Number Crunchin' News
November 2005
Dear SBBA Members,
It was great to see so many people at the last meeting! I realize it can be difficult to make all the monthly meetings, but when we have a good turn out like last month, I really feel the difference in the information “buzz”. We had a wonderful, motivational speaker at last month’s meeting, Alan Tratner. He is the senior lead counselor and manager of the Santa Barbara County Small Business Development Center, a SCORE (Service Corp of Retired Executives) counselor, and the Vice-Chair of the Small Business Entrepreneurship Center (SBEC) and shared an amazing amount of information in a very short time. There is so much support for us out there and it’s wonderful to know more about it.
It’s finally starting to feel like Fall to me now with the time change and shorter days! I’m taking advantage of the calm before the storm to put new systems into place and let my clients know if they have any “extra” work, which always seems to happen, to please let me know now. It seems there is always somebody that decides to change entity types, start or end a business at year-end, and they don’t realize how much extra work that is for us! It’s great to have the extra work, but it always happens when we are so busy. I encourage you to communicate with your clients and remind them to keep you in the loop. Sometimes they forget that it’s really helpful for us to know what they are planning!
Happy Fall! Don’t forget to RSVP for our Holiday Party in December. I have some interesting information to share with you at this month’s meeting ~ I look forward to seeing you all there!
Karen Mora
The regular monthly meeting of the Santa Barbara Bookkeepers’ Association was held Tuesday, October 18, 2005 at Mulligan’s Café.
President Karen Mora opened the meeting. This was followed by the introduction of any new members and a plea for Holiday committee volunteers.
After lunch, Gail Gillies introduced our guest speaker for the day, Mr. Alan Tratner. Mr. Tratner is the Manager of the S. B. County Small Business Development Center. He also has many impressive credentials which are too extensive to list. Alan let us know about a free workshop that was happening on Oct. 29th for the entrepreneurial minded. He also talked about the many supportive resource groups available to entrepreneurs in Santa Barbara. Mr. Tratner was very inspirational!
The winner of next month’s free lunch is Alejandra Diaz.
Rosemary
Chidester
Secretary
November meeting will be a social!
Please email your RSVP for the November 15th Monthly Meeting by Friday, November 10th to Karen Mora at: scubaz@cox.net
Tuesday, December 13th, 11:30 a.m.
Our annual holiday party will be at Stella Mare’s Event Center again this year. Please note this is the 2nd Tuesday of the month, NOT our usual meeting date. Flyers for the event will be available at the meeting and will also be emailed next week.
Here's some interesting stuff for next year from the Kiplinger Letter:
The Social Security wage base is rising to $94,200 in 2005, a $4,200 jump and $900 more than government actuaries predicted. That's an extra $260 tax bill for high-paid workers and their employers. Tax rates remain 6.2% for FICA and 1.45% for Medicare. Self-employeds will pay 15% on the first $94,000 of earnings, and 2.9% above that. The nanny tax threshold will jump to $1,500 in 2006, a $100 hike.
Retirement plans: Many limits on retirement plans are going up for 2006: The 401(k) maximum is rising to $15,000 next year, a $1,000 hike. Employees who were born prior to 1957 can contribute an additional $5,000. These contribution limitations apply to 403(b) and 457 plans as well.
Submitted by Roxanne Russell
FOILING CROOKS
1) The next time you order checks, have only your initials (instead of first name) and last name put on them. If someone takes your check book they will not know if you sign your checks with just your initials or your first name, but your bank will know how you sign your checks.
2) When you are writing checks to pay on your credit card accounts, DO NOT put the complete account number on the "For" line. Instead, just put the last four numbers. The credit card company knows the rest of the number and anyone who might be handling your check as it passes through all the check processing channels won't have access to it.
3) Put your work phone # on your checks instead of your home phone. If you have a PO Box use that instead of your home address. If you do not have a PO Box, use your work address.
4) Never have your SS# or auto license number printed on your checks (DUH!!) - you can add it if it is necessary. But if ;you have it printed, anyone can get it.
In case your wallet is stolen you can limit the damage:
1) Place the contents of your wallet on a photocopy machine. Copy both sides of each license, credit card, etc. You will know what you had in your wallet, and all of the account numbers and phone numbers to call and cancel. Keep the photocopy in a safe place.
