Bookkeeping - Vyde

10 Quick Steps to Catch Up on Last Year’s Bookkeeping for your Business

Let’s assume you haven’t done your small business bookkeeping in…a while. If it’s been several months, you’ve probably got some major catch up bookkeeping to do. We’ve compiled a quick to-do list to catch yourself up before last year’s taxes are due.

Start with your receipts. As a small business owner, your receipts may come in many forms. You’ll need to look for receipts in the form of customer invoices that have or have not been paid, any business expenses put on a credit card, business expenses paid in cash, vehicle expenses, vendor accounts, monthly payments, and so on. Don’t try to reconcile your bank account as you go; you’ll have better luck if you gather all receipts first and reconcile later.
Grab those bank statements. Print off the month’s of bookkeeping you need to catch up on and start comparing with your receipts. This will help you identify any errors on your part, find deductions you missed, and catch any mistakes in your bank records. Your end balance in your bank account should match your balance in your bookkeeping records. You’re better off to have your bank accounts reconciled before heading to your accountant.
Separate business and personal expenses. If you’re not using a separate business bank account, things can get messy. You’ll need to go through every transaction and determine if the expense was personal or professional. Steps 1 and 2 above should help with this part. There will likely be some overlap in these expenses.
Calculate portions of personal expenses that can be used as deductions. If you’re maintaining a home office, some of your personal expenses can be deducted such as a portion of your mortgage, electric bill, and internet. If you use your phone or car for business (who doesn’t?) portions of those bills are deductible as well, depending on the percentage of use.
Create digital records as you go–and from now on. You’ll need to keep all your records for at least 7 years, as that is how long the IRS can audit your company after a tax return has been filed. Fortunately, they accept digital records so snapping quick photos of receipts as you go will save you a lot of time and space. Create an organized system on your computer of yearly folders, with monthly folders within those to store digital copies of receipts.
Collect and send 1099-Miscs, W9s, and W2s. If you paid a contractor more than $600 last year, you’ll need to send them a W9 and Form 1099. (Unless you paid them via PayPal or credit card; more on that here.) A W9 requests a tax payers information, so it’s best to send them that form right when they start working for you. A Form 1099 is used to report how much you paid them during the year. Your company employees will need W2s which state how much they earned in a year.
Factor your net profit and your total expenses for the year. Review your income and subtract all expenses (deductions, payroll, business space rental, etc.) Determine your taxable income for the year.
Browse for common small business deductions you may have missed. You may be missing deductions and not even know it! Learn about commonly missed business deductions here, here, and here.
Hire an accountant. If you’re feeling overwhelmed and confused, call in a professional. (You may need one even if you’re not!) An accountant can help you reconcile your accounts, determine missed deductions, and make sure you’re paying the right amount of taxes.
Don’t let it happen again! Everyone gets behind sometimes, but creating an organized small business bookkeeping system will help you avoid costly mistakes in the future. Whether you hire a bookkeeper, use Quickbooks or your own Excel spreadsheet, or have your grandma do your taxes, be sure to set aside time each week to take care of these tasks. Staying on top of bookkeeping now is the best way to save yourself time during tax season.

Frequently Asked Questions:

What should I prioritize if my small business bookkeeping is behind?

Start by organizing your receipts and comparing them with your bank statements to reconcile transactions accurately.

How can I manage personal and business expenses effectively?

Separate your personal and professional expenses meticulously. Reviewing receipts and bank statements will aid in distinguishing between the two.

Are there specific deductions I can claim for my small business?

Yes, deductions include expenses for home offices, phone or car usage for business, and more. Consult with a tax professional for personalized advice.

How should I handle tax forms for contractors and employees?

Send W9s and 1099-Miscs to contractors paid over $600, and W2s to employees. Ensure accurate records and timely submissions to avoid penalties.

When is it advisable to hire an accountant for small business bookkeeping?

If overwhelmed or uncertain, seeking professional help is wise. An accountant can streamline processes, identify missed deductions, and ensure compliance with tax laws.

Interested in Learning More?

Schedule a free consultation with our team!

4 Ways to Reduce Your Personal Income Tax Bill

As we approach the end of the year (and the beginning of tax season!) it’s time to start thinking about how your year went financially. If you made a little more money than usual or are anticipating a high tax bill for your personal income tax, you still have time to reduce your bill before the end of the year.

