QC Computing Blog

WA State B&O Taxes, Small Business Credit

2012-01-19T11:59:00.001-08:00

Lots of small business owners will overpay this year, because the first familiar B&O Small Business Credit page has the old credits. The new better credits are on the 2nd and 3rd pages, Table 2.

Here's the deal. If 50% or more of your taxable B & O Income is reported under Service, and your B & O tax is anything up to $841, you get a credit for ALL OF IT. It steps up from there to $1681.

Look for it. You deserve a break today.

East West Bookstore Seattle Event

2011-12-23T06:52:00.000-08:00

Saturday, Feb 4th at 7:00 - 8:30, at East/West Bookstore Seattle, I'll be presenting a talk on "Making Peace with Your Finances".

http://www.eastwestbookshop.com/events/3325

East West Bookstore is selling the physical book, "Radically Simple Accounting".

Please alert me if they sell out my book, so I can provide them with more.

At attend, register with the bookstore and pay an $8 fee. That's one of their lowest fees for an event and you can register at the last minute.

My plan on how you can "Make Peace with your Finances" is to understand a few spiritual laws of money. One is that money is currency, it flows, so if you want to hold onto it you need a container--an accounting system.

We'll go over how you create categories for setting up an accounting system. Accounting is software independent, so you can use QuickBooks, or any software you chose. Naturally, I'll answer any questions people may have about the book, but the book is not required reading. Everyone is welcome.

Credit Unions & Banks

2011-10-25T11:52:00.000-07:00

My friend told me that his banker does his bank reconciliation. He says that the men are lined up for her to reconcile their bank accounts. So a shout out to Mallory Thrush at Oregon First Community Credit Union for helping the guys stay on track with their bank accounts. Funny, I could never reconcile my checking account before computers either.

My experience with BECU was not good. I wanted to buy a car with financing. BECU came in at 4.5%, so did Key Bank, and another place came in at 5%. I chose BECU, since it was a credit union. BECU would only qualify the loan for 30 days, and it took me 4 months to find a car. I was at the dealers, closing the loan, when the loan came in 5%. Just the month before I had gotten a 4.5% qualifying letter. BECU said my credit score had gone lower. My credit score had gone lower because they pulled my score so many times. I could have fixed it, if they had warned me. The .05% difference will cost me $1200 over the life of the loan.

The thing is Credit Unions aren't for profit, so more money is staying in the bank. That means that they are in a position to give more and better loans. That's why I signed up with them in the first place.

Radically Simple Accounting can be a Textbook

2011-09-09T11:16:00.000-07:00

Radically Simple Accounting has been used as a textbook for awhile, but now it's been picked up at the university level. And not just any University, but NU in Boston, MA. Which, believe it or not, is the university I attended for my first two years of college. It's a small world!

Northwest Enterpreneur Network (NWEN)

2011-09-03T09:11:00.000-07:00

Last night I won this fabulous, and rather large gift basket from the Northwest Entrepreneur Network (NWEN) event.
http://www.nwen.org/ Thanks to Pacific Real Estate Partners, Inc.

NWEN supports entrepreneurs bringing new products to market. My father was an inventor, he worked at DuPont and invented Tyvek on their time, their dime, so no royalty checks. It's a risk to take a product to market with your own equity, and I respect anyone who's willing to take the risk.

Backup QuickBooks Daily

2011-08-17T19:30:00.000-07:00

VIRUS ALERT. In the coming days, do not open any message with an attachment called: Invitation FACEBOOK, even if it's from a friend. It could be a virus that opens an Olympic torch that burns the whole hard disc C:drive of your computer. This virus will be received from someone you had in your address book . If you receive a mail called: Invitation FACEBOOK, though sent by a friend, DO NOT OPEN IT and DELETE IT IMMEDIATELY. Losing your hard disk is terrible, but if your QuickBooks data is backed up daily, you'll be okay with your financials.

Philippe Matthews TV Show - Rated the Best!

2011-08-03T23:00:00.000-07:00

RATED PHILIPPE'S BEST!

