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View Full Version : Accouting Question for you business owners out there


shelbymustang616
01-27-2010, 10:31 AM
Here is my question to you guys. Lets say i have figured out my overhead costs like loan payments gas for equipment and wages set for my employees for what it costs me to run my business and i finsh a job for a customer, the customer hands me a check for the finshed job. Now within in this amount lets say $4000. How do I break this down into accounts? What i mean is do you guys have seperate accounts like a wages account, gas account, equipment account, capital, etc etc, or do you put everything in one account and just take out of that account when wages are paid, gas needs to be in the trucks, insurance is due, or you buy a new rake? Thanks guys :cool2:

Raymond S.
01-27-2010, 11:20 AM
No separate accounts. It's a credit to cash. Expenses are a debit. (I don't mean cash cash, I mean cash as in bank account) You should get a basic software to help track expenses to help you at the end of the year so you can summarize reports. It should run parallel to your statement from the bank but broken into categories for tax purposes. It's a good idea to cross reference the two monthly just to make sure things are running according to plan. Atleast that's how I do it.

jjarvis4
01-27-2010, 11:37 AM
According to accrual accounting principles, if I get paid for a service it will go into "cash account"(as a debit located under assets). When I buy say a piece of equipment, then I decrease (credit) cash account and increase (debit) my equipment account (also known as PPE) which is under assets. Expenses are documented under an expense account found under the Equity side of the accounting equation.
This is all probably a little confusing! Like Raymond S. said, get something like quicken or quickbooks to help you track all of this. Also look up the "accounting equation" so you will understand what takes place in an accounting program.

shelbymustang616
01-27-2010, 11:40 AM
ok i figured that would be the easiest way of doing insted of making sepearte accounts and depositing a certain amount into each account.(Pain in the Ass) I was thinkin of getting Quick Book. Is this easy to use if you as in you already used it?

shelbymustang616
01-27-2010, 11:42 AM
I am new to the accounting this does make sense but still makes me want to scratch my head. I am graduating college this summer in business but currently learning the accruel accounting as we speak

Stevegotcrabgrass
01-27-2010, 11:56 AM
What you are referring to is double entry book keeping. The larger you get the more it becomes necessary. The reason companies do it is to prepare a set of basic financial statements including an income statement, a balance sheet, a statement of cash flows and a statement of owners equity. In addition it is easier to locate and track items of revenue and expenses. A quick example:

You may have revenue from cutting lawns and you may have received money from the sale of a capital asset, (i.e. a mower). You would account for them differently under GAAP (generally accepted accounting principles, a standard set for US companies). You would not include the sale of the mower as revenues. It would be included as a gain from a sale. This obviously is a very basic example. You also get into the area of differences between the accrual method of accounting (revenues are recognized when they are EARNED and not necessarily in the period in which the cash is received) and the tax method or Cash method.

For a smaller company you will be operating on the cash basis of accounting which is an acceptable method under current IRS tax law. Since your revenues are small you report income when cash is received. Larger companies would use accrual accounting. I would still be aware of HOW the cash is received, be it through operations or sales not related to operations (i.e. selling your mower as you are NOT in the business of selling mowers). This may help you at tax time as your income MAY BE lower if you do not include the sale of a capital asset as revenue and it can be reported as a capital gain/loss depending on the depreciation taken on the machine.

Advice for now. Keep detailed records of where the money is going to and coming from. Once you get the need for this type of book keeping it will be easy to start giving everything account numbers. The poster above is talking about debits and credits. This is called a journal entry. It is used to classify items of revenue, expenses and other transactions. You do NOT need to do this YET. The more simple your book keeping the better. Unless you need or want a CPA. If you want a CPA pm me....:)

Stevegotcrabgrass
01-27-2010, 11:59 AM
Sorry, sometimes I ramble.