Here are four ways to lower your personal income tax obligation before December 31st:

Pay Deductible Expenses Early.

Pay January’s mortgage by end of December
Pay ahead for property taxes due in 2016
Contribute more money to your retirement (IRA & 401K are deductible)

Donate to Charity.

Use a Schedule A to itemize deductions
Keep proof of your charitable donations
You can deduct cash contributions up to 50%of your AGI; 30% for property donations
Use IRS Pub 78 for a list of approved charities for deductible donations

Pay Tuition Early.

Prepay tuition and expenses for academic periods that begin in January through March of next year
See if you qualify for the American Opportunity Credit or the Lifetime Learning Credit

Defer Income.

Deferring income is worthwhile if you expect to be in the same or lower personal income tax bracket next year
Self-employed or cash-basis taxpayers should wait until end-of-year to send out invoices so they won’t receive payment until 2016
Deferring income can be helpful every other year to take advantage of tax breaks

Do you have any other financially-savvy tips for reducing your personal income tax bill? We’d love to hear them! Leave your tips in the comments below.

The Business Standard Mileage Rate and How Do I Use it for My Small Business?

If you own a small business, you’ve likely heard the term “Standard Mileage Rate.” Some business owners spend a great deal of time behind the wheel, logging up to 20,000 miles in a year. Most of the time, they’re using their personal vehicle for business travel which can end up being quite expensive. The IRS has provided a Standard Mileage Rate to ensure those miles driven for business are tax deductible.

Here’s how it works:

Standard Mileage Rate Explained

Rather than adding up every mile driven, gas tank filled, oil changed, car wash and window cleaning, tire rotation, and other vehicle expenses in a year, the IRS offers the Standard Mileage Rate which provides a 57.5 cent deduction (2015) for every mile driven for business in a year. That way, business owners only have to track miles driven, and not every other cent they spend on their car. To figure a standard mileage rate, simply take the number of miles driven and multiply it by the current standard mileage rate (which changes every year).

Example: Jenny, a realtor, drove his car 15,000 miles for business during 2015. To determine her car expense deduction, she simply multiplies her business miles by the applicable standard mileage rate of 57.5 cents per mile. This gives her a total deduction for the year of $8,625 (.575 × 15,000 = $8,625).

Standard Mileage Rate vs. Actual Expense Method

Most business owners find it quicker, more efficient, and financially advantageous to use the Standard Mileage Rate. However, it doesn’t hurt to keep track of receipts and expenses and see which method gives them a better deduction for the year.

To use the actual expense method, a small business owner must keep track of every purchase made for their vehicle. These expenses include:

gas and oil
repairs and maintenance
depreciation of your original vehicle and improvements
car repair tools
license fees
parking fees for business trips
registration fees
tires
a portion of insurance premiums
car washing
a portion of lease payments

The Actual Expense Method can offer a larger deduction at the end of the year, but it require diligent and meticulous record keeping.

Which method is better?

Determining which method is better for a small business owner requires calculating both ways to see which offers the bigger deduction. Keep in mind that smaller cars usually get better gas mileage and may not require as much as maintenance as larger vehicles. In this case, the Standard Mileage Rate is almost always the better option. After you calculate both ways for the first year of using your vehicle for business, you’ll likely stick with the same method year after year. However, you are allowed to switch back and forth between the methods from year to year, but with some restrictions. Ultimately, most small business owners elect to use the Standard Mileage Rate, but both are important in tracking business expenses and deductions.

Vyde’s Year-End Business Accounting Checklist

As December approaches, it’s time to start thinking about your small business bookkeeping and closing out the year for your small business. While that may sound like an overwhelming feat to accomplish in addition to a busy holiday season, we’ve made the accounting part easy with our quick, printable year-end business accounting checklist. Click here to download.

Top 20 Accounting Tips for Insurance Agents

As an insurance agent, there is no one who understands the importance of protecting your assets better than you. You’ve got your clients covered when it comes to their vehicles, home, business, assets, family members, and every other important aspect of their life. Why not do the same for your insurance agency? Proper accounting and bookkeeping practices help protect your business from potential disaster by ensuring your finances are always in order, no matter what comes your way.

