Questions
Straight answers to the bookkeeping and accounting questions small business owners ask us.
How much does a bookkeeper cost for a small business?
Small business bookkeeping typically costs $200 to $600 per month for basic services. The actual price depends on transaction volume, industry complexity, and what's included beyond basic reconciliation.
Read answerWhat is the difference between a bookkeeper and an accountant?
Bookkeepers handle ongoing financial recordkeeping like categorizing transactions and reconciling accounts. Accountants analyze that data, prepare taxes, and provide strategic financial advice. Most small businesses need both working together.
Read answerHow often should I update my books?
Monthly is the minimum for most small businesses. Weekly works better for high-volume operations or when you need current numbers for decisions. The key is establishing a consistent rhythm so your financial picture stays useful.
Read answerShould I use cash or accrual accounting for my business?
Most small service businesses do fine with cash basis because it's simpler and matches your bank activity. Accrual gives a more accurate picture of profitability if you have significant receivables or need financial statements for outside parties.
Read answerWhat does a bookkeeper actually do?
A bookkeeper maintains the day-to-day financial records of your business. They categorize transactions, reconcile accounts, manage bills and invoices, and produce monthly financial statements that show how your business is performing.
Read answerWhen should I hire a bookkeeper for my small business?
Hire a bookkeeper when you're spending several hours monthly on bookkeeping, when you can't answer basic questions about profitability, or when tax season becomes a scramble. Most business owners wait until their books are already messy. The better approach is getting help before problems compound.
Read answerCan a bookkeeper help me with taxes?
Most bookkeepers don't file tax returns, but they help with taxes in ways that matter more than the actual filing. Clean books mean accurate deductions, faster tax prep, and records that survive an audit.
Read answerWhat records should I keep for my small business?
Keep financial records like bank statements, receipts, and invoices for at least seven years. You'll also need tax returns, business formation documents, contracts, and employee records if you have staff.
Read answerHow do I know if my books are accurate?
Start with bank reconciliation. If your accounts match your statements to the penny, that's the foundation. Then check that balance sheet accounts reflect reality and your profit numbers match how the business actually performed.
Read answerWhat is bank reconciliation and why does it matter?
Bank reconciliation matches your accounting records to your bank statement to confirm they agree. It catches errors, detects fraud, and ensures your financial reports reflect reality. Without it, you don't actually know how much money you have.
Read answerHow long should I keep my business financial records?
Keep most business financial records for seven years. This covers IRS audit periods and California state requirements. Some documents like formation papers and major asset records should be kept permanently.
Read answerWhat is the chart of accounts and how do I set one up?
A chart of accounts is the list of categories where your business transactions get recorded. Most accounting software includes a template based on your industry, so you customize that rather than building from scratch.
Read answerWhat is accounts payable vs accounts receivable?
Accounts receivable is money customers owe you. Accounts payable is money you owe vendors. Both show up on your balance sheet and directly impact your cash flow.
Read answerHow do I track business expenses properly?
Separate business and personal finances completely, record expenses promptly with the right category, and save receipts digitally. Reconcile your accounts weekly to catch mistakes while you still remember what happened.
Read answerWhat financial reports should I review monthly?
Every business should review the profit and loss statement, balance sheet, and cash flow statement monthly. Adding accounts receivable and payable aging reports helps you spot collection issues and plan for upcoming bills.
Read answerHow do I separate business and personal expenses?
Open a dedicated business bank account and use it exclusively for business transactions. Add a business credit card, pay yourself intentionally, and keep personal spending completely out of business accounts.
Read answerWhat is double-entry bookkeeping?
Double-entry bookkeeping records every transaction in two accounts, with one side balancing the other. This method provides built-in error checking and produces the financial statements businesses need for taxes, loans, and decision-making.
Read answerHow do I categorize business transactions?
Assign each transaction to a consistent account in your chart of accounts. The key is using the same category every time for similar expenses. Consistency matters more than getting every category perfect.
Read answerWhat is a profit and loss statement?
A profit and loss statement shows your business revenue, expenses, and net income over a specific period. Also called an income statement or P&L, it tells you whether your business is actually making money or losing it.
Read answerHow do I read a balance sheet?
A balance sheet shows what your business owns, what it owes, and what's left for you as the owner. The three sections always follow the equation Assets = Liabilities + Equity.
Read answerWhat questions should I ask before hiring a bookkeeper?
Ask about industry experience, monthly process and timeline, what's included in pricing, and how they communicate. The answers will tell you more than any sales pitch about whether they can actually handle your business.
