In a conversation with a builder today, I noticed huge similarities between the construction process and running a successful business.
This design/build contractor was stating that the best way to run a construction project was to take time to strategically outline the details and then execute the plan. He was explaining how costly and frustrating it can get when his customer makes big changes half way through the job. “Once the foundation is poured”, he said, “it can be very costly to change the design. Time spent planning will always pay off down the road”.
After a while we began to discuss his business and how he moves through his day. “I am constantly putting out fires and sometimes ask myself if I should be doing something else with my time, something more productive”
It hit me that the construction process is not unlike the business process itself.
Make a plan, then work the plan
When we think strategically about our business processes, we can be more effective, more efficient, and happier because we know the tasks that need to done. With a process in place our people then execute the system. Without the clarity of knowing what really works in our business, it’s not surprising that we wander day to day throwing stuff up on the walls of our business to see what sticks.
What specific activities generate new business? What percentage of business comes from the web/social media versus word of mouth referrals? Are you constantly changing course mid-stream? What is the most profitable part of your business? What’s the most productive use of your time and talents?
As the captain of the ship your people and your customers look to you for leadership and direction. Do you know how effective you are in the leadership role? Do you know what makes a good leader?
To successfully pour a foundation, for example, a specific process is followed. A plan is drawn up, general site work takes place, a survey is conducted and stakes positioned to mark the site. People and machinery are brought in to dig the hole, set the forms, pour the concrete, remove the forms, etc.
Do you have similar procedures in place for your business? How you market, answer the phone, take a customer through the sales process, and hold employees accountable?
Most of us come to business from the technical end. We are great carpenters, accountants, photographers, etc. The challenge is when we begin to grow and change our knowledge needs to change with it. Our job description changes from “carpenter” to leader. The activities and knowledge needed by a leader are completely different from that of a technician in the field.
In order to grow your business and have a sane life outside of work it’s necessary to have a solid strategic plan. A plan for your business, a strategic marketing plan, a road map for your people to follow and the desire to change.
The desire to change is the first and most important step. Often business owners don’t make a change until they are feeling the pain. The pain of 60 plus hour work weeks, strained relationships, dwindling check book balance.
Time to face reality.
What’s working in your business? What’s not? By taking time away from the day to day operations and getting a 30,000 ft. view of your business, you will find clarity and direction. Your people, health, relationships, and business depends on it.
A QuickBooks tip for entering Job-to-data costs and billing data at the item level when converting or archiving.
Use this procedure to enter Job-to-date (“JTD”) costs and JTD billing so the Job Profitability Detail Report is accurate at the Item level after converting your existing Quickbooks file to a new database file, or after archiving old QuickBooks transactions. In both cases, you are bringing over beginning balances as of the conversion date into your new data file, and this procedure will prove useful for reporting on jobs that are in progress as of the conversion date.
From your old data file:
Run your Job Profitability Detail Reports for each job in progress to obtain the JTD cost and revenue figures as of the conversion date. In the date fields, leave the first field blank, enter the conversion date in the second date field. You will use the figures on this report for your data entry in the new data file.
In the new data file:
- Create a fake Vendor called “Opening Balance”. You will make this inactive after completing this procedure.
- Create an Other Expense account in the Chart of Accounts called “9999-Conversions-JTD Costs”. You will make this inactive after completing this procedure.
- Create an Other Income account in the Chart of Accounts called “9998 · Conversion – JTD billing”. You will make this inactive after completing this procedure.
- Create a Service Item called “Opening balance JTD Costs” and link it to “9999 · Conversion – JTD Costs”. You will make this inactive after completing this procedure.
- Print your Item List. (Reports>List>Item Listing) Modify the report to display columns for Account and COGS Account; remove price, cost, tax code, etc.
- Look at your Item list and determine which Service Items appear on your Job Profitability Detail Reports. These are the items to edit in step 9. These are active items.
- In the Item List window, make all other Service Items temporarily inactive. Making them inactive will keep them from appearing in the Add/Edit Multiple Items screen allowing you to quickly copy down the account edits you will perform in step 9.
- Create a backup before performing step 9!
- Using the Add/Edit Multiple Items screen (available in QB 2010 and later) ,edit “all active service items” and point the COGS/Expense account to account 9999 and point the Account/Income account to 9998. Change the top item, and quickly copy down the account edits to the other items. Click Save. Do not update existing transactions. You will have to answer No repeatedly by pressing N until it scrolls through all your changes.