Top 20 Accounting Tips for Insurance Agents to Protect Your Business and Keep It Running Smoothly

1. Find an efficient way to track income and expenses. The first accounting tips for insurance agents is to keep track of money coming in and money going out. It is important to track expenses as they really are and not how you want them to be. Having an efficient system for tracking expenses and income is the only way to know how your business is performing financially.
2. Create a budget and stick to it. Categorize and track all expenses for your insurance agency. Your budget should include monthly expenses for different aspects of your business such as payroll, marketing, utilities, office rent, office supplies, business meals, and vehicle expenses.
3. Separate business and personal expenses. One of the first orders of business for insurance agents should be to set up a business bank account and use it for all business expenses. That way, when tax time comes you will only have to review your business account bank statements for deductions and expenses, rather than reviewing your personal account and trying to remember which expenses were for your insurance agency.
4. Set aside time for business bookkeeping and accounting. If you prefer to do business bookkeeping yourself, try set aside at least one hour each week to pay bills and update your income and expenses.
5. Don’t miss out on deductions, big or small. Noting even the smallest tax deduction can add up over the course of a year and really help out during tax season. Any money spent on improving or maintaining your business is tax deductible, as long as the expense is ordinary and necessary. Visit our previous posts on business deductions here, here, and here.
6. Create a home office. If you use part of your home to conduct insurance business, you may be able to claim a home office deduction. The IRS requires that the space designated as your “home office” must be used regularly and exclusively for your insurance agency business.
7. Track vehicle expenses. While you can’t deduct your drive to and from the office, all the other driving you do for your insurance agency is deductible, like driving to see clients or taking the office staff to lunch. Make sure to keep an accurate log of all miles driven for business.
8. Pay close attention to important tax deadlines. The most important tax deadlines to be aware of for insurance agents are Estimated Quarterly Taxes, which are due four times each year.
9. Outsource payroll. Most insurance agents start out doing their payroll in-house; however, when your insurance agency reaches a certain point of growth, you may find the time and effort put into payroll isn’t worth the cost anymore. Outsourcing payroll frees up your time and provides access to the knowledge and expertise of professional accountants, who are less likely to make mistakes while processing payroll.
10. Choose benefits wisely. The most sought-after benefit for employees is health insurance, followed by retirement, life insurance, and paid leave. Employees also appreciate extra perks like wellness programs, gym memberships, and child care assistance.
11. File taxes early to prevent fraud. Not only does it relieve your stress, to get taxes done early, it reduces the risk of identity theft.
12. File a tax extension when you need to. Here’s how.
13. Employ your children. Whether they’re cleaning your insurance office or answering the phone, their wages are tax deductible and they can be a big help to your business. Teaching them work ethic at a young age is an added bonus, right?
14. Invest money wisely in your business. Don’t spend money carelessly, even if you feel like you can afford it. Make business purchases wisely and invest in the aspects of your business that will provide you with the most profit long-term.
15. Set your salary. Decide on a monthly amount or percentage of profit from your insurance agency for your take-home pay. For tips on setting your own salary as a business owner, visit this post here.
16. Develop an exit strategy for your insurance agency. If you’ve partnered with another insurance agent, an exit strategy helps keep the relationship professional and is an added security for the business. Make the tough decisions about how your partnership could potentially end now, rather than when things may be tough down the road.
17. Develop a succession plan for your business. Additionally, setting a plan of who will eventually take on more business responsibilities within your insurance agency helps keep things on track.
18. Save money where you can, but don’t cut corners.
19. Utilize technology. Stay up to date on the latest accounting software for your industry, in addition to utilizing tools like smart phones and tablets to track expenses.
20. Hire a professional accountant. Mazuma accountants can take care of all the taxes, catch-up bookkeeping, and accounting for your insurance agency for less than $100/month. It only takes ten minutes to upload your information monthly or stuff your Purple Vyde Envelope with receipts and invoices and send it off to Vyde accountants who take your financial records and turn them into neat and tidy profit/loss statements.

Protect your business finances like you protect your insurance clients and you’ll be prepared for any unexpected financial crisis that comes your way.

FAQs for Insurance Agents Regarding Accounting Practices

1. How does efficient tracking of income and expenses benefit my insurance agency?

Efficient tracking offers clear insights into financial performance, aiding informed decisions and ensuring accurate financial assessments.

