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As an advocate for innovation and efficiency in accounting practices, I've come to question the over reliance on journal entry accounting for recording sales and expense transactions. While journal entries have long been a staple of financial reporting, I believe that they may not always be the most effective or practical approach, especially in today's rapidly evolving business landscape. Here are some reasons why I'm opposed to journal entry accounting for sales and expense transactions: Lack of Real-Time Visibility Journal entry accounting often involves manual data entry and reconciliation processes, which can be time-consuming and prone to errors. As a result, financial information may not always be up-to-date or readily available for decision-making purposes and historical documentation. In today's fast-paced business environment, real-time visibility into sales and expenses is essential for agile decision-making and strategic planning and legal liability protections. In particular, sales, payroll, A/R and A/P require documentation should a need arise to document sales taxes, income taxes, employee wage, payroll taxes and purchase or sales costs. In particular, it is not possible to add the billable expense feature to a journal entry and customer and vendor naming conventions are distorted. Complexity and Inefficiency Journal entry accounting can be complex, especially for businesses with multiple revenue streams, expense categories, and accounting standards to comply with. Maintaining accurate records and ensuring proper classification of transactions requires meticulous attention to detail and extensive training. This complexity can lead to inefficiencies and administrative burdens, diverting resources away from value-added activities. Risk of Errors and Fraud Manual data entry and manipulation of journal entries increase the risk of errors and fraudulent activities. Without proper controls and oversight, unauthorized or inaccurate journal entries can go undetected, compromising the integrity of financial reporting and exposing the business to regulatory scrutiny and reputational damage. Automating sales and expense transactions can help mitigate these risks by reducing human intervention and enhancing data accuracy and integrity. Limited Analytical Insights Journal entry accounting focuses primarily on recording transactions rather than analyzing and interpreting financial data. While journal entries provide a historical record of sales and expenses, they may not offer meaningful insights into trends, patterns, or performance indicator details. Businesses need robust reporting and analytics capabilities to extract actionable insights from their financial data and drive informed decision-making. Here are some common scenarios where journal entries are appropriately used in accounting: Adjusting Entries : At the end of an accounting period, adjusting entries are made to ensure that revenues and expenses are recognized in the correct period. This includes entries to record accrued expenses, prepaid expenses, accrued revenues, and unearned revenues. Depreciation : Journal entries are used to record the depreciation expense for long-term assets such as buildings, machinery, and equipment. Depreciation entries allocate the cost of these assets over their useful lives to match their expense with the revenue they help generate. Inventory Transactions : Journal entries are used to record inventory adjustments such as inventory shrinkage due to theft or loss. Stock Transactions: When company stock is issued, or repurchased. Asset and Equity: Dividend payouts, and Reinvested Capital from Retained Earnings. Probable Contingencies : Used to record contingent liabilities. Conclusion while journal entry accounting has served as a foundational practice in financial reporting, its limitations in today's dynamic business environment call for a reevaluation of traditional approaches. By embracing innovation and leveraging technology, businesses can unlock new efficiencies, reduce risks, and gain deeper insights into their sales and expense transactions, ultimately driving sustainable growth and success. Each document (Estimate, PO, Bill, Invoice, Credits and Refund, et..) transaction in QuickBooks Online is backed by a transaction journal for T account analysis. Mitigating the use of journal entry accounting should be a top priority for your firm. Consider utilizing sale and expense documents as net zero transactions. Double entry accounting is achieved by utilizing (-) credit and (+) debit entries on these forms. QuickBooks Online provides the software. I provide expert guidance and support. Contact me  or Schedule a 30 minute free consultation See also: Entering Payroll Provider Transactions using Spreadsheet Sync Exploring Alternatives: Journal Entry Accounting

Here are the key differences between bi-weekly and semi-monthly pay schedules Special Rules Section 15. Special Rules for Various Types of Services and Payments Read: https://www.irs.gov/pub/irs-pdf/p15.pdf ➢ Frequency: o Bi-Weekly: Employees are paid every two weeks, resulting in 26 pay periods per year. Payroll Frequencies, Deposit & Report Due Dates o Semi-Monthly: Employees are paid twice a month, typically on the 1st and 15th or the 15th and last day of the month, resulting in 24 pay periods per year. ➢ Pay Dates: o Bi-Weekly: Pay dates are consistent, occurring on the same day of the week (e.g., every other Friday). o Semi-Monthly: Pay dates are fixed and may vary in terms of the day of the week (e.g., 1st and 15th). ➢ Pay Amount: o Bi-Weekly: Paychecks are generally smaller since the annual salary is divided by 26 pay periods. Determined by Gross Salary and Gross Wage e.g. $52,000 / 26 = $2,000.00 o Semi-Monthly: Paychecks are slightly larger since the annual salary is divided by 24 pay periods. Determined by Gross Salary and Gross Wage e.g. $52,000 / 24 = $2,166.66 ➢ Overtime Calculation: Overtime Laws in the States & Minimum Wage https://www.dol.gov/agencies/whd/fact-sheets/23-flsa-overtime-pay https://www.dol.gov/agencies/whd/overtime/laws Davis Bacon Prevailing Wages Here are the deposit and report schedules for Forms 941, 944, 943 and 945 Federal Income Tax, Social Security and Medicare ➢ Form 941 - Social Security, Medicare, Income Tax (Forms W4 , W2 , W3 ) o Lookback Period: The lookback period is the 12-month period covering four quarters, starting from July 1st of the second preceding year and ending on June 30th of the prior year o Report Due Dates ✓ April 15, July 15, October 15, January 15 o Deposit Due Dates ✓ Monthly Schedule Depositor: If the total taxes on Form 941 during the lookback period were $50,000 or less, deposits are due by the 15th of the following month. ✓ Semiweekly Schedule Depositor: If the total taxes on Form 941 during the lookback period were more than $50,000, deposits are due on Wednesdays and/or Fridays, depending on when wages are paid. ➢ Form 944 -Small Employers, liability less than $1000 o Lookback Period: The lookback period is the second preceding calendar year. For example, for 2024, the lookback period is 2022 o Report Due Dates ✓ January 31 with Deposit (include payment if under $2500) o Deposit Due Dates ✓ Annual Depositor: If the total tax liability for the year is less than $2,500, you can pay the taxes with the return. ✓ Monthly or Semiweekly Depositor: If the total tax liability for the year is $2,500 or more, follow the same deposit lookback rules. ➢ Form 943 -Employer’s Annual Federal Tax Return for Agricultural Employees o Lookback Period: Your total taxes after adjustments and nonrefundable credits for the year ( Form 943, line 13 ) are less than $2,500 and you’re paying in full, a timely filed return, or you’re a monthly schedule depositor. In this case, the amount of your payment may be $2,500 or more. o Report Due Dates ✓ January 31 of the following year. You must file Form 943 for each calendar year beginning with the first year that you pay $2,500 or more for farm work or you employ a farmworker who meets the $150 test explained under Social Security and Medicare Taxes, in section 9. Don’t report these wages on Form 941, Form 944, or Form 945. File your Form 943 by January 31st. However, if you made timely deposits in full payment of your taxes for the year, you may file by February 10. Complete Form 943-V if you’re making a payment with Annual Form 943. o Deposit Due Dates Your total taxes after adjustments and nonrefundable credits for the year (Form 943, line 13) are less than $2,500 and you’re paying in full, a timely filed return, or you’re a monthly schedule depositor. In this case, the amount of your payment may be $2,500 or more. Otherwise, you must make deposits by electronic funds transfer. ✓ Monthly Schedule Depositor: If the total taxes on 943, line 13 during the lookback period were $50,000 or less, deposits are due by the 15th of the following month. ✓ Semiweekly Schedule Depositor: If the total taxes on 943, line 13 during the lookback period were more than $50,000, deposits are due on Wednesdays and/or Fridays, depending on when wages are paid. Agricultural employers (who deposit income tax withheld and Social Security and Medicare taxes on a semiweekly schedule) use this Form 943-A to report their tax liability. ➢ Form 945 - Report federal income tax withheld from non-payroll payments o Lookback Period: The lookback period is the second preceding calendar year. For example, for 2024, the lookback period is 2022 o Report Due Dates ✓ January 31 of the following year. o Deposit Due Dates ✓ Monthly Schedule Depositor: If the total taxes on Form 945 during the lookback period were $50,000 or less, deposits are due by the 15th of the following month. ✓ Semiweekly Schedule Depositor: If the total taxes on Form 945 during the lookback period were more than $50,000, deposits are due on Wednesdays and/or Fridays, depending on when the withholding occurred. ➢ Form 940 (FUTA)-Federal Unemployment Tax Act o The FUTA tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base. Your