in a seasonal business or one where demand is fluctuating, you have to plan well.

put some excess cash flow aside to keep the company solvent during the lean times.

nothing will ruin your monthly budget faster than having a check returned for insufficient funds.

• hefty bank fees
• late charges assessed on the original bill
• dings reported to credit bureaus

the sales quota then must be met or the bills won’t get paid that month. duh.

the sales quota is the primary responsibility of the business owner, and without a sales quota enshrined they might give up too quickly and dissipate energies.

bank fees for returned checks are charged to your account immediately

• this will instantly reduce your bank balance
• this often causes other checks to get returned too
• this will generate even more fees

auto expenses and mailing supplies and such

• usually treated as a separate area of the bookkeeping system
• collect reports from employees
• verify these reports
• enter the information into the bookkeeping system

a purchasing clerk works with vendors that sell wholesale merchandise

they check prices and estimate profits before purchases are finalized

avoid impulse buying

pay necessary expenses first

• rent & utilities
• food

never write a check unless there is enough money in your account to cover it

• choose being late over bouncing
• call your creditors and get extensions to avoid late fees

there may be many categories of items in your inventory

the inventory department will do the following:

• check in merchandise from vendors
• send inventory around inside the firm
• keep count of the items in stock and their value

it’s fairly easy to maintain.

you just record the daily transactions of the company and keep a radar eye on the future and then assign your sales quota and then it’s up to you to make that quota.

all bookkeeping systems are set up for a period of twelve months.

Tax returns for fiscal year filers are due approximately three months after the end of that businesses’ fiscal year

what type of equipment is needed for this business?

net profit or loss from a partnership is divided among the owners for tax purposes at the end of the year.

• keep track of any money the partners have drawn from the business during the year.
• call the IRS: 1-800-829-1954 – if you want info on partnerships.

sometimes handled by separate bookkeepers in a firm:

• inventory
• purchasing
• accounts payable
• accounts receivable
• billing
• payroll

a Balance Sheet account

a Profit And Loss account

vendors need to be paid

• process all vendor invoices
  • check invoices for accuracy
  • verify payment terms
• issue checks to vendors
  • pay on time

Other parts of the company send all the expenses they incur to this person who pays it all out.

sometimes its own separate department

you can make changes to this system over time

organize the accounts where the financial data will be recorded

establish a filing system to store the work papers generate by the business activities

hold on to the paper trail

• invoices
• receipts
• inventory records
• client information
• customer information

design this system for easy filing and easy access

what does this do for you?

• gives you hard copies of data you will need for answering questions for clients
• prove that a bill was paid
• provide the IRS receipts in case you’re audited

you must have an orderly filing system for the paper.

categories of income include

• sales
• commissions
• wages earned from a job

usually income is deposited into a bank account.

• this lets us easily pay it out for bills.

bill customers

collect the payments

• make sure all billing info is correct
• make sure all invoices or statements sent are accurate

• meet with new employees
• make sure all paperwork is completed correctly
• compute wages and taxes correctly
• distribute paychecks and expense reimbursement on time
• report all taxes associated with the salaries and wages
  • avoid tax penalties from federal and state government

The bookkeeper must monitor and record the cash that flows into the system.

The bookkeeper must handle the disbursements:

• pay the bills on time and accurately

The bookkeeper must look ahead to the end of the month.

• is our income going to be enough to cover our expenses?

the goal is positive cash flow.

cash flow is the primary concern and responsibility of the bookkeeper.

• refers to all the money that comes in and goes out of a bookkeeping system.

money coming into the system is income from outside sources.

• can be received on a daily basis

money going out of the system is expenses or financial obligations.

• most bills are paid monthly.
• this lets us accumulate enough income to pay our bills.

a financial statement prepared by a CPA is requored by banks when applying for credit or a loan

is the business based on sales or services?

columns in each sheet:

• Date
• Description
• Debit
• Credit
• Balance