2. Is it mandatory to set up a separate business bank account for an insurance agency?

Establishing a separate business account simplifies tax processes, enabling easy identification of business-related expenses during tax assessments.

3. Why consider outsourcing payroll for an insurance agency? Outsourcing payroll, especially with business growth, saves time and minimizes errors. Professional accountants handle complexities more efficiently.

4. What’s the significance of filing taxes early and considering tax extensions?

Early tax filing reduces stress and minimizes identity theft risks. Tax extensions offer flexibility, ensuring accurate filings without unnecessary rush.

5. How can utilizing technology benefit insurance agency accounting?

Adopting updated accounting software and tech tools streamlines expense tracking, enhancing accuracy and efficiency in managing financial records.

6 Ways to Save Time and Money on Bookkeeping and Accounting as a Realtor or Real Estate Agent

There’s nothing better than being able to save a little extra time and money as a real estate agent. Finding an efficient and cost-effective way to take care of your real estate bookkeeping and accounting is imperative to doing just that.

First, let’s make a distinction between bookkeeping and accounting. Sometimes the terms are used interchangeably, but that is incorrect. Bookkeeping and accounting are two parts of the same financial cycle.

Bookkeeping involves the recording of daily transactions for your business including:

Posting debit and credit card expenses
Recording all financial transactions
Issuing invoices
Balancing bank accounts and checkbooks
Payroll duties

Accounting is a higher-level process that takes all of your bookkeeping information and makes sense of it by creating financial documents that give you insights about your business. Accounting includes:

Preparation of financial statements
Profit and loss reports
Financial analysis of the company—operational costs, determining where money can be saved, and analyzing financial data over time
Filling out small business tax forms and returns.

So how can you save time and money on these two time-intensive tasks as a real estate agent or realtor? Here are a few tips to help you out:

Do it right the first time.

If you’re managing your real estate business bookkeeping and accounting yourself, don’t take shortcuts thinking you’ll save time or money. Turn bookkeeping into a regular habit, just like checking your email each day or setting weekly goals for yourself. Decide how often you’ll take care of bookkeeping tasks—ideally at least once per month, and set aside time specifically for this task

Keep all records.

The golden rule for any accurate small business bookkeeping. Whether you prefer hard copy receipts or everything digital, find the quickest, easiest, and safest place to keep your receipts and financial records. Keep a folder or envelope in your office, car and/or wallet where you put all your business receipts. If you prefer a digital method, you can take photos of receipts and upload them to an app such as Expensify or Hello Expense.

Familiarize yourself with common accounting terms.

Accounting jargon can sometimes seem like another language, especially if you’re not familiar with business accounting. Terms like accounts receivable, balance sheet, cash flow, ledger, accrual, and Return on Investment aren’t words that often grace everyday speech. Learn the basic business accounting terms and what they mean, here.

Keep business and personal accounts separate.

Nothing creates a financial mess at the end of the year quite like personal or business expenses charged to the wrong account. By keeping your realtor business and personal accounts separate, your bookkeeping will go much more smoothly and you’ll be able to keep your business’ professional image in tact. For end-of-year accounting, you will need to review your personal account for possible business deductions such as portions of your phone bill or even your mortgage payment. Meanwhile, keep small business purchases on a personal account to an absolute minimum.

Invest in bookkeeping software that’s right for you.

If you plan to manage your own business accounting and bookkeeping, you’ll likely end up needing more features than an excel spreadsheet can provide. Research several types of accounting software and find one that fits your needs. Some are tailored to realtors specifically, but many realtors find success using general accounting software such as Quickbooks. Remember, you can always try our Quickbooks alternative.

Hire an accountant.

If you really wanted to, you could probably tackle any accounting or bookkeeping question that came your way. However, most realtor and real estate agents find that it’s not worth their time to spend hours each month doing bookkeeping when they could be focused more on the money-making aspects of their business. Instead of trying to muddle through on your own, you’re better off to hire a professional accountant to take care of your small business accounting needs. Not only will an accountant save you time, but they can also save you money by finding more business deductions during tax season, catch any accounting errors you may have made or overlooked, and advise you on how to save or invest your money. Vyde provides bookkeeping and accounting services for realtors and real estate agents, and unlimited accounting advice from real CPAs, all for less than $100/month. Give us a call today, we’d love to discuss your real estate agent accounting questions.

