Manage Your Cash By Managing Your Customers

Here’s a  good article about taking steps to get customer payments.

I would also suggest the following:

Be proactive by clearly communicating standard payment terms (i.e. net 30, due upon receipt) with new customers/clients.

Bill regularly so that customers don’t get hit with a bill for two months of service which may upset their monthly budget.

Follow up on late payments promptly…time is money.  The longer you wait to attempt to  collect; the less likely you will collect.

Quickbooks Simple Start is a Rip Off

For the most part, Quickbooks is an effective small business application. I have worked with Quickbooks Pro Desktop (Mac and PC) and the 2005, 2006, 2007 versions. I have used the Quickbooks online version which is like Skipper to Quickbooks’ Desktop Barbie. Quickbooks Simple Start version, which retails for $99.95 and it is absolutely useless. To take the doll analogy further, this version is like the “Midge” of the Quickbooks family of accounting software. I realized this recently when two of my clients erroneously bought the Simple Start version thinking it was easy and cheaper than Quickbooks Pro. However it did not provide the functionality they needed and it was a waste of time and money which is something an entrepreneur cannot afford.

Yes, it’s cheaper but it very little functionality. Also there is a FREE version of the Simple Start that is almost identical except that it has a limit on the number of vendors and contacts you can add. Look at the comparison. I am a little peeved that Quickbooks would put out a $100 version of a free service which adds very little except support and unlimited contacts. Anyway, if you are a business, don’t use Simple Start. It is useless.

I recommend getting the Quickbooks Pro which facilitates getting banking, credit card and Paypal data uploaded into Quickbooks. Math is not hard, but I also recommend getting someone who knows basic accounting to get you set-up so that you start off with your best feet or (on your tippy toes like Barbie) forward.

Less Accounting

There’s another new accounting Web 2.0 application on the block, Less Accounting. I got excited when I read what it is not–Quickbooks, but I just spent about 10 minutes with the beta version and sometimes less is just less.

I understand that the goal is to make accounting simpler, but I can’t really figure out the thing that I think is most important for any and all of the new apps, the ability to import your banking transactions. That is one reason why I like Wesabe. Quickbooks Desktop and the even the troublesome Quickbooks online facilitate that.

One thing I see is that Less Accounting breaks accounting down to the basics–money in and money out.

Plus, on their home page they say something that I tell all my clients, “Quit wasting your valuable time trying to be an accountant.” [That’s my job!]

Insure Your Business

Small business owners even if the business is home-based should consider getting insurance.

For professional services, there’s malpractice insurance.

For people working in your place of business, consider worker’s compensation insurance. [It is a requirement in many states.]

For overall coverage of your workspace and product, then get general liability insurance.

Keep in mind that you should comparison shop for the insurance but do not be misled to think that your home owner’s insurance will protect you. Besides, that is a personal expense and that would be commingling.

For further information, check out the Insurance Information Institute’s guide for small business insurance.

Accountant’s Hourly Rates Increasing

I found this article, and I see that my hourly rates are below market since the average rate is $48.  It’s a trade-off since I get access to very cool start-ups which helps me share information and leverage it across my many clients.  However, I am struggling with covering my own expenses.  Taking my own advice, I need to negotiate better rates for future clients.

Accountant’s Hourly Rates Increasing

I found this article, and I see that my hourly rates are below market since the average rate is $48.  It’s a trade-off since I get access to very cool start-ups which helps me share information and leverage it across my many clients.  However, I am struggling with covering my own expenses.  Taking my own advice, I need to negotiate better rates for future clients.

Minipreneurs, MicroBusinesses and You

If you ever thought to yourself while shopping for products or services, “I could do that”, then you might be a minipreneur. Minipreneurs, according to a very informative trend article on Trendwatching.com, are active consumers who are making money from their creations.

Here are the drivers of this exciting trend:

  1. Multinationals of one –open-source information available
  2. Being in control of own’s destiny– independence
  3. Entrepreneur is chic –The image of a being a mom and pop owner is replaced with chic moms with bakeries or hipster guys with bike shops.
  4. More experience and less risk–we know what we know because we learn from our jobs
  5. A need for the unusal– the niche is where it is.

So take advantage of low cost to entry, the available of information, and your passion to build your mini-empire.

Last Minute Tax Tips

From Lifehacker, there’s a great link to tips for filing taxes this weekend.

  • Get help from the source. The IRS web site is surprisingly useful. There’s a library of forms and publications, an extensive list of frequently asked questions, and information on how to file for an extension.
  • Claim your telephone excise tax refund. If you’ve had phone service since 2003, you can claim a standard refund of either $30 or $60 (depending on the exemptions you claim). If you saved your phone records, you may be able to claim even more! The IRS says that 30% of those filing returns are forgetting to claim this.
  • Take advantage of the Free File program. The IRS reports that 70% of all taxpayers qualify for free electronic tax filing. If your 2006 adjusted gross income was $52,000 or less, check the IRS web site for more information.
  • Use tax preparation software. It’s quicker and less prone to errors. It can even save you money. Matt recently told me about an experiment he conducted: he prepared his own taxes with software, took them to a small-town CPA, and also had them done by a big-name firm. Though the big-name firm had the best results, the tax software was a close second.
  • Check your work. The IRS doesn’t like a sloppy return. (Accidental errors are the top reason for tax audits.) Make sure your numbers are correct. Include your social security number. Attach all retired paperwork. Sign your return! Note that this is another reason to file an electronic return — computers help to catch bonehead errors.
  • Beware of audit flags. Take deductions you can substantiate, but don’t stretch the truth. Don’t be tempted to cut corners. Your best defense against an audit is to be honest.
  • If you can’t pay, don’t panic. The worst thing you can do is nothing at all. The IRS offers several payment options. In January, CPA Brian Brown told GRS readers what to do if you can’t pay your taxes.

How To Be Green Yet Keeping A (Mostly)Paperless Audit Trail


green dragon on gladiolas
Originally uploaded by Shelly and Roy.

Many of my clients ask me if they should keep paper copies of receipts, bank and credit card statements and bills. First of all, I think everyone should be doing online banking. For bank statements, you may want to download a pdf of the latest statement each monthly and only print it out when you need to use it monthly reconciliation. Then you may want to organize the statements in binder because there is always need to refer back to bank statements throughout the year, so if you keep them organized, then there will be no need to reprint or even worse have to pay for old bank statements. With credit card statements, do the same but I suggest printing those only when absolutely necessary (to dispute a charge) and then if you don’t need a paper copy, shred the credit card statement ASAP to deter any identity theft.

Most utility bills are available online and you can keep them there unless there is an occasion (applying for a loan) where you have to show proof of your monthly expenses. Print only when necessary since most of your bill payments will either show up on your business checking or business credit card. If you pay in cash, get a receipt.

Cash receipts for taxi, food, office supplies should recorded in your general ledger. They should be retained until the next year. Now if you have a scanner, you may want to scan all those little TLC (taxi) receipts and put several on a regular letter-size paper, but if your CPA or the IRS wants the originals, then you may have saved a tree but screwed yourself if you get audited. It is better to safe than sorry in this regard.

More paper savers:
Get a shredder. They are not just for Enron employees.
Scan when you can.
Set-up online fax service and have faxes sent directly to email. This is more efficient, too.
Get a printer that enables to recycle printer cartridges.

Big energy saver:
Turn OFF the laptop when you are not working. Stop and smell the roses!