How to Do Catch-Up Bookkeeping Services for Small Businesses

April 26, 2021/by Team

A blue notebook with numbers onthe cover rest on table near a laptop

Author’s Note: This was updated on Dec 13, 2021, with new information and resources for small business owners.

Nearly 25% of businesses are behind on their books and nearly 41% of business owners try to do their bookkeeping themselves. It happens easily— you fall a month or two behind, then by the time you look up, an entire quarter has gone by, and your books haven’t been updated. With inaccurate and out-of-date books, you might have late invoices, end up over-extending your small business, and not be able to dial in your operating cash flow. You might even be in danger of being non-compliant with the IRS. Perhaps nothing bad has happened yet, but you know it’s time to catch up on bookkeeping. For more guidance, explore these bookkeeping tips for small businesses which can help you stay on top of your financials more effectively.

One of the most essential services a bookkeeper can provide for a business owner is to keep the company’s books accurate and up-to-date. Being able to quickly and easily review the status of your finances is crucial to short and long-term success for any business owner. When you know the health of your finances, you can make quicker decisions concerning everything from who to hire next to what marketing strategy recently worked best.

Reasons to catch up/reconcile

Besides being a smart business practice, catch-up bookkeeping provides additional benefits grow growing companies. Such as:

Smart/quick decisions: A bookkeeper will review vendor payments and record expenses to manage your spending, helping you manage your cash flow. A bookkeeper will track your sales, so you know what’s most profitable and can focus on what works.
Tax compliant: With up-to-date, accurate records, a bookkeeper can assist you during tax season – helping you maximize deductions and stay compliant.
Loan: As you grow, you may want to borrow money or open a line of credit. Your lender will want accurate financial statements, and ideally, you aren’t scrambling to create them right then and there.

What is catch-up bookkeeping?

A bookkeeper will review source documents such as your monthly bank and credit card statements, invoices, payroll, receipts, and record basic accounting information for you, such as your monthly reconciliations, in your company’s books.

Finacial documents in a assorted colored folder fan across a table.

The end goal is to bring your financial records fully up-to-date. Outdated books only create problems when it comes to long-range business strategy and tax preparation.

In the worst-case scenario, your outdated books can leave you in the dark when it comes to your cash flow, jeopardizing your ability to cover expenses, payroll, and more.

Catch-up bookkeeping isn’t just for those who neglect their books. Anytime you migrate data or need to reconcile your accounts, it’s helpful to give yourself an audit to ensure you’re working with the latest data. Catch-up bookkeeping therefore offers peace of mind and the confidence you need to focus on your company’s future.

How do I catch up on my bookkeeping?

In fact, the more you can prepare and organize before you start the process, the smoother things will go. Don’t limit your timeframe to when your books started to unravel. Many business owners discover that their books decline in accuracy over the course of time. You’ll therefore want to make sure your catch-up process covers a sufficient number of weeks to ensure total financial accuracy.

Understandably, many business owners want to catch up on their books themselves. We can’t blame anyone for wanting to cut costs, but isn’t that what got you into this situation to begin with?

Busy entrepreneurs often get behind in their books because they’re trying to handle their administrative tasks, as well as their core business. It’s unlikely that you’ll be able to find the time to perform catch-up duties, at least not with the speed and accuracy your business deserves.

That’s why you should seek out an accounting team that specializes in catch-up bookkeeping. Admittedly, this will cost your company money, but most small businesses discover the cost is negligible compared to the peace of mind that comes from having a team of experts to bring their books up to date.

During the catch-up bookkeeping process, a skilled accountant will help you do the following:

Gather your paperwork

Some of the paperwork and documents you will need to gather for your bookkeeper are:

Receipts
Bank and credit card statements
Invoices
Debt collections
Business expenses
Vendor accounts

This is an important part of the process, as it will provide a clear record of all of the income and expenses that apply to your business.

The first benefit will be immediate. You’ll discover whether your business has any outstanding invoices that your customers have yet to pay, which can later be used to track down delinquent accounts and make arrangements to write off bad debt. It can also let you know whether you have any outstanding debts you need to pay.

These receipts will also be useful during tax season, providing a record of any business expenses that can be used as tax deductions.

Reconcile your bank accounts

Each month you need to reconcile all of your bank and credit card accounts. First, make sure all transactions for the month have been entered. Using your bank statements, you can make sure all of the transactions in your books match the transactions in your statements. This allows you to find any errors in your books and ensure your records are accurate.
It’s easy to fall behind on reconciliation, especially if you come across reconciliation errors that need fixing. If you are too far behind on your monthly reconciliations, the bookkeeping team at xendoo can help you get organized, reconciled, and caught up.

Collect W-9s, 1099s, and W-2s

W-9s are IRS forms that all business owners must keep on file for any self-employed workers (such as freelancers and independent contractors), to keep track of their external team members. If you employ subcontractors, you’ll need to make sure you are collecting these important forms.
When a small business pays an independent contractor $600 or more in a given year, they must report these payments to the IRS using a 1099 form for the contractor.
A W-2 form shows the amount of money an employee made, and the amount of taxes that were withheld from paychecks throughout a calendar year.

