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nptrb

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  1. nptrb

    Remarkable Results

    By nptrb,


    Finance
    Last year I had the privilege of`appearing on @carmcapriotto podcast, Remarkable Results. We had a fantastic time talking about how to take care of your business finances and a few things you need to know to have a successful business. Here are a few of the points we discussed.
    Know Your Break Even Point
    The first thing you need to know about your business’ finances is what your break even point is. What is the point where your income and your expenses balance out? In other words, at what point do you actually start to make money?
    To know this number you have to know your expenses. What are your fixed expenses (the expenses that stay the same every month like rent and to some extent utilities)? What are your variable expenses (like labor, parts, and equipment)? And what debts do you have to pay? Once you put together your list of expenses, you can then begin to calculate how much money you need to make just to hit the $0 mark. And from there you can start to build a plan to make money beyond that.
    Know How to Make Your Income
    You also need to know how your income is broken down. For most mechanics shops that I have worked with, parts and labor are each about 50% of the income. But if you look more closely, certain services and parts are more profitable or make up a larger percentage of your sales. Knowing those details will help you decide how to grow beyond the break even point.
    And if you have a business coach who is helping you, you can use their advice combined with your knowledge of where you income comes from to make strategic decisions for the direction and goals of your business
    Know Your Accounts
    The last tip that I shared on the show is to know your accounts. You need to know where your business is as you go and not only when you are looking back through your purchases. It helps to have a bookkeeper who can help you keep on track and flag any issues they see as they come up.
    You also need to have the right model for your financial planning. Although I am not a financial advisor and cannot tell you which model to take, I have seen my clients succeed with a profits first model. With the right model for your business, you can improve your strategic decisions and not only focus on paying the next bill.
    Additionally, you need to have your accounts in order. It helps to have accounts set aside for distinct purposes. I have seen successful companies have separate accounts for purchasing, payroll, taxes, and other types of expenses.
    Success Takes Work
    These points are only the tip of the iceberg. You need a lot of other things in place to build a financially stable business. It takes a lot of work but it is worth it. We talked about these points in a little greater detail on the podcast so make sure you check it out here.
    And if you have any questions about how you can build a financially stable business (especially in the automotive service industry), please let me know. I would love to see how we could help!
  2. nptrb
    When it comes to finding the right person to help your business maintain your finances and bookkeeping, trust and comfort are at the top of our client’s priorities. The clients that chose to work with us asked us a bunch of questions before we began working together. And while I can’t tell you the exact questions they asked, I can tell you the kind of questions they asked and the key principles that convinced them we were the right fit.

    Look For Value

    The first topic our clients covered in their questions was about value. While price was a consideration, they were more focused on the value they would be getting for their money. If you are only concerned about how much it will cost, you may end up missing out on the best value for your money. You need to find a bookkeeper who offers a good rate for good services. 

    But don’t just consider the number or breadth of services included in the cost, consider how using the services will help you achieve your goals. Sometimes the services a company offers can help you accomplish more and be more efficient in your work. Whatever you decide to do, make sure that the value you receive is actually valuable to your bottom line. 

    Look For Accuracy

    Accuracy matters. Even if someone is good at balancing a checkbook, they might not be good at handling the reconciliation processes. And worse yet, not all bookkeepers are capable of helping your business stay in good standing with federal and local legal requirements.

    You need to find someone who is attentive to even the smallest details and is willing to put in the extra effort to ensure that everything is correct. Look for someone who is knowledgeable about the legal requirements placed on your business for both financial reporting and tax planning. Having someone on your team to manage those aspects will set you miles ahead of where you could be by yourself.

    Look for Growth

    Your books are a treasure trove of information. And in the right hands, your books can be used to plan for consistent and significant growth. An average bookkeeper can keep track of all your financials and make sure everything’s up to date. An excellent bookkeeper can help you use the accurate information in your books to identify areas for improvement and growth. 

    Running a business today is harder than ever. And trying to keep up with inflation and cost increases is getting more and more challenging. Having a bookkeeper who is looking to save you money where possible, and grow your money in other areas is an invaluable asset.


    Our Solutions

    At Three Rivers Bookkeeping, our entire goal is to help business owners grow their business through accurate bookkeeping that enables them to work on the parts of their business that matter to the bottom line and have the confidence that their business is moving in a positive direction. If you are looking for a bookkeeper, I would be happy to talk with you about your needs and the solutions we offer.


