How to Choose payroll service blog post

Whenever I mention payroll to business owners I see the telltale signs of them “checking out” mentally, and it’s not surprising!  With terms like FICA, Workers Comp, Unemployment and ObamaCare, it’s no wonder small businesses are confused and sometimes just downright disgusted by it.  In fact, we often tell clients that if they get one thing right in running their business, make sure you hire a competent payroll service!

We want to help you understand how to make the right choice in choosing a payroll service.  So let’s get into it!

Taxes

Penalties on payroll tax errors are some of the most stringent that the IRS will shell out.  So you need to get this right!  Payroll companies will work payroll taxes in one of two ways: impounding and you paying the taxes yourself.

Impounding means that the payroll company takes the taxes from your account, holds on to them, and then pays them on time to the IRS and state agencies.  Sure, they make money on holding onto your funds, but they also take full responsibility for making the payments on time.

Some providers make it pretty easy to pay the taxes yourself via ACH and electronic payments.  However, it’s up to you to press “Submit” and make them on time.

The Verdict:

Use payroll services that impound.  It’s easier to manage cash flow because the taxes are taken out right when you run payroll and the payroll company assumes the responsibility to make the payments on time.

Direct Deposit and Checks

This may seem like a pretty basic thing but did you know that you can save yourself some time and costs by ONLY offering direct deposit?  Direct Deposit is a great way to pay your employees because they get paid right into the accounts.  Checks can be used, but they also create a headache when it comes time to reconcile your bank account.  Payroll companies also charge to push that paper around.  Have employees that don’t have a bank account?  Give them a “Pay Card’ that has it’s own routing and account number and you can “load” it with their pay each pay period.

The Verdict:

Use a payroll service that focuses on direct deposit and you will most likely save money on monthly service fees, postage and mailing, and time when reconciling your bank account.

Integration with Other Apps

Do you use accounting or online scheduling software like Xero or Deputy?  Use a service that ingrates with them to eliminate data entry and make running payroll, easy.  If using online scheduling, within a few clicks you can approve timesheets and send them straight to payroll.  This alone can save you hours each pay period.

The Verdict:

Search out payroll services that are open that integrate with other apps that you use.  Who knows, you may even discover an app you can use for your business this way!

Advanced HR Features

Some businesses have 1-5 employees, some have 50.  And depending on how many you have, will determine how much help you’ll need managing them.

If you have a large staff to manage, payroll companies like ADP have robust services beyond just running payroll that offers on-site HR reps that can come out “do your dirty work” for you, a.k.a.hire and fire.  They can also help you navigate the tricky waters of the ACA (ObamaCare) and provide employee handbooks, amongst other things.

If only a few employees, then a company like Gusto is often a good choice.  While they don’t provide robust HR services, they can offer very competitive rates on Workers Comp insurance, and make managing your employees pretty easy.

The Verdict:

Make a choice based on your payroll needs and employee size.

Pricing and Cost

This is what it boils down to right?  There are two methods that payroll services use to charge their fees: a flat fee per month, or fee per pay period.

Flat fee per month gives you a predictable cost each month.  Generally, there is a base cost and then a per-employee-per-month cost.  So as long as you know how many employees you’re paying, your fee is pretty predictable.  And, these companies don’t charge for anything extra like W-2’s and quarterly reports, as long as you are a subscriber.

Per-pay-period providers charge each time your run a payroll.  For most businesses, this is twice per month.  They will also charge additional fees for W-2’s and quarterly reports.  There are also other charges for mailing checks, etc., so make sure you have the payroll service spell our EVERY thing that is going to cost before you sign up.

The Verdict:

Use a service provider that charges a flat fee per month.  There is less confusion on fees and it’s generally cheaper each month.

Make it Happen!

As you can see, there’re lots to consider when choosing the right payroll service provider for you.  We can help you make that choice and get you in touch with the people to make things happen.   Have questions, leave a comment or reach out to us on our Get In Touch page and we’ll be happy to help you make the best decision for you and your business.