Go digital

Reduce the amount of paperwork you have to keep up with by choosing to have paperless bills and bank statements.
A good choice for the environment, too.

Tow colleagues discuss as they sit at a table with their laptops open

Your smartphone can easily be used to scan receipts, allowing you to maintain a digital archive of your business transactions.

The best accounting firms also integrate with the latest software, which can streamline the catch-up process and ensure that your books are brought up-to-date — and that they can stay that way.

At xendoo, for example, we can sync with such popular software as Gusto, Stripe, Intuit QuickBooks, and more. Relying on these digital solutions can make it easier to maintain your books, reconcile your accounts, and ensure precision and accuracy for all of your financial processes.

Best of all, cloud-based technology makes your financial data accessible from anywhere in the world, giving you maximum flexibility and control over your company’s finances.

How much does catch-up bookkeeping cost?

Starting at just $150, your dedicated xendoo team will catch you up and set you up for success with a solid bookkeeping system, or you can utilize our ongoing bookkeeping services. Once you know how good that feels, you’ll want to sign on for a monthly bookkeeping service package that fits your business needs.

You’ll never worry about falling behind again, knowing your dedicated financial team is on it, your up-to-date records are always available, and there’s an expert at your fingertips to answer any questions. You can count on using your books to make quick, smart decisions – leaving you with a healthy, growing business.

Leave catch-up bookkeeping to the professionals

It’s overwhelming to discover a pile of late invoices and frustrating when you can’t dial in your operating cash flow or realize you’ve over-extended your business expenses because of inaccurate books. Then tax time sneaks up, and you realize you’re non-compliant with the IRS and need someone to organize your financial data quickly. If you’re time-starved and neglecting your bookkeeping, it’s time to enlist xendoo for your catch-up bookkeeping service.

Let a professional sort your books for you and develop a bookkeeping system that will serve you well now and for the future. xendoo can quickly and accurately catch you up, setting you up for success.

Always know your company’s financial status and sleep soundly at night with xendoo’s expert support.

A Prettier Profit and Loss Statement: Up- and Cross-Selling Techniques for Salon Owners

April 23, 2021/in Bookkeeping, Small Business Tips, xendoo /by Team

Editor’s Note: This post was originally published in October 2017 and has been updated for accuracy and comprehensiveness.

If you’re like most salon owners, the chances are good that you decided to start a hair salon because you love meeting new people and helping them feel more beautiful than when they walked in your front door. It’s only natural because everyone loves a rewarding job. Focusing on sales techniques, like up-and cross-selling for salons probably wasn’t high on your list of “pros” when you got into the salon industry.

But for better or for worse, persuading clients to purchase products or services that they didn’t initially come in for is an essential part of your marketing strategy and can boost your profit and loss statement. That doesn’t mean selling them products they don’t need. Cross-selling and up-selling are selling them products they need but didn’t know about. It’s part of your job to educate the client, so let’s take a look at how up-selling and cross-selling for the salon business can be less faux-pas and more moo-lah, and why salon owners already have a head start.

Two women in pola dotted dresses work at a hair salon

The Difference Between Up-Selling and Cross-Selling

Up-selling is the practice of encouraging customers to purchase a more expensive item than they had initially intended. We do this by creating value for the customer in the more expensive product. Often, the customer just needs someone to point out the extra value. Depending on the type of salon, if a client is scheduled for a regular manicure/pedicure procedure at retail price, check-in staff can create value for the customer by offering a deluxe spa treatment for just a slightly higher price. You might even be able to have your salon software automatically remind staff to offer the upgrade at check-in. If the customer is already spending $50, it’s easy to justify upgrading for just $10 more because it represents a good value.

Cross-selling for salons is the practice of encouraging customers to purchase other products or services that complement the original sale in some way. Sometimes customers don’t know what they need, and it’s your job as the expert to educate them about it. Effective cross-selling for salons might look like this: If a dark-haired client has decided to go blonde, you as the stylist know that those harsh chemicals can damage and dry out the hair, but the customer may not know that. You can explain this and encourage your client to buy a conditioning treatment to help offset that damage.

Why Cross-Selling and Up-Selling Are Important

The bottom line is that up-selling and cross-selling for salons are critical to your bottom line in several ways. If you’re not doing it, you’re leaving money on the table. If you have a low-margin product that’s selling great and a high-margin product that’s not selling so well, an excellent cross-selling technique might be to bundle the two together and get that extra profit. But even more importantly, it allows you to create additional value for your customers, which is crucial to maintaining customer loyalty and trust. After all, value is why your customers come to you to begin with and what makes a successful salon. When deciding whether a sales opportunity is right, ask yourself, “Will this improve my customer’s life? Will it help them feel more beautiful?” If the answer is yes, you know what to do.

A woman hair stylist chats with a client.

So What’s This Head Start?