     
    Natalie Paris 
    https://threeriversbookkeeping.com/
    907-331-0208
    [email protected]

  3. nptrb
    One of the biggest and most consistent challenges that my clients face is payroll. All bookkeeping is repetitive, but payroll seems to come up more frequently and present more challenges, especially for smaller companies. One of the first things that I recommend to all my clients when I start helping them with their books is to take payroll off of their plates. Here are four reasons why.
    Withholding Taxes Is Tricky
    If you are an employer and you aren’t using independent contractors, then you are required to collect withholding taxes on behalf of your employees. Calculating the correct amount to withhold and including the right amounts that include taxable fringe benefits is easy to mess up. Having your bookkeeper manage your payroll and manage those withholdings is far easier and less messy for you and your business.
     
    Misclassifying Employees
    Another area that affects taxes is how you classify your employees. If you fail to classify your employees correctly, you could end up on the hook for a tax bill for failing to collect and pay the appropriate taxes. Expensive mistakes like these are easy to avoid if you are using a bookkeeper to manage your payroll. Bookkeepers know exactly how to classify your employees so that your business is collecting and withholding taxes appropriately.
     
    Mistakes in Hours and Data Entry
    Far too often the mistakes made in payroll get overlooked. When you have 20 people to pay, you have to spend time reviewing their hours, and a small error can go unnoticed. Especially if you are busy trying to run your business. These little mistakes add up over time and can cause big errors. And if you try to fix them, you will lose hours checking over your data. A bookkeeper that double-checks every entry and is careful in calculating hours using bookkeeping software is better equipped to avoid most errors and fix any errors that slip through.
     
    Time Wasted
    While you may think of the time you spend taking care of payroll as just the time it takes, handling payroll yourself costs you more than you may realize. Not only are you spending time managing your payroll, you are also not spending time doing what you really need to do- running your business. How many clients did you not help because you were looking for an error in your numbers? How much more money could you have made using those same hours in another area of your business? Time is your most valuable resource as a business owner. Don’t waste it by trying to save money instead of making money.
     
    Doing payroll yourself might seem like a great way to save money, but more often than not it ends up costing more in the long run in terms of time and money. It’s always easier and better to have a service or a bookkeeper help you manage your payroll.
     
    Natalie Paris 
    https://threeriversbookkeeping.com/
    907-331-0208
    [email protected]
     
  4. nptrb
    As a bookkeeper, I have unfortunately seen companies fail. They don’t tend to fail overnight. In fact, most of the companies that fail do so for multiple reasons. But before they fail, there are several signs of problems. Three of the most common signs that I have seen are easy to catch and fix, if you know what they are.
    Inconsistent Sales
    Sales are what make your business a business and not a charity. But if your sales aren’t consistent, your business will begin to suffer. Most people who choose to be employees choose that path because they can have a safety net. They don’t have to bring in work. They just show up to do the jobs. Inconsistent sales make employees feel less secure in their work. Not to mention the problems that inconsistent sales creates for your bottom line.
    One of the best things you can do if you need to improve your sales is get a business coach. Even I have a business coach. A business coach can help you understand what you need to do to grow and improve your business. And if you need a business coach, I have a great recommendation for you. 
    Unhappy Employees
    Another common problem that I see from small businesses that aren’t doing well is unhappy employees. Low morale can come from any one of dozens of factors. But no matter what the root cause, unhappy employees will end up costing your business in the long run. Unhappy employees don’t typically put their best effort into their work. They are also less likely to be looking out for your interests, which can cause increased waste and costly corrections. 
    Sometimes the issues with unhappy employees can be solved by finding better pay structures. Other times you may need to sit down with your employees and figure out what part of the management system is making it harder for them to do and enjoy their jobs. But when you fix morale problems, your team will function better and you can begin to rely on them to have your needs in focus.
    Unorganized and Incorrect Books
    As a bookkeeper, it’s rather obvious that I would find the health of a business easily diagnosed via a company’s books. But a couple of the areas that make it easier for even an amateur to identify as issues are incomplete books and disorganization within the books. If your books aren’t organized properly, your business may be wasting money. It’s easy to miss double charges, mistakes in purchases, and other costly errors when you can’t quickly assess and verify income and expenses. 
    Getting a bookkeeper on your team can make a huge difference. A bookkeeper can pay for themselves by helping you avoid wasting money and time. And the stress you will avoid by relying on a bookkeeper will absolutely be worth bringing a bookkeeper onto your team. 
    As a virtual bookkeeper, I don’t have to be an employee to be part of your team. And if you are interested in what that might look like, I would be happy to speak with you about it.
     