His motto is "If you like O, you're going to love P"

thepmshow.tv/philippes-best/madeline-bailey-on-radically-simple-accounting.

Bank Fees -- Getting them waived

2011-07-08T15:24:00.000-07:00

About every three years they realize I have a free business checking account and want to start charging me again. This months statement had $21 in bank service fees due to a policy change, so it was time to see if I could get them waived again?

Securing free checking is a business dance where not all of the steps are choreographed at the start of the dance. To win, I did the normal moves that I have learned over the years, but today there was a new move. The branch manager said that I had to leave without knowing his decision. It was unsettling, not only what he said but how he said it. Everyone I know would have tried to secure the deal at this point and blown it. But I understood that if I walked out not knowing, that I would win. This step was merely part of today's dance.

I've always succeeded in securing free checking for myself, and for every client too. Think how much money I saved for my business today? ($21 month, times 3 years = $756 saved). Why should you get free checking? As a business customer, even though you have more transactions than a personal account, you maintain a larger overall balance, which the bank invests for profit. So not only is it possible to get free checking; it's your right, and my privilege to help you.

Payroll Seminar and Industry Rates

2011-05-06T20:34:00.000-07:00

For many business owners outsourcing payroll is the way to go. But some clients want to do payroll in-house for a variety of reasons, including job costing.

I had an opening in my schedule, and this is a knowledge business, so I decided to attend a $250 day long QuickBooks payroll seminar. What I learned is that I already know everything about payroll in QuickBooks, except the best way to teach it. I've been answering questions or solving individual problems but from now on I want to walk clients through the whole setup so that we can solve problems they didn't know they had.

Education is expensive, and this is an knowledge business. Someone who charges half my rates isn't half as well educated, they are perhaps 1/100th as educated. Conversely, my rates are artificially capped by the market, so when clients hire me, they're getting a discount on what it should cost to hire the best. It's totally worthwhile and profitable.

"wwmd" stands for "What would Madeline do?"

2011-04-05T12:58:00.000-07:00

One of my favorite clients told me that they have a saying in their office, "wwmd". That stands for "what would Madeline do?". It's a lovely compliment, because it means that I'm adhering to standards. Accounting is all about standards.

If people think my book is not a true accounting book they are mistaken, because accounting is all about standards. The Profit and Loss Report and Balance Sheet I teach readers how to generate are the same reports they would get by learning accounting the hard way. As a matter of fact, the bookkeeper who made up "wwmd" is taking accounting classes towards a business degree. If I wasn't answering her questions correctly, she would have found out by now!

Fraud is all about deviating from standards, so if you employ the "wwmd" accounting standards, you'll have a line of defense in the war against fraud. I want to make you money on the upside and downsize, so you can improve your profit!

Gold and Silver Investing

2011-03-11T10:34:00.001-08:00

Gold and Silver coins are collectibles. According to the Internal Revenue Code, gold, silver, platinum, and palladium are “collectibles” when held in the form of coins or bullion. A collectible includes items such as stamps, coins, fine wines, precious metals and gems, antiques, and fine art. As a result, the tax treatment of capital gains and losses from the sale of precious metals is different from that of investments in stocks and mutual funds.

First, let’s define what a capital gain is. A capital gain is the difference between what you paid for an investment and what you received when you sold that investment. If you made a profit on the investment, you have a capital gain. If you lost money on the investment, you have a capital loss.

Now, let’s look at the tax rates. For 2010 tax returns, short-term capital gains (assets held one year or less) on the sale of precious metals are taxed at your ordinary income tax rate -- 10, 15, 25, 28, 33, or 35 percent. This is similar to the way short-term gains are taxed on stocks and mutual funds. However, long-term capital gains (assets held longer than 1 year) are taxed at a flat 28%.

Which is better – long-term or short-term? Well, it really depends on your individual tax situation. If you are in a tax bracket that is higher than 28%, then long-term gains may be better. If you are in a lower tax bracket, then the opposite may be true.

