For the most part, 1099 rules remain the same this year, but there is one major change.  The IRS is now requiring third party payment processors to report payments made to you through their systems.  You’ll get a 1099-K for each person who paid you with a credit card, debit card, PayPal, etc.  Similarly, people you have paid via these methods will receive a 1099-K from the payment processor.  What does this mean for you?

You need to EXCLUDE from your 1099-MISC calculation any amounts you paid via a payment processor (for most people, debit/credit cards and PayPal).

Intuit is providing solutions to this issue for their QuickBooks products, but you may have to re-code some transactions to get the proper report from your system.  Please follow the appropriate links below to find out how to get the right information out of your accounting system.

QuickBooks Online: https://qboe.custhelp.com/app/answers/detail/a_id/4785

QuickBooks for Mac 2010, 2011, 2012: http://www.qblittlesquare.com/2011/12/1099_2010-2012/

QuickBooks for Mac 2009 and earlier: http://www.qblittlesquare.com/2011/12/1099_2009_and_earlier/

QuickBooks Pro/Premier:

• Information from Payroll Support
• How to use the new 1099 wizard in QuickBooks 2012

Have you ever wondered why your day always ends before your to-do list does? Are endless interruptions keeping you from focusing on the creative or business development work you know you need to do?

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Most businesses have credit or debit cards to manage their non-check or automatic transactions.  But I still run into some businesses that are relying on old school cash for various transactions.  Don’t get me wrong, there’s nothing wrong with properly documented use of cash, but it’s rarely tracked well.

PLEASE, I beg you, do not randomly go to the ATM machine and take cash out for business use.  If you are traveling, you’ll need some cash.  If at all possible, pay for it personally, collect the receipts and/or keep a journal of how the cash was spent.  Then get reimbursed from the business.  This keeps your books clean, doesn’t raise eyebrows in the event of an audit, and gives you a great incentive to make sure you’re collecting those receipts.

Of course, the best action is to use a credit card as much as possible.  With the credit card, there’s a record of the transaction.  That means your bookkeeper knows to ask you for the receipts.  Debit cards can work for this too, but I really prefer businesses to limit their use of debit cards.  Unless you are keenly aware of the amount of money and the bank and on top of cash flow tracking, using the debit card can be a dangerous and expensive habit (overdrafts, inability to pay important bills, etc).

If the above methods don’t work, then take the following steps:

• For small items, you can set up a petty cash fund.  You and your employees will sign for receipt of the cash and must return receipts and change equal to the amount that was given to them.
• Similarly, you can “advance” travel cash which would go on the books as money owed to the business by the individual.   Once again, the recipient must turn in receipts equal to the cash given or will have to repay the advance.

Try to avoid using cash and, if you do, make sure every expense is documented and left over cash is returned to the bank.  A handwritten note stating “tips and stuff for California trip” is not adequate.

I’ve been doing some interviewing lately and I thought I’d share some of the questions I ask potential bookkeepers. For more information on how I like to see them answered, subscribe to CrackerJack Business Insights. A full article will be in the October 21st issue.

1. Do you think accrual or cash basis reporting is better for business management?
2. What is the accounting equation (or balance sheet equation)?
3. The bank account is off $0.72.  How long will you spend looking for the problem and what steps will you take to find it?
4. In cash basis accounting, how would you record a $600 annual insurance premium?
5. How would you record a $600 annual insurance premium using accrual accounting.
6. How many gas stations do you think there are in the U.S.?
7. Rank the following in order of importance for business success: Sales, Teamwork, Quality, Service, Profitability, Integrity
8. Tell me about a time when you didn’t agree with something your boss asked you to do.

You can sign up for CrackerJack Business Insights here:

The latest post over on the People Positive Culture blog is “Throwing money at candidates?”. Steve Potestio delves into the difficult subject of new recruits who require more than a company needs to or should pay. Steve points out that if you have a place where people want to work, pay won’t be the only factor prospective employees take into account when considering an offer. Let’s take this one step further. Not only does having a great place to work have the potential of saving dollars on salary, it introduces other savings as well.

In creative environments, the amount of time it takes to complete a project directly impacts your bottom line. More hours = less profit. You can hover over a designer all day, but that’s not going to make the creative process any faster. You’re not churning out widgets, so you have to look at things a little differently in project and financial management. In creative agencies, it becomes important to invest in the business culture to foster the creative process. Spending on comfortable work environments, engaging in some non-billable fun time, and generally making the “work” easier not only builds a great culture, it will also reduce your costs in the long run.

Having a great company culture also reduces turnover.  Having a place your employees want to work means they won’t be easily poached by competitors.  Do you know how much employee turnover costs?  Turnover costs include the costs of:  interviewing and hiring a replacement, training, lost knowledge, increased unemployment rates, and lost productivity during the transition.  That can get pretty expensive; it’s far less expensive to have happy employees.

There are many ways a good business culture can improve your profitability. Often the costs and benefits of business decisions aren’t easy to see on the income statement. Good financial management requires taking the initiative to see beyond the hard dollars and making decisions for the overall good of your business.

Well, I guess I’m technically not blowing my own horn…but I am very happy to share a new testimonial:

“We threw a big project in Kelly’s lap and she got it done on time and under budget.  Her patience and humor make her a pleasure to work with, and she clearly has sound financial judgement, providing us with insight and constructive suggestions for improving our operations.  We highly recommend her services, and are excited to continue working with Kelly as a “business partner” – so that we can spend more time doing what we like to do!”

Thanks, Carey!  I really enjoy working with you too!

I finally updated my QuickBooks ProAdvisor Certification. I’m now officially a Certified QuickBooks ProAdvisor for 2008 and 2009 versions. I even learned a couple of new tricks through the process.

I also recently became an MYOB Bookkeeping Partner. Unfortunately, MYOB is far behind Intuit in building out their training and tools for accountants and bookkeepers. At any rate, I’m happy to be a partner with MYOB and have free access to their technical support team.

I’ve always hated being called a “nag”.  I think my husband is actually the only person to ever say “STOP nagging me!”  It seems I’m often put in the position of being the “nag” and I’ve always thought it was an awful character flaw.

Recently, I realized, I’m the work “nag” for a couple of my clients.  I need to find a better word for it (please help me out with that).  I tend to be drawn to clients who are unorganized, have a lot going on in their business lives, and are creative, big picture thinkers.  Because of those characteristics, they rarely get to their list of “things to do for Kelly” in a timely manner.

Twice in the past week, I’ve followed up with these clients to nag them for the information I need to get them the information they need (and the appropriate government agencies too, of course).  I follow up regularly with them because my strengths are the opposite of theirs.  I’m great at organizing, details, and follow up.

I have always felt bad about nagging them (even though I do it in a kind, professional way).  I hate the thought of someone feeling like I’m “nagging” and I’m always positive they are saying to themselves “I wish she would stop nagging me!”  Funny, it never occurred to me that they have never requested it to stop and I’ve never lost a client relationship over it.

I was speaking with one of my clients the other day and I apologized for nagging so much.  Her response surprised me and gave me a little more insight into my ideal client.  She said: “Well, that’s why I hired you.  I NEED someone to nag me, or I’ll never do it.  Weeks go by and I have no idea it has been that long.”

The truth is, if I didn’t continuously follow up to get what I need, I wouldn’t be providing very good service. With that, I’m going to cut myself some slack and find a better description for the “nagging” aspect of my services.

~ Kelly