Salon business owners have a special trust relationship with their clients, which gives them an edge in ideas to increase profits. Stylists don’t just know their customers’ names; they know everything going on in their lives —their children, jobs, and health. They open up their entire lives to you, which puts you in a unique position of influence with your customer. To put it more bluntly, if they trust you enough to let you bring sharp blades around their heads and irreversibly alter their appearance (for a few months, anyway), they will trust your recommendation on special products and services. Remind your team that they have this superpower because it’s critical to your business, but don’t abuse it by selling customers things they don’t need. That will almost always backfire and damage your relationship.

OK, I’m Convinced. Now What?

Now that you know the importance of upselling and cross-selling for salons, here are a few things you can do right away to get the ball rolling.

Get effective inventory management and accounting system for your salon if you don’t already have one to know exactly which products are moving and which aren’t, and what the margin on each one is. Good accounting for hair salons is a must, and if you don’t have that information at your fingertips, you’re flying blind.
Create an attractive display with high visibility where customers can browse it easily. Never put it behind the counter because curious customers will feel like it’s inaccessible. Keep it organized, and well-stocked with the products that you believe are strong candidates for this strategy. Remember: eye-level is buy-level. Research has shown that products placed at eye level get 35% more attention than products placed at lower levels.
Ensure your staff is using the products you sell and posting them on social media. The best advertisement for a product is being able to see the results in real-time on a person’s natural hair or skin. Remember the trust relationship; if the stylist uses the product, it gives the customer confidence that it must be good. It’s almost like giving away a little trade secret. Purchasing salon-quality products that stylists actually use makes your customers feel like they have a leg up in their beauty routine.
Give your staff the tools to make cross-selling for salons easier. At a minimum, everyone in your salon should be familiar with every item you sell and be able to describe it to customers. But knowledge of the products is only a start. Your team needs to be trained in effective cross-selling and up-selling techniques and incentivized to use them. Be creative in coming up with ways to encourage selling, like contests with prizes, bonuses, or other incentives.

Remember, you may not see the benefits of cross-selling for your salon business right away. Sometimes the customer may be in a hurry or on a tight budget, and you have to respect that. Just remember that by maintaining the customer’s trust, there will always be another opportunity down the road. Do that consistently, and you’ll begin to grow your business and watch your bottom line trend up.

Best Online Bookkeeping Software for Small Business

March 26, 2021/in Bookkeeping, Small Business Tips /by Team

Bookkeepers and bookkeeping services can be a small business owner’s best investment. Bookkeepers save small businesses money by keeping their books in order and providing accurate financial reports – giving the small business owner more time to do what they do best.

Bookkeepers handle a wide range of duties, including recording financial transactions, maintaining accurate records, and balancing the books of a business. Bookkeepers can manage accounts receivable and accounts payable for small businesses – they can create and send invoices, accept payments, and so much more. They use small business accounting software to reconcile bank accounts and lines of credit, and create vital reports such as Profit & Loss statements and Balance Sheets. Bookkeepers can track and manage inventory, provide payroll services, and even track time. The key financial statements that they prepare can help prepare you for tax time, and their assistance in translating the reports into layman’s terms can help you make smart business decisions.

Making the switch to using an online bookkeeping software like Quickbooks Online or Xero is an ideal choice for small business owners who are looking for more accuracy in their books and reporting – when you just need someone to keep your books in order, working with a bookkeeper who uses one of these cloud-based bookkeeping software solutions is the perfect choice. Online bookkeeping is also great for our remote entrepreneurial lifestyles – since Quickbooks and Xero are cloud-based, you can keep tabs on the financial health of your business anytime from anywhere – office to the beach!

What does bookkeeping software do?

Bookkeeping software allows bookkeepers to accurately manage the finances of a small business. Software such as Xero or Quickbooks Online are all cloud-based and perform a wide variety of bookkeeping functions – creating reports like your Profit & Loss statement, working in Accounts Payable and Receivable, and balancing your books.

Online bookkeeping programs like Xero and Quickbooks Online connect seamlessly with your bank accounts to import transactions. This not only helps save time over entering transactions manually, but it also reduces the human error element that comes with manual data entry and can provide up-to-date financial reports. The software even knows how to categorize your transactions to match your Chart of Accounts. It makes reconciling your accounts every month a breeze!

Main functions of online bookkeeping software:

Importing & categorizing transactions from your bank
Reconciling bank accounts
Accounts payable
Accounts receivable
General ledger
Preparing key financial statements
Managing inventory and purchase orders

Our picks for the best bookkeeping software

Xero

Xero provides fast, simple, powerful bookkeeping software that your users can access simultaneously, regardless of their different locations or operating systems. They offer a wide range of easy-to-use features to help you manage your bookkeeping, such as paying bills, claiming expenses, and accepting payments. Xero is a great choice for small and mid sized businesses – and it’s even a great choice for businesses that are growing – they make it easy to create a plan that meets your changing needs since their software integrates with more than 500 third-party apps, plug-ins, and products. With over 2 million global subscribers, Xero is a leader among online bookkeeping software options, and for good reason – their software and customer support are an excellent choice when you’re looking to choose a bookkeeping program for your small business.

