Bookkeeper or Accountant: Which One Do You Need?

What’s the difference between bookkeeping and accounting? For most people, they mean the same thing — the experts responsible for a company’s finances. Traditionally, though, bookkeepers and accountants have different duties and skills. Let’s take a look at those differences.


Bookkeepers handle the day-to-day recording and implementation of financial transactions. Depending on your type of business, their tasks may include:

Record sales

Accounts receivable — send invoices and track customers’ payments

Accounts payable — verify, record and pay invoices from the company’s suppliers

Pay overhead expenses — rent, utilities, etc.

Pay debt installments — credit cards, business loans

Reconcile bank statements

Track inventory to prevent too much or too little on hand

Prepare payroll

Submit government reports — employee tax, sales tax, etc.

Record capital expenditures such as buying equipment

Record asset depreciation

No special education or qualifications are necessary for these basic data entry tasks; with the right software, anyone can do it. However, you may want to bring in a professional bookkeeper for the following scenarios:

Implement software tools to improve workflow

Train employees to use bookkeeping software correctly

Find and resolve mistakes in the books

Get you caught up if you’re behind in your bookkeeping

Set up a tax recording system


These professionals have the title of Certified Public Accountant (CPA) and offer a higher level of financial analysis. They interpret the data recorded by the bookkeeper to make business decisions. Their services include:

Prepare financial statements

Identify red flags and growth opportunities

Prepare and file taxes

Plan capital purchases and other investments

Strategize for scaling the business

The New Joint Task Force

So the answer to this article’s headline — which one do you need — is that you need both. The good news is that now you can have both in one convenient, affordable package.

As we stated above, there are traditional distinctions between accountants and bookkeepers. However, the industry is now moving toward merging those two roles into one service.

Thanks to software advances, basic data entry is to a large extent automated, eliminating human labor (and error). As a result, the bookkeeper has fewer functions, while the accountant has a greater capability for business analysis. What’s more, the latest cloud software makes it easy for business owners to stay in the loop, with online access to their financial reports at any time.

Xendoo is at the forefront of this evolution with state-of-the-art software that streamlines processes and keeps our rates reasonable for small businesses. Our flat monthly fees — which include both bookkeeping and accounting services — cost less than half what a by-the-hour accountant typically charges.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


Bullet-Proof Your Accounts Payable with 3-Way Matching

How do you know whether the supplier invoices you’re paying are accurate — either accidentally or on purpose? The answer is the 3-way match system. Here’s how it works.

Step 1: Purchase Order

Make it a rule that your business does not buy anything without having a purchase order prepared in advance and entered into your accounting records. No more spur-of-the-moment store runs when you suddenly find yourself short of materials!

Once counter-signed by the supplier, the purchase order is a legally binding document. It should specify:
Names and quantities of items to be bought
Price of items
Delivery date

Step 2: Receiving Report

All supplies you purchase are checked into inventory and a form filled out by the receiving staff. This report is entered into the accounting software, or otherwise made available to Accounts Payable personnel.

A typical receiving report includes:
Date and time of delivery
Purchase order number
Name of vendor and/or shipping company
Description of each item received
Quantity of each item received
Condition of items received (necessary for returning damaged goods)

Step 3: Supplier Invoice

The bill sent by the vendor should match both the purchase order and receiving a report in item names, quantities, and prices. It is the responsibility of Accounts Payable to make sure these three documents match — and if they don’t, find out why not.

Discrepancies may be resolved by having the supplier issue a revised invoice, or in some cases a credit memo.

Benefits and Drawbacks

The benefits of 3-way matching are obvious: the prevention of human error or fraud which could result in financial losses for your business.

On the drawback side, the 3-way match process can be time-consuming for Accounts Payable. This could lead to delays in payment, resulting in late fees and disqualification for early payment discounts. Consider these accounting tips to make it more efficient:
Software which automates the generation of purchase orders and receiving reports, and integrates them with Accounts Payable
Not requiring the 3-way match for recurring or small-dollar invoices
Allowing Accounts Payable staff to approve invoices if the amounts on the purchase order and the invoice are within a few percentage points of matching

Some of these solutions may be beyond the budget of most small businesses, but not when you have Xendoo at your service. Our state-of-the-art accounting software gives you enterprise-level capabilities at an affordable monthly fee. It’s just one of the ways we relieve small business owners from the work and worries of bookkeeping and free their minds to focus on doing what they love.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


New Independent Contractor? Our 7 Essential Habits for Accounting Virgins

When you’re starting as an independent contractor, accounting practices may not be top of mind. But now is the perfect time to develop those good habits that will save you a ton of hassles and heartaches later.