Raymond S.
01-27-2010, 12:10 PM
Don't listen to me. I struggled through accounting in my business program and still get debits and credits confused, that's why I got a program...and an accountant. Know where it's going and coming from and when you get to the point where you need to generate cash flow statements, owner's equity statements, balance sheets, etc. you have an idea of what the accountant is telling you. Most entry level accounting courses prepare you to be able to interpret what your accountant tells you and make sure it's on par. Finance is much more interesting and important to me and if you are still in college that is where I'd spend more of my time after you get an understanding of basic accounting principles.

Stevegotcrabgrass
01-27-2010, 12:16 PM
Don't listen to me. I struggled through accounting in my business program and still get debits and credits confused, that's why I got a program...and an accountant. Know where it's going and coming from and when you get to the point where you need to generate cash flow statements, owner's equity statements, balance sheets, etc. you have an idea of what the accountant is telling you. Most entry level accounting courses prepare you to be able to interpret what your accountant tells you and make sure it's on par. Finance is much more interesting and important to me and if you are still in college that is where I'd spend more of my time after you get an understanding of basic accounting principles.

I agree, Intro accounting teaches you book keeping and to "get" what your CPA tells you. As far as finance and accounting there is a very grey area depending on you line of work (i.e. a foot doctor and a brain surgeon) I practice operation accounting and finance. I am not too much of a tax guy but more of a business/finance guy with some tax knowledge. If you want to succeed in any business I would recommend learning accounting, finance AND business managment or be real freakin good at what you do to be able to AFFORD a good accountant/business manager. Good luck. Any questions please feel free. And I also STILL get debit and credits confused.

As the guy said above, if you get to the point when you NEED to generate financials, you will NEED an accountant anyway, or maybe an Accounting department even if it is a full charge book keeper. Good luck.

SangerLawn
01-27-2010, 01:25 PM
I don’t know about all the technical stuff the other people are writing about and they probably have a better system then me but this is what I do.

I run 3 accounts. Business, business savings (this is actually a checking account because of better intrest but i call it my savings account), and a personal account

I have a main account that all checks get deposited into and all business bills get paid out of…this is my main account. Every Friday when I hand out payroll checks, I pay myself a check that gets deposited into my personal account. Then I write a second check that gets deposited into a savings account for the business. This check is normally around 10 percent of that weeks net income. This account continues to grow for times I need cash for the business…as in something major breaks.

METRO FS
01-27-2010, 03:49 PM
It sounds like Quicken Home & Business might work for you. Tracks income, expenses, creates invoices & estimates, drop down billable items with descriptions and the ability to deposit money to multiple accounts like checking, savings, taxes etc.., HOWEVER, it does not schedule your services. You would need to stay on top of that in another way. Good luck...

shelbymustang616
01-27-2010, 04:34 PM
Again guys can't thank you enough for the responses. This is gonna help me get organized here haha. Stevegotcrabs, thanks for the response. I figured from your response i was reading froma CPA. Sangerlawn your setup seems pretty simple whcih is what I am looking for since ill be running a small business. If it gets to the point where ill need a CPA ill get one. IM looking for a software i can use to schedule appointments and track my payments, invoices and do peyroll etc, does Quick Books do all this?

Stevegotcrabgrass
01-28-2010, 09:06 AM
Again guys can't thank you enough for the responses. This is gonna help me get organized here haha. Stevegotcrabs, thanks for the response. I figured from your response i was reading froma CPA. Sangerlawn your setup seems pretty simple whcih is what I am looking for since ill be running a small business. If it gets to the point where ill need a CPA ill get one. IM looking for a software i can use to schedule appointments and track my payments, invoices and do peyroll etc, does Quick Books do all this?

Hey Glad to help. I don't even use half the stuff I was talking about in my Business. I track all my stuff through excel. It is all formula driven, and I have outlook reminders set. Very simple. Excel can do it all if you are fairly decent at using the program and best of all it's free with your computer usually. Keep in mind, keep track of all your start up expenses. They are deductible the first year to $5000 and the rest can be amortized over 180 months (2009). BE ORGANIZED.