Where do I report my gains or losses? You use first in, first out method of calculating short or long term gain. Your report what you bought, month/year you bought it, how much you paid for it, and then the same for the sale side of the transaction on Form 1040, Schedule D. You can use Quicken to remember your investment purchase details or keep the paperwork handy. Gains and losses are reported for each transaction and once all of them are figured, you will either have a net loss or net gain from all of your trades.

What happens if I sell my precious metals at a loss? That's not possible these days, but if your overall capital losses are more than your capital gains, you can claim a capital loss deduction. You can use your total net loss to reduce your income dollar for dollar, up to $3,000 -- or you can carry over any unused parts and treat it as if you had incurred it in the following year. If part of the loss is still unused after that, you can carry it over to later years until it is completely used up. This is a compelling reason to use the same tax preparer every year.

How do I protect my business? Remember that taxes are just one element of investing in precious metals. Private dealers require cash. Even online dealers charge a premium for you to use credit cards. If the IRS audits your business and the following is true:

you didn't use business checking or business credit cards to buy precious metals,
you're not taking write-offs from the private checking account or credit card you used to buy precious metals so those accounts don't appear in your QuickBooks file.
and you didn't write off your safety deposit box fee (or other investment expenses) as business deductions.

then you've shielded yourself from the IRS looking into your personal finances in case of an otherwise routine audit. You aren't required to separate business and investment finances, you just have to have accurate accounting records, but business protection may be a compelling reason to move in that direction.

Also, be sure you get advice from your financial advisor and/or tax advisor, as the information discussed in this article just scratches the surface on the topic. There is often new tax legislation on the table and rates change from year to year.

What would you do with more profit?

2011-03-07T13:59:00.000-08:00

As I watched clients use my accounting help to improve profitability, I assumed they would use this profitability to expand the business. (Perhaps due to having read too many business journals on the psychology of entrepreneurs.) Imagine my surprise when it turned out that they wanted to use their new-found profitability to take more vacations!

New Audiobook

2011-02-01T17:25:00.001-08:00

The audiobook version of Radically Simple Accounting is now released. Download the book from www.qccomputing.com, and Enjoy!

If you have challenges with technology, the following instructions are for you:

The format for the audiobook is .MP3 files which play on your iPod, and on smart phones, like the iPhone, as well as on .MP3 players. Your computer is also capable of playing mp3 files by default. All you do is double-click on the chapter, and it will start playing immediately in whatever media player your computer uses (iTunes, Windows Media Player, etc.)

All 26 chapters are contained in 1 file that you download. Here are instructions on how to unzip an audiobook:

http://www.wonderhowto.com/how-to-unzip-folder-extract-music-files-into-itunes-and-load-them-onto-ipod-348681/

New database for New Year

2010-12-11T21:11:00.000-08:00

Happy Holidays! As the New Year approaches, you may want to consider creating a new database for 2011. There are many advantages, including:

Faster data retrieval. A huge database can become unbearably slow. One client has a database hit the wall in August. Trust me, you don't want to start a new database midyear if you run payroll or pay taxes by the calendar year.
The ability to start fresh. A new database gives you the opportunity to clean up your chart of accounts, customer, vendor, and other lists. Only lists transfer; no transactions.
The security of having only a single year in a single database; electronic information can become corrupted over time.
The convenience of giving your CPA last year's database while continuing to run your day-to-day business without interruption.
The year, the IRS purchased QuickBooks. If you get audited, having a single year in a single database enables you to provide the IRS with just the information they demand, and nothing more.

While there are many advantages to creating a new database for the new year, there are a few disadvantages. You'll need to hire use to setup a new database. Some data needs to be entered twice,, such as uncleared checks and unpaid invoices. (Consider this an incentive to do collections, or what?) And you won't be able to compare financial reports from one year to the next in the same database; you'll have to do that with print-outs, Excel, Intuit Statement Writer (add-on), or by upgrading to Enterprise Edition.

Ultimately, the decision to create a new database for the new year depends on what's best for your business?

If you'd like more information to help you decide, please contact us. Typically we can get you ready for the 2011 database in less than 4 hours, which leaves time to discuss year-end closing or any other business concerns.

