business partners’ joint venture account had to be regularly contributed to by both team members. They had hired an independent accountant to handle their books long ago – so why were they still not 100% sure of where their accounts stood and who owed how much to their joint account every month?
With the chime of the office doorbell, the answer to that question walked in the door with a flash drive in one hand and a stack of unsigned checks in the other.
Fred the accountant had years of experience and a winsome personality that built loyalty and trust with his customers. Unfortunately, he was falling farther and farther behind on the latest banking and bookkeeping systems and tools that make modern bookkeeping organized and efficient.
Fred the accountant still kept Jake’s and Lisa’s individual books on a flash drive that Jake and Lisa only had up-to-date access to whenever Fred was able to stop by. Fred still handled expenses and payments with paper checks, reports and receipts. It was simply the way he had always done things.
It took up quite a lot of their valuable time for Fred to help Jake and Lisa figure out how much each of them needed to contribute to their joint account each month, and the sums varied so wildly month to month that neither of them were ever sure if they were over or under contributing.
“There’s got to be a simpler, more dependable way to do this,” sighed Jake, rubbing his forehead after Fred left with the stack of freshly signed checks.
“This is becoming too stressful for us individually, and for our partnership,” agreed Lisa. “I think we need to make a change.”
How much of a difference can expert help and up-to-date tools make for financial businesses?
It may surprise you that the answer is more than you might think.
Staying two steps ahead of the latest tools, systems and technologies for financial business bookkeeping is becoming a necessity for those who want to stay ahead in today’s quickly evolving world. More than ever, today’s financial businesses need expert help with a deep understanding of the most accurate and efficient bookkeeping tools on the market so that they can focus on what they value most: serving their customers.
Something we have noticed among our clients is that some businesses are leery of switching from old, manual ways of accounting because they are afraid they will lose the personal touch that comes with the long standing relationships that develop over years working with a single accountant. The learning curve of newer systems and technology seem overwhelming and businesses worry it will take too much of their time.
At System Six we work hard to stay ahead of the curve when it comes to the best, up to date systems and tools available for bookkeeping so you don’t have to. We are also just as committed to building long lasting relationships with our clients – relationships built on great communication and personal attention to the details that matter for your business.
21st Century Solutions to 21st Century Challenges
Jake and Lisa made the decision to change how they were handling their business’ bookkeeping.
By outsourcing their bookkeeping needs to a company that was up to date with today’s best technology, Jake and Lisa began to see immediate improvements in the areas that previously caused so much frustration and stress.
The new bookkeeping team used tools to analyze past years’ spending to project more accurately how much Jake and Lisa needed to be contributing to their joint account each month. Their payments became more consistent so there were no longer last minute surprises at the end of every month.
While trying to understand and manage the various streams of revenue and expenses at their firm had been a nightmare before, now Jake and Lisa received monthly, detailed reports broken down in a clear, concise way. Jake and Lisa finally had vital account information at their fingertips, up to date within ten days of the end of the month. No more waiting for and fussing with flash drives!
Moving their banking and bill pay systems online alleviated the need for paper checks and reports, which made Neighborhood Financial more organized and efficient than ever before.
All this led to surprisingly big benefits for Jake, Lisa and Neighborhood Financial: more peace of mind, better control of their account information, and best of all, more time to devote to their clients.
Does this story sound familiar to you? Have you been wondering how updating the way your business handles partnership accounting would improve your work? If so, we’d love to connect with you!
For churches, the calendar year closes with exciting and reflective celebrations of Advent and Christmas. Church staff focuses on providing reflective, engaging opportunities to connect with one of the most meaningful seasons in the liturgical calendar. In the wake of the tinsel and pageants, advent calendars and carols is another milestone in the annual calendar: donor giving statements. Rather than inciting enthusiasm and joy, most church administrators and accounting volunteers cringe at the thought. These staff members could share stories of fighting with printers, chasing down missing data, and mail merging statements through all hours of the night.
At System Six, we understand how complicated it can be to provide accurate, accessible donor information to your congregants. Every year you may find yourself thinking, “There has got to be a better way…” – there is! We have put together this comprehensive guide to help you streamline your giving throughout the year so that statements can be processed, sent, and reconciled in moments – rather than weeks.
Four components affect church donor giving statements:
1. How you collect donations
2. How you track your spending
3. How you store donor giving data
4. How you send donor statements
A crucial recommendation: the least number of tools needed to complete these steps, the better! Throughout this guide, we will highlight several of our favorite tools. Be sure to evaluate the tools you currently use to see if they can meet any of these needs throughout the year.
At System Six, we believe in the power of trustworthy, high-tech tools to build financial security, transparency, and control. We have been in the cloud since the beginning. Over the years, we have transitioned hundreds of businesses, families, non-profits, and firms to cloud-based tools and seen the impact of reliability and simplicity. Paper and pen systems are notoriously clunky, unreliable, and insecure.