state SUI wage base may be different. Generally, you can take a credit against your FUTA tax for amounts you paid into (SUI) state unemployment funds . The credit may be as much as 5.4% of FUTA taxable wages. If you’re entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.6%. o Report Due Dates January 31 (include payment if under $500) o Deposit Due Dates April 30, July 31, October 31, January 31 (liability over $500) ➢ Federal Income Tax (FIT) *file with FICA 941 Please follow these instructions: https://www.irs.gov/pub/irs-prior/p15t--2025.pdf ➢ State Income Tax (SIT) Refer to your department of revenue for deposit due dates and report due dates. Refer to your Department of Revenue for each specific state. Here are the definitions that apply to lookback periods and deposits requirements Lookback Period: Form 941 filer, your deposit schedule for a calendar year is determined from the total taxes reported on Forms 941, line 12 , in a 4-quarter lookback period. The lookback period begins July 1 and ends June 30 Form 943 or Form 944 filer for the current year or either of the preceding 2 years, your deposit schedule for a calendar year is determined from the total taxes reported during the second preceding calendar year (either on your Forms 941 for all 4 quarters of that year, your Form 943 for that year, or your Form 944 for that year). The lookback period for 2025 for a Form 943 or Form 944 filer is calendar year 2023. Form 945 filer, your deposit schedule for a calendar year is determined from the total taxes reported on line 3 of your Form 945 for the second preceding calendar year. The lookback period for 2025 for a Form 945 filer is calendar year 2023. ➢ Monthly Schedule Depositor: If your total taxes during the lookback period were $50,000 or less, deposits are due by the 15th of the following month. ➢ Semiweekly Schedule Depositor: If your total taxes during the lookback period were more than $50,000, deposits are due on Wednesdays and/or Fridays, depending on when wages are paid. Deposit Schedule: ➢ Monthly Depositor: o Deposit Frequency: Deposits are made once a month. o Due Date: Deposits are due by the 15th of the following month. o Eligibility: Employers with a total tax liability of $50,000 or less during the lookback period. ➢ Semiweekly Depositor: o Deposit Frequency: Deposits are made twice a week. o Due Dates: Deposits are due on Wednesdays and/or Fridays, depending on when wages are paid. o Eligibility: Employers with a total tax liability of more than $50,000 during the lookback period. ➢ $100,000 Next-Day Deposit Rule If you accumulate $100,000 or more in taxes on any day during a monthly or semiweekly deposit period (see Deposit period, earlier in this section), you must deposit the tax by the next business day, whether you’re a monthly or semiweekly schedule depositor New employers . For Form 941 filers, your tax liability for any quarter in the lookback period before you started or acquired your business is considered to be zero. Therefore, you’re a monthly schedule depositor for the first calendar year of your business. For Form 943, Form 944, or Form 945 filers, your tax liability in the lookback period before you started or acquired your business is considered to be zero. Therefore, you're a monthly schedule depositor for the first and second calendar years of your business. Except for $100,000 Next-Day Deposit Rule. How To Deposit You must deposit employment taxes, including Form 945 taxes, by EFT. Generally, an EFT is made using EFTPS. If you don't want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. EFTPS is a free service provided by the Department of the Treasury. To get more information about EFTPS or to enroll in EFTPS, go to EFTPS.gov or call 800-555-4477, 800-244-4829 (Spanish), or 303-967-5916 (toll call). To contact EFTPS using TRS for people who are deaf, hard of hearing, or have a speech disability, dial 711 and then provide the TRS assistant the 800-555-4477 number or 800-733-4829. Additional Information about EFTPS is also available in Pub. 966. Or use the new Direct Pay Service Legal holidays The term “legal holiday” means any legal holiday in the District of Columbia. For purposes of the deposit rules, the term “legal holiday” doesn't include other statewide legal holidays. Deposits Due on Business Days Only If a deposit is required to be made on a day that isn't a business day, the deposit is considered timely if it is made by the close of the next business day. A business day is any day other than a Saturday, Sunday, or legal holiday. For example, if a deposit is required to be made on a Friday and Friday is a legal holiday, the deposit will be considered timely if it is made by the following Monday (if that Monday is a business day). Legal holidays for 2025 are listed next. • January 1—New Year's Day • January 20—Birthday of Martin Luther King, Jr./Inauguration Day • February 17—Washington's Birthday • April 16—District of Columbia Emancipation Day • May 26—Memorial Day • June 19—Juneteenth National Independence Day • July 4—Independence Day • September 1—Labor Day • October 13—Indigenous Peoples' Day (Columbus Day) • November 11—Veterans Day • November 27—Thanksgiving Day • December 25—Christmas Day Accuracy of Deposits Rule You’re required to deposit 100% of your tax liability on or before the deposit due date. However, penalties won't be applied for depositing less than 100% if both of the following conditions are met. • Any deposit shortfall doesn't exceed the greater of $100 or 2% of the amount of taxes otherwise required to be deposited. • The deposit shortfall is paid or deposited by the short fall makeup date: Makeup Date for Deposit Shortfall: • Monthly schedule depositor. Deposit the shortfall or pay it with your return by the due date of your return for the return period in which the shortfall occurred. You may pay the shortfall with your return even if the amount is $2,500 or more. • Semiweekly schedule depositor. Deposit by the earlier of a. The first Wednesday or Friday (whichever comes first) that falls on or after the 15th day of the month following the month in which the shortfall occurred, or b. The due date of your return (for the return period of the tax liability). SUI AZDES: https://des.az.gov/content/reporting-wages-and-paying-taxes-schedule Life is complicated, Payroll doesn't have to be! Let us automate your payroll and obligations! Password Protected: Contact us Add your subcontractor 1099 NEC and 1099 MISC vendors payments and obligations. Password Protected: Contact us See Also: Federal and State Unemployment See Also: https://www.irs.gov/pub/irs-pdf/p15.pdf See Also: Understanding Payroll Deductions: Managing Employee Take Home Pay See Also: The Costly Mistake: Bi-Weekly vs. Semi Monthly Payroll See Also: Entering Payroll Provider Transactions Using Spreadsheet Sync Payroll Pay Schedules, Tax Deposit and Report Due Dates

Retirement Plans for Businesses: A Smart Investment in the Future   Planning for the future is crucial for business owners, not just for themselves but for their employees as well. Offering retirement plans can be a significant benefit that attracts and retains top talent while ensuring financial security for everyone involved. Here’s a quick overview of popular retirement plan options for businesses.   Why Retirement Plans Matter for Businesses   Retirement plans aren’t just an employee perk; they’re also a strategic move for businesses. Offering a retirement plan helps you attract and retain skilled employees, boosting overall job satisfaction and loyalty. Additionally, employer contributions to retirement plans are typically tax-deductible, reducing the company’s tax burden. Popular Retirement Plan Options 1. 401(k) Defined Contribution Plans 401(k) plans are one of the most common retirement options for businesses. Employees can contribute a portion of their salary pre-tax, and employers often match contributions up to a certain percentage. An S-Corp business can contribute up to 25% of your wages but the total contribution (employer and employee) cannot exceed $69,000 ($76,500 if you are 50 or older).  These plans are highly flexible, allowing both employers and employees to contribute a significant amount toward retirement savings. Employers may deduct contributions on their income tax return when employer sponsored. A pre-tax 401(k) —also called a traditional 401(k) —is a retirement savings account where your contributions are made before  income taxes are taken out. That means you’re lowering your taxable income now and deferring taxes until retirement. Contributions come straight from your paycheck  before federal income tax is applied. Your money grows tax-deferred , meaning you don’t pay taxes on investment gains until you withdraw. When you retire and start taking distributions, those withdrawals are taxed as ordinary income . 2. Simplified Employee Pension (SEP) Plans SEP plans are ideal for small businesses or self-employed individuals. They are easy to set up and maintain, with contributions being tax-deductible. Employers contribute to each employee's SEP IRA, but employees cannot contribute themselves. The employer contributes up to 25% of your salary (but not more than $69,000).  SEPs are beneficial due to their low administrative costs and high contribution limits AND the company contributions are a tax deductible expense. 3. Savings Incentive Match Plan for Employees (SIMPLE IRA) A SIMPLE IRA is another option for small businesses with fewer than 100 employees. These plans are straightforward to administer and require mandatory employer contributions, either through matching employee contributions or a fixed contribution percentage. The employee can fund up to $16,000 for 2024 ($19,500 if 50 or older). Your business can match up to 3% of your contribution as an employee. Employers must either match employee contributions up to 3% or make a 2% non-elective contributions. Like a 401(k), employees can contribute a portion of their salary, making it a flexible option for both parties. If the organization is sponsoring the plan the company contribution is tax deductible. 