P.S. If you do this in Dec., you'll be ready to enter Jan 2011 transactions on "Day One".

Time to donate your stuff to charity

2010-11-23T21:00:00.000-08:00

This is the time to donate. You're going to get new stuff for Christmas, and thrift stores have their highest demand for stuff. So clean out now.

Donating your used stuff is an easy way to help others, and create good will in your community. Goodwill, or any thrift store, does a huge amount of good for the community. And it's helpful to you too. Most people have too much stuff. It's not all that hard to let go of your mistakes. Plus, when people get desperate they turn to crime, and you could be their target. But first they turn to charity, so why not provide charity?

How easy can Goodwill make it? You drive up with the stuff you no longer want in the trunk of your car. They take your stuff out. They give you a tax deduction receipt. (If you're serious about taking a non-cash tax deduction, take photo's of the stuff first.) There's even a thrift store at the ritzy Bellevue Mall, Overlake Service Leaque. That's interesting. Take a shopping bag and drop it off. Come home with a new shopping bag.

Your place will look better with less clutter. When you get rid of junk, you accent the nice stuff (and find it!). Try having spaciousness and see how many compliments you get?

Please take your good quality used items to a charity near you. Thanks!

Audiobook

2010-10-14T19:40:00.000-07:00

I'm excited to announce that "Radically Simple Accounting" now comes in Audiobook form.

Besides the QC Computing Website, the audio book is being sold at the following locations online:

CD Baby,
http://www.cdbaby.com/Search/cmFkaWNhbGx5IHNpbXBsZSBhY2NvdW50aW5n/0

Open Book Audio,
http://openbookaudio.com/product/BaileyM/Radically-Simple-Accounting

Thanks to supporters who helped make this happen. Enjoy!

New Bookkeeper

2010-10-14T19:26:00.000-07:00

I'm excited to announce that a new bookkeeper, Miriam Davis, has joined my practice. She's available to work for you on contract. On contract means that you only pay her an hourly rate, while not concerning yourself with payroll taxes or benefits. You don't even need to create another desk, she'll work at yours while you do something more important.

What I like best about her is her trustworthiness. I trust her with any amount of cash, and any confidential information. It's nearly impossible to find a bookkeeper who's 100% trustworthy. She also has a great personality.

Miriam has an Accounting Technology Associates degree from Edmonds Community College and has been working as a bookkeeping assistant for a CPA who recently retired. I met her after giving a presentation at the Bellevue Real Estate Investors Association. She's a real estate investor in her spare time, so you know she's good with numbers!

If you need a bookkeeper long or short term, any number of hours per week or month, please contact me. No reason to put off that filing project any longer!

The Shoemaker's Daughter has no Shoes?

2010-01-03T14:05:00.000-08:00

My accounting is perfectly up to date all the time. Accounting is required in business and if done well, becomes a profit center. What a simple way to make more profit; just requires a little know-how, and self-love. I unabashedly would like more money, wouldn't you?

It's New Year's, 2010, and time to roll over your paperwork!

File by year. Put transactional receipts for 2009 into archive boxes. Keep the boxes out so you can file remainder paperwork as it comes in, and have access to receipts for product returns.

Have only 2010 files in the filing cabinet by your desk. After you clear out 2009 paperwork, you'll have a place to file the 2010 paperwork that is crossing your desk now. This is a huge time-saver. And if you're successful enough in business to last many years, having yearly archives will be a huge time and space-saver as well.

Fixed Assets, such as your vehicle, plus licenses, warranties, credit card legalese, debit card pin numbers, and other paperwork that is current for the business stays in the filing cabinet.

This is a good time to add printed labels. Besides creating a more attractive filing system, printed labels are easier to read, so less paper is misfiled. Toss excess paperwork. Filing is faster if the folders have wiggle room. My filing cabinet is a beauty to behold and it only takes this once a year update to keep it that way.

The last thing I did as I was archiving 2009 paperwork is to note my income vouchers and say a blessing prayer for all the clients/readers who who gave me money last year. I am unabashedly practicing gratitude as a spiritual practice. May you prosper in 2010!