     
    Natalie Paris 
    https://threeriversbookkeeping.com/
    907-331-0208
    [email protected]
  5. nptrb
    One of the most common questions I get is “Why do I need a bookkeeper?” It’s usually accompanied by a “I can do it myself or have a friend help me for less.” I recently had a client I helped that demonstrates exactly what I do and how it helps. I won’t include their name, or any identifying information, but I want to share with you how the work I do impacts their business.
    What a Disaster Looks Like
    I don’t call errors a disaster lightly. A disaster means major problems. When I got my first glance at this set of books, I was shocked that they were still in business. There were a ton of weird transactions that didn’t make any sense. The books had got to the point where they were affecting the taxes. The file was too broken to repair, so I had to start a new file. But the problems with the books hadn’t stayed on paper. The owner didn’t know anything about his income, his sales tax collection, or the state of his bills. And he couldn’t track his expenses in parts or labour. Overall, revenues were trending down drastically.
    The Problem and How to Solve It
    Bad bookkeeping affects your whole business. It keeps you from tracking and controlling your expenses. You won’t be able to make adjustments to be more effective if you can’t measure your costs. In this case, not knowing the state of his business, kept this owner from being able to budget and keep his costs under control. And his taxes would end up costing him more due to fines and fees.
    After I had reviewed his books, I started him on a new file to ensure that none of the problems from the old file were present. I also brought his books into the cloud where they would be easier to access and consistently backed up. I taught him how to send the information to me so we could organize his books properly and categorize his expenses accurately. I also instituted monthly reviews to keep him aware of the state of his books and to help him make better decisions for his business.
    Success Takes Consistency
    Because we implemented the right systems and set him up for success. We were able to get him back on track. As of this year, he is on his way to hit his highest revenue ever. He is organized and can analyze what is happening in his company so he can make better decisions and adjustments to keep on track. And he’s able to grow his business and look at expanding. The difference between success and failure was the organization of his books.
    I’m not saying that every case will be like this client’s. Every set of books brings unique challenges. But fixing your books is a key step to understanding and growing your business. If you want to know how a bookkeeper can help your business turn difficult times into opportunities, I would love to speak with you about your circumstances.
     
    Natalie Paris 
    https://threeriversbookkeeping.com/
    907-331-0208
    [email protected]
  6. nptrb
    Whether you like Tom Brady or not, you have to admit he is the Greatest Of All Time. I’m not a football person, but when I hear or read about his accomplishments, I’m amazed.
    If your shop isn’t the greatest, do you know why? What is your vision for your auto repair shop?
    One lesson I’ve learned is that you have to see where you want to be in the future. See where you want your shop to be in 3 years or 5 years. When you see this picture of your shop the way you want it to be, what does that look like? Does it bring a smile to your face or fill you full of satisfaction?
    Another term you may be familiar with is a Unique Selling Proposition or USP. This is what sets your shop apart from your competition. This is the reason why people do business with you when they have other choices.
    Perhaps your techs are THE very best in town or your pricing is fair and more affordable than the rest. It could be that your customer service is amazing, and you treat you customers like clients. You place them at such a high value that they feel like family.
    This is my goal in my bookkeeping business. To be THE very best at what I do. To serve my clients as part of their team and not just another vendor. If you couldn’t answer that question about if you shop isn’t the greatest, I can help with that.
    I have a report that shows you what your competition is doing, so you may adjust and be better than they are. It would be like having a video tape of your next opponent’s practice. You would be able to defeat them because you knew what they were going to do next.
    This was what the Tampa defense did to Kansas City in this year’s Superbowl. Made Mahomes one frustrated guy and no TD’s! That hasn’t happened often. Andy Reid wasn’t thrilled either.
    I had a friend who knows football help me with that football stuff by the way.
    This is part of who I am. I do the research, so I know my clients and I have the experience to expect what they need.
    I’d love to talk to you about how I can help you become the GOAT of repair shops in your area. Let’s find out how I may be able to be that teammate. The one that helps you become the winner you see when you look at your shop in the future.
    The best to you and the success of your shop.
     