4. Profit-Sharing Plans Profit-sharing plans allow employers to share a portion of the company’s profits with employees. Contributions are made solely by the employer and can vary year by year, offering flexibility depending on the company's financial performance. This type of plan is an excellent option for businesses that experience fluctuating revenues. 5. Defined Benefit Plan (Pensions) Defined benefit plans are employer-sponsored retirement plan where the benefits that an employee will receive upon retirement are predetermined and based on a specific formula. This formula typically factors in the employee's salary history, years of service, and age.  Portability can be an issue if an employee changes jobs, as these plans are often tied to long-term employment with a single company. Key Features of a Defined Benefit Plan: Guaranteed Benefits : Unlike defined contribution plans (e.g., 401(k)), where the retirement benefits depend on the investment performance, a defined benefit plan promises a specific payout at retirement, which is usually a fixed monthly amount. Employer-Managed : The employer is responsible for contributing to the plan and managing the plan’s investments. They bear the investment risk and are required to ensure that the plan has enough funds to meet future obligations. Funding and Contributions : Employers usually fund defined benefit plans, though some plans allow employee contributions. These contributions are determined by actuarial calculations, ensuring there’s enough money to pay for future benefits. Lifetime Income : Often, the benefit is paid out as a lifetime annuity, which means the employee will receive regular payments for life. Some plans offer lump-sum payouts or allow employees to choose between different payout options. Tax Advantages : Contributions to defined benefit plans (ie: an employer sponsored retirement plan that promises a specific, predetermine benefit to employees upon retirement-usually in the form of monthly payments for life) are tax-deferred, meaning taxes on the money are delayed until it’s withdrawn during retirement. Additionally, employers can deduct contributions from their taxable income. Choosing the Right Plan Selecting the right retirement plan depends on the size of your business, the level of administrative effort you’re willing to take on, and your financial goals. A 401(k) might be ideal for a growing company, while a SEP or SIMPLE IRA could be perfect for small businesses or sole proprietors. Profit-sharing plans offer flexibility but require careful financial planning. Watch for These Hidden fees  like 12b-1 marketing charges or high expense ratios in mutual funds can quietly reduce returns If you're self-employed and sponsor a Solo 401(k), you can deduct plan fees  as a business expense Fees are typically paid from pre-tax dollars  within the employees account, so they reduce the account balance but don’t trigger additional tax. May be charged as a flat fee or % of asset Employees cannot deduct 401(k) fees (unless utilizing specific services ie: loans)  on their federal tax returns during 2018–2025 due to the Tax Cuts and Jobs Act. Employers however can deduct fees as a business expense. Fee disclosures  are required annually—check your plan’s prospectus for line items like “Total Asset-Based Fees” or “Expense Ratios” Conclusion Offering a retirement plan is a powerful way to support your employees’ financial futures while enhancing your business's competitive edge. Consult with a financial advisor or retirement plan specialist to find the best solution for your company’s needs. By investing in a retirement plan, you’re not just helping employees secure their future—you’re also securing the future of your business See Also: FAQs about Retirement Plans and ERISA See Also: https://www.dol.gov/general/topic/retirement See Also: Mandatory Retirement Benefits See Also:   Savers Credit  (IRA) See Also:  ABLE See Also:  401K See Also: Retirement plans | Internal Revenue Service See Also: Retirement plan FAQs regarding contributions - Are retirement plan contributions subject to withholding for FICA, Medicare or federal income tax? See Also: Employer's Tax Guide to Fringe Benefits https://www.irs.gov/pub/irs-pdf/p15b.pdf https://www.irs.gov/pub/irs-pdf/p5137.pdf Retirement Plans for Businesses: A Smart Investment in the Future

Managing finances can be a daunting task for many individuals and businesses. Keeping track of expenses, income, taxes, and payroll requires time, accuracy, and expertise. Fortunately, technology has made it easier to handle these tasks efficiently. Online accounting help offers a modern solution that simplifies financial management and saves valuable time. This blog post explores how you can streamline your finances using online accounting tools and services. Virtual Accounting Services Online Why You Need Online Accounting Traditional accounting methods often involve piles of paperwork, manual calculations, and frequent visits to accountants. This approach can lead to errors, missed deadlines, and unnecessary stress. Online accounting help changes the game by providing: Real-time financial tracking : Access your financial data anytime, anywhere. Automated calculations : Reduce human error with software that handles complex computations. Cost savings : Lower expenses compared to hiring full-time accountants. Improved organization : Keep all your financial documents in one secure place. Faster decision-making : Get instant reports to guide your business strategies. For example, a small business owner can use online accounting software to generate invoices, track payments, and prepare tax documents without needing extensive accounting knowledge. This frees up time to focus on growing the business. Online accounting How Online Accounting Help Enhances Financial Management Online accounting platforms offer a variety of features designed to make financial management easier and more effective. Here are some key benefits: 1. Simplified Bookkeeping Choosing the right software for your Virtual Accounting Bookkeeping is the foundation of good financial management. Online tools automate data entry by syncing with bank accounts and credit cards. This means transactions are recorded automatically, reducing manual work and errors. Choosing the right software for your Virtual Accounting 2. Accurate Tax Preparation Tax season can be stressful, but online accounting help simplifies the process. Many platforms provide tax calculators and generate reports that comply with tax regulations. This ensures you file accurate returns and avoid penalties. 3. Expense Tracking and Budgeting Keeping track of expenses is crucial for maintaining profitability. Online accounting software categorizes expenses and helps create budgets. You can set spending limits and receive alerts when you approach them. 4. Payroll Management For businesses with employees, payroll can be complex. Online accounting platforms often include payroll features that calculate wages, withhold taxes, and generate pay stubs. This reduces administrative burden and ensures compliance with labor laws. 5. Financial Reporting and Analysis Understanding your financial health is easier with detailed reports. Online accounting tools generate profit and loss statements, balance sheets, and cash flow reports. These insights help you make informed decisions. What is the Best Online Accounting Platform? Choosing the right online accounting platform depends on your specific needs, budget, and technical comfort level. Here are some popular options to consider: QuickBooks Online QuickBooks is widely used by small to medium-sized businesses. It offers comprehensive features including invoicing, expense tracking, payroll, and tax preparation, ecommerce apps, sales tax integration, income tax and tax planning with a business performance insight dashboard and connects to over 750 apps to tailor the platform to a specific business need.. Its user-friendly interface and extensive support make it a top choice. Xero Xero is known for its clean design and strong integration capabilities. It supports multiple currencies, making it ideal for businesses with international clients. Xero also offers real-time collaboration with accountants. FreshBooks FreshBooks focuses on invoicing and time tracking, making it perfect for freelancers and service-based businesses. It provides easy-to-use tools for managing projects and client billing. Wave Wave is a free accounting software that covers basic bookkeeping, invoicing, and receipt scanning. It’s suitable for startups and small businesses with simple financial needs. Zoho Books Zoho Books offers a wide range of features including inventory management and project tracking. It integrates well with other Zoho business applications, providing a seamless workflow. Patriot Accounting and Payroll An affordable, everything you need for running payroll and managing the books. Small business friendly. Netsuite An American cloud-based enterprise resource planning (ERP) software company that provides products and services tailored for small and medium-sized businesses (SMBs) including accounting and financial management, customer relationship management (CRM), inventory management, human capital management, payroll, procurement, project management and e-commerce software. Sage A British multinational enterprise software company based in Newcastle upon Tyne, England. As of 2017. In the 2020s Sage began to integrate artificial intelligence into more of their products. In 2022 Sage launched a carbon accounting product, Sage Earth. Sage specializes in real estate and construction and the non profit sectors. Microsoft Dynamics Finance 365 Integrate data from various departments and systems into a centralized hub for full transparency. Enhance agility with financial planning, budgeting, and forecasting using Copilot within business performance management capabilities. Proactively manage liquidity with predictive analytics and cash-flow forecasting. Optimize