Why Bookkeeping Experience Matters

by Jul 15, 2019Bookkeeping

When you run a small business, you might not intend to do everything yourself. Sometimes it just works out that way. To maintain your cash flow, you cut back on the professional services you consider nonessential. You do your own marketing calls, product development, and HR tasks. You do bookkeeping even if you have no bookkeeping experience.

Some business owners think of bookkeeping as a nonessential service. They cut it from their budget, choose a DIY option and learn as they go. With easy access to bookkeeping apps and software, that seems like a reasonable move. In fact, DIY bookkeeping can work, but it works best when the person behind the app has bookkeeping experience.

Should you DIY your bookkeeping?

As the SCORE article, “10 Tips for Better Small Business Bookkeeping” explains, that bookkeeping can be unpleasant “…if you’re not a “numbers person…” It can be tedious, boring, and sometimes confusing. Tracking business numbers is not much fun for professionals who don’t have bookkeeping experience. Besides, lots of business owners just aren’t very good at it.

Apps like QuickBooks make it easier to do your own bookkeeping. They track your cash flow and handle your accounts payables and receivables. They perform payroll, reconciliation, and numerous other automated tasks and they back up your data to the cloud. Your data is always there if a disaster takes out your local system.

Of course, you only have access to all of these bookkeeping features when you do your part. Doing your part means installing your software and keeping it updated, learning which bookkeeping functions are important to your business, and adding new tasks to your already overburdened workday.

What happens when you DIY without bookkeeping experience?

Your automated bookkeeping program is basically traditional bookkeeping with a technological twist. It works efficiently when it’s set it up to comply with traditional bookkeeping functions. If you don’t set it up properly, organize your data, and keep it updated, your bookkeeping app will still function but it won’t do everything you need it to do.

  • Accurately track and reflect your cash flow.
  • Sync your accounts and payroll data
  • Help you track your payables and receivables
  • Generate accurate financial reports
  • Give you an accurate snapshot of your business financials

We do bookkeeping better than you

At Goode Bookkeeping, our professional bookkeepers provide management services so your QuickBooks app can do what you need it to do. We set up your software, manage your accounts, track your business expenses, and perform many other critical tasks. We do all the things you would do if only you had the bookkeeping experience and the time to do it right.

Call Goode Bookkeeping and Consulting at (860) 659-6543 to learn more about QuickBooks management and other professional services for your small business.

When you operate a small business, you cut corners wherever you can. As long as you can avoid IRS problems, an independent contractor strategy will help you meet your cost-saving goals. When properly selected, independent contractors can do the work employees usually do.

You save money because independent contractors cost less than employees, primarily because of the benefits you pay.

  • Employees enter the job market with high expectations. They want enough income to support their families. They also want sick pay, vacation pay, health insurance, and paid personal days.
  • Independent contractors enter a working relationship understanding that they will receive pay but no benefits. They work for an hourly wage or a per job payment only.

The Contractor vs Employee Dilemma

Some businesses fail to avoid IRS problems because they treat some workers like employees but pay them like contractors. The cost savings make it easy and advantageous to get pulled into that dynamic.

If you don’t understand the difference between an employee and a contractor, it’s mostly about control. IRS guidelines can help you determine if your contractors are actually employees. They focus primarily on three areas of control

  • Behavioral Control: You determine behavioral control based on the type and degree of instructions you give, your evaluation system, and your training.
  • Financial Control: You have financial control over a worker when you control their significant investments, expenses, profit and loss opportunities, service availability and payment methods.
  • Type of Relationship: You may call a worker a contractor but your type of relationship is actually defined by written contracts, employee benefits, relationship permanency, and services provided.

The IRS May Punish You If You Get It Wrong

When you misclassify an employee, it eliminates your responsibility for employee withholding, FICA, Unemployment taxes, and possibly health insurance under the Affordable Care Act. To take away the financial incentives for intentional misclassification and trying to avoid IRS problems, the IRS established a schedule of penalties. These include a fine for each W-2 not submitted, a fine based on the percentage of unpaid taxes, and other potential penalties.

The IRS also created a way out if you choose to come clean. The Voluntary Classification Settlement Program gives employers an opportunity to correct misclassification errors. Any settlement must include a promise that you will not misclassify future employees.

Contact Goode Bookkeeping & Consulting

If you’d like to know more about IRS Guidelines for proper employee classification, call us at (860) 659-6543 or complete our consultation request.

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