QuickBooks for the Mac

2009-07-06T20:43:00.000-07:00

QuickBooks for the Mac is not that much different than QuickBooks on the PC. I support all versions/editions of QuickBooks. But my background and expertise in with PC's. I've been using PC's for over 22 years. Now, as more and more clients are moving to Mac's, I decided to learn about Mac OS.

Mac training at the Apple Store is a great deal. Go to the Apple Store at your local mall to sign up. Pay them $99 for a year's worth of training. They offer all kinds of training but the one I'm using is the 1-on-1 private training by appointment. I can get a one hour session per week, 52 a year. I've found it easy to book a session at my convenience. I've had four sessions in 4 months and feel as if I've gotten my money's worth.

Today I took in my PC laptop with iTunes and my iPod to find out why they aren't working correctly. Being over 17 years old I never learned how to make them work correctly in the first place.

If you're even thinking of getting a Mac, you might want to sign up for training first, so you can make an informed purchasing decision. And then you can continue to take more training to learn how to become an expert with your new computer.

Why QuickBooks Online Edition is Slower than QuickBooks Desktop (All Versions)

2009-05-16T13:34:00.000-07:00

I support all years/versions of QuickBooks, including QuickBooks Online Editions. Sometimes a business has a compelling reason to use QuickBooks Online, like the various financial people need to be able to dial in from a variety of remote locations, including hotel rooms. But most businesses will do better using a desktop version of QuickBooks and Remote Desktop Connection. It's much faster for anyone entering or manipulating data, especially a power user like myself.

For the purpose of this article, "desktop" QuickBooks includes all other versions: QuickBooks Pro, QuickBooks Premier, QuickBooks Accountant, QuickBooks Enterprise, QuickBooks Mac, and all special Editions like contractor's edition, manufacturing edition, etc.

Here are some specific examples of differences in speed.

Function: Add a New Account

o). In online edition, you have to select what account type you want to add, such as Expense Account, and then a secondary type of expense account, for example General & Administrative Expense. Sub accounts must match this secondary level type. Why bother? It's a useless designation. So for ease-of-use, chose one secondary type of expense account, and make them all the same.

d). In desktop edition, you can just add a new account with account type, such as Expense.

Function: Delete an Account

o). In online edition, you can delete accounts with balances in them. Before you delete an account you have to check and make sure it doesn't contain any transactions. The Quick Report comes up with "this month", so you have to select "all" to see if there are any transactions from the past.

d). In desktop edition, you can just say delete, and QB will protect you from deleting an account with a transaction.

Function: Select an Account to post the transaction to:

o). Online edition shows you EVERY account in the chart of accounts, with it's parent account. It's a long list so it's very time consuming to find the exact account you want. Usually you want an expense account, which is at the bottom of the list.

d). Desktop version shows you just the expense accounts, so you're looking at a much shorter list of accounts. And you can set Preferences to select, "see the lower account".

Function: Accept a Transactions

o). Online Edition makes you find the "okay" button to save a transaction.

d). Desktop version saves automatically.

Function: Editing a List

o). Online edition you have to find the "edit" or "new" button. Type ahead does work but not very well.

d). Desktop editions let you use keyboard shortcuts, like “ctrl-E” for "edit" or “ctrl-N” for "new". I can edit a list lightening fast with two hands. Type ahead works perfectly.

Other differences? Please submit things I'm missing, or changes, so I can build a comprehensive unbiased article. Are we having fun yet?

Success Stories

2009-02-23T09:02:00.000-08:00

At some point along my path, I realized I had a gift for helping people make their dreams come true. Here are a couple of my more unusual success stories with friends and clients:

A plumber with hurt knees remembers he was attracted to computers in the army but never had a chance to pursue it. He follows my recommendations for what computer to buy first, uses it, asks my advice on different ideas so he doesn't waste his time, and then tries his hand at becoming a software developer. A few years later he is earning a high hourly rate and being flown all over the country for his expertise.