monetization with AI-powered billing, accounts receivable (AR), collections, and more. Specialty Software: Studio Designer For interior designers. Powerful project management, procurement, client portals, calendar management with advanced reporting. (also: https://mydomastudio.com/ ) Stessa For Property Management. Track income and expenses seamlessly, draft leases, screen tenants and collect rent online, simplify tax time, and use real-time dashboards to manage smarter and faster. Includes resident log in. Single Entry cash accounting only. Yardi Complete Real Estate and Property Management software since 1984 More in depth information is available: Comparison of Accounting Software When selecting a platform, consider factors such as: Ease of use Feature set Pricing plans Customer support Integration with other tools Accounting Software How to Get Started with Virtual Accounting Services If you want to take your financial management to the next level, consider using our virtual accounting services . These services combine the power of online accounting software with professional expertise. Here’s how to get started: Step 1: Assess Your Needs Identify the financial tasks you want to outsource or automate. This could include bookkeeping, payroll, tax filing, or financial reporting, or more comprehensive service . Step 2: Choose a Service Provider Look for virtual accounting providers with good reviews, transparent pricing, and experience.. Verify their credentials and data security measures. Step 3: Set Up Your Accounts Work with the dedicated virtual accountant to connect your bank accounts, credit cards, and other financial data sources. This ensures seamless data flow. Step 4: Customize Your Services Decide on the level of support you need. We provide full-service accounting, or assistance with specific tasks. Step 5: Monitor and Communicate Regularly review financial reports and communicate with your virtual accountant. This helps you stay informed and make timely decisions. Using Bookkeeping Business Online services can save you time, reduce errors, and provide expert insights without the cost of hiring in-house staff. Financial Statements Tips for Maximizing the Benefits of Online Accounting Help To get the most out of online accounting tools and services, keep these tips in mind: Keep your data organized : Regularly update and categorize transactions. Use mobile apps : Manage finances on the go with smartphone apps. Backup your data : Ensure your financial information is securely backed up. Stay informed about updates : Software providers often release new features and security patches. Train your team : If you have employees, make sure they understand how to use the accounting tools. Review reports regularly : Use financial reports to track progress and identify issues early. Integrate with other tools : Connect your accounting software with CRM, inventory, or payroll systems for a streamlined workflow. By following these recommendations, you can enhance accuracy, save time, and improve your overall financial management. Streamlining your finances with online accounting help is a smart move in today’s fast-paced world. Whether you manage a small business or your personal finances, leveraging technology and professional services can simplify complex tasks. Explore the options available and take control of your financial future today. Get Started Today! Bookkeeping Business Online

In the ever-evolving landscape of coin and cryptocurrencies, accounting practices are facing unprecedented challenges. As the crypto space continues to innovate at a rapid pace, conventional accounting standards are being established. This guide aims to illuminate the complexities of crypto asset accounting while emphasizing the importance of a principles-based approach. Exploring the nuance d differences in accounting for coin and crypto assets under International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP), we delve into key considerations such as initial recognition, subsequent measurement, fair value assessment, tax implications, and disclosure requirements. The Evolving Coin and Crypto Asset Accounting Landscape: The dynamic nature of coin and cryptocurrencies presents a unique challenge to traditional accounting standards, prompting a careful examination of existing principles to ensure accurate and transparent financial reporting. Key Standard Setters: IASB and FASB: At the forefront of shaping accounting standards are the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB). Formulating International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP) respectively, these entities play a pivotal role in determining how businesses account for coin and crypto assets. It's crucial to recognize that while both aim to enhance financial transparency, the application of accounting principles may vary slightly under IFRS and US GAAP, depending on the jurisdiction of the entity. Accounting Considerations for Coin and Crypto Assets: This guide delves into critical aspects of coin and crypto asset accounting, including: Initial Recognition and Subsequent Measurement: Distinguishing the treatment of coin and crypto assets under IFRS and US GAAP, where IFRS allows for accounting under Intangibles or Inventory, while US GAAP restricts crypto assets to Intangibles.  IFRS-IAS 2 ‘Inventory’, IFRS - IAS 38 ‘Intangible Assets’, US GAAP - ASC 350 ‘Intangibles, Goodwill and other’ Fair Value Measurement: Exploring the definition of fair value under both IFRS 13 and US GAAP ASC 820, the fair value is “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”.  With different exchanges quoting different prices, it is important to maintain a consistent approach with regards to pricing the source of your coin and crypto assets where the greatest volume is being traded.  Additionally, because markets never close, it is advisable to use the same time for pricing assets. Tax Considerations: Calculating Capital Gains/Losses: Calculating capital gains or losses by various methods, such as FIFO, WAC, LIFO, and HIFO, to determine cost basis as standard. Finance managers monitor digital asset unrealized gains/losses for informed investments and risk management. Calculating capital gains or losses is crucial for tax considerations, allowing the offset of tax liabilities with capital losses. Realized gains, determined by subtracting the acquisition cost from the fair market value at sale, are typically relevant for tax reporting. Use Form 1099-B to the IRS when a customer has earned $600 or more of coin and cryptocurrency income. It is likely that all exchanges will be required to send Form 1099-DA starting in 2026. Form 8949 is the tax form that is used to report the sales and disposals of capital assets, including coin and cryptocurrency. Not every coin and cryptocurrency transaction are subject to tax! You do not trigger a taxable event when you: Hold coin and cryptocurrency Buy coin and cryptocurrency with fiat currency and hold it Transfer coin and crypto from one wallet you own to another wallet you own Use coin and cryptocurrency as collateral for a loan IRC Section 6050I requires that any person engaged in a trade or business that receives cash in excess of $10,000 in a single transaction or in related transactions must file Form 8300 , Report of Cash Payments Over $10,000 Received in a Trade or Business The IRS can track Coin and Crypto transactions using Chain analysis contractors who analyze the blockchain and crack down on tax fraud. Accounting Methods: In the app market you can use the Gilded app . This app will Sync Bitcoin, Ethereum, and coin and cryptocurrency transactions (Income, Expenses, Fees) to QuickBooks Online and is SOC II compliant ( SOC 2 Type 2 Compliance: Essential Guide for Organization ) . Coin and Crypto Tax Ledger is also available to track coin and crypto, Defi, NFT transactions, integrating with several tax reporting software manufacturers. These transactions will be in the form of Journal Entries which, in my opinion provide very little useful data to the Coin and Crypto holders. Before Proceeding Please read: The Importance of Establishing and Following Consistent Accounting Procedures: Fraud Prevention Otherwise, or in addition, like typical banking, you can (1) Set up a Coin or Crypto-bank account as a bank asset to track coin or crypto-value. Bank  acco unts (exchanges) like checking, and wallet income (cash/coin on hand) like savings or petty cash, on the balance sheet. Use location distinction on transactions to specify the specific exchange/wallet and class to distinguish coin or crypto type. **currently QuickBooks Online only supports Bitcoin xPub via Blockpath app (2) Intangible inventory product and service items are setup as current assets, to track coin and crypto quantities, mapped to a Chart of Accounts Income Coin or Crypto Asset and COGS Coin or Crypto. (3) Create estimates, purchase orders, bills (cash, or A/P purchase, yielding/staking-Defi liability) with corresponding bill payment, along with invoices (cash or A/R inventory asset staking/yielding-Defi lending) with corresponding invoice payments to track income, deposits, expenses, withdrawals to fiat (cash on hand wallet), transfers and exchange trades. QuickBooks Online will track the coin and crypto-inventory COGS and value on a FIFO valuation basis on your Income Statement when coin inventory quantities move, by bill or invoice (buy/sell). (4) Reconcile the asset coin or crypto-bank account on the "measurement date & time" using the market capitalization rate (or lesser-known FD Market Rate) to determine fair value reconciliation beginning and ending balance. After entering any fee expenses, changes in value will be recognized as: (Bank Value Gain/Loss RECON ADJ to Income Statement Coin & Crypto Gain/Loss) Note: You can use Excel Spreadsheets (Spreadsheet Sync) to track market capitalization rates beginning and ending balances on "measurement dates" and later use this information to chart changes in the market capitalization rates of your coin & crypto, providing