Read answerShould I hire an in-house bookkeeper or outsource?
Most small businesses don't generate enough bookkeeping work to justify a full-time hire. Outsourcing typically costs a fraction of an employee while providing broader expertise and consistent coverage.
Read answerHow do I find a good bookkeeper near me?
Start with referrals from your accountant or other business owners. Look for someone who understands your industry, communicates clearly, and has a professional process. Local isn't always necessary since most bookkeeping happens remotely.
Read answerWhat qualifications should a bookkeeper have?
Formal certification isn't required for bookkeepers, but software proficiency, attention to detail, and industry experience matter most. The right qualifications depend on your business needs and how well the bookkeeper understands your specific situation.
Read answerIs virtual bookkeeping secure?
Virtual bookkeeping is secure when proper practices are in place. Modern cloud accounting software uses bank-level encryption, and bookkeepers typically have read-only access that lets them see transactions without the ability to move money.
Read answerWhat is the difference between a bookkeeper and a CPA?
Bookkeepers maintain your financial records throughout the year. CPAs are licensed professionals who prepare taxes and can represent you before the IRS. Most small businesses need both.
Read answerHow much should I pay a bookkeeper per month?
Small businesses typically pay $200 to $600 monthly for bookkeeping, though prices can go higher for complex operations. What you pay depends on transaction volume, industry complexity, and which services are included beyond basic books.
Read answerWhat should be included in bookkeeping services?
Core bookkeeping services should include transaction categorization, bank reconciliation, and monthly financial statements. Payroll, accounts receivable, and sales tax filing are often separate. The real test is whether you get accurate books and usable reports each month.
Read answerHow do I know if my bookkeeper is doing a good job?
Look for reconciled accounts, timely reports, and accurate categorization. The real test is whether you trust your numbers and whether tax time goes smoothly.
Read answerCan I switch bookkeepers mid-year?
Yes, you can switch bookkeepers anytime. Your books are your property. The transition is smoother than most business owners expect if you get the right files from your current bookkeeper.
Read answerWhat information does a new bookkeeper need from me?
Your new bookkeeper needs access to your bank accounts, credit cards, and any existing accounting software. They'll also need your business formation documents, recent tax returns, and enough context about your operations to categorize transactions correctly.
Read answerShould my bookkeeper have industry experience?
Industry experience isn't strictly required, but it matters significantly for businesses with specialized needs. A bookkeeper who knows your industry already understands your chart of accounts, key metrics, and common compliance requirements.
Read answerWhat is outsourced bookkeeping?
Outsourced bookkeeping means hiring an external firm or individual to handle your financial record-keeping instead of doing it yourself or employing someone in-house. The bookkeeper works remotely through cloud accounting software.
Read answerHow do I transition from DIY bookkeeping to a professional?
Gather what you have, provide software access, and be honest about where things stand. You don't need to clean up your books first. A professional can sort through messy records faster than you can.
Read answerWhat are the benefits of hiring a virtual bookkeeper?
Virtual bookkeepers cost less than in-house staff, scale with your needs, and give you access to expertise without the overhead of an employee. You also get real-time access to your books through cloud software.
Read answerHow do I set up QuickBooks Online for my business?
QuickBooks Online walks you through the basics when you create an account. The real work is configuring your chart of accounts, bank connections, and tracking features to match how your business actually operates.
Read answerWhat is the difference between QuickBooks Online and Desktop?
QuickBooks Online is cloud-based software you access through a browser from anywhere. Desktop is installed on a specific computer. For most small businesses today, Online is the better choice due to accessibility, integrations, and ongoing development from Intuit.
Read answerHow do I connect my bank account to QuickBooks?
In QuickBooks Online, go to Banking, click Link Account, search for your bank, and enter your online banking credentials. After connecting, review imported transactions carefully to avoid creating duplicates with any manually entered data.
Read answerWhat is a QuickBooks ProAdvisor?
A QuickBooks ProAdvisor is someone certified by Intuit after passing exams on QuickBooks features. The certification shows baseline software knowledge but experience applying it to real businesses matters more.
Read answerHow do I fix errors in QuickBooks?
The fix depends on the type of error. Duplicate transactions get deleted. Wrong categories get edited. Incorrect amounts get corrected on the original transaction. Missing entries get added back.
Read answerCan QuickBooks handle multiple businesses?
Yes, QuickBooks can handle multiple businesses. QuickBooks Online lets you manage multiple companies under one login, but each business needs its own subscription and company file.