Quickbooks Online

Quickbooks Online is the cloud-based version of Intuit’s classic bookkeeping program. Quickbooks Online does it all – reconcile your bank accounts, create and send invoices, accept business payments, manage and pay bills, and even manage payroll. It is one of the most popular bookkeeping software options for small and mid sized businesses and is one of the most trusted bookkeeping software options out there.

Sage Accounting

Sage is known for being easy to use and set-up. Sage gives you control to automate your business finances, speed up payments, manage cash flow, and track expenses. Their real-time tracking feature lets you know the minute your invoice is viewed and paid.

AccountEdge Pro – AccountEdge offers full-featured accounting software for your small business, via their desktop application – and with no monthly subscription. Their command centers help you run and report on all aspects of your business: sales and invoicing, purchases, payroll, inventory, time billing, and more.

Wave

Wave offers free accounting, invoicing, and receipt scanning software. But these kinds of free software tools have fewer features, and will not be able to scale as your business grows.

NetSuite

NetSuite offers an entire suite of enterprise-grade applications that reach well beyond the needs of accounting & finance. Companies use NetSuite for enterprise resource planning (ERP) and to manage inventory, track their financials, host e-commerce stores, and maintain customer relationship management (CRM) systems. It’s a flexible platform that can be applied to a wide range of business applications.

Freshbooks

FreshBooks is a cloud-based accounting software solution designed for freelancers and small business owners. It is a simple and intuitive solution, so accounting isn’t intimidating. You can create professional invoices, capture your expenses and track your time towards projects.

Why you should hire a professional bookkeeper

Keeping your company’s books accurate and up-to-date takes up a lot of valuable time as a small business owner. And as your business grows you’ll find you don’t have enough hours in the day to accurately manage your own small business bookkeeping. Hiring a professional bookkeeper becomes essential to keeping your finances on track. With a bookkeeper on your team, you can then easily review your finances, make smart decisions fast, and grow your small business.

xendoo’s online bookkeeping service plans utilize Xero and Quickbooks Online software, and come with a dedicated team of bookkeepers and accountants who are committed to helping you grow your business. xendoo offers a variety of packages because we know not all business owners are created equal. You can choose the package that works best for you and your business.

Conclusion

Online bookkeeping software makes doing your own books possible, however paying a monthly rate to xendoo will provide you with Quickbooks and Xero, plus a dedicated financial team on the go. You gain the freedom to focus on managing and marketing your business while staying passionate and avoiding burnout.

10 Reasons Your Small Business Needs a Bookkeeper

February 24, 2021/in Bookkeeping /by Team

Are you behind on your books? Losing track of your expenses? Do you need someone who can help you file your taxes and stay compliant?

A small business bookkeeper or bookkeeping service can support you with everything from simple bookkeeping to offering more in-depth tax filing services and business consulting. A skilled bookkeeper will save you time and money, set you up with systems that will simplify running a small business, keep you tax compliant and ready, and ensure you are always in-the-know when it comes to your financials.

Save time

Whether you’re filing your taxes or just doing simple data entry, it is incredibly easy to make mistakes when you aren’t a professional bookkeeper and these mistakes can cost you a lot of time. When it comes time to speak with a lender, make a big decision, prepare your taxes, or just wrap up your monthly reconciliation you might end up having to undo an entire month’s worth of data entry – or likely even more due to one little mistake. One simple slip-up in your books can have a huge ripple effect and cost a busy business owner like you a massive amount of time that would be better spent elsewhere.

Save money

Small business bookkeepers and bookkeeping services can save small businesses money in many different ways. Since one simple slip-up in bookkeeping can have a huge ripple effect and cost you a massive amount of time as you try to fix your problems – you know you’ll be saving money by trusting a professional with your books from the start. A very popular option with small businesses is an accounting service that charges a fixed amount every month. It’s easy to budget for, and it can cost less than half what you would pay an hourly accountant for the same amount of service.

xendoo bookkeeping service plans come with a dedicated team of bookkeepers who are committed to helping you grow your business. xendoo offers a variety of packages because we know not all business owners are created equal, so you can choose the package that works best for you and your business. A great place to start is the Hustle plan – it’s made for self-employed small business owners like you and starts at $195/mo. You’ll get expert bookkeeping and on-time financials – and you won’t stay up at night worrying about catching up.

Gather Information

Bookkeepers can help you with the big picture aspects of running a small business, such as reviewing options for how to finance your business. Whether it’s how to apply for loans and which ones to apply for in the first place, to exploring options for lines of credit, bookkeepers can help you navigate how to grow your business. Big picture bookkeeping services can include financial analysis, tax reporting, year-end tax projections, and so much more.

Keep you up-to-date

When you don’t have up-to-date books during the year, you can’t use monthly or quarterly financial statements to guide your business decisions.