- When you are done with the following procedures, you will edit these same Items again, and change the COGS/Expense and Account/Income accounts back to what they were. Do not update existing transactions. You will have to answer No repeatedly by pressing N until it scrolls through all your changes.
To enter the JTD Costs for each item on each job:
Enter a zero dollar Bill to the “Opening Balance” vendor for the JTD cost. On the item tab enter each Item and the costs on the job profitability detail report and the appropriate Customer/Job. Keep the Billable box checked. On the last line, enter a negative number to the “Opening balance JTD Costs” Item with no customer:job.
This results in no AP balance, leaves no effect on GL, but leaves the correct JTD cost by Item in your Job Cost reports.
Create a new zero-dollar Bill for each active job as of the conversion date.
To enter the JTD Billing for each job:
Enter an Invoice for the Customer:Job for the total Billing-to-date on the job. The Add Time/Costs box will pop up, select the Item tab and bring over all Items to the invoice. You now only have to edit the dollar amounts to agree with your JTD Billing on your Job Profitability Detail report.
Enter a Journal Entry for the total amount of the JTD Billing on the job. The debit is to the “9998 · Conversion – JTD billing” account, leave the Name field blank. The credit is to Accounts Receivable. Select the Customer/Job name in the Name field.
In Receive Payments, enter the Customer/Job, and you will find the above Journal Entry is available as a credit against the Invoice you created above. Apply the Journal Entry to the Invoice.
The net effect on GL is zero, the invoice is paid, and the correct Job-To-Date Billing as of the conversion date will be reflected in your Job Cost reports.
Create a new Invoice, Journal Entry and Receive Payment entry for each active job as of the conversion date.
Run your Job Profitability Detail Reports on the new data file and compare with the same report on the old data file. They should agree. If not, you’ll need to double check your data entry.
I hope you find this QuickBooks tip to be helpful. If so, please leave a comment or share it on your favorite social media platform by using the buttons below.
A QuickBooks tip about how to customize invoices without purchasing pre-printed forms.
You use the Create Invoice icon to invoice your customers. The invoices are plain looking, just your company name, no logo, nothing that really makes it stand out and look like a professional invoice. How would you like to customize the invoice without the cost of purchasing invoices? You can by using the customization tool available.
While in the invoice, go to the Customize button at the top and click the down arrow, then click on Manage Templates and you will see this screen:
Highlight the template you want to customize and click okay at the bottom of the page. The next window that opens will look like this:
This window will give you several options on how you want to design your invoice. To add your own company logo put a check mark in the box next to Use logo and then click on Select Logo. You can then upload the image from a file on your computer. To change the color to match your company color click on the Select Color Scheme and pick a color, then click on the Apply Color Scheme button.
You can change the font for any of the text by highlighting any field in the box below “Change Font For” and clicking on Change Font button. Do this for each text you want to change. Under the Company and Transaction information put a check mark in the box next to each piece of information you want to show on your invoice. Click on the Update Information button to update any company information.
Anytime during your customization process you can click on the Print Preview button located in the bottom right corner to see what your invoice looks like. If you don’t like what you have done, you can go back and make changes.
If you find you need to move different fields around, click on the Layout Designer button at the bottom of the window. This is what you will see:
Put your cursor on any field, highlight it and move it to the desired position. You can make the field bigger or smaller. Double click in the middle of the field to open up another window for more customization options for that particular field. It may take several tries to get it to look exactly the way you want.
Once you have your logo on your invoice and you have done some other customization your invoice will look professional.
Accounting professionals are often considered to be the “trusted adviser”, working in the best interests of their client and helping overcome obstacles to business success. At the very minimum, business owners recognize that they need their accountant to get their taxes done, and that relationship alone requires a level of trust that no typical vendor can boast.
Accounting professionals are also often advocates for certain computer technology and/or software solutions, largely because they are viewed as tools which facilitate a better working relationship between the client and their accountant, and which may improve the quality of information available to both. Recommendations regarding the selection of accounting software packages and solutions to record and report on business activities may be made by the accountant, and those recommendations are often accepted by the business owner based on the belief that the accountant has the necessary understanding of the client business requirements.