1. Save Receipts

As a business owner, you’re entitled to many tax deductions on expenses, from travel to office supplies to advertising costs. But you can’t claim those deductions (or pass an audit) if you can’t prove they happened. That’s why you need to keep good records.

For converting paper receipts to electronic records, you can choose from a variety of receipt scanning and tracking apps, such as Expensify and Shoeboxed.

2. Keep Business and Personal Expenses Separate

That purchase on your credit card statement from Best Buy: was it for the office printer or your home TV? Doing your books — and your taxes — will be a nightmare if you lose track of what category your purchases should have been put in. Ways to idiot-proof your bookkeeping entries include:
A separate bank account for the business
A separate credit card for the business
Accounting software that automatically codes entries

3. Back-Up Financial Records

What would happen to your business if your computer died or your office burned down? Keep copies of everything (both digital and paper) in a separate location. Many entrepreneurs are moving to cloud-based digital storage, which allows remote access and top-of-the-line security without the need to buy a lot of expensive hardware and software.

You may not require much in the way of a bookkeeping system when you’re starting, but you will as your business expands. Choose software that can scale up with additional capabilities as necessary — and save yourself having to make major changes later.

4. Save for Setbacks

Don’t plow all your profits back into the business. Set aside a percentage of that cash as a hedge against the unexpected events that could ruin you: the illness that prevents you from working, natural disasters, economic downturn, and so on. There are also the expected large expenses to save for, such as inventory stocking and tax payments.

5. Pay Estimated Taxes

Since you’re not working for an employer who takes payroll taxes out of every paycheck, you’re responsible for making your own periodic income tax payments. Estimated taxes are divided up into four payments, one due every quarter. This is easier on the wallet than making one huge payment in April when you file your tax return (however, you can make one annual payment if you’re willing to pay a small penalty).

Estimated taxes are filed with IRS Form 1040-ES. Learn how to estimate the payment amount and how to make payments here.

6. Hire the Expertise You Lack

Not sure what business laws or tax regulations you must follow? Clueless about bookkeeping formulas? Rather than waste your own time and energy trying to figure it out, it may be more cost-effective to outsource those tasks.

At Xendoo, we specialize in accounting and bookkeeping for small businesses. An affordable monthly fee puts decades of expertise and industry-leading, cloud-based software at your fingertips. While we do the numbers, you can get back to doing what you do best.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


Loan Options for the Woman-Owned Small Business

Did you know that before the Women’s Business Ownership Act of 1988, many states required a woman to have a male guarantor for her business loan? Times have certainly changed since then. In fact, 40% of U.S. businesses are now owned by women.

You’d think banks couldn’t afford to ignore such a large market for their lending products; and to give them credit, they have made efforts (in varying degrees) to give equal treatment to women and other minorities who apply for business loans.

However, it’s not too unlikely that you’ll still run into some male chauvinism at a traditional bank — especially if you don’t own a major asset, such as a house, to use as collateral to secure the debt. If that happens, you’ve got other options.

U.S. Small Business Administration

This federal government agency offers a variety of resources to everyone who owns or is considering launching a small business — including loans from $500 to $5.5 million. An SBA guarantee on your loan with one of their partner lenders may help you get financing with less collateral and/or a lower interest rate.

Community Development Financial Institutions Fund

An initiative of the U.S. Department of Treasury, the CDFI provides microloans of $500 to $50,000 to those individuals or communities that lack access to traditional financing.

Women’s Venture Fund

This nonprofit organization focuses on business development in urban communities. As one of the CDFI institutions mentioned above, it offers small loans as well as technical and advisory services.

Grameen America

Another nonprofit, Grameen America is dedicated to enabling women to rise above the poverty line through entrepreneur loans. Loan amounts range from $1,500 or $15,000 and can be used for building a business or getting financial education.

Association of Women’s Business Centers

Start here if you’re looking for local financial support. This national network connects more than 100 state and regional locations with a mission of securing economic justice, entrepreneurial opportunities, and financing.

Women’s Economic Ventures

If you’re low or moderate-income and/or an underserved minority, the WEV offers another discrimination-free option. For business start-ups, they lend between $250 and $25,000; for business expansions, they’ll go up to $50,000.

Opportunity Fund

Women and other minorities who live in the states of California, Florida, Georgia, Illinois, Michigan, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, or Washington can apply to the Opportunity Fund for a small business loan.

