In the last year, numerous banks have developed apps for the IPhone and/or Droid to assist depositors with depositing checks to their accounts. The depositor simply opens the app and then takes a picture of the check. The check amount is then deposited to their account.

I was recently reconciling a client’s business checking account and discovered that a payroll check had cleared the bank on the current reconciliation. What was odd was that it had also cleared the previous month. Same check number, amount, etc. When I began researching with the bank why it had cleared twice, I was informed that it was processed through the banking app. Of course the employee denied any wrongdoing and that it was simply an oversight on their part. While this may or may not be true, it brings home several issues related to business banking and protecting your accounts.

Recently, I have had discussions with various banks concerning this issue and have been assured that it would not be possible at their institutions since they have limits in the amount that can be deposited and safeguards to ensure that a deposit could not be made twice. Even the bank that processed this check twice assured me that it would be impossible for it to occur. After showing them the transaction that occurred, they began to backpedal on the ability to prevent this from occurring all the time. However, as a business owner, you can take steps to prevent it by incorporating the following procedures:

• Checking accounts should be reconciled on a monthly basis at the minimum. Since online banking makes it so easy, I have some clients reconciling on a daily or weekly basis. This allows the company to identify issues that occur with the cash account and take immediate action to correct them.
• Set up a separate payroll account and maintain a maximum balance of $100. Fund the account for the current payroll only. This will prevent multiple deposits from the same check from clearing provided you have instructed your banker not to overdraw the account.
• Use automatic paycheck deposit for your payroll. Another client I have encountered an instance where the boyfriend of one of their employees copied the checking information from the paycheck, had checks printed and then cashed them as payroll checks. Payroll was being paid through the operating account at the time and he managed to steal over $30,000.
• Allow for only 1 or 2 signers on the account. The primary signer should always be the owner, and a secondary signer should be designated for emergency situations only. This gives complete control of the cash account to the owner.
• Bank statements should be opened by the owner only. This gives the owner a chance to review the cash that has come into and gone out of the company. Also request the photo image of each check with the statement and review the signatures.

Remember, cash is the lifeblood of any business and cash is king! Guard it carefully!

For many it might be that your entire system is lost. For others it might be that their accounting makes no sense when the time comes to prepare for tax season. Others fear they have a controller or accountant that might be costing them thousands. If any of these are your business accounting concerns and you have or are thinking about converting to QuickBooks … you might need Dan Cote!

How to Save Time & Energy Using QuickBooks

Do you like to waste your time and energy every month doing your QuickBooks? Likely your answer is ‘No Way Jose!’ and should be. My specialty is coming into businesses as sort of a ‘fixer’ to clean up accounting messes and get my business owners to save their time and energy so it can be applied to their core strength…running their business!

Here are three ways to save time and energy in QuickBooks (which I’ll explore more in a future article):

1) Have your QuickBooks system setup specific to your business and workflow

2) Meet with your business accountant or consultant at least bi-weekly or weekly

3) Get it right ‘before’ you enter it into Quickbooks

Why Setting Up QuickBooks Files Properly Is Important

Neat and tidy. Sort of like cleaning your room as a kid. However, many of us didn’t have neat and tidy rooms and nowadays lack this in your business accounting. Getting messy in your QuickBooks files can be even worse!

I like to meet with my clients to listen to their struggles, wishes and goals with their accounting and QuickBooks, then offer my advice or plan, and execute in a timely manner. Being organized and having your QuickBooks files and system setup properly will lead to cleaner books in the future and less headaches surely.

QuickBooks Consulting Basics

One of the most important things I like to share with my clients is the importance of being up front to start with. One thing my peers and colleagues admire about my qualities as a QuickBooks Certified Pro and QuickBooks consultant is that I’m very open and honest with my clients. Whether they’re in manufacturing, retail or otherwise, from Tacoma to Seattle, Bellevue and North, I treat each and every client with the same respect and integrity. We will likely accomplish more in just a couple hours and get your business’ QuickBooks files going the right direction than your last month perhaps!

For more info or help with your QuickBooks or business accounting, contact Dan Cote today!

Increase the methods of payment you’ll accept

Accepting credit and debit cards gets your invoices paid instantly. If a customer orders from you regularly, get permission to automatically charge their credit card or withdraw the payment from their bank account. Offer a small discount as an incentive.