Read answerHow do I reconcile accounts in QuickBooks?
Reconciliation matches your QuickBooks transactions against your bank or credit card statement. In QuickBooks Online, go to Settings, select Reconcile, and check off transactions until the difference reaches zero.
Read answerWhat QuickBooks reports should I run monthly?
At minimum, run the Profit and Loss, Balance Sheet, and Cash Flow Statement every month. Add A/R and A/P aging reports if you invoice customers or have vendor bills. The key is actually reviewing them, not just generating them.
Read answerHow do I set up classes and locations in QuickBooks?
Classes track types of work or departments. Locations track physical places. Enable both in QuickBooks settings under Advanced, but plan your structure before creating them.
Read answerCan QuickBooks integrate with my POS system?
Yes, QuickBooks Online integrates with most major POS systems including Square, Toast, Clover, and Shopify. The key is setting up the integration correctly so sales data flows into the right accounts.
Read answerHow do I track projects in QuickBooks Online?
Enable Projects in your QBO settings, create a project for each customer engagement, then assign every expense, invoice, and time entry to the correct project. Run Project Profitability reports to see your margins.
Read answerWhat is the best QuickBooks plan for my business?
Most small businesses fit best on Essentials or Plus. The decision comes down to user count, whether you need project tracking, and how you manage bills and inventory.
Read answerHow do I import transactions into QuickBooks?
Bank feeds are the easiest way to import transactions automatically. For manual imports, download a CSV from your bank, use the Upload from File feature, and map your columns correctly before adding transactions to your books.
Read answerCan I use QuickBooks for job costing?
Yes, QuickBooks Online handles job costing through its Projects feature. The software tracks costs and revenue by job, but proper setup determines whether your reports actually show project profitability.
Read answerHow do I set up invoicing in QuickBooks?
Configure your company info, customize invoice templates, and set default payment terms before sending your first invoice. Enable QuickBooks Payments so customers can pay online directly from the invoice.
Read answerHow do I catch up on months of bookkeeping?
Start by gathering all bank and credit card statements for the months you're behind. Work chronologically from the oldest month forward, reconciling each account before moving to the next. The key is tackling it systematically rather than jumping around.
Read answerWhat is bookkeeping cleanup?
Bookkeeping cleanup corrects and completes historical financial records that have fallen behind or become inaccurate. It involves reconciling accounts, fixing categorization errors, and establishing accurate balances you can trust.
Read answerHow much does catch-up bookkeeping cost?
Catch-up bookkeeping is priced per project, typically ranging from $750 to $5,000 or more depending on how far behind you are, transaction volume, and business complexity. The condition of existing records also affects the cost.
Read answerMy books are a mess—where do I start?
Start by gathering your bank and credit card statements for the period you need to clean up. Bank reconciliation comes first because it establishes what actually happened. From there, you can categorize transactions and work toward usable financial statements.
Read answerCan a bookkeeper fix years of neglected books?
Yes. Bookkeepers regularly handle catch-up work for businesses with years of neglected records. As long as bank statements and basic documentation exist, the books can almost always be reconstructed and brought current.
Read answerHow long does bookkeeping cleanup take?
Most cleanup projects take two to four weeks for a single year of backlog. Complex situations or multiple years can stretch to several months depending on transaction volume and documentation quality.
Read answerWhat documents do I need for bookkeeping cleanup?
Bank statements are essential. Credit card statements, prior tax returns, and existing bookkeeping records also help. You probably won't have everything perfectly organized, and that's okay.
Read answerShould I clean up my books before tax season?
Yes. Messy books cost you twice: your accountant charges more to sort through chaos, and you miss deductions they can't verify. Clean books before meeting with your tax preparer saves money on both ends.
Read answerHow do I reconcile old bank statements?
Start with the oldest unreconciled month and work forward chronologically. Match each transaction on your bank statement to your accounting records, adding missing entries and investigating discrepancies as you go.
Read answerWhat happens if I have missing receipts?
Missing receipts don't automatically mean you lose the deduction. Bank statements, credit card records, and reconstructed notes can serve as backup documentation, though original receipts are always stronger in an audit.
Read answerHow do I set up payroll for my small business?
Start with an EIN from the IRS, then register with your state's tax and employment agencies. You'll need to set up withholding calculations, choose a payroll system, and establish a schedule for tax deposits and filings.
Read answerWhat payroll taxes do I need to pay in California?
