It may seem like a no-brainer – cut expenses to make more money – but many small changes can result in significant savings.

It looks like the economy may finally be looking up. Still, this is no time to loosen the purse strings in terms of your business expenses. Rather, why not re-double your efforts to cut costs and boost your profitability?

Excessive expenses cause debt, which in itself can be very costly. So any money-saving actions you take will be doubly rewarding.

More Effective Money Management

To cut expenses significantly, poke into every corner of your company’s finances. Inventory is a good place to start. If you sell multiple units of the same item and reorder regularly, you should be using QuickBooks’ inventory-tracking tools. Go to Edit | Preferences | Items & Inventory | Company Preferences.

You should be stocking your inventory to match the pace of sales. You don’t want to be caught short, nor do you want to be sitting on too much and tying up money unnecessarily. QuickBooks can help, but you’ll need to calculate the sweet spot for each item. Several built-in reports can help, including:

• Inventory Valuation Summary. Displays the current asset and retail value of each item and inventory as a whole
• Inventory Valuation Detail. Shows how individual transactions have affected the value of your inventory
• Inventory Stock Status By Item. Helps you set up smart reordering procedures
• Open Purchase Orders. Outlines each purchase order and its expected delivery date

Ratio reports, like profit over sales, can also be very telling. QuickBooks does not supply these, but we can help you create them in Excel.

Using Available Tools

The efforts you make toward reducing expenses in other ways can result in more savings than you might think. Here are some actions you can take that will accelerate your cash flow:

Use QuickBooks’ budgeting tools. This doesn’t need to be as onerous as you might expect – you can start by pulling in your real data from the previous year as a base. Build in line items for ongoing accounting support like QuickBooks maintenance. Click on Company | Planning & Budgeting | Set Up Budgets.

Minimize your April 15 obligation with year-round tax planning. Work with us throughout the year on the next year’s taxes to, for example, make smarter quarterly payments, and we’ll help you reduce your tax bill by making better decisions every day.

Get discounts by paying invoices early. Set up a custom field in vendor records to track this.

Analyze the cost-effectiveness of your transportation. Can you replace some in-person sales calls with web-based communication? Make sure that your delivery routes and sales call paths are efficient.

Change product/service prices to build in your own cost increases. Do it across the board, in small increments. It may not even be that noticeable to customers.

Talk to us about establishing a line of credit. We’ll help you determine if this is a viable option for emergencies. It’s cheaper than using credit cards.

Cross-train employees. Have employees train each other on their tasks where it makes sense. You can avoid costly temp help and relieve overworked departments.

Don’t try to change everything at once. Establishing these new procedures will require some extra work. And you may not notice a reduction in expenses immediately. But over time, you will see a positive change – one that will give you extra dollars and hours to invest in making your company flourish.

QuickBooks handles billable expenses capably, but it’s critical that you understand the process thoroughly before proceeding.

Billing for inventory parts is easy. Pick the items from a list and specify a quantity. Poof. Done.

Billing for costs, time or mileage is a little more complex. QuickBooks has built-in tools to help you do this, but it’s a bit of a process.

To simplify your workflow, do this groundwork first:

• Go to Edit | Preferences | Time & Expenses | Company Preferences. Click the Yes button under Time tracking and indicate your choices under Invoicing options. If you plan to mark up some costs and want a default number, enter a percentage and account (these can be changed on individual invoices).
• Add any billing items necessary by clicking Lists | Item List and then Item | New in the lower left corner.
• If you plan to bill for mileage, go to Lists | Customer & Vendor Profile List | Vehicle List and enter information about every business vehicle.

Invoicing for Services

If you’re a service-oriented company, you bill for time frequently. This is easy. You’re probably already familiar with the Enter Time entry in the Employees menu. Whether you make individual time entries or complete a timesheet, it’s critical that you make the correct selections for each Customer: Job, Service Item and Payroll Item field, and check the Billable box.

You can let QuickBooks enter the time totals now, or add them later by clicking the Add Time/Costs button. Either way, the Choose Billable Time and Costs window opens. Add a checkmark next to each entry that should be billed, and click Options… to indicate whether you want one line for each time entry or would rather combine all similar service item types.

More Complexity

If you’re done with billable expenses for this invoice, click OK. If there are other costs that you covered, click the Expenses tab to see all transactions that you earmarked for this client on a bill, check or credit card. You have the option here to mark up the cost by a percentage or amount (even if you established this in Preferences), and to specify an account.

Do the same for Mileage, which you would have entered previously – when it was incurred — at Company | Enter Vehicle Mileage. Then select any Items that you purchased for the customer. Your records should be correct – assuming that you were conscientious about assigning expenses to customers and jobs.