We understand it can be overwhelming to sift through the myriad of available software and applications to help streamline your processes – even more so if you’re doing it for your personal finances. Accounts payable at your company probably do not pay the internet bill at your rental property or handle the landscaping company’s monthly fee. As your personal wealth, properties, and real estate grows, how do you handle the influx of papers and filing?
Our advice? Set yourself up with reliable, trustworthy cloud-based tools. Our team has helped countless families transition away from paper tools. If you’re looking to make the jump, here are four tools we recommend adding to your personal toolbox:
1. An accurate time tracker
If you have employees who work on behalf of your family or are working in your home, they must have the ability to track their time accurately. It’s easy for timecards to be lost or misreported when using paper and pencil. To increase accuracy, we recommend using online software to track your employees’ time. Companies like Gusto, Quickbooks Time, and Toggl have created systems that benefit households by eliminating errors with timecards. In addition, these systems will save you time by syncing to your household’s central accounting software. Several of these tools have mobile apps for quick and easy access and can differentiate between projects, so you know where your staff invests most of their time.
2. Bill pay software
Writing checks, creating invoices, and processing payments can be very time-consuming. A bill pay software helps streamline these practices through technology. Bill.com is the platform our Systems Six bookkeepers recommend. Not only will this software help make your accounts receivable and accounts payable more efficient, but it will also connect to Quickbooks, our suggested central office for your paperless accounting system. Bill pay software keeps your bank credentials safe by operating as a separate platform, increasing convenience and security. This way, your bills and cards can sync directly with your bank account without giving away your login credentials.
3. A shared space for files
When making the transition to paperless accounting, it can be challenging to resist the urge to keep all your paper bills, invoices, and receipts. We recommend using a shared space to upload pictures of your files to keep them digitally. Google Drive, Dropbox, and Sharefile are all platforms that provide the necessary storage you need to go paperless. These files can be shared and accessed from any device with a login, making it easy for your bookkeeper or accountant to find pertinent files without needing to dig through a filing cabinet.
4. A receipt management system
If you have employees working on behalf of your family who have the authority to use credit cards linked to your bank account, you must set clear boundaries. We recommend establishing spending limits for each employee and linking your bank account to Ally. This software organizes your receipts from multiple members of your staff without sacrificing your time and energy. These receipts can easily align with other management software like Quickbooks to provide checks and balances for those with authority to spend on your behalf.
We believe you started your business out of a place of passion and to meet a need in your community. As a small business owner, you likely wear many hats, juggling your time between owner, human resources director, marketing manager, and accountant, to name a few. Your time is valuable, but in light of all of your job titles, time never seems to be in abundance. Due dates loom, tasks pile up, details are overlooked, and stress begins to consume you. The solution? Delegate. Here are five signs it’s time to look for an outsourced bookkeeper so you can get back to dreaming and growing your business.
1. Receipts and bills are stacking up
Is your desk becoming overgrown with bills and receipts? Does the paperwork feel like it never ends? Organizing your books can be discouraging when you are drowning in financial data. It becomes even more difficult if your business did not set up a proper system for bookkeeping from the beginning. Without a standardized approach, maintaining your books can be burdensome. Your employees rely on you for accurate and timely payroll and budgeting.
Organized books are critical for profit-loss statements, financial planning, and budgeting. Cloud-based tools like Quickbooks will make it easy to keep tabs on your finances without the mountain of papers on your desk. Don’t let those receipts get the best of you; hiring a professional bookkeeper can help.
2. Tax-prep is stressful and overwhelming
Does tax season stimulate anxiety? You took the right step in hiring a Certified Public Accountant to file your taxes, but tax preparation is still required. Someone needs to run reports, apply updated tax codes, and categorize paperwork. Doing this on your own can be intimidating. While financially savvy and experienced, your CPA is not involved in the ins and outs of daily business and doesn’t know what papers you filed where or how your business runs cash-flow through the weeks and years.
CPAs don’t typically do tax preparation, and it will require much more time, money, and communication to find all of the documents and data they need. Outsourcing all your business’s tax prep to a bookkeeper can alleviate the oppressiveness of tax season by streamlining communication with your CPA and increasing your confidence that your taxes will be filed correctly.
3. Financing is necessary for growth
Is your company looking to grow? Do you need additional financing options? For more financing, you must have organized and accurate financial data. Banks will evaluate your business on the organization of its financial records, debt repayment history, and reputation. By hiring a bookkeeper to execute financial tasks, your business will have a greater opportunity for increased lending. In doing so, you can know your profit and loss statements will be timely and accurate when submitting paperwork to a bank. If you need additional documentation, your bookkeeper is a call away. Don’t let approvals get in the way of your organization’s growth.
4. Every penny counts
If you’re a small business owner, you know that every penny matters. Unanticipated fees and additional expenses are simply not an option. Avoiding unwanted costs is a must, and cash flow management is essential to running a successful business. By hiring a bookkeeper, your company avoids the risk of audits and late fees. In addition, bookkeepers can facilitate a more efficient business on your behalf by appropriately entering all information for your taxes, which saves money in the long run. Get back to looking at the big financial picture, let the bookkeepers handle the pennies.