A welfare mother cries on my shoulder that she can't get off welfare because she has no time to work at a job. I look around her apartment and suggest she start off just focusing on clearing out her place so she'll become more efficient time-wise. This ignites her spirit. She sells off as much as she can: clothes, books, movies, as well as eliminating junk and clearing out projects. As her place starts looking cleaner, her ex-husband pitches in by buying new bookshelves. Finally her life is efficient enough whereby she finds time to work at a part-time job while her children are at public school. This eventually pays well enough to get the family off of welfare.

A successful 56 year old functionally-illiterate blue-collar business owner hires me to help him with current bookkeeping and to pay back taxes. Everyone else had frauded him which is how he got into this mess. I help him as asked, and then get his accounting into perfect order. It takes a few years but when all in said and done he has financial security. So I ask him what he wants to do next? He decides to retire and pursue a hobby. I help him collect money owed, and create a list of assets he can liquidate as he needs money. A year later he dies suddenly. He received the precious gift of a year in retirement because his finances were in order.

The broader picture is that we don’t always need more; sometimes we need to manage existing resources in a manner that helps us to accomplish our true goals in life.

How to leverage a loan

2008-11-05T09:26:00.000-08:00

A woman walks into a bank in New York City and asks for the loan officer. She tells the loan officer that she is going to China on business for two weeks and needs to borrow $5,000.

The bank officer tells her that the bank will need some form of security for the loan, so the woman hands over the keys to a new Ferrari parked on the street in front of the bank. She produces the title and everything checks out.

The Loan officer agrees to accept the car as collateral for the loan. The bank's president and its officers all enjoy a good laugh at the woman for using a $250,000 Ferrari as collateral against a $5,000 loan. An employee of the bank then drives the Ferrari into the bank's underground garage and parks it there.

Two weeks later, the woman returns, repays the $5,000 and the interest, which comes to $15.41.

The loan officer says, 'Madame, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a multi-millionaire. What puzzles us is why you would bother to borrow $5,000?

The woman replies: 'Where else in New York City can I park my car for two weeks for only $15.41 and expect it to be there safely when I return?

This was submitted by Lawrence Gu, my PC hardware/OS tech. Please email him for help at: gulawrence@yahoo.com

Filing Systems -- Find Any Piece of Paper in Minutes

2008-07-28T12:11:00.000-07:00

I love organizing data, and offices (and all of my friends closets). Real work is messy; so it's nice to start and end with a clear palette. In this way, one creates a balanced office.

In my own filing system, I can find any piece of paper, from any year, within minutes. In the book, I explain how to create a filing system, even if you're starting with an office disaster. From that core system, you'll modify your filing system according to how you do business, so that you too can find any piece of paper in minutes. This is absolutely doable; I've done it for many clients. Here's one tip: it's rarely necessary to file a singe piece of paper. Put it in a "To Be Filed" folder. When you find yourself with a spare 10 minutes do all the filing.

As Alan Weiss, expert consultant, said in his newsletter "Balancing Act", "In many cases, I love my ducks in a row. But there are times when I just run through the bushes, because it seems like fun. And, interestingly enough, the ducks on my pond have yet to line themselves up in a row." To subscribe: http://summitconsulting.com/newsletter.html

How rich are you?

2008-07-23T16:19:00.000-07:00

Rich, after all, is relative -- as the folks at Poke, a creative agency in London, want to remind us.

Click on this link: Global Rich List and put in how much you make in a year, rough estimate. Based on World Bank data, this little calculator tells you how rich you are compared to the rest of the world.

How do you handle a business crisis, like a computer crash?

2008-07-23T15:36:00.000-07:00

Computer Crash. You think it will never happen to you, but it can, and probably will someday.

My computer went from a dense blanket of software to threadbare in less than 45 minutes recently! Only Safari, the Mac browser program, still worked. I had a visual image of why my Mac client base is growing!

How do you handle a crisis such as a hardware crash? Initially, I freak out. So I take a walk, or a nap. That gives another part of me an opportunity to shine forth. It asks questions that can lead to new growth. “How can I turn this crisis into an opportunity?”