Turning expenses into invoices and then into income can be complicated. Let us know if we can help. We are your partner in building a successful business.

QuickBooks Tip

Here’s a cool little keyboard shortcut. Hit F2 while you’re in QuickBooks, and you’ll get the Product Information screen. It’ll tell you everything you want to know about your specific copy of QuickBooks, like your release and license number, the file size, number of users logged in, audit trail status and the total number of accounts, customers, employees, etc.

QuickBooks News

As of May 31, 2012, Intuit is discontinuing support for QuickBooks Pro, Premier and Simple Start 2009, QuickBooks for Mac 2009 and QuickBooks Enterprise Solutions 9. You can continue to use these solutions, of course, but live technical support and add-on services like payroll, credit card processing, online banking and bill-pay will not be accessible. Talk to us about upgrading if you’re using any of these products or services.

First, there will be a longer write-off period for certain property. For qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property placed in service in 2012, the write-off period will increase from 15 years to 39 years.

Second, reduced expensing will occur. For tax years beginning in 2012, the Code Section 179 (Annual Write-Off) expensing deduction is reduced to $139,000 (from $500,000 in 2011). Section 179 is begins phasing out if qualified purchases exceed $560,000 with a complete elimination of the deduction if qualified purchases exceed $699,000. For 2013, the Section 179 is further reduced to $25,000 with a complete elimination of the write off if qualified purchases exceed $225,000.

Third, 100% bonus depreciation will no longer apply. Property placed in service after December 31, 2011 will not be eligible for 100% bonus depreciation. However, 50% bonus depreciation will apply to qualified purchases purchased during 2012. After 2012, bonus depreciation will not be applicable.

To qualify for the new hire retention credit, the employee:

• Cannot be related to any owner or officer of the company.
• Before being hired, was either unemployed or only had part-time employment with someone else in the 60 days prior to being hired by you.
• Completed form W-11 under penalties of perjury declaring that they were not employed for more than 40 hours during the 60-day period ending on the date if hire.
• Was not hired to replace another employee unless the other employee was terminated for cause or separated voluntarily.
• Must have been hired after February 3, 2010.
• Was employed for 52 consecutive weeks at any time during the period from February 3, 2010 and January 1, 2011.

Further, if the wages paid in the second consecutive 26 week period are less than 80% of the wages paid in the first consecutive 26 week period, none of the wages paid are eligible for the credit.

The credit is equal to the lesser of 6.2% of the eligible retained worker’s wages or $1,000. Thus, if the wages paid to a qualified employee exceed $16,129 you will qualify for the maximum credit. The credit is considered a general business credit and is claimed in the period during which the 52 week consecutive period ends. Therefore, calendar year taxpayers will claim the credit for the 2011 tax year while fiscal year taxpayers may have to claim the credit over two years. The credit cannot be carried back to any tax year beginning before March 18, 2010 but can be carried forward 20 years.

If you claimed the new hire credit in 2010 there is a good chance you are eligible for the New Hire Retention Credit. How do you know if you claimed the new hire credit? Take a quick look at your 2010 quarterly 941 filings or call your payroll service provider.

1. Don’t panic. Many of these letters can be dealt with simply and painlessly.

2. There are a number of reasons why the IRS might send you a notice. Notices may:

a. request payment of taxes

b. notify you of changes to your account,

c. request additional information.

The notice you receive normally covers a very specific issue about your account or tax return.

3. Each letter and notice offers specific instructions on what you are asked to do to satisfy the inquiry.

4. If you receive a correction notice, you should review the correspondence and compare it with the information on your return. DO NOT FILE an amended return.

5. If you agree with the correction to your account, then usually no reply is necessary unless a payment is due or the notice directs otherwise.

6. If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree and include any documents and information you want the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 to 60 days for a response.

7. Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right-hand corner of the notice. Have a copy of your tax return and the correspondence available when you call to help with your inquiry.

8. It is important that you keep copies of any correspondence with your records.

9. It is also important to know that NO taxing authority will ever contact you by email. All notices are by mail or occasionally a revenue officer may actually ring your doorbell. So, if you receive what looks like a tax notice by email, it is very likely spam.

10. Most important, if you do not understand the notice, notify your RFC representative.

If you have any questions regarding this newsletter or any other recent tax issues, please call us at (636) 498-1900, (314) 892-6700, or (573) 756-6400.

However, limited partners were restricted by having to meet one of three tests in order to be considered materially participating. A limited partner was defined as a partner that was designated as such in the partnership agreement or the partner was limited with respect to the liabilities of the partnership under state law. While states continued to change their laws with the advent of Limited Liability Companies (LLC), the IRS had not continued to evolve their tests. In addition, the IRS had litigated and lost a number of cases under these antiquated requirements.