you with valuable data analysis. This method of accounting is transparent, provides valuable reporting insight and follows the basics of financial accounting principles. *If the coin or crypto platform has Excel data for your coin or crypto, with your balances, transactions, fees and ongoing capital gains earnings (ie..interest earned), the information can be imported to the QuickBooks Online Coin or Crypto bank account. Item Setup: Intangible Inventory Asset set up in Products and Services, for each Crypto-Coin would follow these rules: Intangible Inventory (Inventory Asset=Intangible Coin or Crypto Name, Income=Sale of Coin or Crypto Income, Expenses=Cost of Goods Sold: Coin or Crypto) Cost basis is required for Income Statement COGS Calculations. Use Excel Spreadsheet Sync to update most current price and cost (fair value) be sure you do not overwrite the quantities on hand . (For Crypto: use measurement date and time) Update frequently, or as required for reconciliation and Income Statement reporting. COGS will calculate from the Products and Services list "first in purchase cost" if a new bill with the latest cost (paid or unpaid) is not entered in the system and attached to an invoice. Sell Transactions: Customer/Client: Use platforms such as Coinbase, Cashapp, Biance, FTX When to Sell? Enter an Invoice to include a line ITEM for Intangible Inventory coin or crypto Name (Income=Sale of Coin or Crypto Income) and Category line item for additional fees (can be setup in Products and Services (COS). Use for Crypto inventory asset credit (reduce inventory, increase COGS) disposition, ( staking/yielding-Defi lending) Class will represent the Coin or Crypto Name. Reports can be filtered to show Class, Customer and Location. NEXT > Receive payment and deposit to the Coin or Crypto Wallet (Cash/Coin on Hand), Crypto Bank Account, Cash, Other Balance Sheet Account or Fiat Currency. Two ways to Request Exchange Payment for Billable Expenses (Coin or Crypto): (1) Invoice directly from an estimate, with already marked up items you are requesting payment or exchange for. If this is the case, when the billable Coin or Crypto is a buy transaction, the field for the client is entered on the bill or expense as they appear in the bank feed, but they are NOT marked up, only marked billable. These will then appear on the Unbilled Charges to be invoiced. When earned revenue is realized directly from the estimate/invoice, the markup is already calculated and the difference on the Income Statement is the estimated Sale of Coin or Crypto Income  and associated Cost of Goods Sold: Coin or Crypto = Gross Profit/Net Income. (2) If you are entering invoices directly from a bill or expense, marked billable and marked up to a client, the invoice will reflect on the Income Statement as Sale of Coin or Crypto Income and associated Cost of Goods Sold: Coin or Crypto , with markup as a separate income line item. This process creates a GAAP compliant transaction. You can also invoice with other bills and expenses as needed. If time is billable, make timesheets billable so you can add them to invoices. Turn this feature, and the Markup feature on in Accounts and Settings. Consult local jurisdictions for sales or other tax requirements. NEXT > Receive payment to the Coin or Crypto Wallet (Cash/Coin on Hand), Crypto Bank Account, Cash, Other Balance Sheet Account or Fiat Currency. Buy Transactions: Coin or Crypto Bills and Expenses: Payee/Vendor: Intangible Inventory 'Coin or Crypto Name' Buy Price: Establishes Fair Market Value on buy date of the Coin or Crypto Inventory Item Enter fees as an expense category line item mapped to the Income Statement (or set up a product and service item) Enter Coin or Crypto Inventory as the item: Intangible Inventory Coin or Crypto Name NEXT > Pay Crypto Bills and Expenses with the Crypto Wallet (Cash/Coin On Hand), Crypto Bank Account, Cash, Other Account or Fiat Currency. QuickBooks Online provides multi-currency in accounts and settings under multicurrency. Currently QuickBooks Online only supports Bitcoin xPub via Blockpath app Obtaining Clean Data for Cost Basis Calculations: Highlighting the importance of reviewing transaction fees, gas fees and timestamping of transactions when maintaining a ledger of digital asset transactions.    Fees Imposed by centralized wallets are: Fees Imposed by centralized wallets Default Time Zones for popular block explorers and centralized exchanges: Default Time Zones for popular block explorers and centralized exchanges: The process and data format may vary. Always refer to the platform's documentation for accurate information. Disclosure for Coin and Crypto Assets: On December 13, 2023, the FASB issued ASU 2023-08 Conclusion: Given that existing standards require a principles-based approach, it is crucial to stay informed about evolving regulations and emerging best practices for accurate and transparent financial reporting. Whether you're a bookkeeper, accountant, investor, or financial professional, navigating the dynamic terrain of coin and crypto assets accounting requires a proactive and informed approach, ensuring alignment with jurisdiction-specific guidelines. As the coin and crypto industry continues to evolve, staying abreast of regulatory changes remains paramount for individuals and organizations to uphold the highest standards of financial reporting. What You Actually Get When You Buy Bitcoin, Steven Ehrlich Forbes Staff, Director of FDA; Editor, Forbes Crypto Asset & Blockchain Advisor. See also: Investopedia Simulator Crypto See also: Forbes Digital Assets See Also: Warren Buffett Revealed To Be Quietly Making Bank From Bitcoin And Crypto Amid Price Swings See also: JP Morgan Chase Opinion Market capitalization is a measure of the total value of a coin and cryptocurrency in circulation and is calculated by multiplying the current market price per unit of the coin and cryptocurrency by the total circulating supply. The formula for calculating market capitalization is: Market Capitalization=Current Price × Circulating Supply Here's a breakdown of the components: Current Price:  This is the current market price of one unit of the coin or cryptocurrency, usually quoted in a specific fiat currency like US dollars (USD) or Bitcoin (BTC). Circulating Supply:  This represents the total number of units of the coin and cryptocurrency that are currently available and circulating in the market. It excludes tokens that are locked, reserved, or not yet mined. What is a good market cap in coin and crypto? Large-Cap: Coin and Cryptocurrencies with a market cap above $10 billion . For example, Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and USDC. They are considered more stable. Mid-Cap: Coin and Cryptocurrencies with a market cap between $1 billion and $10 billion See also: IRS: Crypto Currency Income Tax Question See also: Virtual Currency Tax Compliance Enforcement Can Be Improved *If you have any questions or concerns about this method of coin and crypto accounting don't hesitate to Contact Bookkeeping Business Online

Revenue Deferral (Revenue Recognition) is a crucial accounting practice that enables businesses to accurately reflect their financial performance over time, especially in industries where services are rendered, or products are delivered over extended periods. In this blog post, we’ll explore the step-by-step process of deferring revenue, highlighting essential tasks such as creating estimates, issuing sales and change order invoices (earned revenue), and managing deposit-retainers (unearned or deferred revenue).  I recommend using QuickBooks Online Advanced with Excel Spreadsheet Sync for large projects. (In the case of inventory management and reporting Finale Inventory is a QuickBooks Online Solutions Partner) although there are other apps that integrate with QBO for Inventory and Ecommerce . Your records in QBO should match the records of Finale Inventory. Sync with Spreadsheet Sync, Finale or other apps only after you have run a BOM (Bill of Materials) report establishing your basis/historical transactions of Inventory, COGS and Sales, save records to My Accountant > Shared Documents. Revenue Deferral for Retail: (before beginning be sure products and services are entered into the system, including sales price, and cost of goods sold and are mapped correctly to your financial statements. (Sales tax needs to be entered correctly for each product or service.) Step 1: Create an Estimate (Non-Posting) Start with a detailed estimate outlining the inventory quantity, costs, and timeline for delivery. Duplicate the estimate: Approved copy  for invoicing/sales receipt (unchangeable) Pending copy  for purchasing Step 2: Create a Purchase Order from the pending Estimate After approval of the estimate, create a purchase order and deliver to the Vendor. This Vendor approved PO links the estimate to the Bill for inventory + COGS + markup (per product and service item(s)). When received upload the bill from the Vendor to Transactions > Receipts (If you are required to enter a customer name, use generic Inventory (c), class according to your setup for the ecommerce provider, mark billable . This will track the inventory on the Unbilled Charges report, populate A/P, and add to inventory in stock for each product item) NOTE: The rate column on a bill is COGS and the Sales Amount column is sales price (e.g. COGS .50 cents - Sales Price $1.00 = .50 gross profit (so 100% markup, which you will select markup on the bill. If the cost has changed from the PO to Bill, you will want to update your product and service item accordingly. The items are check marked billable and marked up directly on the bill (Cost Plus billing)  and matched to the PO and a (spent transaction) in the bank feed when paid. The markup amount will appear as a separate Income line item  on the income statement when products are sold via Invoice or Sales Receipt. Billable Income and billable expense line items should match EOM, leaving you with the gross profit (markup income). Typical of Cost-Plus Billing, your Income will be clearly visible as the difference between Markup Income + Item Income - billed Item COGS = Gross Profit (example: Bill COGS $100 + 20% MU = Invoice $120 Sold Income = $20 Markup Gross Profit) The rule of COGS calculations: An invoice (income) + bill attachment (Item: COGS) with markup = gross profit. An invoice (income) + bill attachment (Item: COGS) and no markup is a reimbursement = zero gross profit.   