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App PowerPack Post

Unless you’ve been under a rock the past 5 years, I’m sure you’ve noticed the era of cloud-based apps has far outpaced its desktop counterparts.  We like cloud-based apps a lot—for good reasons that are too many to go into here.  You can check out this BLOG POST  to see a previous post about cloud-based apps. We like them so much that we’ve completely transitioned our business to using cloud apps for us and our clients.  We spend lots of time vetting out the ever growing list of cloud-based apps, and have come to rely on 3 core apps.  These apps are our top pick to make our “PowerPack” of apps that we set up with each client.

  xeroXero – Accounting

Xero touts itself as “beautiful accounting software”, and we agree.  From the first time you log in, you can tell right away that Xero has taken design pretty serious.  But that doesn’t mean that it lacks in power and functionality.  Features include: invoicing, quotes, purchase orders, A/P (bills), document management, real-time cash flow tools, contact management, powerful reporting, and much more.  Perhaps one of it’s best features is the eco-system of software add-on’s that integrate with Xero.

hubdoc_logo_full  Hubdoc – Receipt and Statement Management

Trust us, we know how daunting it is to manage all the paper for running a business!  Hubdoc solves this issue with automation and storage.  The idea behind the system is:

  1. To be a repository for your bank and utility statements by connecting to your online accounts and pulling the statements automatically
  2. To serve as an easy way to get the information from receipts, into your accounting system.  Simply snap a pic of any receipt using the mobile app on your device, and Hubdoc will read the date, amount, and vendor.

 

By integrating with Xero, Bill.com, and Google Drive, you can have a completely paperless system that allows you to automatically keep bank, utility statements, and store digital copies of your receipts.

 

 

download

Expensify – Expense Reports and Mileage Tracking

Expensify has revolutionized the way you track and submit expenses for reimbursement.  From single to a team of several employees, expense reports for mileage, personal expenses, and travel can easily be imported into Xero and even reimbursed via ACH straight from within the app.  For most of our single-owner businesses, it works perfectly for keeping track of money you spend on personal accounts.  Enabling GPS on their mobile app makes it a breeze to track your auto mileage as well.

 

 

Want to know more about these “Power Hitter” apps?  Leave a comment or reach out to see how they can benefit your business and even get them for free as part of one of our monthly service plans.

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receipts
If you’ve been in business for any amount of time, you’ve probably heard something about keeping your receipts.  And we’ve heard some good myths about when and when you don’t have to keep them.  We’re here to set the record straight and tell you exactly when you need to keep receipts.

First, let me explain that there are different suggested records for different types of transactions.  For example, what you keep to prove the purchase of inventory is different than gas for your car.  We’re going to explore two categories today: General, and Travel/Entertainment expenses. But there are many more that we’re not discussing today.

General Expenses

What are they?

General expenses are things like paper, utilities, cell phone, etc.  Those types of expenses must be be proved with a bank/credit card statement, receipt, or invoice that shows the date, amount, and busienss purpose.

How long should I keep records for?

Generally speaking, you’ll want to keep records for at least 3 years from when you claimed them on your tax return.  The good news is that you can keep them in paper form, or electronically.  We’re a big fan of using the mobile app for Xero to take a snapshot of the receipt, and recording the transaction right on the spot when it happens.  You can also use other systems like Evernote, Google Drive, Dropbox and Box to store your records.  If you choose to keep paper, then have a good file system organized by year and type of expense, at the very least.

 

Travel & Entertainment Expenses

What are they?

41131785-business-team-on-the-way-to-meetingsJust as it sounds, expenses you incur to travel, take clients out to lunch.  It also covers lodging, rental cars, transportation, and a host of other things.  See IRS Publication 463 that is referenced below for more things that qualify as travel and entertainment expenses.

 

 

How should I keep records and for how long?

The trick here is to have “adequate” records.  There are 4 main points that you must prove in order to have a deemed adequate expense in this category:

  1. Amount
  2. Time (for travel)
  3. Place or Description
  4. Business Purpose

What that basically means is that you must have a receipt, log book, or some kind of record that proves those 4 main points for each expenses you deduct.  Estimates don’t count.  The long and short of this is: that you keep all receipts/invoices for each expense in this category.  There are only a few exceptions, one of them being that if your expense in under $75 (except lodging), you can simply provide bank statements to prove you expense.  Of course there are more exceptions, but we don’t have time to go into them in this post.

And like above, you should keep these records for 3 years after you file the tax return for the year you’re taking the deduction in.

 

The IRS has some pretty elaborate articles and publications on this topic.  We referenced IRS Publication 463.  Feel free to check it out if you need to dive in a bit deeper.  Or, leave a comment and reach out to us and we can help you navigate the murky waters of business deductions.

 

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“My bank says I have $5000, but my Profit and Loss says I made $10,000… huh?!”

Ever asked this question?

With this post, let’s dive into one of the most mis-understood and under-used reports that you have in your accounting software arsenal: Statement of Cash Flows (aka Cash Flow Statement).  This statement will answer the very question may have plagued you for some time now.

