What Happens When You’re Gone?

Succession planning has typically been the bastion of the big guys, the corporations who ensure that key positions are filled in so the company can keep moving forward, no matter what happens.

That’s all good and well for them, but for those of us who don’t have the wherewithal to have legions of replacements standing at the ready, what do we do? Obviously we intend to have nothing happen to us, but get this: things happen. Unplanned, unprovoked, unwarranted, and unwanted things. You could be run over by a truck, just when you thought life was going along swimmingly well. You could be kidnapped and held for ransom by robber barons who care little what happens to your company in your absence. You could step into a shower one day, slip and hit your head, and be dead within the week. (This happened to someone I knew. Not something one can plan for, is it?)

I don’t mean to be morbid, but here’s the thing: things can happen that we never expected. It’s what makes life so interesting, the possibility that every day wondrous things can happen, but so can horrible things, things that we never anticipated. These things can remove us permanently from our business, or they can remove us only temporarily, or they can fall into the great unknown category: will we return to work? Only time will tell.

And what happens to your business then? Perhaps you don’t care. After all, you won’t be around, so what does it matter? How do your customers and clients feel about that? One of the reasons people go to big companies is to ensure they’re taken care of, even if something should happen to the person handling their account. How can you give your customers the same level of comfort?

If you work with others in your business, either partners or employees, is there enough information so the loss of one of you doesn’t mean the customers will be neglected? Are procedures in writing and does everyone know where they are? If it’s just you running your business, what will happen if you disappear one day?

It’s one thing to plan what will happen to your business if something happens to you. If you’re a sole prop, you are your business, so the business will come to an end. But what about your customers and clients? How will they feel about it? Oh sure, they’ll be sad, of course, but what about THEM? They’re going to wonder what’s going to happen to them, which is a natural response. And what will happen to them? These are the things you should be thinking about now, and the beginning of a new year is a good time to do it.

Some of my colleagues who have their own businesses have reciprocal arrangements. If something happens to me, my husband knows who to contact to take over my client work. I have information on all my clients in a file, or will, as soon as I finish updating it. Here’s the thing: this is not a one-time all-done-never-have-to-think-about-it-again sort of thing. It’s an ongoing process, keeping in mind how you’d like your vendors to take care of you, should anything happen to THEM. Do no less for your own customers, and you’ll rest a lot easier in that hospital bed, which will mean you’ll be able to return to work faster and get back to living your life. If you’ve planned to take care of your customers when you can’t do it yourself, they’ll still be there, waiting for you.

QuickBooks 2010 has been released!

QuickBooks 2010 is on its way, and previews promise some exciting new changes. I'm looking forward to receiving my copy any day now, and the anticipation is overwhelming! (Some of us are more easily amused than others.)

New Features in 2010
One that I'm looking forward to is the Client Data Review, which will allow me to easily identify errors and make mass corrections. This is only in the Accountant's version, but it will also allow me to fix and send back files from QB Pro and Premier 2009 to clients easily. This is huge, since I'll be able to fix things from 2009 and send it back to you using the Accountant's Copy. No upgrading necessary from 2009!

A totally new feature in 2010 for Pro, Premier, and Enterprise is the Document Management system which will store documents in the Internet cloud. Know how you collect all those pesky receipts and documents that have to be filed? With 2010, we can scan the documents directly into QB, and attach them to transactions, accounts, vendors, employees, and customers. This keeps your documents as well as your QB file backed up, and will simplify collecting and matching documents to specific transactions.

A TWAIN compliant scanner is required for this, so if you're thinking of getting a new scanner, you'll want to make sure it's TWAIN.

Also in Pro, Premier, and Enterprise will be the ability to copy and paste lists from Excel directly into QB lists. And instead of editing each list entry individually, we'll be able to copy the changes to many.

Do You Need to Upgrade?

I'm often asked if upgrading is necessary, and the answer is certainly not. Depending on the features you use, upgrading is entirely optional. QuickBooks does support only the previous three versions, so this year 2006 was sunsetted, which means payroll subscriptions no longer work, as well as online banking. If, however, you're not using those and want to continue with an older version, go right ahead. I would advise that you make regular backups after every use and keep them in a secure location because if there is a problem, there's nothing Intuit support can do to help you. Next year 2007 will be sunsetted, so if you have a payroll subscription or use online banking, you'll want to upgrade.