Since I'm new to town I realized that this was the perfect opportunity to hire a new hardware tech. Using Safari I posted an ad and harvested email remotely. And now I have some good hardware techs to support my business and refer to clients.

You can’t trust hardware. Even Macs fail. In order to keep your business running smoothly have redundant systems for anything that is mission critical, and be prepared to be down or replace quickly anything that isn’t:

Have a second backup laptop.
Have a hard disk or offline backup, depending on your needs.
Backup data that changes daily, like QuickBooks, daily with a USB key perhaps
Keep all current software in one box.
Keep current hardware spare parts in one place.
Keep older software and hardware in your garage
Keep all technology original boxes somewhere for returns and warranties.

The Chinese symbol for crisis also means opportunity. Every business crisis can become into an opportunity!

Bookstore Presentation

2008-07-23T15:27:00.000-07:00

Last night I presented Radical Accounting ideas at New Renaissance Bookstore presentation center. Many people, including Roma and Ko, supported this event in practical ways which made me happy. I felt happy preparing the room with refreshments, as well as a table with free stuff including Intuit demo software, and vendors office supply samples. Someday Intuit will provide a demo MAC QuickBooks on CD. You have to download the demo for now.

I've been doing QuickBooks consulting for a decade and I still love it. But teaching is new and fresh. How cool is what we're doing, anyway? A group of twenty entrepreneurs, bookkeepers, CPA's, non-profit managers, and aspiring all-of-the-above, learned, shared our frustrations, networked, ate, drank, and took notes. As a result, everyone gained more control over their financial situation. Accounting classes and books are terribly boring. Talking about money isn't boring, so why should accounting be that way? I bring the joy back into accounting...how radical is thatl!
~~~~~~~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

New Renaissance Bookstore carries the book, so you can get a copy NOW in Portland.

Customizing Your Chart of Accounts

2008-07-23T15:15:00.000-07:00

Here's an interesting question that came up lately. When do you classify an account as cost of goods, and when do you classify it as an expense?

Mike: Suppose I advertise a product in a magazine or on TV and I hire a company to process the incoming calls from customers wishing to place orders for the product, should the answering service's fees be considered Cost of Goods sold or general expense? Also, is the cost of advertising COGS, also?

Madeline: Mike, No. Cost of goods would be the costs of your product, but not advertising or customer support.

Mike: Okay thanks, but every time the "order-taking company" takes an order over the phone, it costs me $2 or $3. Is COGS always and exclusively the cost of materials needed to product the product?

Madeline: Actually, I see your point. There's no law that says you can't have it as a COGS account. It's a marketing expense, but it's coming off the top of the line, so in that sense it's a direct cost. I'd call the account, "Sales processing fee". That's pretty direct, ha, ha, and a banker would understand it, don't you think?

For one client who asked me to help him make his business more profitable, I noticed that while his gross was high, he wasn't making as much off of each sale as he imagined, so I changed his merchant fees to a COGS account, which appeared to lower his markup. It worked psychologically. He changed pricing such that his gross sales went down, but profit went up. With fewer sales, he was spending less time at the business...another plus.

Every business owner has different profit challenges, which is why the book, Radical Accounting, guides you through customizing your chart of accounts for your business.

Disclaimer

2008-07-21T14:49:00.000-07:00

You're an expert in your business and I respect that. To provide myself with the same respect and security, here's an ironclad, legally-binding, no-holds barred disclaimer. Ms. Bailey will do her best to give you useful and accurate information, but it’s your responsibility to verify all information before relying on it. Laws, procedures and regulations change frequently. Tax code is subject to different interpretations. Every state has its own laws as well. Please obtain up-to-date advice from the appropriate government agency, financial, or legal advisor before taking action. You agree to take full responsibility for any decisions or actions you take directly, or indirectly, as a result of Ms. Bailey’s answers. Ms. Bailey makes no representations or warranties with respect to the contents hereof and specifically disclaims any implied warranties of guaranteed success. Under no circumstances will she be held responsible for economic or non-economic damages resulting from the use or misuse of any furnished documentation or source.

Above are some questions and answers that come up in the normal course of business that might help you make your business more profitable!

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