Question 1

What is a QuickBooks ProAdvisor?

Accepted Answer

A QuickBooks ProAdvisor is trained and certified in QuickBooks software and completes annual recertification to stay current on the software's features and best practices. ProAdvisors can assist with QuickBooks setup, maintenance, troubleshooting, reconciliation, cash flow forecasting, and customized reporting. Every team member at Journals & Ledgers is a QuickBooks ProAdvisor.

Question 2

What is a Statement of Cash Flows?

Accepted Answer

A Statement of Cash Flows is a financial statement that summarizes the cash coming into and going out of a business during a specific period of time.

It divides cash flow into three categories: operating activities, investing activities, and financing activities. The report helps business owners understand how the company generates and uses cash and provides insight into liquidity, solvency, and overall financial health.

Question 3

What are retained earnings?

Accepted Answer

Retained earnings are the profits that have accumulated since a business started. They appear in the equity section of the balance sheet.

When a business earns a profit, the owners can distribute the profit or retain it in the company to support activities such as purchasing equipment, hiring employees, buying inventory, or improving products and services.

Question 4

Why do I need to send Form 1099?

Accepted Answer

Form 1099 helps ensure that income paid by businesses is properly reported to the IRS. When you make certain payments to individuals or non-incorporated businesses, that income may need to be reported by both your business and the recipient.

Proper 1099 reporting helps your business maintain compliance, keep accurate financial records, and reduce the risk of penalties associated with failing to file required forms.

Question 5

Who needs to receive a Form 1099?

Accepted Answer

Businesses may be required to file a Form 1099 for individuals or non-incorporated businesses paid $2000 or more during the year as part of the company's trade or business.

Common reportable payments include non-employee compensation, rent and equipment rentals, medical payments, legal fees, and certain settlement proceeds.

Question 6

Which payment methods may require my business to issue a 1099?

Accepted Answer

The 1099 reporting information provided by Journals & Ledgers identifies company checks, cash, ACH bank transfers, and Zelle as payment methods that may be subject to business 1099 reporting requirements.

Whether a Form 1099 is required also depends on the type of payment and the vendor's tax classification.

Question 7

Do credit card, PayPal, Venmo, or other third-party payments require me to issue a 1099?

Accepted Answer

The Journals & Ledgers 1099 guidance identifies payments made through debit cards, credit cards, PayPal, Venmo, Cash App, Stripe, and Square as excluded from the business's 1099-NEC/MISC reporting because those third-party payment networks handle their own reporting.

These transactions should still be recorded properly in your bookkeeping.

Question 8

Why do I need a Form W-9 from contractors and vendors?

Accepted Answer

Form W-9 provides the information needed to determine whether a vendor should receive a Form 1099. It provides the vendor's legal name, tax identification number, and federal tax classification.

Without a completed W-9, your business may not have the information necessary to accurately determine and complete its reporting requirements.

Question 9

When should I collect a Form W-9?

Accepted Answer

Best practice is to request a Form W-9 as part of your vendor onboarding process and before issuing the first payment to a new vendor who may be subject to Form 1099 reporting.

Collecting the information early helps prevent the last-minute scramble to obtain names, addresses, tax identification numbers, and entity classifications at year-end.

Question 10

What is bookkeeping cleanup?

Accepted Answer

Bookkeeping cleanup is the process of reviewing and correcting existing accounting records so they provide an accurate financial picture of your business.

A cleanup may involve reconciling accounts, correcting duplicate transactions, reclassifying transactions, reviewing assets and liabilities, and resolving differences between accounting records and previous tax filings.

Question 11

How do I know if my books need to be cleaned up?

Accepted Answer

Common signs include unreconciled accounts, duplicate transactions, personal expenses categorized as business expenses, revenue or expenses posted to the wrong accounts, and financial reports that do not match previous tax filings.

These errors can distort your financial reports and make it difficult to make informed business decisions.

Question 12

Why is my business profitable but there isn't much cash in the bank?

Accepted Answer

Profit and cash are not the same thing. Profit measures what remains after revenue and expenses over a period of time, while cash is the money actually available in your bank account today.

Uncollected customer invoices, loan principal payments, equipment purchases, inventory purchases, owner withdrawals, and payments of previously recorded bills can all reduce cash without reducing current reported profit by the same amount.

Question 13

What should I review on my business's balance sheet?

Accepted Answer

A balance sheet shows your assets, liabilities, and equity at a specific point in time. Business owners should review items such as bank and credit card balances, outstanding loans, accounts receivable, accounts payable, inventory, fixed assets, and owner equity accounts.

An accurate balance sheet can help you evaluate financial strength, plan for expenses, support loan applications, and identify accounting errors that require attention.

Question 14

Why should I keep receipts for business expenses?

Accepted Answer

Receipts are source documents that provide evidence of your business expenses. They help document what was purchased, when it was purchased, how much was paid, and the business purpose of the expense.

Keeping complete records also helps with expense tracking, budgeting, financial planning, tax preparation, and supporting your deductions if your business is audited.

Question 15

Are bank statements enough documentation for business expenses?

Accepted Answer

Bank statements generally show who was paid and how much was paid, but they may not show exactly what was purchased or the business purpose of the purchase. For that reason, businesses should maintain the underlying bills, invoices, and receipts that provide details about the transaction rather than relying solely on bank records.

Question 16

How should I store my business receipts?

Accepted Answer

Paper receipts can fade or become lost over time, so using a system to scan and electronically store receipts can make recordkeeping easier and more reliable.

Digital storage makes receipts easier to organize and retrieve, provides backup and recovery options, and makes documentation more readily available for tax preparation or an audit. Journals & Ledgers clients can use the secure client portal for electronic receipt storage.

Question 17

What does my bookkeeper do compared with my tax accountant?

Accepted Answer

Your bookkeeping team helps maintain accurate financial records throughout the year through activities such as reconciliation, transaction review, financial reporting, and maintaining the information needed for tax preparation.

Your tax accountant uses your financial information along with your personal tax situation to assist with tax planning, estimated tax payments, deductions, retirement planning, and other tax-related decisions. Keeping your books current gives your tax accountant more reliable information to work with.

Question 18

Are Venmo, PayPal, Cash App, and Apple Cash FDIC insured?

Accepted Answer

The original Journals & Ledgers article on this topic explains that payment applications do not necessarily provide the same protections as keeping funds directly in an FDIC-insured bank account. Because protections can vary by provider and account configuration, businesses should review the current terms of the payment service before keeping significant balances in these applications.

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