However, there are always good deals to be found on the current software, especially if you don't have to run out and buy it on a moment's notice. If you'd like to be notified of these sales, let me know and I'll add you to my email list that I send out when I become aware of them. Sometimes they only last a day.

Communicating by Technology

This is not a post about accounting, or bookkeeping, or even QuickBooks, one of my most favorite subjects of all (she said facetiously). It’s about communication. It doesn’t matter what line of work we’re in, we need to communicate effectively. As I worked through my day today I witnessed several instances of miscommunication, all from the comfort of my desk in my office in my home, where there are no people, except for my husband who occasionally wanders in, and then out again. We don’t even need to be around people to have communication problems, thanks to the telephone, email, Facebook, Twitter, instant messaging, etc. I chatted with four people online this afternoon, and once found myself typing a response to one person in the message box of another.

This is not what I mean when I say we have problems communicating. Sure, it confuses the person receiving the message, but that’s the least of my worries. (The largest of my worries is the way my dogs insist on sleeping at my feet when there’s only room for one of them, but that’s another story.)

When we talk to people we don’t know, and it happens far more than we might think, we’re apt to forget that they aren’t operating with the same sets of assumptions that we are. They don’t even know us, and while we may be funny and entertaining to our friends, people who don’t know us may not react the same way. It’s easy to think we can write to people who don’t know us well as if we were writing to anyone else, but it’s more productive to realize that first we should find out their method of communication, and respond to them appropriately.

Are they formal in email, casual in conversation? Do they hate email so much that they’d rather talk in person? (Yes, there are people like that. I am not one of them.) Do they fear the telephone so much that they’d be happier emailing or IM’ing? When they do email, do they like to stick to just the facts, and leave out the extraneous chit chat? Should you forget about the technology altogether and meet them for coffee? Obviously, this only works if they’re close by. Otherwise, you’re going to have to make do.

Do the words you use mean the same thing to them that they mean to you? Words are more than a few letters strung together. The emotions they evoke are unpredictable, and the intonation when they’re spoken says as much as the words themselves. In email we don’t have intonation or facial expression or anything of that sort, and no, emoticons aren’t quite the same thing. In fact, emoticons might annoy your reader, if they’re of the anti-emoticon camp. (The Anti-Emoticons have a strong following, so be careful.)

We have only the words and the sentence structure to guide us, so it’s helpful if we use them judiciously. Short sentences are good, politeness is good, and remembering that your contact may not have any idea what you’re talking about is also good.

Providing enough information is also helpful. Today I searched extravagantly for a phone number because the sender hadn’t included one on his original email. “Call me,” doesn’t have much relevance if I can’t find the phone number.

I’m guilty, in my emails, of being overly familiar. I’m likely to start off with, “Hey, how’s it going?” I’m likely to make jokes without even knowing if the receiver likes jokes. Maybe they don’t want to hear my sad excuses for jokes. Of course, it’s awkward to send out a questionnaire on communication styles before you begin communicating with someone, so all we can really do is remember that people communicate differently, not only by different methods, but with different preconceptions and with a wide variety of styles. Make it easier for them. Pay attention to what they’re most comfortable with, and adapt your style so you’re getting your message across.

Time Travel in QuickBooks

Here’s some news: QuickBooks does not have a time travel feature. Several questions this week have illustrated the need to point this out. While it’s easy enough to fix most anything that is entered incorrectly in QB, it’s still important to be careful when entering transactions. One end user wanted to go back a week in time, exclaiming, “If I can just erase the past week, before it all went bad, I could start over from there.” Another asked, “Can I go back two hours? I deleted transactions that I want back.”

Other than restoring from a backup, there’s no way to go back in time. This has been true for as long as I can remember, and if it changes I hope someone lets me know. In the meantime, we’re stuck with the current reality, which is that once transactions are entered, they’re there, and once transactions are deleted, they’re deleted, which harkens back to several other questions this week along the lines of, “I deleted some transactions by mistake, can I undelete them?”

It would be so convenient if life came with an undelete button, like Microsoft Word, but in accounting software, undo is not really an option. If a transaction is deleted and you want it back, you must go back in and recreate it. I could make an analogy to life, but that would mean straying from the topic of this post, which has little to do with life philosophy and more to do with QuickBooks.

So what do we do, if we can’t go back in time, and we can’t undo?