    Natalie Paris 
    https://threeriversbookkeeping.com/
    907-331-0208
    [email protected]

  7. nptrb
    Whew! We’re moving on from the PPP loan blog series to dispensing knowledge about the Employee Retention Credit. Hello IRS!
    With all of the changes and tax time approaching ~2 months away, I hope you’re ready to go. If you haven’t already filed, here is some information that’s about two weeks old, so grab a cup of coffee as we dive into a summary of this credit.
    This credit is designed to make it easier for businesses that chose to keep employees on their payroll through all the challenges that COVID-19 brought and is still brining. For those of you who kept your employees, thank you and stick with me as I open some data. 
    The name of this is the Taxpayer Certainty and Disaster Tax Relief Act of 2020, and was enacted December 27, 2020. This made changes to the CARES Act and directly related to this was modifying and extending the Employee Retention Credit (ERC), for six months through June 30, 2021. Several of the changes apply only to 2021, while others apply to both 2020 and 2021.
    Here’s what this new Act reads as an employer, you can a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. The limits of qualified wages are $10,000 per employee per calendar quarter in 2021. This means the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021. Depending on the size of your team, this could be a substantial credit.
    You as an employer can access the ERC for Q1 and Q2 of ’21 prior to filing your employment tax returns by reducing employment tax deposits. If you are an employer with 500 or less full-time employees in 2019, you may request an advance payment (subject to certain limits) on  Form 7200, Advance of Employer Credits Due to Covid-19, after reducing deposits. In 2021, if you are an employer with greater than 500 employees, you are not eligible for the advance.
    Here are a couple of eligibility rules. As of 1/1/21 employers are eligible if you operate a trade business during 1/1/21 – 6/30/21 (Q1 & Q2 of 2021) and either of these apply.
    A full or partial suspension of the operation of their trade or business during this period because of governmental orders limiting commerce, travel, or group meetings due to COVID-19, or A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80% of the gross receipts in the same calendar quarter in 2019 (to be eligible based on a decline in gross receipts in 2020 the gross receipts were required to be less than 50%). If you started your business in 2020 then you can use the corresponding quarter in 2020 to measure your decline. For Q1 and Q2 of ’21 you can measure the decline in gross receipts using the quarter that came immediately before the current quarter (Q4 of ‘20 to measure Q1 of ’21).
    Effective 1/1/21 the definition of qualified wages was changed to read:
    For an employer that averaged more than 500 full-time employees in 2019, qualified wages are generally those wages paid to employees that are not providing services because operations were fully or partially suspended or due to the decline in gross receipts.  For an employer that averaged 500 or fewer full-time employees in 2019, qualified wages are generally those wages paid to all employees during a period that operations were fully or partially suspended or during the quarter that the employer had a decline in gross receipts regardless of whether the employees are providing services. Lastly, here is a paragraph for employers who received PPP loans from 3/27/20 and forward. You may claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan.
    You may check out this link for more information  COVID-19-Related Employee Retention Credits: How to Claim the Employee Retention Credit FAQs or contact me and we can talk through this.
    The next blog will be about what to do after you receive your PPP loan.
     
    Natalie Paris 
    https://threeriversbookkeeping.com/
    907-331-0208
    [email protected]
  8. nptrb

    COVID Relief Bill

    By nptrb,

    The new 5,500+ page Covid Relief Bill is massive, and it will take many weeks to digest everything included in the legislation. Here's what we know about business relief and PPP funds:   There is now streamlined forgiveness for PPP loans under $150K. This is a significant development for many so check with your lender about how they want that now to be handled.   There is also now an additional $284B in PPP funding for impacted businesses to access.   More on this in days to come...
  9. nptrb