An invoice with no bill or expense attachment will not calculate COGS (if not stated in your products and services), increasing your stated gross profit-income, and your tax liability. An Invoice with only a receipt attachment may not calculate the true COGS, or COGS at all, to your income statement (from the receipt) if the price and cost are pulling from the products and services is incorrect and no billable expense item is attached. Increasing gross profit income and your tax liability. Sales, Inventory and COGS should be reconciled EOM. Create a (BOM) monthly and save to My Accountant > Shared Documents, maintaining a historical record of Inventory, COGS and Sales. Step 3: Create Sales Invoice(s) or import from your Ecommerce App Check that the sales price is correct! I noticed that invoices are converting "rate (COGS)" instead of sales amount (sales price)" when opening an invoice. 1/24/2025 I have requested that the markup field be returned to the estimates and that products and services items setup of purchase field show: cost & amount for COGS or expense and that the income field show sales price & rate account only removing 'rate' on a Bill, replacing it "cost" It wouldn't hurt to flip the category drop down field with the item drop down field on a Bill either! Categories are for indirect overhead expenses on your Profit and Loss and Items are for COGS or COS (direct overhead) related to the products and services you sell (to be invoiced). While COGS can be categorized directly to your Profit and Loss statement and made billable to a customer, doing so by passess Products and Services Reporting capabilities and does not support accounting consistency. Please send a request to correct from the Gear Icon > Feedback to QBO software engineers to correct this. Sales invoices or sales receipts from Ecommerce should be mapped to appropriate Product Item (which is already mapped to the appropriate income account and COGS on the general ledger, with sales tax for the product established by the automated feature or manually established) Sales invoices or sales receipts are dated to the day of sales (e.g. batch close) Due to Nexus tracking laws, all sales must be imported per sale, per customer and location, and include origin of item(s) (ship from) location with other associated fees such as shipping income, shipping costs, merchant fees, etc.... Review: Integrating Your Ecommerce App When the income from the sale(s) comes through the bank feed for the day (batch close) the deposit amount should match all of the sales documents with items sales prices + be check marked taxable (tax rate is mapped to the sales tax liability on the balance sheet and calculated as a total. (Sales tax should have already been set up in your products and services for each inventory item) If you are working with a Marketplace Facilitator and they are paying your sales tax, add a separate line (service item mapped to Prepaid Expense Asset) and subtract (-) the amount of the total sales tax due on the sales receipt. This will credit (increase) your sales tax liability and debit (increase) Prepaid Expenses Asset. Your A/R will include only the items sold on the invoice. You will need to make the payment, from the sales tax module as a payment from the Prepaid Expenses Asset, when you confirm the sale tax was paid by the Marketplace Facilitator. Reconcile the account monthly. Otherwise for Payment Processors, who are not paying your sales tax, follow the normal procedure, items + taxable, and follow appropriate requirements of the state to whom sales tax payments are due. Sales tax is always the seller's responsibility, and the liability accounts need to be reconciled monthly, even if no payment has been made until quarter end. Payments are made based on your filing status and nexus obligations. See: ( Sales Tax Set Up for Ecommerce ) The sales receipt or invoice will reduce inventory in stock and transfer the cost of goods sold based on the information in your products and services, or per the attached bill from the unbilled charges report to your income statement. I noticed that if you don't invoice for all items on the bill the bill is removed from the unbilled charges report and the items remaining in stock will not appear for the particular generic inventory (c) when trying to rebill and you cannot mark the bill to be included on the unbilled charges report again. QBO Engineers should remove the requirement to add a customer name to a bill, allowing the Unbilled charges to be distributed (BIN Holding) to as many customers as necessary, or to a particular customer, but remain on the unbilled charges report until fully depleted. This is inventory accounting appropriate. On 1/24/2025 I requested this feature be corrected. Please send feedback to QBO Engineers Gear Icon > Feedback. Notes regarding Sales Tax: Issuing Refunds: If the invoice has not been paid: The invoice or sales receipt can be edited directly. If the invoice has been paid: A refund to the customer must be made including the sales tax they were charged. Issuing Refunds will produce a credit (decrease) to the bank account where the funds were deposited to in the initial sale, and a debit (decrease) to the sales tax liability account, as well as increase (debit) inventory, and (credit) COGS. A refund check or credit card credit will be issued to the customer, after approval . QBO engineers need to remove the immediate credit processing! Gear Icon > Feedback Create Credit Memos:    (Confirm the Credit Memo is in fact "bad debt" and not inventory theft, customer and location needs to be recorded, along with any inventory and sales tax adjustments) If an invoice has not been paid and is considered "Bad Debt" it is best to issue and apply a Credit Memo.  Intuit calls it "Bad Debt" but really, it is a write off of uncollected A/R, which is the reversal of a sale. Your Item on the credit memo can link to Bad Debt as expense, though the IRS considers Allowances and Refunds as Contra-Accounting, which makes it (negative) Income. On the products and services set up, set the income account as the bad debt expense. Don't forget to apply the Credit Memo to the open invoice! Issuing "Bad Debt" Credit Memos will clear A/R, and clear sales tax liability (A bad debt Item should be set up as taxable if the original sale was taxed), The bad debt expense account on the income statement will show an expense but will not be reflected against the products and services (item originally sold) report.  In addition, if the sales tax collected on a bad debt was already reported and paid.  A credit should be requested on the next sales tax state filing and be recorded in the sales tax module in the current month the bad debt is created. If inventory is being tracked in QBO: a Credit Memo should be issued for the original product sold thereby replacing the inventory item to stock, clearing A/R and clearing the sales tax liability and will appear on the products and services report. Don't forget to apply the Credit Memo to the open invoice. If the credit memo is really a refund you will need to follow refund receipt processes . Read: IRS Topic: Bad Debt Deductions         V oiding, Deleting and Changing Dates of Invoices/Sales Receipts If you void or delete an invoice that has a payment attached to it, QuickBooks won’t delete the payment, you’ll need to apply it to a different invoice.  If sales tax was already included on your sales tax report to the State your sales tax liability will be out of balance. I suggest you do not delete sales documents connected to state sales tax. If you change dates on a sales document that has sales tax, and the tax was already reported, your sales tax liabilities will be out of balance. I suggest you do not change dates on sales documents connected to state sales tax. A word of caution:   journal entries made to adjust for taxable sales and income can cause problems with QBO sales tax liabilities, the sales tax module and Inventory.  In addition, changes in tax laws and rates are not automatically updated by the software. I do not recommend journal entry accounting with ecommerce. Optional: Create a Deposit-Deferred Revenue Invoice (Only works with Marketplace Facilitators due to sales tax obligations ) Step 1) After bill approval, create an invoice for the billable items and attach them to the invoice (Keep in mind the bill will increase A/P and inventory, allowing you to track vendor liabilities from the date of purchase). The invoice will have a line for the items (+) and for the items (-) and an additional line (+) for deferred revenue. This does not increase A/R rather it will date the items on the invoice date, to a future date, becoming deferred revenue. This invoice should be dated to the expected sale of all inventory items on the bill. The invoice links the Estimate + PO + Bill + Invoice. I would suggest updating your products and services to reflect appropriate COGS (cost) of the items. Step 2) Immediately after entering the first invoice create a copy and add a line for (-) deferred-revenue plus the inventory items (+) amounts. This invoice should be dated to the expected sale of all inventory items. I recommend Days of Sales Inventory (KPI for Inventory) This invoice will increase A/R, reduce inventory on hand, move deferred income to the income statement (earned revenue) and calculate COGS from your products and services Item cost. Match payments (sales receipts) from the Marketplace Facilitator for the items (from undeposited funds) and reconcile the bank deposit accurately on the earned revenue date(s). These steps adhere to GAAP standards, supports accurate financial