We back up frequently, just in case. There are ways to set your software to automatically back up, and systems to ensure you always have a current backup. It’s one of those things that people tend not to think about, until they’re wishing they had a backup. It may not make it possible to travel back in time, but it does make it possible to erase what happened in that period of time and start over again. Of course, like life, then you have to hurry to catch up, but that’s okay, it keeps us on our toes.

Don’t delete transactions until you know why you’re deleting them. This isn’t nearly as obvious as you might think, based on the questions I’ve seen from QB users. If you’re not sure, void the transactions instead. Then you have a better record of what was there, especially if you make notes in the transaction about why it was voided. I recommend my clients always void instead of delete. Deletion is so . . . permanent.
Close your period when you’re done with it so nothing can be done to change it without a password. It’s so easy to set that up, but even easier to change a transaction in a prior period that can cause problems.

Check your audit trail. Under Reports, Accountant and Taxes, we find the Audit Trail. This is to find the transactions that have been deleted, changed, added, etc. It’s there for a reason. If you have multiple users, it will tell you who did what. Don’t let everyone use Admin – no way of telling who did what then.

Taking a few simple steps can make your usage of QB safer, keep your data intact, and keep you from wondering what to do next, at least regarding QuickBooks. It’s a start.

Do You Keep Copies of Your Payroll Forms?

This week I have seen more than a few QuickBooks questions about how to “retrieve” payroll forms from last year and the prior year, as in, “How do I retrieve my 2007 W-2’s?” and “Where can I get a copy of a 941 from last year?”

The simple answer is this: Wherever you keep your copies, that’s where you get one. Don’t count on your software to do it for you.

Keep copies of all payroll reports. QuickBooks updates its forms each year, so you can’t go back in and print something from last year, at least not correctly. It’s the responsibility of the business to keep copies of forms for their files. This can be as simple as making a PDF of the forms and filing them on your computer (making sure to keep backups of course) if you’re a paperless office, but there’s really no getting around the necessity of keeping copies for yourself.

It is not uncommon for issues to arise with past filings. I’ve had the feds come back and ask for copies of previous year’s W-2’s and 941’s, claiming they weren’t received (which is another issue entirely), and it’s my responsibility to keep those forms on hand when that happens. Don’t assume that once you’ve sent a form, it’s done and over with. This is the federal government we’re talking about here.

Also, the IRS site is pretty easy to navigate. It’s at www.irs.gov, and they have a search engine. When looking for forms and information, sometimes the fastest and most reliable method is to go there and search for what you want.

Embezzlement is Far Too Common

Small business owners make it so easy for embezzlers they may as well put out a welcome mat for them. "Steal from me," they may as well yell out into a crowd, "I won't notice!" Isn't it nice that people still trust people?

Here's just one example:

http://www.sacbee.com/static/weblogs/crime/archives/embezzlement/

These stories pop up every day, everywhere. There's certainly no shortage of people looking for these opportunities, and no shortage of opportunities.

If you have a business and trust a bookkeeper to keep track of everything for you, all I can say is, don't. Don't rely on one person, even if you think they're fabulous. Even if you've known them for years. All the bookkeepers and accountants who have embezzled were also trusted and well-liked -- that's why they had access.

If you have someone doing your books, check your bank statements. Open them yourself, look at them. Look at your cancelled checks. If you don't get cancelled checks back from the bank, look at your bank account online and review the checks. Writing checks and paying them to themselves is the most popular way for embezzlers to get your money out of your business and into their pockets.

Ask questions. If expenses seem high, ask for documentation. Pay attention to what's going on with your business.

If you have only one person in your office and no one else, arrange for an independent review every so often. These things have been allowed to happen because no one else is looking, no one's paying attention, and the embezzler has no obstacles in their way. The Association of Certified Fraud Examiners (www.acfe.com) has resources and you can also locate a Certified Fraud Examiner if the situation warrants it.

The reasons people embezzle aren't important. Whether it's an entitlement issue or someone thinks they need the money that badly is irrelevant. What matters is that you keep them from taking what's yours. And if you do find out you've been the victim of an embezzler, prosecute them. Too many times an embezzler will leave one position once they've been discovered and get hired at another company, and repeat their activities. Check out the people you hire.

I really don't like embezzlers.