    Charitable Contributions

    By nptrb,

    As you plan for your giving budget in this holiday season, remember that THIS YEAR ONLY (per the CARES Act), you can take the standard deduction, as well as up to $300 of cash donations. It has to be cash though, and it's up to $300 per return, so if you file jointly, it's still only $300. (Since most people use the new higher standard deduction, charitable giving is not deductible. But this year, you can claim up to $300 on top of that standard deduction.)
  10. nptrb
    With the end of 2020 fast approaching, we’re going to look at annual financial reports. Your shop’s financial report is being prepared and there are some steps for you to take. There are also steps you can take to prepare for a solid start to the new year.
    The content of this blog comes from two checklists provided by Three Rivers Bookkeeping. If you would like copies of these checklists, ask by phone or email at the bottom of this post. I would love to deliver these useful tools to you.
    Let’s start with a quick explanation of the annual report. Annual reports contain your repair shop’s operating and financial activities over the past year. These reports serve two functions:
    1. To evaluate your shop’s financial performance
    2. Guide you to make future strategic financial decisions.
    Here is an end of year checklist. You, the shop owner use these items and so does your bookkeeper. These items are the foundation of your annual report.
    End of Year Checklist:
     All bank and credit card account reconciled
     Are there any duplicate transactions?
    Income Statement for the year
     Compare to the previous year
     Are all the transactions properly categorized?
     Are there items in miscellaneous/uncategorized accounts?
     Are there any “Ask my Accountant” items?
     Do payroll expenses match what was paid for the year? (940/941, state unemployment)
     Calculate gross profit percentage of net revenue
    Balance Sheet for the year
     Review each Balance Sheet account
     Assets
        All transactions are like type and belong in that account
        All adjusting entries are accounted for and
        All account balances make sense
     Liabilities
        All transactions are like type and belong in that account
        All adjusting entries are accounted for and
        All account balances make sense
     Equity
        All transactions are like type and belong in that account
        All adjusting entries are accounted for and
        All account balances make sense
    Last, let’s look at a checklist that will prepare you for the new year and thinking ahead.
    New Year Checklist:
     Make updates to payroll withholding rates, if the rates have changed
     Does payroll reflect the correct unemployment rate?
     Start a new budget
     Fill out the business calendar of important tax dates
     Set some goals!
    My goal in showing you this information is that you will see what to expect at the end of the year. Looking at the new year, this should get you thinking and planning for an outstanding 2021!
    If I may assist you in any way or if you’d like copies of the checklists outlined above, send an email to me at [email protected]
  11. nptrb
    Within this post we’re going to pull back the covers and take a look at what goes into a quarterly report. For this conversation we’ll be talking about privately owned auto repair shops only.
    By definition a quarterly report is a summary or collection of unaudited financial statements. These include balance sheets, income statements, and cash flow statements. These are prepared by your bookkeeper every quarter (three months). Some quarterly reports may also include year-to- date figures and compare last year’s quarter to this years quarter results.
    Companies fiscal years may begin on January 1st and end on December 31st. Some will mirror the federal government’s fiscal year which begins on October 1st and ends on September 30th.
    For calendar year accounting the quarters end on March 31st, June 30th, September 30th and December 31st. Using the government fiscal year model the quarters end on December 31st, March 31st, June 30th, and
    September 30th. File quarterly reports within a few weeks of a quarter’s end.
    Quarterly reports include key accounting and financial data for a company. This includes gross revenue, net profit, operational expenses, and cash flow. If there are investors in the shop, there may be a meeting where the
    owner presents the quarterly report. The quarterly report is a summary or a collection of the shop’s financial statements. These include balance sheets and income statements and the comparison reports mentioned
    earlier.
    Other ingredients in quarterly reports may include an executive summary, goals and objectives, highlights, and new and ongoing challenges. When addressing challenges, the quarterly report may include strategies
    planned and implemented to overcome them.
    The specific reports and other ingredients depend upon the ownership structure and what financial data is relevant to the shop. Ownership decides what to include and shares with your bookkeeper so these reports
    are available on time with accurate data. The presentation of the data is also important. The format is also a decision that is made during a conversation between the shop’s owner and their bookkeeper.
    Besides the written line-by-line data, graphs and spreadsheet provide a visual representation of the date and help to add context.