reporting, and aids financial planning and analysis. With the exception of the red highlighted items. I suggested you ask QBO engineers to correct! Gear Icon > Feedback Revenue Recognition Standards for Ecommerce and Storefront Retail Key Tip:  Use linked transactions (estimates, POs, bills, invoices, etc.) instead of journal entries to achieve accuracy and clarity in financial reporting, maintaining a clear audit trail. See example transactions below. See Also: Integrating Your Ecommerce App with QuickBooks Online: A How-To Guide for Marketplace Facilitators and Payment Processors "Sellers Data Gold" See Also: FIFO vs. LIFO vs. Average Costing Inventory Management and Cost of Goods Sold See Also: The Importance of Establishing and Following Consistent Accounting Procedures: Fraud Prevention Understanding the New Revenue Recognition Standards for Ecommerce and Store Front Retail Unbilled Charges Report showing 7 items @ .50 cents each Marked up 100% to $7.00 remaining to be billed Accounts Payable for 7 items @ .50 cents each, total COGS $3.50 Generic Item COGS .50 cents & Sales Price/Rate $1.00   I want to point out that the income "rate" of the item is the sales price of the item on the invoice, not COGS as you find on a bill. I have asked Intuit to correctly reflect the item terminology. The column on a Bill should be "cost" rather than "rate". I suggested you ask QBO engineers to correct! Gear Icon > Feedback Selling 3 items at .50 cents (Change rate to Sales Price) and remove markup line (Correct 3 items x $1.00 = $3.00) This document has recently been changed and needs to be fixed. Please leave feedback to correct this invoice! Gear Icon > Feedback. Removing Markup Line (Delete Line) **this is a new and very unnecessary step! Please leave feedback to correct this invoice! Gear Icon > Feedback. Bill of Materials (BOM) Inventory Asset, COGS and Sales. 4 remain on hand @ Value .50 cents = $2.00, $3.00 sold @ $1.00 = $3.00 income and COGS 3 @ .50$ = $1.50. Total Gross Profit $1.50 Need assistance: Contact | BookkeepingBusinessOnline.com

When it comes to billing for services, particularly in industries like construction, consulting, and IT, two common methods are cost-plus billing and time and materials billing. Both have their advantages and disadvantages, and choosing the right method can significantly impact project management, client relationships, and financial outcomes. In this post, we'll explore the key differences between these two billing methods to help you make an informed decision. Cost-Plus Billing Definition: Cost-plus billing, also known as cost-plus pricing, involves charging the client for the actual cost of the project plus a fixed percentage or fee as profit. This method ensures that all expenses are covered, and the contractor or service provider earns a predetermined markup percentage for all materials and labor. as they are expended. Components: Direct Costs:  These include labor, materials, and equipment directly used in the project. (COGS) Indirect Costs:  These are overhead expenses that are not directly tied to the project but are necessary for its completion, such as office rent and administrative salaries and are typically covered by the predetermined percentage or fixed fee. Profit Margin:  A predetermined percentage or fixed fee is added to the actual bills and expenses as they are incurred to ensure profitability. Advantages: Transparency:  Clients can see a detailed breakdown of costs, which can build trust. Flexibility:  Allows for adjustments in scope and changes during the project without renegotiating the entire contract. Each expense is directly marked up as the project progresses. Reduced Risk:  Protects contractors from unforeseen expenses, or an increase in material costs over and above the original estimate, as all costs are reimbursed by the client. Disadvantages: Complexity:  Requires detailed tracking and documentation of all billable costs and income, which can be time-consuming. Receipts can now be uploaded directly to the accounting software, easing this burden for contractors. Potential for Cost Overruns:  Clients may be concerned about the final cost being higher than expected due to change orders or inefficiencies. Not to exceed clauses are common in these forms of contracts. Time and Materials Billing (Milestone Billing) Definition: Time and materials (T&M) billing involve charging the client based on the time spent on the project and the materials used plus a predetermine profit margin . Components: Labor Costs:  Charges based on the hourly rates of the workers or professionals involved plus predetermined profit/markup, usually a percentage of the total job Material Costs:  The actual cost of materials used in the project plus predetermined profit/markup, usually a percentage of the total job. Additional Expenses:  Any other costs incurred during the project (direct or indirect expenses), or subcontractor fees plus profit/markup, usually a percentage of the total job. Advantages: Simplicity:  Easy to understand and implement, especially for smaller projects or those with clear project scopes. Flexibility:  Allows for adjustments in project scope and requirements without renegotiating the contract. *Use Change Orders Transparency:  Clients can see exactly what they are paying for in terms of hours worked and materials used. The total contract amount is estimated and approved prior to the start of a project. Automation: The project accounting and scheduling can be automated according to an approved estimate of stages or job phases (e.g., foundation, framing, interior finish), and payment is released upon the completion and approval of each stage or job phase.  Cash flow is more predictable. Pro's and Con's: Pros:  Provides clear, specific milestones and detailed contract language, aligning payments with project job phases. Easing the burden of cash flow inefficiencies. Cons:   May not be suitable for projects with uncertain scope or frequent changes . Choosing the Right Billing Method: Cost-Plus Billing vs. Time and Materials Billing The choice between cost-plus billing and time and materials billing largely depends on the nature of the project, the client's preferences, and the contractor's business model. Here are some considerations to help you decide: Project Scope:  For projects with an uncertain or evolving scopes, cost-plus billing may allow more flexibility . For projects with a well-defined scope and clear cost estimate time and materials billing can provide the necessary conformity. Client Relationship:  Consider the level of trust and communication with the client. Cost-plus billing requires detailed cost tracking and reporting, which may be more transparent for some clients but a burden to the contractor when the payment of invoices is delayed. T&M billing is straightforward and may be preferred by clients for its simplicity and pre-communicated job details. Risk Management:  Assess the potential risks and uncertainties of the project. Cost-plus billing can mitigate financial risks for the contractor while increasing the risk and uncertainty for the client. T&M billing can offer more predictable planning, and budget control for the client's and contactor's. A brief example: Time and Materials:  You agree to pay for the parts and materials and the contractor's hourly rate, plus a flat fee for overhead, usually expressed as a percentage margin of the total contract. Cost-Plus:  You pay the contractors hourly rate and the cost of the parts and materials plus an agreed upon markup percentage as expended for the project. Conclusion Both cost-plus billing and time and materials billing have their unique advantages and challenges. By understanding the differences and carefully considering the nature of your project, you can choose the billing method that best suits your needs and ensures a successful outcome. Clear communication with your client and detailed documentation of costs and time will always be essential, regardless of the billing method chosen. Also See: Revenue Deferral (Revenue Recognition): A Step-by-Step Guide for Project Managers Cost-Plus Billing vs. Time and Materials Billing: Key Differences

Efficient financial management is a cornerstone of business success, and one essential metric that aids in evaluating operational efficiency is the Operating Ratio (OPEX). This key performance indicator provides valuable insights into how well a company is managing its operating expenses relative to its net sales. Let's delve into the definition of Operating Ratio and the formula used for its calculation. Understanding Operating Ratio (OPEX): Operating Ratio, often referred to as OPEX, is a financial metric that measures the efficiency of a company's operations by analyzing the proportion of operating expenses in relation to its net sales. Operating Expenses (OPEX) refer to the costs directly tied to the day-to-day operations of a business. These are the recurring expenses necessary to keep the business running smoothly. Calculation Formula: The Operating Ratio is calculated using the following formula: If you are using excel to calculate OPEX, use the format cell as a percent feature rather than the *100 Operating Ratio (OPEX) = (operating expenses)/ ( net  income) * 100 = OPEX ratio meaning the company spends X amount of its net income (net profit) on its total operating expenses. See an example of Samsung Electronics Co. LTD vs Apple Inc. Some companies may calculate OPEX from Gross Income ( as does QBO ) resulting in lower ratios and can be compared to the amount a company spends to produce Gross Sales Revenue (Total Income) . It's important to determine the method a company uses to calculate OPEX when determining ROI As an Example of the difference in calculations: Calculating OPEX Either way these numbers can be used to calculate Markup % from your COGS and will assist in managing your taxable Net Profits Calculating Markup of COGS from OPEX Breaking Down the Formula: Operating or Indirect Expenses: These include costs directly associated with the day-to-day operations