California employers pay four state-specific payroll taxes on top of federal requirements. Unemployment Insurance and Employment Training Tax come from your pocket, while SDI and Personal Income Tax get withheld from employees.
Read answerHow do I run payroll myself?
Running payroll yourself requires an EIN, state tax registrations, and either software or careful manual calculations. Each pay period involves calculating gross pay, withholding taxes, making deposits on schedule, and filing quarterly reports.
Read answerWhat is the difference between employees and contractors?
The core difference is control. Employees work under your direction while contractors control how they complete the work. This distinction affects taxes, paperwork, and legal liability.
Read answerHow do I handle payroll for tipped employees?
California requires you to pay tipped employees full minimum wage before tips. Track all tips, withhold taxes on wages plus tips combined, and make sure employees report cash tips for accurate payroll processing.
Read answerWhat payroll records do I need to keep?
Federal law requires keeping payroll records for at least four years. This includes employee information, timekeeping, wage payments, and tax filings. California adds stricter requirements for itemized wage statements.
Read answerHow do I file payroll taxes quarterly?
File Form 941 with the IRS and Forms DE 9 and DE 9C with California EDD by the end of the month following each quarter. Deposits happen more frequently than filing, so don't confuse making tax payments with submitting the quarterly returns.
Read answerWhat is workers compensation insurance?
Workers compensation insurance covers employees who get injured or sick because of their job. It pays for medical expenses and a portion of lost wages while they recover.
Read answerHow do I set up direct deposit for employees?
Start with a payroll platform that handles ACH transfers, then collect authorization forms and bank details from each employee. Run a test transaction to verify account information before the first real payday.
Read answerWhat forms do I need for new employees?
The core forms are the federal W-4 and I-9, plus California's DE 4 for state withholding. California also requires several notices at time of hire including wage theft prevention, workers' comp, and paid family leave information.
Read answerHow does sales tax work in California?
California sales tax combines a statewide base rate with local district taxes, resulting in rates that vary by location. Most tangible goods are taxable while most services are exempt. Businesses must register with the CDTFA and file returns based on their tax liability.
Read answerDo I need to collect sales tax on services?
In California, most services aren't subject to sales tax. However, services that produce tangible goods or are bundled with materials can become taxable. The distinction matters for contractors, fabricators, and businesses that combine products with service.
Read answerHow do I register for a California seller's permit?
Register online at the CDTFA website for free. You'll need your business entity info, EIN, and estimated sales figures. Most applications are approved immediately.
Read answerWhen are California sales tax returns due?
California sales tax due dates depend on your filing frequency. Quarterly filers submit by the last day of the month following each quarter. Monthly filers submit by the last day of the following month.
Read answerWhat is use tax and do I owe it?
Use tax is the sales tax you owe when a seller doesn't collect it from you. Most businesses owe it on out-of-state and online purchases where no California sales tax was charged. The rate matches your local sales tax rate.
Read answerHow do I file sales tax in multiple states?
You'll need to register for a sales tax permit in each state where you have nexus, then file returns according to each state's deadlines and requirements. Most businesses selling online or across state lines need automation software or professional help to stay compliant.
Read answerWhat is nexus and how does it affect sales tax?
Nexus is the connection between your business and a state that triggers an obligation to collect sales tax there. You can establish nexus through physical presence or by exceeding economic thresholds based on sales volume.
Read answerDo I need to charge sales tax on shipping?
It depends on the state and how the charge appears on invoices. In California, shipping is generally not taxable if separately stated and reflecting actual carrier costs, but handling fees are taxable.
Read answerHow do I set up sales tax in QuickBooks?
Start by getting your California seller's permit, then enable the sales tax feature in QuickBooks Online and configure your business address. QuickBooks will calculate district-level rates automatically based on customer locations.
Read answerWhat happens if I miss a sales tax filing?
Missing a sales tax filing triggers penalties and interest that grow the longer you wait. In California, you'll face a 10% late filing penalty plus interest on unpaid amounts. The best move is to file as soon as possible, even if you can't pay the full amount immediately.
Read answerWhat is job costing for construction companies?
Job costing tracks every expense by individual project rather than lumping costs into general categories. It shows you exactly which jobs make money and which ones lose it, so you can bid smarter and catch overruns before they drain your profits.
Read answerHow do I track costs by job in QuickBooks?
Turn on the Projects feature in QuickBooks Online, then assign every expense and income transaction to the right project. The setup takes minutes but consistent coding takes discipline.
Read answerWhat is the best accounting software for contractors?