    There are also quarterly payments due and reports that are filed with the IRS, state, and local governments. An example of these is on a quarterly checklist available from Three Rivers Bookkeeping and include the
    following items::
     Make estimated tax payments
     Make payroll payments which include
     State report and payment
     941 report
     940 deposit
    Communication is the most important ingredient to achieve accurate and timely quarterly reports. This ensures quarterly payments are made and reports are filed. I am your source for which reports and payments are
    needed. Requirements vary depending upon your state and local regulations.
    You as a shop owner need to communicate what your expectations are for the quarterly report. One sign that you have a competent and professional bookkeeper is the questions she asks. I can guide you to having the quarterly report that will serve you best.
  12. nptrb
    Before this installment, I talked about the balance sheet and before that I educated you about the income statement. Let’s learn about your statement of cash flows and how to read it. My goal today is for you to totally understand the statement of cash flows
    The statement of cash flows is also called the cash flow statement. It is a general-purpose financial statement and the numbers are related to the information on the balance sheet. When the balance sheet changes, so does the cash account on the cash flow statement for the same time (for this blog we'll be using a month. It also reconciles beginning and ending cash and cash equivalents account balances. Don’t get frustrated by the terms. These will be broken down as we move forward.
    This statement shows what transaction affected the cash accounts. It also shows how effectively and efficiently your shop uses its cash to finance operations and if needed, expansions in equipment and facilities. In other words, does your shop have good cash flow?
    A healthy statement of cash flows is very valuable should you look for investors or when is comes time to sell your shop.
    Generally ‘cash flow’ defines your shop’s ability to collect and maintain positive cash flow and balances to pay upcoming bills. Another way to look at this is that when you have good cash flow, you can pay for your operations and pay your debts without making late payments.
    The statement of cash flows has three main sections. Cash flows from:
    Operating Activities Investing Activities Financing Activities Let’s take a look at operating activities
    Cash flows generated from operating activities include transactions from the operations of the business. This section represents the cash collected from the primary cash generating activities (revenues) of the business like service and sales. These are short-term activities and only affect the current month. An example is, payment of supplies is an operating activity because it relates to the shop’s operations and is used in the current month.
    Operating cash flows are calculated by adjusting net income by the changes in current asset and liability categories on the balance sheet.
    Now let’s shift our attention to investing activities.
    Cash flows from investing activities consist of cash coming in from sales (inflows)and cash going out for purchases of long-term assets (outflows). As defined in an earlier blog a long-term asset is an asset that is not expected to convert to cash within one year of the date shown in the heading of the balance sheet.
    In other words, the investing section of the statement represents the cash that the shop either collected from selling a long-term asset or spending money on buying a new long-term asset. You can also think of this section as the shop investing in itself.
    Investing cash flows are calculated by adding up the changes in long-term asset accounts.
    Drum roll please?! Now for the final topic, financing activities
    Depending upon the size and structure of your shop financing activities may not apply to your situation. Check out the rest to see if it does.
    The financing section on the cash flow statement represents the amount of cash collected from issuing stock or taking out loans and the amount of cash disbursed to pay dividends and long-term debt. You can think of financing activities as the ways a shop finances its operations either through long-term debt or investment financing.
    Financing cash flows are calculated by adding up the changes in all the long-term liability and equity accounts. These numbers come from your balance sheet
    If you need a bit more help understanding your cash flow statement, sit down with your bookkeeper and she will show you the money until you have total understanding of what your cash flow statement means to your shop.
  13. nptrb
    Check out this post to learn about the three parts of your balance sheet; Assets, Liabilities, and Equity. We’ll break them apart but first here’s a statement about a balance sheet in general.
    A balance sheet is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by owners, investors and/or shareholders. In other words, the balance sheet shows a shop owner(s) the shop's net worth.
    Now let’s talk about assets.
    Within the assets segments, accounts are typically listed from top to bottom in the order they convert into cash. The term for that is liquidity. Assets are separated into current assets (converted into cash in one year or less) and non-current or long-term assets (cannot convert into cash within 12 months).
    In general, this is the order that current assets are listed on your balance sheet:
     
