Tell us how BAS came about?

Throughout my career, I’ve worked at few different types of accounting firms and what I kept noticing over and over, is that these firms will take care of your taxes, and payroll etc, but they don’t necessarily give you the tools you need to ensure business success - I wanted to create a different kind of firm, one that will notice the nuances of finances, to pinpoint what’s working, what’s not, and how we can help overcome everyday challenges for business success.

Can you give us an example?

Sure, we had one client that saw their sales drop by about 30% in just once month – we took a look at their books and noticed that their marketing expenses also dropped by 20% – they quickly increased their promotional work and saw the sales go right back up.

What do you love most about your job?

I love showing clients how well they can be doing with accurate reporting, sure we do the usual payroll, bookkeeping and taxes, but what gives me particular pleasure is getting all the financial information down accurately so businesses can make educated decisions. It’s a key part of small business success and I’m proud to be a part of it.

What’s one thing most people don’t know about you?

Hm, one things? Ok, I have hypnotherapy degree. Yes, really, though I haven’t used it  in years.

Before leaving your job for a new venture, consider moonlighting or going part-time. A steady income to cover personal overheads can be a life-saver while you develop your concept. Few new companies can afford to pay their founder a decent salary at the beginning. It will mean working on your new project at weekends, evenings and holidays—but then no entrepreneur ever made it without trade-offs.

Always write a comprehensive business plan. Even if you don’t need a business plan to raise cash, it’s worthwhile to express your thoughts in a coherent way in written form. A plan should include a timetable, a description of the product and potential customers, the capitalization, biographies of the key management, and financial projections—as a minimum. The plan shouldn’t be longer than 20 pages, but it must include all the key details.

If you haven’t already recruited a partner, look into it. Teams are generally more likely to succeed than one-man or -woman bands. A partnership will be seen as a better proposition by capital providers, and a combination of skills and resources is more likely to overcome the inevitable challenges facing any new firm. I have always worked with partners—being a sole trader can be a lonely occupation, and the journey is always more enjoyable if you have a colleague with whom to share it.

Never give a bank or landlord a personal guarantee. There is almost always another source of funding, or another property to occupy. When you sign a personal guarantee to a lender, you risk being made bankrupt if the business fails. Too many first-time entrepreneurs agree to such bank demands when they should say no. Sometimes the bank will still extend the facility, but sometimes it will be necessary to look elsewhere for financing.

Do what you know. Don’t plunge into a new sector without having done extensive homework—or preferably having worked in the field. Most entrepreneurs who do well have studied the technical aspects of the industry by working in it before breaking off on their own. That way they gain contacts, credibility and an understanding of customers and the particular economics of their preferred niche.

It’s the execution, not the idea, that counts most. Lots of would-be millionaires believe they have a world-beating business concept. But a dream is just that, unless it is translated into concrete and practical action. Passion matters, but commerce is at heart a pragmatic exercise, not an emotional one. Before deciding to become your own boss, be sure you are willing to do the gritty essentials, like selling and bookkeeping. It is not a career for the faint of heart or the chronically shy—or indeed the idle.

Don’t take a franchise. Very few franchise offerings represent good value, and those that do, like McDonald’s, are generally oversubscribed. Many franchises don’t deliver on their promises, and have an obvious formula and a mediocre brand—for which franchisees pay through the nose. The point about working for yourself is that you enjoy freedom and independence—it’s hard to do that as a franchisee.

Creating a real business takes time. Few companies do well quickly—most take years to cultivate their customers, perfect their services and generate sustainable profits. This means entrepreneurs need both a sense of urgency, in order to make things happen, and a degree of patience. Many start-ups have to reinvent themselves to discover the right business model—often several times. All this requires perseverance and flexibility over the long haul.

It’s not just about the money. Few entrepreneurs start a business just because they want to be rich. They do it because they want to build something, because they see an unexploited gap, because they have no choice, because they have a point to prove, because of the thrill of making something from nothing.

Of course, positive cash flow and the profit motive are integral—no business survives that loses money. But the high achievers know that being vitally engaged in something worthwhile is what really counts.

Be prepared to make sacrifices. Quite a few entrepreneurs I know reckon they earn less working for themselves than they could as an employee. They do it because they love the life, and couldn’t bear the bureaucracy and office politics so prevalent in so many large organizations. But be sure your family support you in your adventure, and that you have the stamina and desire to see it through. It is unlikely to be an easy ride, but I have found the rewards to be worth the price.

—”Start It Up: Why Running Your Own Business is Easier Than You Think” was published in September by Portfolio Penguin.

Lower Tax Rates Extended

The 2010 Tax Relief Act extends through the end of 2012 the tax rates in effect in 2010. They had been scheduled to increase to the higher tax rates that were in effect prior to 2001.

Estate Tax

For individuals dying after 2010, the federal estate tax continues with a $5 million exemption and a 35 percent maximum rate. The current federal estate tax rules are scheduled to end after 2012.

Lower Capital Gains and Dividend Tax Rates Extended Through 2012

The tax rate reductions for long-term capital gains remain in effect for 2011 and 2012.

Child Tax Credit

The credit of $1,000 per eligible child continues through 2012. The credit was extended by two years by the 2010 Tax Relief Act.

Payroll Tax Credit

Starting in 2011, the partial credit for payroll taxes paid by employers is no longer available.

Section 179 Expense Deduction

The $500,000 maximum amount of equipment placed in service that businesses can expense and the annual investment limit of $2,000,000 remain in effect for 2011.

Tax Credit for College Tuition

The American Opportunity Tax Credit remains in effect through 2012.