5. Dreaming for your business has become stagnant
You didn’t go into business for the endless bills, crinkled receipts, and math homework. You became a business owner because you had a dream: a desire to change and serve your community and to build time and financial freedom. We believe you deserve to have the time and energy to focus on your goals and see them come to fruition. A professional bookkeeper grants you the mental space to be inspired again by maintaining the areas of your business that drag you down. Get back to dreaming, hire a bookkeeper.
By delegating the bookkeeping to a professional team like System Six, you regain time, energy, money, and most importantly, the space to grow your business. Are you interested in taking the next step to finding a trustworthy and dependable bookkeeper? Let’s chat. At System Six, we help business owners get back to what’s important, one line item at a time.
Welcome to the final part of our three part series on bookkeeping and finance specific to churches. This third part of the series covers budgeting. Just like I mentioned in part two, I recommend reading the previous parts (on Helpful Tools and Program Spending) of the series since this final edition of the series builds on what was previously covered.
In part three we will be discussing budgeting and the various aspects of the process to consider while walking your clients through building a budget.
The biggest challenge to budgeting is making sure that the appropriate people are involved in the process. Usually the primary champion of the budgeting process is whoever is sitting in the board treasurer or church operations role. Unfortunately, this most often ends up as the only person that cares about having a budget.
It may seem simplistic, but it’s important to start with the basics: “What is a budget?” Throughout my years of helping with budgets, and even working on my own household budget, I have learned that a budget is a plan for how to spend money. With a church, that money belongs to the churchgoers who donated those funds. In a church, a budget is a plan for how to spend other people’s money and that plan should support the ministry goals and objectives of the church.
Who Should Make the Budget?
Since these ministry goals and objectives are often discussed and set by church leadership, a budget should support those goals. Because of this it is vitally important that other members of leadership contribute to, or assist with budgeting. In most cases, pastors and lay leaders are not financially minded so their natural inclination is to avoid the budgeting process altogether. In their minds that is the reason they hired or appointed an operations or finance director.
As outsourced bookkeepers and consultants, the goal here is to advise our church clients that the budget committee should consist of ministry leaders, operations staff, and ministers. During the process the question of “Does this budget support the ministry goals and objectives of our church?” should be at the forefront of everyone’s minds, and the committee consists of all the right people that can answer that question.
The Mechanics of a Balanced Budget
Now that all the right people are at the table, it’s okay for the operations and financially minded leaders to lead the process. The best place to start is with income.
Income for a church can be a challenge due to the following:
How many church attenders are giving?
Will those church attenders continue to give at the rate they are giving?
If the church is growing, how much will the revenue grow?
If the church is getting smaller, are the people leaving regular givers?
Of the people leaving, how much are they giving?
Is there a plan to encourage increased giving in the upcoming period?
In part two of this series some of the donor management and church management tools that I listed can help to answer these questions. Other questions are better answered by pastors and ministry leaders, which is why it’s important that they are involved in the process.
Once all these questions are answered it’s important that the revenue budget is set based on practical expectations and not on the amount that is desired. The revenue can be divided evenly across all twelve months of the year, or allocated differently to each month based on previous year giving trends. If using the latter method, make sure that the monthly cash flow can handle particular months where expenses may exceed revenue. This situation may arise since most expenses are the same month-to-month, but monthly revenue can fluctuate. Once revenue is determined, expenses naturally follow.
The first pass through expenses can be accomplished without looking at revenue, and based only on the needs of the church and ministries. It’s important that expenses are then compared to the overall projected revenue. If total expenses exceed total revenue for the year, that means the church likely can’t accomplish everything that it wants to that year. This is again why it is important to have a budget committee made up of ministry leaders and pastors because at this point, hard decisions will have to be made about where to reduce expenses. These decisions should be guided by the ministry goals of the church, and if expenses are cut in certain areas, it’s a collective decision instead of a financial director simply moving numbers around on a spreadsheet.
At the end of the process the difference between total expenses and total income ideally should be zero. If expenses exceed revenue, that means there will be an expected cash burn (disregarding any balance sheet considerations). If revenue exceeds expenses, there is the potential that the extra money can be put towards a reserve for future savings.
Bookkeeping to Serve the Church
As stated earlier, budgeting is important and because it is important, needs to involve many stakeholders. Since churches are made up of many people, many people should be involved. In our role as trusted advisors we can encourage the churches we are serving in this direction.
Since this wraps up the three part series on outsourced church bookkeeping, our hope is that we have helped to provide clarity on some of the potential pitfalls of serving churches. The intention is that this will help to increase the value that we are providing, and ensure the success of the churches and non-profit ministries we are serving.
If you are an outsourced bookkeeper looking for further ideas, or a church that is in need of outsourced bookkeeping, we are glad to serve, and we can be reached at email@example.com.