    Cash and cash equivalents The most liquid and can include Hard currency Treasury bills Short term certificates of deposit Marketable securities Equity and debt securities for which there is a liquid market Accounts receivable Money that customers owe the shop Consider subtracting a percentage of customers who can be expected not to pay Inventory Goods available for sale Value these at a lower cost or market price Prepaid expenses The value that has already been paid for: Insurance Advertising/marketing contracts Rent/Mortgage Long-term assets are listed in any order and they include:
    Long-term investments Securities that will not or cannot be liquidated in the next year Fixed assets Land Machinery Equipment Buildings Other durable, capital-intensive assets From the plus side of the sheet, assets, now let’s move into the minus side or liabilities.
    Liabilities are the money that a shop owes to outside parties, to include invoices to suppliers and/or vendors to rent/mortgage, utilities and salaries. As with assets, these are separated into current liabilities (due within one year,listed in order of their due date) and long-term liabilities (due after one year).
    Current liabilities may include the following:
    Current portion of long-term debt Bank loans Interest payable Wages payable Customer prepayments Earned and unearned premiums Within the insurance category; talk to your bookkeeper or insurance agent Accounts payable Long-term liabilities may include the following:
    Long-term debt Example: interest and principles on bonds issued Pension fund liability The contributions the shop pays into employees’ retirement accounts like a 401K Deferred tax liability Taxes that the shop owes but will not pay for another year See you tax professional for an explanation The final category, equity, known as owners’ equity or shareholder’s equity, depending upon the size and structure of the shop ownership. This is also called “net assets,” which is calculated by subtracting liabilities (debt owed to non-shareholders) from total assets.
    A sub category to equity is retained earnings. These are earnings retained by the shop owners and is not paid to investors in the form of dividends.
    Retained earnings are used to pay down debt or invest in the shop for expansion or to take advantage of growth opportunities such as new or upgraded equipment or expanding the footprint of the shop.
    Balance sheets have some limitations. This snapshot contains valuable information is it static and represents one moment. When combined with the other financial reports, the income statement and the statement of cash flows shows you the complete picture of your shops financial health.
    If you have any questions or concerns about your balance sheet, sit down with your bookkeeper and she will be able to pull back the covers until you have total understanding of what the balance sheet means to your shop.
  14. nptrb
    Last time we took a quick look at three financial reports:
    Balance sheet Income statement Statement of cash flows We talked about how you should read/review each of these monthly like reading the financial GPS to your repair shop’s finances. How financially healthy is your shop?
    Not-so-subtle hint, if you haven’t talked to your bookkeeper about the three reports, book an appointment with her today.
    In this day and age, this is a bare minimum service that your bookkeeper should be providing for your business. Your bookkeeper should also be able to easily explain what each point on these reports mean specifically for your business.
    We’re diving deeper into what an Income Statement is. You may want to take notes as you read along or print this out. Great, useful information coming your way…
    Income statements show how much profit a business generated during a specific time slice. This includes the amount of expenses incurred while earning revenue.
    Talk to your bookkeeper about the most effective interval for your specific situation.
    Income statements are also known as a profit and loss statement (P & L) and can be called a statement of operations, statement of earnings, or statement of income.
    Remember the income statement shows:
    Revenues Cost of goods sold Expenses Gains Losses You can also learn a great story from the income statement:
    Is the business making money? Are the products and services the right ones? Are products and services priced correctly? Do we know what our true direct costs are? Do we have the right mix of clients? It does not show:
    Cash receipts (money you receive) Cash disbursements (money you pay out) The income statement shows how profitable your repair shop was during the previous month, quarter, and year.
    This part of your financial road map is important because it is a clear snapshot of how healthy your shop is.
    Let’s take a look at other users of the income statement.
    Income statements are not only used by business owners. Others who also place high importance on Income Statements and the information they show are:
    Accountants Bookkeepers Current Investors Prospective Investors Banks and other Lenders Each one of these people glean crucial information from this profit and loss statement.
    Looking at the structure of an income statement it finds the net income of a business. This is described as total revenue minus total expenses.
    Start from the gross income from revenue the business received and work from there to get to the net income. Depending upon how many different sources of revenue or expenses a shop may have this can involve a lot of figures.
    Common income generating services may include:
    Diagnostics Alignment checks Suspension A/C and Heating Oil changes Brake jobs Tire repair and replacement Engine work Transmission tuneups and repairs With each of these services come their own specific expenses. You can see how valuable your bookkeeper is as she creates an accurate profit and loss statement.
    Overhead is also listed in the expense side of the statement and examples of these expenses are:
    Rent/mortgage Advertising Marketing Office Supplies Utility bills Insurance Depreciation of fixed assets Not all of these may apply to your shop and there may be more overhead expenses which are not listed here.
    Subtract the operating expenses from the gross income and you have a total known as your operating income. This may also be your net income if there are no other figures to factor into your shops finances.
    We mentioned investors, banks, and lenders earlier. They, as the shop owner, use Income Statements for comparison from previous months, quarters, and/or fiscal years. With this information, you and they can better analyze if your shop is getting financially stronger.
    When looking to buy, lease, or repair your equipment, these numbers are valuable to securing financing at the most attractive terms available.
    We hope you have learned more about how an income statement is structured and the critical information it shows you. Sit down with your bookkeeper and let her teach you what your profit and loss statement says. That’s part of her job she enjoys because she wants you to have the full financial picture of your successful repair shop.
  15. nptrb
    Let's take a look at three financial reports, balance sheet, income statement, statement of cash flows. You should read/review each of these monthly. Looking at the numbers from these three reports is a clear picture of your shop’s financial health. This is a road map to planning your future.
