Blog - Key Strokes Inc.
Here you will find numerous articles that will give you insight into accounting and bookkeeping.
bookkeeping, accounting, payroll, small business bookkeeping, tax services, income tax, tax consultant, tax preparation, business registration, financial statement preparation, inventory management, legal billing, cpa, public notary, bookkeeping service
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20 Oct Bookkeeper Embezzlement

“I hate this scenario, and I find myself here at least several times a year.  It’s a new client, sometimes in tears, sometimes with steam coming out of their ears, recounting a story about how their trusted bookkeeper stole thousands of dollars.  It’s a tricky place to be, of course, as I am often being interviewed as the replacement.  It’s my job to educate the client on how to prevent this awful experience from occurring again while simultaneously gaining her trust after it’s just been so horribly broken.

Unfortunately, bookkeeping is an unregulated industry.  Unlike CPAs (or Certified Public Accountants), who must pass and stay certified by their local state licensing agencies, bookkeepers are a little rogue.  Additionally, if you think you can call your local police station and have someone arrested for a crime like this, think again.  “White collar crime,” in which bookkeepers or assistants steal from you using various mechanisms (which I discuss in this piece) are very hard to prove and police don’t respond (at least in my experience) particularly rigorously.

So, let’s talk prevention.”
The rest of this extremely informative article written by Justine Lackey can be found at https://www.dailyworth.com/posts/2641-is-my-bookkeeper-stealing/1 .  It’s well worth the read.

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19 Oct What’s a Reconciliation?

Remember when your parents took you to the bank for your first bank account, and more recently, your shiny, new debit card.  Well, about that time they probably tried to teach you how to balance your checkbook too.  Now, when’s the last time you actually sat down and balanced your checkbook?

“You see, balancing a checkbook is actually the layman’s term for reconciling your bank account.  When reconciling your accounts you ensure YOUR records match the bank records. It’s important to note that the bank records are what “really and truly” happened in your financial life.

If your bookkeeping records don’t match your bank records, something is wrong. And it could be VERY wrong if you aren’t paying close attention.
Reconciling helps you to:

  • Make sure your bookkeeping is accurate
  • If your bookkeeping is accurate, your financial reports are accurate. YEAH!
  • If your financial reports are accurate, your tax returns are going to be accurate YEAH!
  • BUT if your tax returns aren’t accurate, boy you could really get screwed. BOO!

Reconciling is the ONLY way to make sure you and your bank and your money are in sync.  In my professional journeys, the reconciliation process has helped me find:

  • Bank deposits that were “lost” in ATMs (yep, it happened. The bank lost a deposit and the client would have been out several 1,000 dollars without the reconciliation process in place)
  • Recurring transactions that were being double billed – for months – without the client knowing
  • Unbilled income – another words invoices that were never sent or generated
  • Major bookkeeping inaccuracies because of poor data entry

Reconciling can take a while to learn, and longer to master.  A good place to start is to look on the bank of your printed monthly bank statement where there should be some instructions from your bank on how to balance your checkbook.

When you are interviewing bookkeepers make sure you ask them about their reconciliation process.  Ask them how often they do it (at least monthly), what they do if they discover an error (they should alert you to it), how they would go about fixing it in the books (they should track down the problem, and correct it at it’s source, versus just leaving the account unreconciled).

Ask for monthly reconciliation reports.  Your report should match your bank statement, and if you are unsure how to read either, get your bookkeeper to teach you!  A good bookkeeper doesn’t just come in and do the work, a good bookkeeper engages their clients in the accounting process.  A good bookkeeper finds mistakes, brings them to the client’s attention, and finds the way to correct them.”

Part of this article is an excerpt from Justine Lackey’s article regarding reconciliation.  You can read her full article at http://goodcentsbookkeeping.com/reconciling-and-im-not-talking-about-your-relationship/.

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19 Oct The Most Costly Bookkeeping Mistakes Made by Small Businesses

Every business in existence, from the Mom & Pop Store all the way to the “Walmart-esque” conglomerate, uses bookkeeping on a daily basis.  One may use notes written on napkins and backs of envelopes, while the other has a highly developed, multi-million dollar system in place, but ultimately, the end goal is the same.  Tracking your business or personal income and expenses is key to know if you are successful.

Now that we know bookkeeping must get done, no matter how mundane it can be, we need to address the most common pitfalls that many businesses and individuals face.  This list is full of things that are completely avoidable when a little bit of knowledge, skill and experience is employed.

  1.       Relying Only on Yourself – You may be a business owner or a business professional, either way, that makes you a highly capable individual.  Relying too much on yourself and spreading yourself too thin though can be costly.  Bringing in a skilled and efficient bookkeeper ensures things are done the right way and frees you up to actually work on your business.
  2.       Not Reconciling & Keeping Accurate Records – Are you familiar with account reconciliations?  If you’re not, then your financial records may be in quite a bit of disarray.  Reconciling monthly is essential to keep your books accurate throughout the year.  Bookkeepers should undoubtedly be familiar with this duty.
  3.       Miscategorization – With whatever bookkeeping system you use, you’ll have a chart of accounts with all kinds of categories ranging from liabilities, expenses, assets, equity accounts, and on and on.  Getting your daily activities into the right categories can be confusing if you’re not familiar with what they really mean.  It’s also vital to place them correctly, following generally accepted accounting principles.
  4.       Neglecting to Track Expenses – Often, new businesses and owners aren’t familiar with how business expenses work and affect taxes.  The lines between personal and business expenses can get very blurred.  An experienced bookkeeper can help advise you whether or not that quick trip to the store should be assigned to the business.
  5.       Tracking Employees Incorrectly – Small businesses regularly take advantage of freelancers and independent contractors.  On the other hand, you may be ready to hire a new full-time employee.  Determining how to pay these people and how to properly file with the state and IRS can get confusing.  A bookkeeper with experience in payroll and filings can easily lead you through this process.
  6.       Unfamiliarity with Sales Tax – The vast majority of businesses that sell goods or offer services will have to collect and pay the sales tax they collect to the state on a monthly or quarterly basis.  Recording this tax at the correct rate and filing it is extremely important (I cannot under-emphasize that) to avoid some very costly fines and penalties.
  7.       Not Having Reliable Backup Records – Everything recently seems to be moving to the “paperless office” where nobody will print anything and the clunky filing cabinet will go the way of the dinosaur.  Unfortunately, computers do crash and the IRS always has the right to audit your business.  Without that filing cabinet full of receipts and documents, it may be difficult to explain why certain expenses were assigned to the business and such.  A competent bookkeeper will always keep your records safely and securely.
  8.       Underestimating the “Small Stuff” – Small purchases here and there, a quick trip to the store to grab something simple, not keeping cash-on-hand records, not throwing a small receipt in to be filed.  These add up in the long run and can really help or hurt.  Doing the small things consistently, and having a bookkeeper who has the same mindset, is what will keep your records pinpoint accurate and set you up for success.
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