Other Financing Sources

Most of the lenders above do serve very specific groups, such as those who have low income, lack any collateral assets, or live in defined regions. If you don’t fall into any of these groups, you may want to consider:
Peer-to-peer lending platforms, such as Lending Club, Prosper and Funding Circle
Crowdfunding through social media sites such as GoFundMe, Indiegogo , and Kickstarter
Angel investors (who put their own money into your business in return for equity in the company)
Venture capitalists (who invest other people’s money in your business)

A grant is not actually a loan because you never have to pay it back. In other words, free money! We’ve given you a link to the federal grants page, but there are also state and local government grants to be had if you look.

You must have a very particular type of business in order to qualify for a grant, such as:
Economic/jobs development
Improved health
Diversity (ethnic minorities, veterans, women)

As you can see, the financial resources for women-owned businesses extend far beyond traditional banks. Go out and get your piece of the pie!


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


What Not to Charge to Your Business Credit Card

You’ve probably read in some of our other blogs that you shouldn’t put personal expenses on your business credit card (and vice versa). But there are also some business-related expenses that shouldn’t really go on that card, either.

Why Have a Business Credit Card?

In the first place, it just makes life easier for bookkeeping and tax-paying to keep business and personal expenses separate. In addition, business cards offer lower interest rates, higher credit limits, and other perks that personal credit cards don’t.

On the other hand, they don’t offer the same levels of consumer protection as personal cards. For example:
Interest rates can be raised and credit lines lowered at any sign of financial problems
No cap on late fees
Over-limit fees can be applied
Late or defaulted payments on a business card could affect your personal credit rating

That’s why it’s better to find alternate methods of paying for the following expenses.

Capital Expenditures

When buying big-ticket equipment or other business-related supplies, it really pays to find the lowest possible interest rate to finance that venture. The rate on your business card is almost sure to be higher than that of a bank or personal loan.

A good rule of thumb is to only use the credit card for items you can pay off within a few months.


Some online accounting apps and management tools offer the convenience of linking to a credit card for payroll, instead of issuing bank paychecks. But beware, you’ll pay a high price for that convenience — namely, a lot of interest.

If you need to resort to a credit card to pay employees, it’s a signal that your business is in financial trouble.

Cash Advances

This is another sign that you have cash flow problems — which could alert lenders and card issuers if you do it often enough. Plus, with a cash advance, there’s a fee. And interest is charged from the moment you take the money, not starting at the end of the month.

Rather than racking up fees and interest every time you run short, take a hard look at your profit and loss statement and business plan to see what must be changed to prevent recurring cash shortfalls.

High-Risk Investments

We’re not talking about investing in your business, but rather the investing you do to grow your capital. Investments labeled high risk carry a high probability that their value will go down instead of up. Bitcoin, for example, is so risky that many credit card issuers won’t even allow you to use their card to buy it.

Minimize your risk by using another source of money to buy the investment — one that won’t leave you with a mountain of high-interest debt if the investment should go south.

Non-Deductible Travel & Entertainment

The IRS does allow some travel and client entertainment expenses to be deducted from your income tax. But if you go over the top, you’re letting yourself in for an audit. For example, if you fly to Las Vegas for an industry convention, you can deduct airfare, hotel, and meals; but you can’t deduct the costs of bringing your family along and staying an extra couple of days to party.

Put allowable expenses on your business credit card and anything extra on your personal card.

Legal Settlements

Charging a legal settlement to your business credit card is simply broadcasting to the financial world that your business is in trouble. Questions will be asked about your ability to repay a loan or credit card debt.

A better solution is to negotiate a payment plan directly with the other party.

Best Practices for Your Business Credit Card

For small operating expenses, a business credit card offers great convenience — as long as you can pay off balances quickly and avoid high-interest charges. (If you can’t avoid paying interest on a regular basis, the debt should be reflected in your balance sheet so you know how much profit you’re actually making.)

Think of your business credit card as a record-keeping device to track expenditures for accounting and tax purposes — not as a source of working capital.

Business credit card records —items purchased as well as dollar amounts — can and will be looked at by potential lenders and investors. Will those records reflect your good money management, or will they raise a red flag?

Xendoo’s advanced accounting software integrates with your business credit card to automatically import and code transactions. It’s just one of the ways we save business owners like you time and labor on bookkeeping and tax preparation chores. Result: you have more brainpower to focus on the company’s core activities. Not to mention the peace of mind for a good night’s sleep!


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


Hiring an Independent Contractor? You’ll Need These Forms

Whether you’re a small start-up with no employees or a larger company just dipping its toe into the “gig economy,” here’s what you need to know about contracting with a freelancer.

What Is an Independent Contractor?