In short, this report follows one of the most important things in your business: CASH.  It tracks where the cash came from, and where it went.  The report breaks up your income and spending into three different categories: Operating, Investing, and Financing activities.

Here’s a brief explanation of each:

  1. Operating Activities: this is income and expenses from regular revenue and expenses in your business.  For example, sale of services/products that you provide, and money spent on supplies.
  2. Investing Activities: this is money spent on selling and purchasing assets.  For example, you buy a new computer and sell an old vehicle that the business owns.
  3. Financing Activities: this is money that you or an investor infuses into the business, or money taken out by owners.  For example, you contribute money into the business to cover expenses, or you take money out of the business to pay your self as an owner/shareholder.

Now, let’s show you what a statement looks like.  For this post, we’re using a statement from Xero.  QuickBooks will give you one that looks a little bit different, the differences are minor, and it tells you the same thing.

Xero Cash Summary Demo Company US

Or, here’s a downloadable version of the same report:

Demo Company (US) – Cash Summary

This report answers the question “where did my cash go?”, and will show you where the cash went.  At the very least, this report should help you understand your business activities so that you can make better decisions.  If you need further help making sense of this, or maybe your business has a unique situation, please don’t hesitate to reach out and contact us.

So now that you know more about your cash, what are you going to do with it?
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Having the ability to process your accounting, payroll, CRM, etc., on any computer (PC or Mac) is all within reach now for any business starting out.  And since we’ve helped many businesses setup cloud-based processes, naturally we’ve done a lot of trial and error on what applications work.  These are many out there, but we’ve narrowed it down to our top 5 favorites for most small businesses.

1.  Google Mail (Gmail):  Since email is the center of most business, we figured that it should be #1!  Google mail, aka “Gmail”, has been the go-to mail app for a lot people.  And rightfully so.  It’s spam filters are superb, and you can customize it how you like to read/process emails.  Google even offers a business class version called Google Apps.  And while this version is not free, it offers no advertising and increased storage amounts.  The learning curve is very short.  Some of our favorite features:

  • Gmail is FREE (Google Apps is $60 per user per year)
  • Excellent spam filters
  • Good mobile app
  • Free access to Calendar
  • Free access to Google Drive (cloud file storage)
  • Free access to Docs, Sheets, and Slides (Google’s equivalent to Microsoft’s Word, Excel, and PowerPoint)

 

2.  Google Calendar:  A sister app to Gmail (above), let’s you keep track of your schedule using a number of tools.  Integration between Gmail and Calendar is tight, and has a host of solutions to run many types of businesses.  Some of our favorite features:

  • Meetings are easy to setup and invite attendees
  • Visibility into who has accepted/not accepted meetings
  • Can schedule recurring calendar events (i.e. once per month, week, every 2 weeks, etc.)
  • Can create calendar events directly from an email in Gmail
  • Can create and share different calendars for different purposes (i.e. calendar for each team member, company wide vacation calendar, personal calendars, etc.)

 

3. Xero Accounting Software: Designed to give the small business what they need within a few clicks, is our top choice.  With solid functions like invoicing, bills, quotes, and real-time bank feeds, you can manage your business from your computer, iPad, or any iOS or Android device.  One of the things we love about Xero is it’s add on ecosystem.  Want to see if your client paid you, from your CRM?  You can do it with their add on’s.  You can build out really smooth business processes this way.  We really like:

  • Online invoicing
  • Connect to payment services like PayPal and Stripe
  • Customer/Vendor Management
  • Bank transactions directly imported from bank
  • ascetically pleasing and just looks good
  • Reports exportable to PDF, Excel, and Google Sheets
  • Easy to collaborate with your accountant or other people

 

4.  Gusto (formerly ZenPayroll):  Designed for just one person, or scales up to several employees, this payroll has direct integration to Xero and QuickBooks Online.  With it’s great feature list, and straightforward pricing, it’s hard to beat.  Here’s a few of it’s valuable features:

  • Direct Deposit
  • Employee self on-boarding
  • Simple and easy to use interface
  • Full service payroll – they process all the payments and file all the returns for you
  • Can pay contractors along side employees
  • Integration with Worker’s Comp Insurance and soon, Health Benefits
  • Integration with Xero

 

5. Evernote: We’ve come to use Evernote every day here at the firm.  Mainly because we can access it from any device we’re on.  No matter where we are, we can get to our notes!  Evernote is great for just jotting down a simple note, or connecting to other services like Uber Conference to keep track of phone calls, meetings, you name it.  You can build out folder and tag structure, or just starting taking notes that are searchable.  Some of the best features are:

  • On any device (windows, mac, android, iOS)
  • Can create any type of note (meeting, to-do list, etc.)
  • Can set due dates for notes (great for to-do lists)
  • Can add attachments like PDF’s
  • Can email a note directly into Evernote
  • Can share and chat about notes, directly from within Evernote

 

Believe me, we could go on and on about other apps and the great things they can do.  But for any one looking to start, or run their existing business more efficiently, these apps are more than adequate to get you started.  We love talking to folks to help them make their business run smoother and get you back to doing what you love.  So feel free to leave us a comment, or give us a ring if you if we can help.