    Let’s begin with the balance sheet.
    A balance sheet is a snapshot of your shop's financial condition at a moment in time. In the this article, we’re going to use a month as the bookkeeping period.
    Assets and liabilities are short- and long-term obligations. These include cash accounts such as checking, money market, or government securities. An asset is anything the business owns that has monetary value. Liabilities are the claims of creditors against the assets of the business.
    Now that we know what a balance sheet is, let’s take a look at how you use a balance sheet.
    A balance sheet helps a shop owner get a handle on the financial strength of the business. Is the business in a position to expand? Can your shop handle the normal financial ebbs and flows of income and expenses? Should the repair shop take immediate steps to increase cash reserves?
    Now let’s shift our focus onto the second type of report, the income statement.
    Income statements show how much profit a business generated during a specific time slice (in this discussion, one month). This include the amount of expenses incurred while earning revenue. Income statements are also know as profit and loss statement (P & L). This is a statement of operations, statement of earnings, or statement of income.
    Keep in mind the income statement shows revenues, expenses, gains, and losses. It does not show cash receipts (money you receive) nor cash disbursements (money you pay out). The income statement shows how profitable your repair shop was during the previous month.
    This part of your financial road map is important because it is a clear snapshot of how healthy your shop is. Another use of income statements is they are critical to obtaining credit should the need arise.
    Balance sheets, along with income statements, are the most basic elements in providing financial reporting. Provide these to potential lenders such as banks, investors, and vendors who are considering how much credit to grant the firm.
    Ready for the third piece of your monthly financial tripod? Let’s move forward to the statement of cash flows.
    The statement of cash flows also known as the cash flow statement, reports the cash generated and used during the time interval specified; monthly for this conversation. Generally, the period of time is the same as the income statement.
    The statement of cash flows reports a businesses major cash flows in the following categories:
    Operating Activities - Converts the items reported on the income statement from the accrual basis of accounting to cash. Investing Activities - Reports the buy and sale of long-term investments and property, plant, and equipment Financing Activities - Reports the borrowings and repayment of short-term and long-term bank loans and other debt. Supplemental Information - Reports the exchange of significant items that did not involve cash and reports the amount of income taxes paid and interest paid. Now that you have an overview of income statements, balance sheets, and statement of cash flows, consider your next action. Having a conversation with your bookkeeper so she can teach you how each of these reports apply to your specific situation. Her explaining how these reports crafted to your business shines a light on how to understand what all the numbers mean.
    By reading and reviewing these reports on a monthly basis, you will keep your finger on the financial pulse of your business. Know exactly what moves you can make that will protect and move your repair shop forward. Like a road map or GPS that guides you to your destination, these reports are the coordinates you plug into your financial GPS to keep you on course to a solid financial future.
  16. nptrb
    Are you thinking about hiring a bookkeeper to handle the day to day finances of your business but not sure of the price tag?
    Not to worry, here at Three Rivers Bookkeeping, we want to give you as much information as possible so that you can make an informed decision about hiring a great bookkeeper.
    What is the initial cost?
    When outsourcing a new bookkeeper there might be some up front costs that are incurred and they can range anywhere from $200 - $5000.
    Why can this range be so big? There are several questions and considerations that a bookkeeper will have for you that will go into the initial cost. A good bookkeeper will request read-only access of your financial information. In order for them to give you an accurate initial cost, they need to be able to see the current state of your finances. A few questions that they might have for you include:
    Are your books up-to-date? Are your taxes up-to-date? Has the bookkeeping been kept up or is there clean up that needs to taken care of? Do you already have accounting software or does this need to be set up? Is there payroll for the business? If there are several months worth of clean up work, some of these initial costs may be paid over several months and that can ease the payment of the initial cost.
    What are the monthly costs?
    The costs of outsourcing a good bookkeeper for your business are dependent on many, many different variables. Company size, the number of bank and credit card accounts, the number of transactions per month, the number of employees, how payroll is handled, how many invoices need to be sent out and how many bills the business incurs every month are just a few of the variables that can go into the monthly cost of hiring a bookkeeper.
    When considering these variables, a good outsourced bookkeeper can charge anywhere from $550 - $2500 per month depending on the level of service that your business needs, their expertise or specific industry that they work with.
    There's no doubt that you get what you pay for and unfortunately hiring a good bookkeeper is not going to be cheap, however, a good bookkeeper is worth their weight in gold when it comes to saving you money during tax time, keeping your finances organized and up to IRS standards and keeping your accountant happy when tax time comes around. However, one of the all time best benefits for you, is that your bookkeeper will be able to prepare critical financial statements and best of all be able to educate you on what these key business documents mean for your business.
    Now I know you're probably sitting here with your jaw almost to the floor with those numbers but in all reality, a great bookkeeper is going to save you more money than you actually spend for their monthly services.
    What should be included in monthly services?
    The three biggest reasons to have a bookkeeper is to make sure that you are staying in compliance with IRS regulations, are ready for tax time and to help you understand where your business stands financially.
    A quick, bare minimum list of the services that your bookkeeper should be providing for you:
    Correct organization and classification of transactions in accounting software Monthly reconciliation of bank and credit card accounts Monthly financial statements Takeaways
    Hiring a good virtual bookkeeper can not only keep you in compliance but can help your business reach ultimate financial success. Three Rivers Bookkeeping specializes in outsourced bookkeeping for auto shops. If you have any more questions after reading this article, please do not hesitate to reach out.
    Now get out there and do what you do best... run your business like the champ that you are!









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