QuickBooks Online handles job costing well for most contractors when set up correctly. Larger operations or complex billing requirements may need construction-specific software. The setup and discipline matter more than which software you pick.
Read answerHow do I handle retainage in construction accounting?
Track retainage using separate asset and liability accounts in your chart of accounts. Record the withheld portion separately from regular receivables since the collection timing is different.
Read answerWhat is WIP reporting for construction?
WIP reporting matches revenue recognition to actual work completed on long-term projects. It shows whether you're overbilling or underbilling on each job, which affects your financial statements, bonding capacity, and banking relationships.
Read answerHow do I track subcontractor payments?
Track subcontractor payments by collecting W-9s upfront, setting up vendors in accounting software, and coding every payment to its job. Consistent tracking keeps you compliant and shows true project costs.
Read answerWhat is prevailing wage and how do I track it?
Prevailing wage is the minimum hourly rate required on public works projects, set by government agencies for each trade and region. Tracking it requires separating hours by project, maintaining accurate trade classifications, and submitting certified payroll reports.
Read answerHow do I bid jobs accurately using job costing?
Accurate bidding comes from comparing your estimates to actual costs on completed jobs. Track costs by phase and category, identify where you consistently over or underestimate, and build future bids from your own historical data instead of guesses.
Read answerWhat is percentage of completion accounting?
Percentage of completion is a method for recognizing revenue on long-term projects based on how much work you've finished. Instead of waiting until a project is done, you record revenue as you complete the work.
Read answerHow do I track equipment costs by job?
Equipment costs fall into three categories that each require different tracking. Rentals go directly to the job. Owned equipment uses an hourly or daily rate. Small tools can be direct-charged or treated as overhead.
Read answerWhat financial reports do contractors need?
Contractors need job-level reports that standard businesses don't. The essentials include profit and loss by job, work in progress reports, job cost reports, and accounts receivable aging.
Read answerHow do I handle change orders in my accounting?
Track change orders separately from your original contract. Each change order needs its own cost codes so you can see profitability on the original scope versus additional work.
Read answerWhat is the difference between direct and indirect costs?
Direct costs can be traced to a specific job, product, or project. Indirect costs support the business overall but can't be assigned to one job. Understanding this distinction is essential for accurate pricing and knowing whether individual projects are actually profitable.
Read answerHow do I calculate overhead for construction jobs?
Add up all your indirect business costs for the year, then divide by your allocation base (usually direct labor costs or total direct costs). The resulting percentage gets applied to each job estimate to cover those expenses.
Read answerDo I need a bookkeeper who understands construction?
Yes. Construction accounting involves job costing, progress billing, retainage, and subcontractor tracking. A general bookkeeper will produce books that are technically correct but don't show you which jobs actually made money.
Read answerHow do I track food costs for my restaurant?
Food cost tracking uses a simple formula: beginning inventory plus purchases minus ending inventory equals your cost of goods sold. Count inventory weekly, track every purchase, and calculate your food cost percentage to catch problems before they hurt your margins.
Read answerWhat is prime cost and why does it matter?
Prime cost is your cost of goods sold plus labor costs. For restaurants, it's typically the two largest controllable expenses and should stay between 55% and 65% of sales for healthy profitability.
Read answerHow do I report employee tips for taxes?
Employees must report their tips to you, and you include those tips in their wages for payroll tax purposes. You withhold income tax and FICA from their pay, and you pay the employer portion of FICA on the reported tips.
Read answerWhat is the best POS system for restaurant accounting?
There's no single best POS for every restaurant, but the right choice integrates cleanly with your accounting software and provides clear daily sales data. Toast, Square for Restaurants, and Clover are popular options.
Read answerHow do I reconcile daily sales with deposits?
Daily sales and bank deposits rarely match dollar for dollar. Credit card batches settle 1-2 days later with fees deducted, and cash requires its own tracking. The key is matching each payment type to its deposit path.
Read answerWhat is COGS for a restaurant?
COGS (cost of goods sold) represents the direct cost of food and beverages you sell to customers. It includes everything that becomes a menu item but excludes labor, rent, and other operating expenses.
Read answerHow do I track inventory for a restaurant?
Weekly counts of high-value items combined with monthly full counts give you what you need. The goal is calculating your food cost percentage and catching variance before it kills your margins.
Read answerWhat financial reports should restaurant owners review?
Focus on your profit and loss statement, food cost report, and labor cost report. These three tell you whether you're making money and where it's going.
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