One of the most essential services a bookkeeper can provide for a business owner is to keep the company’s books accurate and up-to-date. Being able to quickly and easily review the status of your finances is crucial to short and long-term success for any business owner. When you know the health of your finances, you can make decisions quicker concerning everything from who to hire next, to what marketing strategy recently worked best. It truly informs all aspects of a healthy business.

There’s no need to play catch up when you have a professional bookkeeper keeping you up-to-date every step of the way!

Keep you organized

A small business bookkeeper helps everyone stay organized. They help you categorize expenses correctly, reconcile your accounts, and even help you keep your business and personal accounts separate. In small businesses especially, you’ll often see bookkeepers paying bills, cutting checks to employees, invoicing clients, and making deposits. Just like a small business owner, a small business bookkeeper wears many hats!

xendoo will keep you organized – we provide on-time monthly reports and data for your business. You’ll receive monthly balance sheets and profit and loss statements that you can easily access from your desktop or mobile, as well as weekly reconciliations so you have clear visibility of your business’s financial health.

Payroll

A small business bookkeeper can save you time and money by managing your business’s payroll – and many choose to use online payroll services such as Gusto. With Gusto, you can schedule payroll to run automatically each pay period, and even reimburse employees for out-of-pocket expenses at the same time. They take care of all the employee management involved in payroll, too, like setting up direct deposit, online onboarding, digital paystubs, and tracking vacation and sick time management.

Financial reports

Small business owners who have access to up-to-date financial statements are more confident and quick in their decision-making. Every kind of decision, from what kind of inventory and equipment to invest in, to who to hire next, is made easier when you have a recent profit and loss statement and balance sheet in hand.

As you grow you may want to borrow money or open a line of credit. Your lender will want accurate financial statements, and ideally, you aren’t scrambling to create them right then and there. With a professional bookkeeper on your side, you can quickly access all financial statements necessary as soon as you need them.

A small business bookkeeper can help you report sales taxes on time with a system that accurately tracks sales amounts, so you don’t accidentally overstate your sales and remit too much sales tax – a surprisingly common error that bookkeepers can prevent.

File your returns

A small business bookkeeper will set up a tax recording system for you and submit government reports – like employee tax and sales tax – making it simple for an accountant to regularly file your returns.

Work with accountants

Bookkeepers focus on the everyday tasks that maintain your business’s finances while accountants consider the big picture strategy needed to keep your business strong and growing. Understanding the difference between bookkeeping and accounting is crucial as they play complementary but distinct roles in the business environment.

Accountants can answer your questions about financial reports, cash flow, depreciation, and more. They can give tax savings advice, such as when to make capital purchases, what you can deduct, and how to reduce taxes on capital gains. They can identify opportunities to improve profit margin and business growth and keep you legal – preventing missed deadlines and noncompliance penalties.

Working with an accountant can be complicated, confusing, and expensive – but bookkeepers make it easy and save you money by being an efficient and knowledgeable partner for the accountant to work with.

xendoo offers a dedicated bookkeeper that keeps monthly books up to date, plus you also have access to a CPA and an accountant. This allows us to offer tax consulting and yearly planning to all xendoo customers.

Overall, contributing to the success of your small business

Every aspect of a company is affected by its finances, so having a clear and accurate picture of these records is key to a company’s health and success. Properly managing and organizing your small-business finances and operations will help ensure that you are hitting your profit goals, staying legally compliant, and will overall contribute to the success of your business.

Final

Hiring a small business bookkeeper or bookkeeping service like xendoo will keep your books organized and accurate so you always have easy access to the most up-to-date information on your company’s finances. It is invaluable to your business to have the administrative details taken care of, so you can focus on running your business and doing the parts that you do best – or even taking a day off!

The Best Bookkeeping Service For Your Small Business

February 24, 2021/in Bookkeeping /by Team

There are different types of bookkeeping services for small businesses. You can handle it all yourself, utilizing software like Quickbooks and Xero; hire a part-time small business bookkeeper; or opt for a full-service bookkeeping service like xendoo that can handle it all for you.

What are the different types of bookkeeping services for small businesses?

You may choose to handle all of your small business bookkeeping on your own, but keep in mind that it’s more than just simple data entry. You’ll need to familiarize yourself with your software of choice, such as Quickbooks or Xero and set up your Chart of Accounts among other things – and of course make sure your records are always as up-to-date as possible.

A popular option for small business owners is to hire a part-time bookkeeper. This is a great solution for small business owners who have enough time to take on some of the bookkeeping work themselves or who have someone on staff who can manage it. One important aspect of hiring a part-time bookkeeper to keep in mind is that you will still need to oversee and be involved with the part-time bookkeeper’s work. You’ll need to review their data entry, monthly reconciliations, and any communication they have with your accountant. Additionally, you will need to organize receipts, invoices, and any other financial paperwork for them and make sure to stay organized on your end.