Jim Bo
01-28-2010, 09:44 AM
Quick Books can do all that, plus when you get an accountant alot of them want you use Quickbooks. When I took on employees I transfered everything to the On line version, when my accountant does payroll, pays taxes or we have a quartly meeting they just sign in from there office with there own password. There are enough owners around this forum if you make a mistake with it that we can talk you through it.

shelbymustang616
01-28-2010, 11:57 AM
I am not to shabby at excel. I have taking course doing spreadsheets with excel in some of my courses. If you have a template could you email one to me? Shelbymustang616@aol.com I was also thinking about quick books as well.

SangerLawn
01-28-2010, 01:32 PM
I am not to shabby at excel. I have taking course doing spreadsheets with excel in some of my courses. If you have a template could you email one to me? Shelbymustang616@aol.com I was also thinking about quick books as well.

Excel worked awesome for our first year in business. Once you grow to much excel basically becomes a pain in the butt….we have been using quickbooks for 3 years now. It keeps up with everything and easy to use. The best thing about it is…if you keep up with it all year long correctly, at the end of the year you will be ready for tax time…load the printer with paper, click a few buttons….and go to your accountant and you done…

shelbymustang616
01-28-2010, 02:41 PM
is quick books pretty staright foward to learn to use?

SangerLawn
01-28-2010, 02:48 PM
is quick books pretty staright foward to learn to use?

You can download a free version. Everything works but you can only handle up to 20 customers. Try it yourself…it is pretty simple once you learn it. I think the is the correct web site….i just googled it http://quickbooks.intuit.com/product/about_quickbooks/trials.jsp

shelbymustang616
01-28-2010, 02:50 PM
Thanks man really appreciate it

flow69
01-29-2010, 12:37 PM
You said you were looking for scheduling as well, look into gopher software.

I don't mean to hijack, but sanger, with the quickbooks free account, do those 20 customer accounts transfer over upon purchasing the QB's Pro?

AlpineNaturescapes
01-29-2010, 07:09 PM
I will take a stab at this. Revenue is just that. I use Quickbooks. Good and fairly cheap. There are add-ons too. Like scheduling programs etc that will integrate with it.

As for your expenses, my suggestion is to make the following expense "accts" within quickbooks: offroad fuel (for fed fuel tax credit), truck expenses (fuel the works, but also keep mileage), repairs, prop. rent, equip. rent, advertising, office expense, bus insurance (not truck), commissions, business taxes, bus. licenses & education, wages, inventory, new equipment (must depreciate for taxes). There you have it - then you will be ready for tax time.

shelbymustang616
01-29-2010, 07:53 PM
Good stuff thanks man

g21
02-11-2010, 07:18 PM
You really should get quickbooks pro. You only need one bank account. Your dilemma is answered with a "chart of accounts" inside the program. A code is assigned to every dollar that is spent as well as every dollar that comes in. By generating a weekly or at the very least a monthly P&L statement, it will tell you "everything" that is right and wrong inside your operation from a financial view.

We will be spending a great deal of time helping contractors figure all this out. Let me know if you need any further help.

Tommy

DA Quality Lawn & YS
02-11-2010, 10:17 PM
OP - Don't reinvent the wheel. Unless you are a large corp, keep things simple.

shelbymustang616
02-12-2010, 10:47 AM
yea simple and staright forward is what im looking forward. I quicbooks easy to pick up after some practice at it. I do have some accounting knowledge, but never used quickbooks.

PestPro
02-14-2010, 08:54 AM
[QUOTE=shelbymustang616;3384526]Here is my question to you guys. Lets say i have figured out my overhead costs like loan payments gas for equipment and wages set for my employees for what it costs me to run my business and i finsh a job for a customer, the customer hands me a check for the finshed job. Now within in this amount lets say $4000. How do I break this down into accounts? What i mean is do you guys have seperate accounts like a wages account, gas account, equipment account, capital, etc etc, or do you put everything in one account and just take out of that account when wages are paid, gas needs to be in the trucks, insurance is due, or you buy a new rake? Thanks guys :cool2:[/QUOTE

When you make out your invoice you can list want catagories (chart of account). You want the money to go to (Gas, Parts, Wages, Equipment,) the lists is endless, and if there is a catagory that you need that is not listed, you can add it. This is all in Quickbooks Pro.