Therefore the IRS has issued new proposed regulations to address the issue of what is considered a limited partner. The new regulations provide that an interest in an entity will be treated as an interest in a limited partnership, if:

•The entity is classified as a partnership, and

•The holder of the interest does not have rights to manage the entity at all times during the entity’s taxable year. Rights to manage include the power to bind the entity.

The new regulations have the effect of allowing limited partners or LLC members to meet one of the more expansive material participation tests.

The rules in the proposed regulations are provided solely for purposes of section 469.

In the meantime, Intuit itself, as well as third-party developers, have built online apps that fill in some of the gaps. These add-on solutions exist on websites, but they can collect data and synchronize it with desktop QuickBooks. So can that iPhone or Android that’s sitting on your desk right now. The following three web-based apps – accessible via your smartphone — provide mobile access to QuickBooks data.

Many Mobile Applications

To find these apps, go to the Intuit App Center and click on All Apps. There are dozens of them, arranged by category (Billing and Invoicing, Customer Management, Inventory Management, Apps by Intuit, etc.).

Your first stop should be at Intuit’s QuickBooks Connect (this is the name of the online application that you’d use on a remote PC or laptop; the name of the smartphone app is QuickBooks Mobile). This app gives you easy access to your customer and sales data when you’re away from your office.

Remote Sales Tools

Whether you’re working in web-based QuickBooks Connect or on a smartphone, your data and transaction options are similar. QuickBooks Connect has a few more features, like an Item List and Customer Center, but both let you:

* Access multiple company files

* View, add, and edit customers, estimates, invoices, and sales receipts, using QuickBooks’ custom templates

* E-mail these forms to customers

QuickBooks Mobile and QuickBooks Connect use the Intuit Sync Manager – located on the desktop where QuickBooks is installed — to keep data current everywhere. That computer must be running for syncs to work.

Prices start at $9.95/month for one user; a 30-day free trial is available.

Manage Travel Expenes

Concur Breeze grabs the data you need (customers, employees, jobs, etc.) from QuickBooks to record expenses on the road. You can enter charges directly into a form or snap a picture with your phone – it’ll be attached to your expense report. These charges are then sent to a report template that thoroughly documents the charge, letting you specify variables like the trip purpose, travel policy type, project and client. The status of your approval and payment are also included here.

You can send travel itineraries from your free TripIt Pro account and credit card charges directly to an existing expense report to accelerate the process. And once an expense report is approved, money can be moved automatically from the designated company bank account to an employee’s account. $8 per month per user; free 30-day trial.

Mobile Time-Tracking

If your company has employees or contractors who work remotely and submit hours for approval, consider eBillity Time Tracker for Intuit QuickBooks. After it pulls in customers, service items, and employees from QuickBooks, you can invite workers to track their time on their smartphones by either entering it manually or using the timer, and then sync it with the online application.

Mobile workers can use the application in offline mode; entries are uploaded when they reconnect. Prices start at $10/month for Admin and one user.

The Cloud=Convenience and Accessibility

Synchronization – especially across three or more devices – is a simple concept whose implementation can be not-so-simple. We can help you determine which apps make sense for you and get them up and running.

Integrated, web-based applications accessed by whatever computing device happens to be nearby are the essence of cloud-based accounting. Intuit and its companion mobile apps offer the convenience and accessibility that the Internet is making possible.

If you have any questions regarding this newsletter or any other recent tax issues, please call us at (636) 498-1900, (314) 892-6700, or (573) 756-6400

In addition to the extension of payroll tax cuts, the legislation also extends federal unemployment insurance benefits and prevents scheduled cuts to Medicare providers through the end of 2012.

If you have any questions regarding this newsletter or any other recent tax issues, please call us at (636) 498-1900, (314) 892-6700, or (573) 756-6400

Sincerely,

Your Professional Team

RFC Advisors, LLC

But first, you’ll need to make sure that this output will be accurate.

Describe Your Company Accurately

Your tax entity setting should have been established when you first set up QuickBooks, but verify that you’ve specified the correct one. Go to Company | Company Information. Your Report Information is in the lower left corner. Click the arrow next to Income Tax Form Used to see what’s active. 

QuickBooks automatically assigns some of your accounts to their matching lines on the 1040 and assorted forms and schedules; this is called tax line mapping. So when you create tax reports, related transactions will be grouped by these designations.

This can be a real time-saver – as long as you’ve specified the correct entity. If:

• <Other/None> was selected
• This setting is incorrect
• You’re starting a business and don’t know which to choose…

… please contact us. If you switch entities, your existing tax line mapping will disappear and will have to be reassigned.