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Whether you you have 1 or 30 employees, payroll is often synonymous with big costs and lots of headaches.  And rightfully so.  For a small business, payroll is often the #1 expense, and if you’ve ever tried to run and file payroll returns your self, you know how complex it can be.

In the last few years a new breed of cloud-based payroll companies have emerged into the small business services market.  Not only do they cater to the small business, but they make it easy for a small business owner to run their own payroll.  Here are some features that we like, and that can benefit your small business:

Cloud (Internet) based software

Since these services are cloud based, they’re accessible from any computer with an internet connection.  They also follow the “Software as a Service”, or “SaaS’ model.  Which means you pay a monthly fee for access to the software, with no IT or other software costs to you.

Direct Integration With Your Accounting Software

A good majority of them integrate with some of our favorite cloud-based accounting systems like Xero & QuickBooks Online.  This means that every time you run payroll, the entries are automatically entered into your books with no complicated manual entries required.

Time and Attendance that Integrates Directly with Your Payroll

Along side cloud payroll, are time and attendance solutions that integrate directly to your payroll AND your accounting software.  Again, this saves you tons of time with calculating hours, and inputting onto a time sheet.  Approving hours and paying your employees is often just a few mouse clicks.

One Cost for Everything

Cloud-based payroll systems have cut and dry pricing.  One fee per month, for unlimited pay runs and no extra hidden charges.  Some of the big players, charge you per each pay run, charge you for quarterly returns, and even W-2’s at the end of the year.

Direct Deposit and Online Pay Stubs

Direct deposit means that you don’t have to spend hours cutting checks for your employees.  And often, cloud payroll services give each employee their own access to view and print their own pay stubs.

Collaboration With Your Accountant

Not only is cloud payroll easily accessible, but it’s also easily shared with your accountant.  This allows for quick, and easy help when you need it.

 

Cloud payroll services may not be the best fit for everyone, but for most small businesses, they offer what you need at a fraction of the cost of some of the big players.  Here at iAccounting Solutions, we’re experts in cloud payroll services.  Feel free to reach out to us if you have questions, or need some advice on which service to choose.

 

 

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22495836-tax-documents-with-accessories

 

 

 

 

If you run a small business, then chances are you maybe required to file 1099’s.  These are probably one of the most misunderstood forms business owners file.

Here’s the scoop:

What are they for?

Form 1099 is used to report money paid to individuals who are not your employees.  The IRS uses your 1099 to make sure the people you pay are reporting the income on their tax returns.

Who should I file a 1099 for?

File a 1099 for everyone that is not an employee (individuals you’re not withholding taxes for) that you pay more than $600 to in a calendar year.  You are not required to file 1099’s for money paid to company’s (LLC, Corps).

 How do I file a 1099?

There are many service providers that will do this for you.  Whether it’s your accountant, or a web service, we recommend using one to assure that they are accurate, and filed timely.  All 1099’s should be filed and in the mail by Jan 31st.  But if you’re a DIY (do it yourself) type of person, there are plenty of services on the web that do this for you at a very reasonable cost.  Our favorite is Track1099

How do I keep track of how much and who to file 1099’s for?

This is easily done in accounting software like Xero and QuickBooks.  You can designate contacts/vendors as 1099 recipients, and as long as you record all your transactions, you can run a report at the end of the year that will tell you how much to file them for.  We recommend using Xero for this.  It’s easy, and will be a breeze to setup and do.

What happens if I don’t file 1099’s?

You may get away with it…for awhile.  But if the IRS decides to audit you, and you didn’t file, then watch for penalties coming your way!

What do I do if I have no clue what to do?

Easy, reach out to us and we can take care of from start to finish!  We can help no matter what state you live in.

 

Have questions, feel free to leave comments and we’ll answer them ASAP.  Want to reach out directly, fill out our “Contact” page and we’ll get back to you within 1 business day.

Thanks for reading!