Complete the assignment or delivery on time
When you accept an order, send an acknowledgement stating the expected completion or delivery date before you begin the assignment or order processing. If there are delays in completing an order or assignment, that could impact your customer’s business and increase the likelihood of charge-backs, returns or non-payment.

Send out invoices in a timely manner
Stay current with your billing. Set aside one morning or afternoon each week to keep a steady flow of invoices going out the door, whether

1. If you get a big refund each year, you’re having too much withheld from your paycheck.

In effect, you’re giving the government an interest-free loan.

2. If you have too little withheld, you may be charged an underpayment penalty.

You must pay 90% of what you owe for the tax year by the end of that year or an amount equal to 100% of your tax liability for the previous tax year, whichever is smaller.

3. Not every dollar of your taxable income is taxed at the same rate.

That’s because portions of your earned income fall into different brackets, which are assigned different tax rates. Generally speaking, the first dollar you make will be taxed at a lower rate than your last dollar. Your marginal tax rate is the tax bracket at which the highest (or last) portion of your income is taxed.

4. Your combined tax bracket determines how much tax you’ll owe on income from investments such as CDs and money market funds.

Your combined bracket is the sum of your top (or marginal) federal tax rate and your top state income tax rate. It may be less if you itemize deductions since you will be able to deduct your state income tax on your federal return.

5. If you file your return by April 15, but don’t pay the tax you owe, you may receive a late payment penalty.

The same goes if you file for an extension. An extension only allows you to file your return after the due date. But full payment is still required by April 15. If you make a partial payment by then, you may be charged interest on the amount outstanding.

6. You can reduce your chances of being audited.

One of the best ways is to fill out your return completely, correctly, and on time every year.

7. You should pay estimated taxes if you’re self-employed; expect hefty investment income or profits from a property sale; or if you don’t have enough taxes withheld to cover the taxes you’ll owe on non-wage-related income.

Retirees should also consider paying them if they haven’t opted for voluntary withholding on their pension or IRA payments. Estimated taxes are due four times a year (April 15, June 15, Sept. 15, and Jan. 15).

8. Your adjusted gross income (AGI) is your total income minus certain “above the line” deductions such as deductible IRA contributions, alimony payments, or health savings account contributions.

Your AGI primarily determines whether or not you’re eligible for tax breaks. Almost every break, be it a deduction, exemption, or a credit, has its own AGI limit.

9. Your taxable income is your AGI minus exemptions and deductions.

The less your taxable income, the less in taxes you’ll owe. That’s why it’s in your best interest to take advantage of tax breaks where you can.

10. A credit is better than a deduction.

A credit is a dollar-for-dollar reduction of the taxes you owe. A $100 credit means you pay $100 less in taxes. A deduction reduces the taxes you owe by a percent of every dollar you’re allowed to deduct.

You calculate the worth of your deduction by multiplying your marginal (or top) tax rate by the amount of the deduction. If you’re in the 25% tax bracket, a $100 deduction means you’ll pay $25 less in taxes (0.25 times $100).

Reach Dan Cote today to talk about your company’s accounting and tax strategy

Handling and Avoiding Crises

How Do You Define Cash Flow?

If your definition of cash flow is flawed, and you’re not tracking the right numbers, you may grow your company right into a cash crisis.

The 10 Absolutely Must Follow Cash Flow Rules

Everyone wants cash on hand at all times. Here are 10 rules to help you get there.

The Magic Number

Every business has a magic number. By employing his, our columnist didn’t overstaff this year.

Riding the Economic Roller Coaster

Tighten your seatbelt. Surviving the ups and downs of the world economy means keeping an eye on business finances.

When a Cash Crisis Strikes

Credibility with vendors, bankers, and other creditors is built slowly, but can be destroyed quickly if your company falls behind on payments. Know how to break the bad news to preserve your business’s relationships.

Hot Tip: Prepare for a Cash Crisis

How do you prep for a cash crisis? Wayne Karpoff, president of Myrias Software Corp., knew cash would be a problem late last year. His 15-employee, $1.5-million company dropped selling its products and became a full-time service business. So he built a contingency fund into his annual budget — an amount equal to three months’ worth of payroll. He got the idea when his bank suggested he set up a contingency fund to safeguard his mortgage payments in the event he found himself out of work. He dipped into the fund three times last year to float the company during project and payment delays.