The Top 10 Tax Deductions for Realtors & Real Estate Agents

Almost everything you buy for your real estate agency is tax deductible, as long as it is ordinary, necessary, and reasonable. The great thing about spending all that money on your real estate agency throughout the year is that the expenses can be subtracted from your taxable income at the end of the year and can really help you out during tax season. So just what is tax deductible when it comes to being a realtor ?

Top 10 Common Tax Deductions from the Real Estate Pros:

Car Deductions. Undoubtedly the single most commonly claimed tax deduction for all small businesses — but especially for real estate agents. While you can’t deduct your drive to and from the office, all the other driving you do for your real estate business is deductible, like driving clients to see homes or putting up signs. We talked more about how to track mileage and deduct those expenses, here.

Office Expenses and Supplies. The great thing about real estate is that you’re not stuck behind a desk all day, yet you still have plenty of desk work to keep you busy. Any office supplies you purchase — from post-it notes to printer ink to a new office chair — is tax deductible. Don’t overlook the big items either, like office rent, utilities, and renter’s insurance. If you work from home, you will claim a home office on your taxes and your deductions may be calculated differently.

Professional Services. Any fees you pay for consulting, accounting, and legal advice. can be deducted, as long as they are directly related to your business. This includes networking groups.

Travel. When you go out of town for real estate, you can deduct airfare, taxi rides, train tickets, and other transportation at 100%. You can also deduct hotel/lodging expenses at that rate. However, only 50% of your meals and entertainment can be deducted for business travel, but if your trip is well planned you may be able to squeeze in a little fun while you’re away.

Insurance. If you have business liability insurance or insurance on your business property, it is tax deductible. If your office is in your home, only a portion of your homeowner’s insurance is deductible. If you are completely self-employed, you can also deduct 100% of your health insurance premiums.

Meals and Entertainment. Expounding on deduction 4 above, meals and entertainment can be deducted at 50% only if a serious business conversation took place before, during, or after the event.

Advertising Expenses. Any money you spend to promote your real estate agency is tax deductible. This includes business cards, website creation, website design, website hosting, promotional signs and billboards, balloons, open house costs, promotional events and/or booths, and home demonstrations. Keep close track of advertising expenses; they add up quickly in real estate!

Computer Software. Any leased or purchase software for your real estate business is tax deductible. Microsoft Office to QuickBooks to Adobe Creative Cloud, as well as software, can be deductible.

Education Expenses. Any money you spend to further your knowledge or skills in the real estate business is tax deductible. Whether you take an online class, enroll in a college course, take a mandatory certification or CE (real estate continuing education), or subscribe to a real estate magazine, you can deduct the money spent on improving yourself professionally.

Cell Phone. It’s no surprise that realtors use their phones perhaps more than many other small business owners. They’re constantly connecting with clients, brokers, home owners, home buyers, coworkers, and lenders. Calculate the percentage of time you use your phone for business and use that number to determine the deductible portion of your phone bill. If you have a smart phone, you’re likely using your phone for business even more to research addresses, neighborhoods, and mapping home visits with clients.

Realtors and brokers have hundreds of tax deductions available to them. We’d love to help you with your real estate tax deductions; give us a call today.

Small Business Payroll 101: What Are The Costs Associated With Small Business Payroll?

Payroll takes up a significant portion of a company’s revenue, but in addition to the money paid to employees for their work, there are other costs associated with payroll as well.

Some of the costs associated with payroll include:

Printing checks for employees. Since payroll checks include Year to Date pay information, they must be special business checks.
Direct deposit fees and other banking costs.
Employer portion of the following: Social Security Tax, Medicare Tax, state unemployment, federal unemployment, worker’s compensation insurance, paid holidays, sick days, contributions toward 401K, retirement, etc.
Time spent by a business owner or accountant to calculate gross and net incomes for each employee.
If your company uses an outside service to process payroll, they may be charged based on the number of checks cut, plus a flat fee for each time payroll is processed. The more often you pay your employees, the higher your processing fees are.

Many small business owners find that as their company grows, their time becomes more precious, and they can actually save money by outsourcing payroll services.