2) File a police report immediately in the jurisdiction where it was stolen. This proves to credit providers that you were diligent, and is a first step toward an investigation - if there ever is one.
3) Call the three national credit reporting organizations immediately to place a fraud alert on your name and Social Security number. The alert means any company that checks your credit knows your information was stolen and they have to contact you by phone to authorize new credit. The numbers are:
Equifax: 1-800-525-6285
Experian (formerly TRW) 1-888-397-3742
Trans Union: 1-800-680-7289
Social Security Administration (fraud line) 1-800-269-0271
Submitted by Pam Allman
YEAR END CONCERNS:
Year end is only two months away. This may be a good time to start looking at whether or not your clients’ books are ready to be turned over to their CPA.
The following tips will help you make sure you give the CPA a set of books that is complete and final. The CPA will be able to prepare the tax return easily with a minimum of questions and delays.
This will make both your client and his/her CPA happy.
a) QuickBooks allows checks to be voided at any time. However, it voids the check using the date the check was created.
b) If you need to void a 2004 check in 2005, please note the following procedures.
i. Prepare a journal entry for 2004:
1. Debit the Expense Account that the check to be voided was posted to.
2. Credit Cash in Bank.
ii. Void the check with the 2004 date. QB will do the following:
1. The expense is credited.
2. Cash is Bank is debited.
3. Net result to cash in bank in 2004 will be zero.
4. Therefore there will be no change between 2004 ending bank balance and 2005 beginning bank balance.
iii. Since the expense has already been deducted on the 2004 tax return, it will be necessary to prepare a journal entry for 2005 to correct the books:
1. Credit the Expense Account.
2. Debit Cash in Bank.
Note: Always Void checks in QuickBooks. Never delete them. It is important to be able to account for every check number even if it has been voided.
2. Deposits that don’t clear can also change the beginning balance:
a) Do the same for any deposits that for some reason may have been made in the prior year but were not actually deposited or were actually deposited in the current year.
i. Look carefully at transfers between accounts to make sure both sides of the transaction have been entered.
ii. It is helpful to have a Balance Transfer account and to take the time to enter both sides of the transaction. The Balance Transfer account should always be zero. Then you know both sides of the transaction have been entered correctly.
iii. For the deposit:
1. Debit cash in bank
2. Credit Balance Transfer
iv. For the check:
1. Credit cash in bank
2. Debit Balance Transfer
3. Opening Balance Equity
a) This should always be zero.
b) QuickBooks will put entries here if you allow QuickBooks to make adjustments for you on the bank reconciliation.
c) Always find bank reconciliation errors yourself. If you can’t find a small error, prepare a journal entry. This is preferable to allowing QuickBooks to post entries to Opening Balance Equity.
d) If there are entries in this account, research them and post to the correct account.
4. Close prior year draw accounts to equity for:
a) Sole Proprietorships
b) Partnerships—allocate to partners
c) S-Corporations
d) LLC’s
5. Close prior year income to equity for:
a) Sole Proprietorships
b) Partnerships—allocate to partners
c) S-Corporations
d) LLC’s
NOTE: Only C Corporations carry forward their income in the Retained Earnings account. All other entities close out Retained Earnings and allocate the amount to the various equity accounts.
QuickBooks uses Retained Earnings for all entities. This requires that the bookkeeper make the necessary adjusting entries each year.
6. Make sure equity accounts equal last year’s tax return for:
a) Partners individually as well as the total equity stated on page 4 of the 1065.
b) S-Corporations
c) Members in LLC’s
7. Review all transactions for the current year.
a) Are there any duplicated accounts? Merge them.
b) Make sure draw accounts clearly indicate tax deductible items if personal items have been entered into the business books for:
iv. Medical Expense
v. Taxes
vi. Charitable Contributions
vii. Mortgage Interest
8. Not for Profit Organizations
a) Allocate Expenses (Using classes facilitates the following required allocations.):
viii. Program costs
ix. Fundraising costs
x. General and Administrative costs
b) Retained Earning is called “Net Assets” for not-profit organizations.
Submitted by Kate Walker
NOTE FROM
THE EDITOR:
This month's Newsletter was
edited by Sandy Stites, with many thanks to everyone who submitted items!!!
We need one volunteer willing to prepare the April, August & December newsletters . . . how about you?
The Not So Fine Print