As a small business owner, you wear many, many hats. From sales and marketing to employee management and not to mention, your specialty – the good or service you set out to provide in the first place – whether it’s operating a small bakery, selling home goods, or running a childcare center – you do it all. When you are ready to catch up on your bookkeeping and make sure it always stays up to date, you can opt for hiring a full-service bookkeeping service like xendoo. xendoo is proud to support thousands of small business owners with their financial needs to help set them up for success and provide financial peace of mind. It’s one important thing you can take off of your to-do list, and you can rest easy knowing your financials are being properly handled throughout the year by professionals – no more worrying about when you’ll do your bookkeeping, and no more playing catch up when tax time rolls around.

When should a small business hire a bookkeeper?

It is estimated that small business owners spend as many as 120 working days per year on administrative tasks and bookkeeping. That’s almost four months! This is time that could be spent doing the work you love that led you to start a small business in the first place. Perhaps you set out to own and operate a dog grooming business – you never thought you would end up spending all your days at your computer with piles of paperwork! Small grocers, massage therapists, photographers, dentists, even nail salon owners – every small business owner is different, yet they all need someone to handle their bookkeeping.

An excellent time for a small business owner to consider hiring a bookkeeper is when you see that your small business is growing. Perhaps your bookkeeping tasks are taking more time than you can afford, and your books are never up to date. Maybe you recently added on a new location, hired more team members, or have seen a sharp increase in sales – whatever the case is, it looks like your small business is growing. As your business continues to grow, your bookkeeping workload will also increase, so if you’re posting more and more transactions each month, entering data on a regular basis can make bookkeeping more difficult and time-consuming. Even when you use online bookkeeping software solutions such as QuickBooks or Xero, a bookkeeping service for small business service can help you manage and maintain your books accurately and save you a large amount of time and money.

A bookkeeper will keep your company’s financial records accurate and up-to-date by performing basic bookkeeping services, that in the end can take hours and hours that a busy small business owner just doesn’t have. This includes regularly reviewing source documents such as your monthly bank and credit card statements, invoices, expense reports, payroll, and receipts, and recording basic accounting information for you – such as your data entry and monthly reconciliations – in your company’s books.

Small business owners notoriously spend a large amount of time on administrative work, like employee scheduling and management, preparing payroll, reviewing invoices, and especially hours and hours of bookkeeping. When you find you can’t afford to spend your precious time on administrative work like bookkeeping any longer, you know it is time to delegate and outsource the work to a bookkeeping service for small business.

Are there bookkeeping packages for small businesses?

xendoo offers bookkeeping services for small businesses packages of all shapes and sizes. No matter the plan, each one comes with a dedicated financial team – you will have a dedicated bookkeeper assigned to your account who is supported by a full team of bookkeepers that have your back, and are available to talk, text, or email with you as you navigate your busy workday.

xendoo offers five different bookkeeping service for small business plans for small business owners to choose from – and even offers custom plans. To determine which bookkeeping package is right for your small business, check out the pricing page on the xendoo website. You’ll see that the five different packages are determined by the amount of your small business’s monthly expenses. We know every small business is unique, so when necessary, we work with our customers to create custom bookkeeping packages to suit their specific needs and goals.

And it’s easy to change your xendoo plan if you ever need to! Perhaps your monthly expenses have increased and you need to bump up to a more robust plan, or maybe you are in a slow season and need less help with your bookkeeping. Whatever the case may be, you can easily log in to your account and modify your plan.

No matter which bookkeeping service for small business package you choose from xendoo, you will be up to date, compliant, and ready to grow. Not to mention, you will have peace of mind and one less thing on your to-do list. You will rest easy knowing you are not part of the 25% of small business owners who report that they are behind on their bookkeeping.

Do bookkeepers save small businesses money?

Bookkeepers and bookkeeping services for small businesses save both time and money. Small business owners notoriously spend a large amount of time on administrative work, like employee scheduling, preparing payroll, and especially hours and hours of bookkeeping. It is estimated that SMBs spend 120 working days per year on these administrative tasks and bookkeeping. A bookkeeper can save you money by helping to maximize your business’s income, help you determine where you can cut costs, and give back your valuable time to focus on the reasons you started your business in the first place. For a set monthly fee, xendoo’s bookkeeping solutions come with a fully dedicated financial team to save you time, money, and most importantly – stress.

When SMB Owners Use QuickBooks: 6 DIY Mistakes to Avoid

April 2, 2020/in Bookkeeping, Small Business Tips /by Team

a person looking at a computer in a dark room

QuickBooks accounting software can be a great tool for small businesses — but only if you’re using the tool right. We often see mistakes or omissions in books that were DIYed by our clients.

Unfortunately, even little mistakes can snowball into big, expensive consequences. For example, if your tax return contains errors or discrepancies, you could get hit with penalties from the IRS.

1. Not switching to cash basis accounting.

QuickBooks defaults to the other most common method of accounting, called accrual accounting. With accrual, you enter money owed to you at the time of the sale; with cash basis, you enter it when you actually get paid (a time difference that could be weeks or months). For small businesses, it’s more useful to see how much cash you really have at the moment, rather than a theoretical number.