of the business, such as rent, utilities, salaries, research and development, et.... (calculate less depreciation) COS/COGS or Direct Expenses: These are costs directly associated with gross sales (production), including the raw materials, direct service labor, manufacturing overhead (factory utilities, equipment depreciation), or freight-in and packaging directly tied to inventory purchased for resale. Net Sales Revenue (Net Income): This represents the total income generated by the company from its primary business activities, after COGS and expenses. Gross Sales Revenue (Total Income): All income received before any COGS or Expense are deducted. Gross Profit (Gross Margin): All income received after COGS have been deducted. Net Profit (Net Margin): All income received after Indirect Overhead Expenses and COGS have been deducted. Interpreting the Results: Low to Medium Operating Ratio: A lower OPEX indicates that a company is managing its operating expenses efficiently, leaving more room for profit generation. It suggests effective cost control and streamlines operations. High Operating Ratio: Conversely, a higher OPEX percentage implies that a significant portion of net sales is being consumed by operating expenses. This may indicate a need for cost-cutting measures or improved operational efficiency. Importance of Operating Ratio: Performance Benchmark: OPEX serves as a benchmark for comparing a company's operational efficiency over time or against industry standards. It helps in identifying areas for improvement. Investor Insight: Investors often use the Operating Ratio to gauge a company's financial health. A lower ratio may make the company more attractive to investors. Operational Efficiency: By analyzing the OPEX, businesses can pinpoint inefficiencies in their day-to-day operations and take corrective actions to enhance overall efficiency. An important distinction to know: Revenue (Total Income):  Revenue, also known as gross revenue, gross sales or total income, refers to the total amount of money generated by a business from its primary activities, such as selling goods or services. It represents the total inflow of funds before any deductions. Revenue is typically reported as the top line on a company's income statement. Net Sales (Net Profit):  Net sales, sometimes referred to as sales revenue, net revenue, or net profit, is the revenue generated by a company after deducting all expenses and COGS from gross sales. It represents the actual amount of revenue earned by the company from its total income and COGS activities. Net sales provide a more accurate picture of the revenue realized from sales transactions. Other Revenue (Other Income):  This includes revenue from secondary activities, and investments. Drawback of the operating ratio is its disregard for debt. A number of organizations accumulate a huge amount of debt. This usually translates to paying high interest expenses, which are never included in the figures used to work out the operating ratio and markup. In the world of finance, Operating Ratio is a vital tool that provides a snapshot of a company's operational efficiency. By understanding the definition and calculation formula, businesses can leverage the Operating Ratio to make informed decisions, streamline operations, and ultimately pave the way for sustained financial success. OPEX

In the realm of legal practice, managing client funds ethically and in compliance with regulatory requirements is paramount.  The Interest on Lawyers' Trust Accounts (IOLTA) system plays a crucial role in ensuring that client funds held in trust generate interest, with the proceeds contributing to legal aid programs. This guide provides lawyers with a comprehensive overview of IOLTA Trust accounting. Covering essential steps from setting up the IOLTA Trust Bank account to navigating deferred revenue and earned revenue transitions, this guide aims to assist legal professionals in maintaining accurate and compliant financial records. By following the principles of GAAP accrual accounting and adhering to state-specific regulations, lawyers can confidently navigate the intricacies of IOLTA Trust accounting while reinforcing their commitment to transparency and client financial protection. See IOLTA Litigation Summary for details.

Margins by sector (US) refers to the profit margins or profitability levels that are typical or common within specific industry sectors. Profit margins are essential metrics that indicate the percentage of revenue a company retains as earnings after covering its costs. Different industries have distinct characteristics, cost structures, and competitive landscapes, leading to variations in profit margins. See also: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html   It's important to note that these are general trends, and individual companies within each sector may exhibit variations in their margins based on their business models, strategies, and market positioning. Additionally, external factors such as economic conditions, regulatory changes, and global events can impact margins across all sectors. Margins by Sector (US)

Revenue recognition is a crucial aspect of financial reporting that directly impacts a company's financial statements and performance metrics. The Financial Accounting Standards Board (FASB) introduced Accounting Standards Codification (ASC) 606 to establish a comprehensive framework for revenue recognition. ASC 606 provides a standardized approach to recognizing revenue from customer contracts across various industries. In this blog post, we will delve into the five essential steps of ASC 606 revenue recognition. Step 1: Identify the Contract with the Customer The first step in applying ASC 606 is to identify the contract(s) with a customer. A contract is an agreement between two or more parties that creates enforceable rights and obligations. It could be written, verbal, or implied by customary business practices. Companies need to assess whether the contract meets specific criteria outlined in ASC 606, such as the parties' approval, identification of rights regarding the goods or services to be transferred, payment terms, and the probability of collecting consideration. (Accounting Procedure: Project Cost Estimate Begin Date "acceptance") Step 2: Identify the Performance Obligations in the Contract Once a contract is identified, the next step is to determine the performance obligations within that contract. A performance obligation is a promise to transfer a distinct good or service to the customer. Companies must carefully evaluate the contract terms to identify separate performance obligations that represent distinct units of account. If a promise is not distinct, it should be combined with other promises until a distinct performance obligation is identified. (Accounting Procedure: Determine Deferred Revenue Job Phase(s) Start Dates and Sales Earned Revenue End Dates) Step 3: Determine the Transaction Price The transaction price is the amount of consideration a company expects to receive in exchange for transferring goods or services to a customer. Determining the transaction price involves considering variable consideration, non-cash consideration, and the time value of money. Companies may need to use estimation techniques, such as expected value or most likely amount, to account for uncertainty in variable consideration. It's important to update the transaction price if there are changes in the contract that affect the amount of consideration. (Accounting Procedure: Determine Price and Markup/Margin of the Products and Services Items + applicable taxes included on the approved Estimate to Purchase Orders) Step 4: Allocate the Transaction Price to the Performance Obligations Once the transaction price is determined, it needs to be allocated to the identified performance obligations in the contract. This allocation is based on the standalone selling prices of each distinct good or service promised in the contract. In cases where standalone selling prices are not directly observable, companies may use estimation methods to allocate the transaction price fairly. The objective is to attribute the consideration to the performance obligations in a manner that reflects the amount the entity expects to receive in exchange for satisfying each obligation. (Accounting Procedure: Estimate to Invoice PLUS Deposit-Retainer amount LESS items and amounts being deferred + *applicable tax) Step 5: Recognize Revenue when or as the Entity Satisfies a Performance Obligation The final step is to recognize revenue when the entity satisfies a performance obligation. This occurs when control of a good or service is transferred to the customer, either over time or at a point in time. The timing of revenue recognition depends on various factors, such as the nature of the performance obligation, the transfer of control criteria, and the terms of the contract. Companies need to assess these factors to determine when revenue should be recognized. (Accounting Procedure: Sales Invoice(s) PLUS items and amounts previously deferred LESS Deposit-Retainer Deferred End Date)----Earn revenue to the Income Statement (with associated COGS (Bills) and Direct expenses for GAAP compliance and ASC 606 recognition) ASC 606 provides a systematic and comprehensive framework for revenue recognition, ensuring consistency and comparability across different industries. By following these five essential steps, companies can navigate the complexities of revenue recognition, enhance financial transparency, and comply with accounting standards. Staying informed about ASC 606 is crucial for financial professionals and organizations seeking to maintain accurate and reliable financial reporting. See Also: Demystifying Revenue Deferral: A Step-by-Step Guide See Also: Navigating Revenue Recognition: A Brief Guide to ASC 606 Compliance Understanding ASC 606 Revenue Recognition: Five Essential Steps

Continuation of Health Coverage (COBRA) http://www.dol.gov/dol/topic/health-plans/cobra.htm Continuation of Health Coverage (COBRA)