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Welcome back to our “Making the Switch from QuickBooks to Xero” series.  In this post, we’ll talk about what Step 2.  In case you missed it, click on Step 1 to start from the beginning.  So now that you’ve cleaned up your lists, now it’s time to look at a few financial reports and make sure your numbers look reasonable.

Step 2: Review your Balance Sheet and Profit and Loss statements for completeness

Run a Balance Sheet and Profit and Loss statements.  What you’re going to do here is use your trained eye to spot any inconsistencies.  YOU, will be able to do this much easier than any accountant as you know your business better than anyone else.  And, YOU also know what your expenses look like from month to month, so it will be easier for you to answer any future questions by your accountant.

Scan the Balance Sheet.  If there any negative numbers besides the bank balance, you may want to drill down (double click on the number) and see if there are any blatant mistakes.  Having a negative asset or liability is generally not normal and can be indicative of mistakes.  If you spot it and can fix it, go ahead and do so now.  If you see it, but don’t know how to fix it, start a list for your accountant.  If you don’t know why it is negative, just leave it and tell your accountant about it.

Next, Scan the Profit and Loss statement and do the same thing.  There should be no negative numbers on this.  If there are, repeat the steps above in reference to the balance sheet.  Also, look at the expenses accounts and make sure they look “reasonable”.   For example, if there is $20,000 in the Meals and Entertainment account, take a look and make sure something didn’t get expensed incorrectly.  Doing this will help you review what’s there, and answer any questions the accountant has when it’s tax time.

Step 2 is complete.  Stay tuned for Step 3 and more to come about switching from QuickBooks to Xero.  Have questions?  Don’t hesitate to reach out and give us a ring or shoot us an email.

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QuickBooks giving you a headache?  Or maybe you’d rather listen to nails on a chalkboard rather than do your accounting.  Either way, switching to Xero Accounting will set you on your journey to an easy, and even enjoyable way to get your accounting done.  Even if you are paying an accountant to do this for you, it will still require some input from you, the small business owner.  We’ve worked with lots of small businesses in converting from QuickBooks to Xero.  So we decided to post some useful tips on how to start, and carry out this process.

Step 1: Clean up your QuickBooks company file

Ok, so if you’re not an accountant, and you’ve been doing your own bookkeeping, chances are that you’ve made some “boo boo’s” in your books.  QuickBooks is a very forgiving program.  Meaning that it allows you enough freedom to hang your self…so to speak!   DON’T WORRY…Even if your QuickBooks is a mess, you can still get useful information out of it and get it in shape to transfer to the easiest online accounting tool: Xero Accounting.

Here’s what to do:

Clean up your contacts, vendors, and other lists.  Go through and merge, or archive the ones you don’t need.  Whittle your  customer and vendor lists down to only what you use now.

Next, go through your chart of accounts and do the same thing.  Make sure your chart of accounts is up to date, accurate, and that there aren’t too many accounts that you’re not using.

Lastly, make sure all your transactions are entered into QuickBooks BEFORE  you get the file converted.  Whether that’s bank transactions, credit card transactions, or whatever else, just make sure they’re all in there.  If you want the “extra credit”, reconcile your transactions with the “bank reconciliation” feature.  This is not absolutely necessary, but will make future steps a bit easier.

Once you have done these things, go to Step 2 blog post (coming soon).  If you need help along the way, just reach out to us and we’ll be  happy to help!

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Johnny Shryock Headshot

During the early phases of my photography career, I was still a high school teacher and I did not devote enough time to managing my revenue and expenses from my photography business.  My business evolved very organically and in the early phases, I made a few classic accounting errors.  For example, I never had a specific start date where I created a separate bank account for photography.  I came to iAccounting Solutions at a point where my business was running successfully, but I lacked a good system for tracking my revenue and expenses.  I decided to use Xero, an online cloud-based accounting platform, but I wanted to talk with an expert about best practices.  I set up a consulting call with Stephan Goldsmith to learn more about the Xero workflow, and also to fill in some gaps in my education regarding business accounting.  Later, I made the move to hire iAccounting Solutions to input all of my historical data into Xero.  This was a very challenging job, involving categorizing and inputting transactions from both my personal accounts and my photography account.  Now, all of my past business transactions are clean and tidy in Xero and it is such a relief to have it all done correctly.  I can go inside my account and everything is there.  From the original consulting call through the large task of setting up my Xero account with all of my past transactions, iAccounting Solutions has been phenomenal every step of the way!  I am so glad I hired them.

 

Thanks Johnny!