2. Inventing your own chart of accounts.

QuickBooks enables you to set up a system for organizing transactions into categories, such as income, assets, liabilities, receivables, and operating expenses. It should be as simple and straightforward as possible; a good guide is the categories on your tax return (IRS Form 1040 Schedule C).

Complicating the chart of accounts with too many sub-categories will only cause confusion. Plus, it increases your chance of coding items incorrectly and messing up your tax return.

3. Forgetting to record transactions.

When you’re focused on running your business, it’s all too easy to put off data entry to some more convenient time — a time that may not come for a while. By then, you may have completely forgotten about it, or can’t find the receipt.

As the saying goes, “Do a little, do it often.” It’s much easier to find 15 minutes a day or week to update the books, rather than hours to tackle a huge pile at the end of the month, quarter or year. Plus, you’ll always have an accurate view of your current cash flow, and be able to nip potential problems in the bud.

4. Entering the same transaction twice.

For example, you might buy printer ink with your credit card and enter it as a business expense on the day of the purchase. When the credit card bill comes in, you might enter that expense again.

5. Not performing adjustments correctly.

Some DIY bookkeepers skip the steps necessary to separately identify gross income, net income, and expenses. Say, for example, you’re an e-commerce business that uses a payment processing service such as Shopify. Your customer buys a $100 item, and Shopify takes a $10 fee. You can’t just enter your net revenue of $90. You must enter the gross revenue of $100 and an expense of $10 separately.

Mistakes also often occur in adjusting for interest paid on a business loan. You should be using an amortization schedule to get the numbers right.

6. Not saving old records.

If you leave QuickBooks for any reason, you’ll get read-only access to the most recent year of your bookkeeping. Anything older than that will be lost forever unless you export and save them.

Even if your business is closed, you should hang onto them. Those records could help you get a loan or investors to start a new business, or be an essential requirement in an IRS audit.

The last thing you shouldn’t do is worry over whether you’re doing QuickBooks right. xendoo accounting experts can help you clean up any problems and provide helpful tips for getting the most out of your accounting software.

The Profit and Loss Statement as a Planning Tool

September 12, 2019/in Bookkeeping /by Team

The monthly P&L statement you receive from xendoo is a great snapshot of how your business has performed in the recent past. But did you know that it can also help you strategize for future success?

Its numbers can guide you to answers for frequently asked questions like these:

Am I Meeting My Profit Margin?

If your Net Income is very small (or worse, a loss) and there are no external influences such as a normal seasonal dip in sales, your profit margin is too low. To figure your profit margin, use this formula:

Gross Profit ÷ Total Revenue = Profit Margin (usually expressed as a percent)

Example: $25,000 Gross Profit ÷ $100,000 Total Revenue = 0.25 Profit Margin (25%)

Is that percentage the one you determined when you set up your business plan? If not, look for areas that may need improvement in both the Revenue and Cost of Sales sections of your profit & loss statement. Consider raising prices, trimming expenses, or doing some of each.

Do I Have Money to Reinvest in the Business?

Look at the “bottom line” — your Net Income. This is how much you have left of your total sales after you pay both direct and indirect costs of operating the business. You should keep some cash available as a cushion against unexpected setbacks, such as an interruption in cash flow. If the net income is more than that, you can think about ways to use it to grow your business, such as buying new equipment.

Can I Afford to Expand?

Unlike the previous question, this one is about increasing your ongoing operating expenses — hiring additional employees, moving to a larger space (with higher rent), and so on. To make this decision:

1. Plug the increased numbers into the relevant lines in your in Other Income and Expense section on the P&L statement (i.e. Payroll).

2. Add up the section to get a new Total Other Income and Expense.

3. Calculate Gross Profit – Total Other Income and Expense = your new projected Net Income.

Now you can easily see whether the business can tolerate higher operating costs. We suggest that you use year-to-date figures rather than the results for the previous month. They are a more reliable indicator of how your business is likely to be performing in the future.

Should I Get a Business Loan?

Here again, the costs of paying back the loan will be reflected in the Other Income and Expense section of the profit and loss statement. Use the same steps in the paragraph above to decide whether this is a smart idea.

As a general rule, using a business loan to cover overhead expenses such as payroll is only digging yourself deeper into the hole. Go back to the first question for suggestions on how to improve profit margins so that you won’t need to seek loans.

Also, be aware that potential lenders will look at your P&L statements to judge whether you are a good risk. These financial professionals will be able to tell whether your business model is working and how efficient your operation is. Make sure you know those things yourself, so you can address any issues they might bring up with you.

Have more questions about the numbers on your profit and loss statement? Just ask your xendoo accounting professional. And remember, xendoo guarantees delivery of the statement by the 5th business day after the end of the month, so you can rest assured you’re acting on timely information

Bookkeeper or Accountant: Which One Do You Need?

August 30, 2019/in Bookkeeping /by Team

a person sitting in front of stacks of paper

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.

Bookkeeper

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

Accountant

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.

