#BookkeepingTip: Balance Sheet

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I remember back a few years when I was first learning bookkeeping and we got to the financial statements. I kept getting them all confused!

No one pointed out what I'm about to point out to you ;)

So the balance sheet is just a report that shows your balances in accounts.

BALANCE sheet = BALANCES


You can think of it kind of like your dashboard on your online banking where you can see all of your accounts at one time and how much money is in each account. Only with a balance sheet you can change the date to any date you'd like, plus you can also see credit cards, loans, how much money you've put into the business, and how much you've paid yourself.

For our clients, we also break out taxes paid. Most bookkeepers don't do this.

#BookkeepingTip: Equity Shmequity?

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So you're thinking...

Equity schmequity! Who cares! My business is too small for me to be worried about what this is.

Ah ah ah - not so fast!

Equity matters to you too, even you micro businesses out there.

Equity is really just what you've got in your biz. This includes money you've put in, equipment you gave to the business (like your laptop), what you've paid yourself, and the earnings your business has made that you've left put in the business.

See! That's not so hard ;)

#BookkeepingTip: Liabilities

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Big scary accounting term #2 --> LIABILITIES!

But really this is nothing to freak out over! Just think about these as items/money you are liable for - or owe to someone else.

This can be credit cards, loans, and sales tax you've collected but need to give to your state, gift cards, and bills when someone sends you an invoice that you haven't paid yet.

It's also important to keep this all separate in your bookkeeping so you can tell exactly how much you owe to whom <-- did I get that right grammar sticklers? 

¯\_(ツ)_/¯

#BookkeepingTip: ASS-ets

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Heey girl, let me get a look at your ass-ets 😘😘😘

While a pickup line like that might make you run for the hills, don't let terms like assets, liabilities, and equity scare you off.

Simply put, assets are the things your business own that are of value - usually money or if it's an object it should be resellable like inventory or your bomb-ass MacBook 😉

These 'assets' will show up on your balance sheet...but more on that later!

#BookkeepingTip: Income Statements...Easy as 1 2 3

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Before I was a bookkeeper & money coach I was a VA and I was totally CLUELESS about bookkeeping.

I'll never forget the first time I tried to look at my Income Statement and feeling like a total goob. I didn't even know what an Income Statement was much less how to read one.

At the time I only sold my services, so when I saw services and product sales under revenue with roughly the same amount in each...I nearly had a panic attack!

How could that be?! I don't sell products!! What is this?

What I didn't realize and NEVER figured out until I took a course in bookkeeping was that I had simply marked the wrong revenue account on an invoice. When I duplicated that invoice over and over again, that money kept going in the wrong account. That's neither here nor there...I'm rambling 😬

Here's the point: I don't want you to look at your Income Statement, freak out, and click away before you get a chance to understand what's on there.

So in my simplest explanation possible, your Income Statement will show you three things.

1) How much you made.

This will either be called Revenue or Income and might even be split out underneath if you have different income streams like coaching and courses.

2) How much you spent.

This is called your Expenses. Your expenses will be broken out into different categories called expense accounts. For example, it's easier for you to understand where your money is if you have separate accounts for internet, website, and advertising instead of having them all lumped together.

3) What was left over.

This is called your Net Income. This is your income - expenses. Many people think of this as their profit, but if you are a sole proprietor or LLC you need to remember that your pay and taxes have not been taken out of this.

So if you only have $50 net income, you're in the black, but 😩 you're probably not getting paid much this month!

#BookkeepingTip: Accountants Hate Bookkeeping

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I'm at it again with another broad stroke, this time in a beautiful purple hue 🎨

So from my experience, accountants tend to love the challenge taxes provide. They LOVE looking for those little loop holes and getting the bottom line as low as they can go like a good game of LIMBO 😂

But when it comes to bookkeeping...eh. It's just not their passion. Obviously some do feel this way, but -> 🎨

So definitely search out an accountant if you need help with the SERIOUSLY AWFUL task of filing your taxes because my goodness, ain't nobody got time for that...well except for accountants of course!

#BookkeepingTip: Bookkeepers Hate Taxes 😯

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See that big green stroke? I'm making a broad generalization here so don't stone me 😘

GENERALLY bookkeepers do the books and abhor taxes. I do anyways! Don't even get me started on the confusing instructions on tax forms 😝

But just because we bookkeepers hate taxes, doesn't mean we don't know anything about them.

We do stay in the know about tax laws that will affect how we do your books and we're damn good at making sure everything gets recorded right down to the cent so you can get every deduction you deserve.

We got your back 💛

#BookkeepingTip: Meals + Entertainment Deduction

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Along the same vein of yesterday's tip comes today's tip about those meals and entertainment with clients only being 50% deductible!

But don't let this stop you from enjoying this fun aspect of your business if you and your clients love it! Do it anyway!

It's a great way for you to make connections with clients that you may have only met in the online space.

For instance, I had been working with a client for nearly two years and we'd never actually met in person. I happened to be in her city so we met up! I covered the bill and it really helped solidify our relationship that much more. She laughed when I wrote 'Client - [her name]' on the receipt and snapped a picture before leaving the table. We got a laugh over me practicing what I teach 😆

#BookkeepingTip: Your Daily Coffee isn't Deductible

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I've had many clients over the years be super confused about meals & coffees being deductible.

-Their morning coffee on the go
-Their lunch each day on their way to see a client
-Their dinner when they were out of town for business
-Dinner ordered in while working late

Were any of these deductible? Just one.