Earned Income Tax Credit (EITC)

Temporary increases in the Earned Income Tax Credit for filers with three or more children and the higher income levels for the phaseout of the credit have been extended through the end of 2012.

Mortgage Insurance Premiums

The special itemized deduction for mortgage insurance premiums paid on mortgages taken out after 2006 expires on Dec. 31, 2010.

Credit for Energy-Saving Home Improvements

The 30 percent tax credit of the cost of energy-saving home improvements was extended by the Tax Relief Act of 2010 through 2011.

For example, you would purchase the general ledger module and then add on only the modules you needed, such as accounts receivable and accounts payable. You would enter your data into these modules into batches and you would post these batches to the general ledger. Quickbooks is a forms driven program and does not use modules, however the process is similar, it’s just that QuickBooks does the posting to the general ledger in the background.

When you enter a bill or an invoice and use the item tab, the items you are choosing have already been set up to post to a general ledger account number. Some items are single sided items, which means they only post to one general ledger account and some items are two sided items, meaning they post to two general ledger accounts. There is no need to post anything else to the general ledger account.

There are several different lists in QuickBooks, but this blog will cover the regular item list. Which items do you need and why?

• Service Item – Once you have setup an item as a service item it cannot be changed to another type of item. Use this item for professional type of work or payment for professional service. You will use an income account for this. If you are going to use this for both income and expense, mark the box that says “this item will be used in assemblies or is performed by a subcontractor or partner.”
• Inventory Part – Use this item to setup your inventory item list. For the expense account use your COS account and for income use one of your income accounts. You also need to enter your inventory account (balance sheet account), reorder point, and on hand amount.
• Inventory Assembly – Use this for inventory items that have been assembled from other inventory items. Your expense account is COS and use one of your income accounts for income. In the Bill of Materials box fill in the inventory items that make up the Inventory Assembly. You will also need to add your inventory account (balance sheet account), reorder point and on hand amount.
• Non-inventory Part – You will use this item for products you purchase but are not going to keep track of as inventory such as office supplies. It would be a single sided item in this case. If you are going to charge your customer or use it in an assembly item then mark the box “This item is used in assemblies or purchased for a specific customer:job”. You will then have to enter both the expense and income accounts.
• Other Charge – Use for miscellaneous labor, material, part charges, delivery charges, set up fees, service fees, etc. You can use this as either a single or double sided item.
• Subtotal – Adding this to your forms will give you a total of the amounts above the subtotal row up to the previous subtotal row.
• Group – Use this item to quickly enter several items at one time on your forms. Give the group a name and in the box list the individual items and quantities to include in this group and save.
• Discounts – Use this item to give your customer a discount on a product or service. Do not use it for a prepayment. You will use an income account for this item.
• Payment – Use this to record payment at the time of the sale. When entered on the invoice it will reduce the amount due. There is no account to set up for this item.
• Sales Tax Item – Use this item if you only pay one tax rate to one taxing authority.
• Sales Tax Group – Use this item if you pay different rates to different taxing authorities for the same sale. The customer will only see the total tax due.

Understanding how your items work in QuickBooks is critical in getting the correct reports from your data. If you do not have the right account number associated with them, your reports will not be correct. I hope I have helped you to understand items a little better, if not please don’t hesitate to contact us.

How do you choose an accounting program for your business? There are several good programs out there that may meet your needs. Research the specifications for programs and ask other businesses what they are using and what they like and don’t like about the program they are using.

I am partial to QuickBooks and eighty-five percent of small businesses use QuickBooks as their accounting software, so I am going to write about some of it’s features. First of all, there are several editions to choose from depending on the size of your business, number of users that will need access to the program, and the reports you will need to generate.

• QuickBooks Pro – This is the simplest of the offerings, but still robust. One user is included with the price, and two additional users can be purchased. Several new features are available this year including batching of invoices, four new built-in reports, convenient access to customer or vendor’s balance or transaction history along with other features. It also integrates with Payroll Services and Merchant Services, both of which are sold separately.

• QuickBooks Premiere – This version can have up to five simultaneous users. This version has several different industries to choose from when setting up your company file. Because it is so industy specific, reports can be generated that are also specific to your industry. In addition to the features of QuickBooks Pro, QuickBooks Premiere forcasts sales and expenses. A new feature for this year is tracking the balance sheet by class.

• QuickBooks Enterprise – This version is for the mid-size company who is growing and needs more features than QuickBooks Premiere can offer. It will allow up to 30 simultaneous users with different security settings for each user. It will track inventory in multiple locations with Advanced Inventory (sold separately). You can work in two company files at one time. You can combine reports from multiple companies files and create professional financial statements.

• Mac Desktop Solutions – This is a 3-user edition that integrates with Payroll for Mac and Merchant Services (both sold separately). New features added this year are that job-related mileage can be tracked by mileage or job, export reports to Excel or Report, find transactions faster by sorting by account registers by date, type, number amount, and more, among other new features.

The editions listed above are all desktop editions of QuickBooks and should you need to access your file while away from your computer, you would need to use either the built-in remote access feature in QuickBooks or an online remote access such as Team Viewer or GoToMyPC. You could also have your QuickBooks hosted from a number of hosting companies if you need to be working in your file at the same time as your off-site bookkeeper or accountant.

Once you have choosen the right product for your business your Certified QuickBooks ProAdvisor will help you set up your company file, enter all existing transactions and train you on how to use the features of your new accounting system. If you are unsure on which product you need your Certified QuickBooks ProAdvisor will be glad to help you with that decision.