Unlike a full-time, part-time or temporary employee, independent contractors are ultimately in charge of their own work. They:
Accept tasks on a case-by-case basis and can turn down offers of work
Have more than one client
Set their own schedule
Use their own personal method for doing the work
Supply their own tools

Taxpayer Identification — IRS Form W-9

This is the independent contractor equivalent of the Form W-4 that employees use. You should obtain a filled-out Form W-9 from the independent contractor before work begins.

Income Reporting — IRS Form 1099-Misc

Whenever you pay an independent contractor more than $600 total for the year, you must report that income to the IRS, just as you do on Form W-2 for regular employees. The due date for sending copies of it to the IRS and the contractor is January 31 (with some exceptions).

Purchase Order

If your company’s accounting system requires a purchase order to buy goods and services, you should also use it with your independent contractor. You may wish to specify that the P.O. # be included on the contractor’s invoice, for easy matching against the info in your system.

Contractor’s Invoice

Keep your Accounts Payable system running smoothly by requiring that independent contractors submit an invoice for work completed — whether their personal invoice or that of online freelancers or payment platform. You should not be billed for expenses such as equipment and mileage (those are part of the contractor’s business overhead, not yours). And check that the work listed on the invoice matches what you agreed to.

Contract for Work

You may also want to draw up a written contract specifying the scope, quality, and timeframe of work you are purchasing from the independent contractor. That way, you can avoid disputes over what each party’s obligations are. Plus, when you work consistently with a freelancer, it’s easy to fall into the habit of informally requesting little additional jobs — and forgetting that you’ll be billed for them. A contract will help limit that behavior.

As more and more of the workforce moves into non-traditional job roles such as independent contracting, it’s likely that you’ll utilize this type of labor at some point in the life of your business. Xendoo stands ready to help you navigate this unfamiliar territory with guidance on taxes, cost controls, and more.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


Why Should a Sole Proprietor Bother with Accounting Software?

You’re just a small business. Is it really necessary to go beyond an Excel spreadsheet to keep track of finances?

Well, it may not be absolutely necessary, but it sure would save you a lot of time and hassles. Here are 4 ways spreadsheets let you down — and accounting software does it better.

No Automatic Updating

Spreadsheets just give you a freeze-frame picture of one moment in time. With every new transaction, you have to manually enter that information. It’s hard to find time to do that; but if you don’t, you fall hopelessly behind.

Accounting software updates automatically, giving you a real-time look at your cash flow with zero effort. Data is backed up automatically, too. Plus, the software generates reports and graphs that help you see the trends, warnings, and opportunities your numbers are telling you.

No Growth Ability

As your business scales up, you may need features such as payroll processing, online invoicing, or direct payments to suppliers. Spreadsheets can’t do any of that.

Sole proprietors can choose accounting software that will stay with them for the long haul, handling new tasks as they arise. Today’s cloud-based programs also let you share data remotely with your outsourced financial consultants, such as an accountant or tax preparer, saving you the hassles of physical paperwork.

No Safeguards against Mistakes

A spreadsheet is only as accurate as of the numbers you put into it. Manually typing or copying and pasting allows a human error to creep in. How and when will you catch those mistakes?

Accounting software syncs with your sales system and bank, directly importing the numbers from the transactions into your books. Not only is it foolproof, but it also saves you a huge amount of time.

No Audit Tracking

Anyone who has access to your spreadsheet can enter information, and you have to record who did it or when. That may be OK if you as the sole proprietor are the only “keeper of the keys”; but it does leave you vulnerable to fraud.

Accounting software tracks every entry and who made it. This is called an audit trail. Hopefully, you’ll never need it; but isn’t it good to know it’s there?

What to Look for in Sole Proprietor Software

Right now you don’t need numerous capabilities and complexities. These are the functionalities that will change your life as a sole proprietor:

Easy to use — No complicated training or expertise necessary. Many software companies offer a free trial of their products.

Remote accessibility — Cloud-based accounting software that lets you (and selected other users) log in from any device, in any location, at any time.

Security — Cloud-based servers with multiple levels of protection and password requirements.

Scalability — Features you don’t need now but may in the future, such as payroll for employees. Can the software be upgraded as you grow?

Industry-specific functions — For example, if you’re an e-commerce company, look for software that integrates with the major selling platforms.

Subscription payments — Small businesses usually find it easier on the budget to make monthly payments rather than come up with a large sum to buy the product.

Another great option for sole proprietors is to partner with an accounting company that offers integration with its own accounting software. This gives you professional-level functionality far beyond what you could afford if you were buying it yourself.

Xendoo offers a variety of cloud-based accounting and bookkeeping packages at flat monthly fees that are less than half what a typical by-the-hour accountant charges. Say goodbye to spreadsheets and enjoy the difference accounting software makes in your life as a sole proprietor!


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.