Dedicated Tax Reports

Many of QuickBooks’ general financial reports provide tax-related information. But there are some that specifically relate to the numbers that will go on your return. Go to Reports | Accounting & Taxes | Income Tax Preparation.  QuickBooks automatically assigns many accounts to the appropriate tax form lines, based on your specified tax entity.

Here, QuickBooks shows you which tax lines have been pre-assigned to your accounts. You can specify a tax form line for unassigned accounts, but this is something you should not attempt on your own. This report, though, will give you an idea of how useful your report output will be and where you’ll need our assistance.

Other reports provide tax-related data. You can access them by going again to Reports | Accountant & Taxes and clicking:

• Income Tax Summary. This displays totals for each tax line that’s relevant to your particular tax entity. Double-click on any number, and the Tax Line By Account report appears, detailing every transaction related to every tax-related account (you could add a column for Tax Line in Display options and make this quite a useful report).
• Income Tax Detail. This lists all individual transactions by tax form/schedule line assignment.

Paring it Down

Some tax reports can be very lengthy; you may want to filter them to look at various “slices.” Click Customize Report | Filters.  This window displays a powerful set of filtering options.

The options listed under Choose Filter are available on other reports; they help you set up incredibly complex searches using multiple filters.

Let’s say you want a report that displays your installation labor costs on new residential construction from the last year (you could also throw other variables in). You’d simply choose the filters from the left pane and then select related options in the next pane (usually a list). You’d want to also click on the Display tab to make sure that the appropriate columns appear.  You can apply multiple filters to your reports.

QuickBooks reports can shave time off of tax preparation, and filtered views help you scrutinize your data in quite creative – and very useful – ways. The program’s boilerplate reports have their place in simple examinations of your financial status, but filters are potent tools. They can facilitate the kind of deep analysis that helps you make critical business decisions.

If you have any questions regarding this newsletter or any other recent tax issues, please call us at (636) 498-1900, (314) 892-6700, or (573) 756-6400.

QuickBooks supplies you with a wide variety of pre-formatted reports whose modification options can help you do focused, critical analysis of your financial data. The right set of numbers will help you understand your history and plan for the future more effectively.

Note: The reports discussed and pictured here shows only one possible set of customization options. There are many variations. We can answer your questions.

Check Your Preferences

When you created your company file in QuickBooks, you chose between reporting on a cash (income and expenses are recorded when money changes hands) or accrual (recorded when you invoice or receive a bill) basis. This affects summary reports, but not those that break out individual transactions or are simply lists.

If you want to change this, click Edit | Preferences | Reports & Graphs | Company Preferences and click the desired button: 

You can set other preferences in this window that will affect your report output here, too, as you can see.

Altering The Display

Open the Income by Customer Summary report (Reports | Company & Financial). Change the dates to reflect a range you’d like to see. Want the data displayed by different time increments – like week or quarter – instead of just the total? Click the arrow next to Columns and select Four week. 

By default, your report rows display alphabetically. If you want to view a column by total in ascending or descending order, select the column by hovering over the top number until the magnifying glass appears, and click on it. Click the arrow next to Sort by and choose Total, then click the AZ [down arrow] icon (in some reports, there will be other options here).

Additional options in this toolbar let you:

• Memorize the report
• Print, email or export it to Excel
• Hide or Show the Header
• Collapse or Expand the columns
• Refresh the report if you’ve made changes that will alter data

More Display Options

Click Customize Report to open this window which outlines your report’s content options.

Some of the options here duplicate what you saw in the toolbar. In addition, you can switch between Accrual and Cash for just this report, and add subcolumns in some. The latter is a complicated operation, one that you must understand well in order to glean any insight from it. We can help you with this.

Sometimes the subcolumns are generic, as shown in the screen above. In other reports, they’re very specific to that group of data.

Clicking on Revert takes you back to the default format, and Advanced opens additional options specific to the current report.

More customization = more insightful results = more informed financial choices

Transaction reports have many similarities and two major differences: You can change the column order by hovering your cursor over the column label until a hand appears. Click, hold and drag the column to the desired spot and let go. You can also add or delete columns by clicking Customize Report and checking or unchecking labels.  In transaction – or detail -reports, you can alter the column structure.

Learn the mechanics of report display modification well, and your company’s finances will come into much sharper focus, improving the wisdom of future choices. Up next month: filtering your reports for additional clarity.

If you have any questions regarding this newsletter or any other recent tax issues, please call us at (636) 498-1900, (314) 892-6700, or (573) 756-6400.