On average, businesses are overpaying employees by about 4 percent because of differences between the employee’s time and an accurate time record. Hiring an expert accountant to handle payroll can often reduce these discrepancies.

Another quick way to determine if outsourcing payroll would save your business money is to look through your small business bookkeeping and figure out how many hours your employees are devoting to payroll-related activities. Then, calculate how much you’re spending and compare the amount to the plans offered by several payroll-services providers.

Doing payroll yourself can take a lot of time and focus from the money-making aspects of your business. Payroll may not directly increase sales, but done incorrectly, it can put your business in a world of hurt. To be in accordance with the laws and legal requirements of payroll takes a considerable amount of time and detail. Outsourcing payroll will help you save time and allow you to spend more money on the profitable parts of your business.

Visit more posts in our Payroll 101 series:

What is Payroll?

The 1099-Misc Explained

Setting Your Own Salary as a Business Owner

The W-2 Explained

How Often Should You Pay Employees?

5 of the Best Benefits to Offer Employees

The Power of the Employee Pay Stub

Mazuma’s 3 Year Anniversary

Mazuma is turning 3! And, we’re doing the hula accountant-style over here because we’re celebrating another great year. We couldn’t have done it without you. We started with the idea that small businesses need simple, affordable accounting and because of you and the family, friends and colleagues you’ve referred to us we’ve grown. Thank you for entrusting us with your accounting.

There are all kinds of wonderful going on this week and you’re invited to participate in them all.

MAZUMA ANNIVERSARY SWEEPSTAKES

WIN A $25 GIFT CERTIFICATE TO YOUR FAVORITE RESTAURANT/STORE
ENTER BOTH CONTESTS FOR TWO CHANCES TO WIN

Say Cheese!

Grab your purple envelope and smile! Take a photo of you and your purple Mazuma envelope, add it to Facebook with a caption telling the world about your feelings for Mazuma. Share it with Mazuma to be entered into the contest. Want some free publicity? Stand by your business sign or hold up your bcard in the photo.
Be a Mazuma Star!
Tell your Mazuma story. Review and share Mazuma on Facebook to be entered into the contest.

Not a facebook groupie? Send us an email with your review and photo to be entered in the contests or post it to google.

MAZUMA STYLE TRAINING VIDEOS LAUNCHED
As part of Anniversary Week, Ben Sutton taped a three part series exposing the real secrets of accounting and how to use it to be more successful in your business. These informative videos show the document you’ll receive from Mazuma each month and how to read the Income Statement, Balance Sheet and Ledger Report to get the most out of your Mazuma services. Ben even highlights ways to use the numbers in your real life situations. And, he uses normal words and examples. Insert applause here.

Profit and Loss/Income Statement Training

Balance Sheet Training

Ledger Report Training

PARTY ALL WEEK LIVE AND VIRTUALLY
All week long we’ll be partying online on our facebook and pinterest pages. Join the fun and share what you think of Mazuma and where you stash your purple envelope. Or if you have general questions, ask away. We’ll respond.

If you’re in the Utah area, plan on joining us for some food and fun. Watch for your invite in your inbox.

Thanks for celebrating with us!

Resources

Category: Bookkeeping

10 Quick Steps to Catch Up on Last Year’s Bookkeeping for your Business

10 Quick Steps to Catch Up on Last Year’s Bookkeeping for your Business

Frequently Asked Questions:

Interested in Learning More?

4 Ways to Reduce Your Personal Income Tax Bill

The Business Standard Mileage Rate and How Do I Use it for My Small Business?

Vyde’s Year-End Business Accounting Checklist

Top 20 Accounting Tips for Insurance Agents

Top 20 Accounting Tips for Insurance Agents to Protect Your Business and Keep It Running Smoothly

FAQs for Insurance Agents Regarding Accounting Practices

6 Ways to Save Time and Money on Bookkeeping and Accounting as a Realtor or Real Estate Agent

So how can you save time and money on these two time-intensive tasks as a real estate agent or realtor? Here are a few tips to help you out:

The Top 10 Tax Deductions for Realtors & Real Estate Agents

Top 10 Common Tax Deductions from the Real Estate Pros:

Small Business Payroll 101: What Are The Costs Associated With Small Business Payroll?

Some of the costs associated with payroll include:

Mazuma’s 3 Year Anniversary

Our Services

About Vyde