QuickBooks: The Answer to Life

Intuit, the maker of QuickBooks, has done a fabulous job of marketing their product to the masses. Anyone who can turn on a computer is told that they too can become their own bookkeeper/accountant in no time at all. It’s as easy as installing the software, with no need for experience nor training. It’s a wonderful thing, this software. It also has the largest market share for small businesses, so it must be doing something right.

But . . .you knew there would be a but, didn’t you?

I’ve been spending some time on the Intuit boards, answering questions from inexperienced users who are convinced that since they’ve purchased this software they too can do all the setup and bookkeeping themselves, without having to engage the services of a bookkeeper, or an accountant, or any of those redundant professions that technology has eliminated. As they work on figuring out a system that is easy to use for those with a basic understanding of accounting they become frustrated and irritated, annoyed that they’ve spent money on something which is harder than they think it should be. Occasionally they lash out, screaming into the ether about how they’ve been ripped off, and how there must be a flaw in the software, a bug, something that’s just not right, and if only Intuit would fix it, all would be well.

If only I could think my way to losing ten pounds without diet or exercise, or if only the marketing hype that surrounds me each day were true, think how perfect my life would be!

Unfortunately, this is real life.

Bookkeeping and accounting are a cost of doing business, and when I see business owners spending countless hours trying to figure out a system unrelated to their income stream, I could cry. Not really. I’m not that emotional. I do think that people would be better served by plunking down a few dollars to get their books set up right, perhaps to have someone explain to them how it works and what they need to do, so they would have more time to work on their business. That’s my biggest concern: people are losing track of the intent of the business, which is to generate income, not to learn a new skill. Learning takes time, especially if one doesn’t know a credit from a debit, or how an income statement works. Or why they’d even want one.
And what must their tax preparers think at year end, when they receive information that doesn’t seem to make sense? As a tax preparer, I wonder about that.

Of course QuickBooks, like any software, isn’t perfect. It doesn’t do everything we want it to do. It’s an off-the-shelf inexpensive software, and you get what you pay for. I use it extensively, and does it do everything I might want? No, of course not. There are multiple ways to get things done in QB, just like in life, and knowing the shortcuts and how it works saves considerable time. Time = money, doesn’t it?

We are a proud and independent people. So independent and so cautious about spending money on something we could well do ourselves that we lose sight of what matters: getting the job done fast and accurately. That is something you can put a price on, unlike the hours lost trying to figure out why things don’t work like you want them to, losing the opportunity to generate income while you try to manage the income you have, or even just having a few extra hours to do things you might actually enjoy, like taking the kids to the park, certainly more enjoyable an activity than screaming at your computer while it insists on its inane system of debits and credits.

Think about what it is that you want to achieve, and how much on-the-job learning you want to spend your time on. Think about relieving yourself of some of the anxiety. Think about generating income instead of spending your time trying to figure out how to make the numbers come out right. Think about the cost of your time. It’s a non-renewable resource.

Independent Contractor or Employee?

This is a huge issue that causes much confusion. Independent contractors are NOT substitutes for employees, but a separate category altogether, and employees cannot be classified as independent contractors merely if they agree to it. That is not enough to satisfy the IRS, and if they should come checking, they will assess back payroll taxes if the independent contractor status has been used to avoid taxes.

The common law rules that determine if someone is an independent contractor or an employee now fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

(From the IRS: see this)

The IRS site states specifically that no one factor stands alone in making this determination, but that all factors must be considered. Consider all the factors, and document each of the factors. If you're still unsure, give us a call, and we can help you answer the questions to make the determination.

Profits vs. Cash

They are not the same thing. This may come as a surprise, but making a profit does not mean there is an abundance of cash to be had. Common misperception, and this is one reason why accoutants and bookkeepers come in handy. It's not just because we're so fun to have around, though that is a definite plus.

Did you end your year with a lot of inventory on hand? Inventory is not an expense, not until it's sold. So if you've bought inventory, you have an asset, and it'll stay an asset until you sell it. Until then, there's no expense, and therefore more profit. Perhaps you don't see it as a profit because you don't have the money to spend, but you spent it already, on inventory.

There are many reasons your idea of what you should show as profit and what you actually show as profit are different, and this is just one example. Look at your balance sheet. Look at what you paid for personal expenses out of your business account. We don't recommend you pay for personal expenses out of your business, but it does happen. Look at assets you've purchased.

It's like a puzzle, and you want to look at all aspects that make up the whole picture, or you're only seeing a part of the whole.