Making software and other technology-related recommendations to clients allows the accounting professional to potentially influence the decision of the business owner, the result of which is often that the client ends up using a solution that the accountant is familiar with and can therefore assist with setup, training, and support services. Because the accounting professional simply made a recommendation to the client, there is some safety in the event that the recommendation ends up not working out. If the client purchases the wrong software or equipment, the professional retains a level of distance from the issue because they were not the vendor of the product. Recommendations are made based on the information available, and the accountant’s defense may be that they did not have all the necessary information to make a better recommendation.
But what happens when the accounting professional BECOMES the technology provider to their client? Accounting professionals should strongly consider whether it makes sense for them to be the technology provider to their client, or simply collaborate with the client on a recommended solution. The areas of concern may include operational impacts to the client business and cost, but one main area of concern should be in the client’s perception of their service provider.
As the accountant, the trusted adviser, you benefit from a high level of respect from your client. The client recognizes that you have knowledge that they need and that can help them. You have a high status level with the client.
When the accounting professional becomes the technology provider, however, changes begin to happen with the client’s perception of their once-trusted adviser. Rather than viewing their accountant as the provider of a valuable service, the client may now view their accountant as a technology provider, responsible for the performance and functionality of IT systems. Now relegated to the position of “technician”, the accounting professional must overcome a variety of obstacles, including those specifically and only related to the technology. Difficulties with technology may overshadow the other areas where the professional is involved, and will often become the focus of ongoing discussions. While the accountant may have been trying to improve their overall value proposition with the client, the actual result may be a reduction of confidence and trust. Where once the accountant was a trusted adviser, they are now simply an IT vendor (and a replaceable vendor, at that).
With accountants and their clients now embracing cloud computing models, many accounting professionals are recognizing the potential benefits of private-labeling and reselling cloud-based solutions to their clients. Particularly if a service becomes a key element to the workflow, or is an enabling feature of the accounting service, there are compelling arguments for incorporating the solution into the “package” offered by the accounting professional. Cloud solutions are, however, just another “flavor” of technology, and the same issues regarding reselling should be strongly considered.
Accountants provide a valuable professional service to their clients. While technology and information systems facilitate and enable this relationship, the relationship itself is not fundamentally IT-based. For this reason, professionals should use caution when considering how to involve IT solutions in their service offerings. Delivering a service under the accountant business brand communicates to the client who their service provider is, but it also communicates a level of responsibility that the firm may not be prepared to take on. When the systems are working well, the private-label model may work very well for the firm. But when systems fail, the risk to the professional is not only lost productivity, but a potential loss of faith and trust – and business – from the client.
A payroll tip about who the IRS may hold liable for 941 tax payments.
Are you the bookkeeper or accountant for your company? Are you a signer on any of the company bank accounts? What about your client’s accounts? Do you sign on any of them? If so, you may be held responsible by the IRS for underpaid 941 liabilities. Sounds scary, but it can be true.
How is it possible that can be true? The IRS says the federal income tax and the employee’s portion of social security and medicare taxes withheld is a trust fund. It is to be deposited according to the schedule they have determined for your company. The IRS cannot collect this tax from the employee, even if the employer does not pay the tax to the government.
To protect the government when the tax has not been paid, Internal Revenue Service Code 6672 subjects “all responsible persons” for withholding and payment of taxes to a penalty equal to the amount of taxes due. The penalty is imposed on anyone who is required to collect, administer and pay over the tax and who willfully fails to so.
Two requirements must be met. First you must be a “responsible person”. The IRS considers a responsible person anyone who has authority to make business decisions for the company, not just owners of companies. If you pay the company bills and sign the checks, then you are making business decisions. You process payroll and sign checks, make the 941 tax deposits and file the 941 quarterly returns, you are making business decisions.
The second requirement for the penalty to be imposed would be if you willfully failed to pay the tax due. You withheld the money from the pay checks that you signed, but rather than paying the tax liability, you decided to pay a supplier, or a utility, or another vendor. Once you have done that, you have met both requirements and are subject to the penalty imposed by I.R.S. Code 6672.
Once the IRS determines that a tax is due, forms 4180 and 4183 are completed by an agent, which identifies the responsible person in the company. In 1993 the IRS determined that secretaries, bookkeepers (nonaccountants), and charitable volunteers are not subject to I.R.S. Code 6672. Accountants, however, are still held accountable.
What can you do as an employee? Advise your employer of the penalties he will face for not paying the taxes due. If possible, don’t be a signer on any accounts. You don’t want to be personally responsible for the company you are working for.
What can you do as an owner? Pay your taxes on time. Pay them before you pay your other vendors. It’s not your money once you have paid your employees.
