Accurate, organized bookkeeping saves time and money during tax season

Casper – Certified public accountants (CPA) Kim Garrett and Terry Grannan want small business owners to realize time is money when it comes to accounting services.

“When people bring their documents to CPAs, they are paying for the time and expertise provided,” said Kim Garrett, Lenhart, Mason and Associates manager. 

Garrett and Grannan presented their “QuickBooks 101” workshop on Dec. 13, 2017 for small business owners like farmers and ranchers. Wyoming Women in Ag hosted the workshop. 

Garrett said the purpose of the workshop was to provide tips to save money and avoid traps small business may face.

Compiling information

Most of the time, Garrett mentioned, clients either bring too much information or not enough for CPAs.

“If a client brings in a lot of information, we feel inclined to got through every document, which takes more time. When there’s missing information, the project gets stone-walled, and then we have a list of questions for the client,” explained Garrett.

She noted client questions take multiple days to be answered and having all the necessary information expedites the whole process.

Oftentimes, client information is unorganized, leading to more work and longer delays, she said.

“Sometimes the QuickBooks reports don’t represent what a company did the previous year, and assets or expenses are in the wrong areas,” added Garrett.

Wrong data

Incorrect information that doesn’t support business documents is also a problem CPAs face.

“We use bank statements and other outside sources to reconcile balance sheets and make sure accounts match,” Garrett said. “Most times, important information is missing.”

Mixed transactions between business and personal expenses also create problems for CPAs, she noted.

“A lot of personal transactions get mixed up with business transactions, which decreases the integrity of clients’ data,” Garrett explained.

Software

By far, according to Grannan, Lenhart, Mason and Associates accounting specialist and certified QuickBooks Pro advisor, the most common accounting system is QuickBooks, which can be used on Mac products, in the cloud and on a PC.

“QuickBooks Pro is the most common version and is the most user friendly,” Grannan stated. “Some people use Excel or other types of systems, but QuickBooks definitely makes it easier to take information to an accountant.”

For businesses with a payroll, internet is required and an annual subscription fee is assessed for updates, noted Grannan. 

Solid books

One way to avoid extra time and money on accounting services is to have a solid set of books, according to Garrett.

“Financial books need to be accurate, which means the QuickBooks balance sheet needs to reconcile or be consistent with bank statements, fixed asset documents, payroll liabilities or loan statements,” Garrett stated.

In QuickBooks, the reports generated should be helpful management tools for small businesses to determine if they made a profit or not, she noted.

“The goal is to be prepared. A clean set of books makes accountants happy and reduces their bill,” added Garrett.

Foundation

A good set of books, stated Garrett, starts with an organized balance sheet.

“The first step is to go through the different accounts on the balance sheet and reconcile them with the bank statements, but people can run into trouble with checks,” Garrett explained. “Checks with the wrong dates cause books to not reconcile. It’s up to the bookkeeper to put in the correct dates and check them.”

She also recommended not going back and changing information that’s been reconciled because it upsets the data and takes more time to fix.

Credit cards

Grannan encouraged everyone to have a credit card and use it instead of a debit card, for both business and personal transactions.

“A debit card is more susceptible to fraud. Credit cards are safer and have a paper trail with a statement every month,” noted Grannan.

In the long run, it is better to keep business and personal transactions separate, according to Garrett.

“Be really strict about what is put on the business card,” she added. “Another good idea is to itemize credit card purchases as they come in, so the end of the year reconciliation turns out better.”

Garrett stated a major challenge for businesses and credit cards is not paying off the full card balance every month because funds can be misallocated and it takes more time at the end of the year to deal with.

“At the end of the year, if the full balance isn’t paid off, the accounts won’t reconcile,” she noted.

Credit cards are also considered deductible just like cash, Garrett mentioned. 

“If a credit card payment is due in January but most of the transactions are from December, those charges can’t be deducted,” stated Garrett. “Charges need to be entered into QuickBooks as they happen so they go into the right accounts and can be deducted in the proper year.”

Clients need to make sure they send all credit card statements, including the last statement with charges from the previous year, and other outside sources for CPAs to back up tax returns, Garrett explained.

“Also, watch for the due dates on card statements and insufficient substantiation. It is on the client to send in all of the necessary information,” she added.

Overall, if small businesses keep their financial books organized and have the paper work to support their books they end up saving money and time for accounting services. 

Heather Loraas is assistant editor of the Wyoming Livestock Roundup and can be reached at heather@wylr.net.