Your daily coffees and meals eaten alone are not a business deduction - sorry 👎😟

The only time meals eaten alone are deductible is when you are out of town traveling for business. AND then the meals are only 50% deductible (or per diem which would need to be discussed with your accountant).

#BookkeepingTip: Who Needs a 1099-MISC?

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I remember the first time I had to file a 1099-MISC for a contractor. I was so confused if I actually needed to file it. What I needed from her. If I was filling it out the right way.

So first thing's first, you need to figure out if this is even something you should be concerned with. 


Is the person in the United States?

If not, no need to worry with a 1099-MISC. But you will need another form I'll be talking about in another #BookkeepingTip ;)

If so, keep going.


Did you pay this person $600 or more?

If not, no need to worry with a 1099-MISC.

If so, keep going.


Is the person/business working for you a corporation or an LLC filing as a corporation?

If so, no need to worry with a 1099-MISC.

If not, keep going.


Did you pay them by ACH (bank to bank transfer), cash, check, or direct deposit?

If not, no need to worry with a 1099-MISC.


If so, you need to file a 1099-MISC.


Any contractors paid by credit card or PayPal will receive a 1099-K if certain stipulations are met from those payment processors. This is no longer your domain to worry about.


If you have a contractor who will need a 1099-MISC, you should send them a W-9 first to get their correct info --> https://www.irs.gov/pub/irs-pdf/fw9.pdf

To file a 1099-MISC, you can choose to have your bookkeeper or accountant do it. Or if you are the DIY type, you can use an online service like https://www.track1099.com/ to do it fairly easily and inexpensively.

#BookkeepingTip: Processing Fees Forgotten

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This is a tricky one that a lot of business owners forget! When you take credit card or ACH payments, a processing fee is removed.

You need to check whether your processor removes the fee before giving you your money (like Stripe) or after (some apps where you pay a monthly fee + processing fees all at once).

So let me explain with an example since this can be confusing.

Let's say you charge a client $2,000 with Stripe. Stripe will remove 2.9%+.30, in this case $58.30 for processing the payment. The deposit you see on your bank statement will be $1,941.70. A lot of people just mark that as income and move on.

But wait! That could really throw you off when you're trying to figure out how much you made over the month or year. Instead of reporting $2,000 in income, you've now only reported $1,941.70. So how do we fix this?

Well, unfortunately every software is different. But most have the ability to create an invoice to match this payment to. When you do that, the difference of $58.30 will show up and you can create a separate transaction for the processing fee.

Like I said, this process will be different in every software so if you need help let me know, I'm happy to help you out 😁

#BookkeepingTip: Separate Biz + Personal

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So many business owners mix their business and personal income & expenses all in one personal account.

I get it, when you first get started there's a million things to do to get started, who wants to go open a bank account? Or maybe you accidently fell into owning a business and a bank account never crossed your mind. Or maybe you even don't consider your freelance work a business, but

HEY HEY this is your wake up call 📣

Get a separate account for your business! Run all business income and expenses out of that account.

When you need to buy something personal, use your personal account. When you want to pay yourself, move money from the business account to your personal account.

Don't tell yourself the story that keeping business and personal separate is hard. That's an excuse! #RealTalk

#BookkeepingTip: Payroll Yourself for Corporations

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I know most of you are sole proprietors & LLCs, but I also know there are a couple of you in here who are LLCs filing as S Corps and some S Corps (maybe even some C Corps).

So let me tell you a little story about a business owner. She and her accountant decided it would be better tax-wise for her business to file as an S Corp. So she filed the necessary paperwork.

Her accountant told her she needed to get on payroll ASAP. So she got a quote from us and the accountant, but decided she would handle it on her own...except she never did. Instead, she kept paying herself with transfers and asking her "employees" to remove their own taxes.

And that brings us to now! 9 months later and a big ol' heapin' mess that somebody has to clean up because the IRS is NOT going to be happy.

Moral of the story? Consider it a wise investment to get help with payroll when you upgrade to filing as a corporation if you don't know how to do it yourself.

#BookkeepingTip: Save Time by Integrating Bank + Bookkeeping

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I recently met with a BIG corporation that was working with well known companies like Whole Foods and Trello. I was flabbergasted (gosh I love that word 😝) to find out they were using Excel for their books.

It was taking them many, many hours to do their bookkeeping every month and it was a huge headache!

My suggestion? Yes, bookkeeping software! But what was really going to make all the difference for them was integrating their bank with the software.

Instead of endless data entry that makes you feel like twiddling your thumbs would be a better (and way more fun) use of your time, the integration will do all that work for you! Not to mention the accuracy of that data entry just skyrocketed!!

I know bank integrations isn't exactly sexy...but I think taking 10 minutes of setup to save you at least 1 hour + each month is pretty damn sexy 😘

#BookkeepingTip: Recording Payments to Yourself

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Yesterday I shared how easy it is to pay yourself if you're a sole proprietor or LLC...by simply transferring money to your personal account.

But what about in your books? How do you mark this? Is it an expense?

Nope! If you're moving money to your personal account it is NOT considered an expense.

I won't go into all the details about what it actually is, but you need to mark this as an Owner Draw. When you're looking for this account it won't be under expenses; it will be under equity.

Easy peasy 😊

#BookkeepingTip: How to Pay Yourself

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Before I was a money coach and bookkeeper, I started out in the online world as a VA.

I got my first client and was ready to pay myself, but I remember being so confused.

"Wait, how DO I pay myself?"

Well, if you've asked that same question and you are a sole proprietor or LLC, it's super easy! Just transfer money to your personal account and voila!

💰💰💰  You just got paid  💰💰💰