Do a Balance Sheet Health Check for Fast Answers

July 19, 2019/in Bookkeeping /by Team

If someone asked you, “How’s Business?” — what would you say? You’d be surprised how many small business owners don’t know. Or they think they know, but are forgetting some costs or not recognizing early warning signs.

What’s on the Balance Sheet?

Basically, you’ll see three lists: assets, liabilities, and equity. The total assets will be the same, or balanced with, total liabilities plus equity — hence the name “balance sheet.”

Assets include cash/cash equivalents, accounts receivable, property, equipment, and some types of intangible assets. Assets are usually reported at their original cost or lower to allow for depreciation and other factors.
Liabilities are any money owed, such as business loans, taxes, accounts payable, and accrued expenses.
Equity is the money invested by the owners plus any company earnings that you chose not to withdraw as dividends or distributions.

Health Check #1: Assets to Liabilities Ratio

Current Liabilities ÷ Current Assets = Debt to Equity Ratio

This number shows you whether the company is able to pay its bills — it has more current assets (cash or convert to cash within one year) than current debts (payable within one year).

If the ratio is more than 1, congratulations, your business is healthy.
If it’s 1, you’re breaking even.
If it’s less than 1, you’re in trouble.

Health Check #2: Debt to Equity Ratio

Current Liabilities ÷ Total Equity = Debt to Equity Ratio

This reveals whether you’re too deeply in debt; in other words, you have too much financing from loans as compared to investments from owners or stockholders. A high ratio number might be a sign that there will be problems with debt repayment. It also tells prospective lenders or investors that the business is a higher risk.

For most small and medium-sized businesses the maximum acceptable debt to equity ratio is 1.5 to 2 (15% to 20%).

Health Check #3: Asset Turnover Ratio

Net Sales ÷ Average Total Assets = Asset Turnover Ratio

(Net Sales: see your income statement)

(Average Total Assets: from the last 2 years’ beginning and ending balance sheets)

This tells you how efficiently your business generates sales from its assets. The higher the ratio, the better. On the other hand, a low ratio may point to management or production issues.

What’s considered a “good” asset turnover ratio varies widely by industry. Therefore, it’s best to compare your ratio with similar companies in your field.

The balance sheet is just one of the essential documents xendoo provides our clients, giving them the information they need to avoid the pitfalls and seize the opportunities for growth and success. Contact us to learn more about our affordable, real-time financial services for small businesses.

6 Ways Profit & Loss Statements Help Small Businesses Succeed

March 25, 2019/in Bookkeeping /by Team

a woman looking at papers while sitting at a desk

The most obvious benefit of your monthly P&L statement is that it shows whether you made more money than you spent — in other words, your net income (or loss). But that’s just the beginning.

Here are 6 more ways to use that accounting report to keep your business on track for success.

1. Check up on company expenses.

Like most accountants, we believe that operating and administrative expenses should not be more than 20% of gross revenues. To find your percentage, subtract expenses (not including cost of goods or sales) from revenues, then divide that amount by revenues.

Example:

Step 1. $100,000 gross revenues – $80,000 expenses = $20,000 difference

Step 2. $20,000 difference ÷ $100,000 gross revenues = 0.2 (20%)

If your percentage is too high, you’ll need to look closely at every line in your expenses column, from advertising to utilities, for cost-cutting opportunities.

2. Analyze the cost of goods or sales (COGS).

Many business experts say that COGS should not be more than 75% of your gross revenues. With both cost of goods and gross revenues shown on your P&L statement, this percentage is easy to calculate.

If it’s more than 75%, the next step is to do something about it. Look for ways to reduce COGS by cutting production costs, finding better prices on supplies, and so on. Conversely, consider increasing gross sales, perhaps by raising prices.

3. Prepare for tax season.

By regularly updating your P&L statements, you’ll also be keeping your books current. Everything will be ready to prepare your return, and you’ll spare yourself the giant headache of trying to catch up on months’ worth of backlog all at once.

4. See how much you can reinvest in the business.

Is it the right time to move to a larger facility, add more staff, expand your product offerings? The answers are right there in your bookkeeping reports, such as the profit and loss statement.

5. Prove you’re a success.

When the day comes that you need a business loan, a new investor, or a buyer for your business, your P&L statements will be a valuable negotiating tool. They provide concrete, chronological record of exactly how well the business has done since its beginning.

6. Compare yourself to your industry standard.

Two important ratios show how you stack up against your competitors.

Gross Profit Ratio reveals how much income your business generates on sales. A high ratio means you have a healthy profit margin, and won’t be wiped out by unexpected increases in expenses.

The formula: Gross revenues – COGS ÷ gross revenues = GPR

Return on Equity measures how much investors have gotten back from what they put into your company, and is a good predictor of future returns for anyone thinking of investing in you.

The formula: Net income ÷ shareholder’s equity = ROE

As you can see, the profit & loss statement is essential to making informed, timely decisions. That’s why xendoo guarantees delivery of P&L statements to our clients on the 5th business day of every month. It’s all part of our real-time bookkeeping service that moves at the speed of business and lets you get back to doing the work you love.