BAM Bookkeeping LLP

How about some chrome for your soul? Owner Mike of Big Red's Trucking just had his rig in for upgrades. Not only does his ride look prime, but he also books some expenses to adjust his net income. Win win.

QuickBooks Pro Tip:
If you are using bank feeds (linked your account to upload transactions automatically) and enter your transactions, then MATCH in the bank feed to the corresponding previously entered transaction. Do not categorize it from the bank line in the banking center. This will create a duplicate entry and when you attempt to reconcile the bank account the ending balance will be off.

If you haven't entered the transaction into QuickBooks previously, it is acceptable to categorize from the bank feed - and can save some time for appropriate transactions. Better yet, create some rules for regularly occurring expenses.

The picture below shows where you can check in QuickBooks Online if a transaction has been matched to a bank feed line item. It will show in blue text in the top left hand corner of the opened transaction. You can click on it to view the bank feed match.

Let us know if you have a specific question or topic you'd like us to address!

Would anybody be interested in Quickbooks Tips??

Heads up - tax filing deadline is Monday, May 17.

BAM Bookkeeping LLP updated their info in the about section.

Financial statements are possibly the most important result of the services we provide. Why? Because these are what lenders, investors, buyers, tax preparers, unions, and management use to make decisions, calculate ratios, and determine the profitability of a business. Understanding financial statements (or hiring a bookkeeping service that does ;) ) is a vital component to a growing business.

"So, what exactly does a bookkeeper do?" I hear this question frequently. A bookkeeper's primary function is to track, enter, classify, and report business/personal financial transactions.
*But many bookkeepers also serve as personal assistants, tax preparers, advisors, account watchdogs, bill payers, personal shoppers, and more.

The next question I usually hear is: "Why is that so important?"
So, here are some of the reasons bookkeeping, accurate financial record keeping, reporting, and regular, frequent account monitoring is not just important, but crucial, to business owners.

- Income tax is paid on the company's net income. Net income is the sum of income minus cost of goods sold minus qualifying expenses. If a business hasn't properly categorized or tracked expenses, it could potentially result in a largely bloated, unnecessary tax payment or, worse, a shortage that could accumulate interest and penalties.

- We are able - and do - supply reports, calculations and figures that show a detailed representation of a business' financial health. The result of our work is the first indicator of whether a business model is performing successfully or needs some adjustments - and which precise areas are thriving or sinking.

- We translate the data given to us into numbers that go onto federal tax forms, which in turn, go to the IRS. If a business has claimed (categorized) expenses that don't belong, that could spell trouble in the event of an audit. Knowing what belongs where, and what doesn't, really is a big deal.

- Most bookkeepers have the ability, knowledge, and experience to create, monitor, and update working budgets for businesses, creating less stress and more certainty for business owners.

- Accruals and deferrals. Credits and debits. Liabilities and equity. Chart of accounts. Revenue, gains, losses, depreciation, on and on.... these are some of the lyrics to the song of our industry. We know them well and have memorized the verses, so that our clients don't have to sing along. Instead, they can focus on other things, like making money. :)

There are so many more reasons, and I'm ready to sign off for the night, but if you have any questions about how a bookkeeper can benefit you personally or your business, feel free to comment, shoot us a message, text, call, email or post.

Also, please keep in mind, the finished product we present to our clients is only as accurate and detailed as the information we are given or the have the ability to access.

That is all. Hug your bookkeeper. ❤️

Back to Cryptocurrency 101 - now that we have some time.

A crypto exchange is a medium that allows you to buy and sell cryptocurrency. Some are crypto dedicated, like Kraken and Gemini, and some offer other investments, like Robinhood.

If you're planning on purchasing a particular form of crypto, you will want to check to make sure the exchange you are interested in offers it as an option.

Some exchanges offer integrated crypto wallets (method for storing the digital information for safe keeping). More and more commonly, exchanges will store your crypto on your behalf (such as Robinhood). This is limiting in the fact that you would not be able to make a purchase with the cryptocurrency you own. This method does have advantages though. I will explain below.

Crypto wallets come in 2 general "types". Hot and cold. Hot is mainly for temporary storage. If you plan on buying and selling, trading, or using for a purchase within a short amount of time. Cold storage is for long term holding. Both types are available in several different forms such as cell phone apps, external devices, dedicated software, and third party contracts. Most commonly used wallets require complex seed password configurations comprised of a string of words, a public key (to receive crypto), and a private key (to send crypto).

The benefit to having a trading platform holding your cryptocurrency on your behalf is that you won't have a root/tree password or keys to forget, misplace, or protect.

Emily hasn't posted lately because she's been studying like a maniac for over 2 weeks for the Quickbooks Online Advanced ProAdvisor Certification. I'm happy to announce that as of 4:30PM today, SHE PASSED THE EXAM!!! 🥂🥳🥳🥳

Welcome to Part 2 of the Cryptocurrency Breakdown Series - Crypto Speak: The Foundation Basics

When I started researching cryptocurrency, I spent a lot of time looking up terminology and concepts. It seems like crypto fans and followers have their own language and, in some ways, they do. Here are some commonly used terms you'll encounter, and I will do my best to explain/define:

cryptocurrency - A digital token or coin that can be used as currency.

blocks - Groups of transaction information secured by cryptography (thus cryptocurrency). Cryptography is deciphered using computer processing power. When a block is decoded, it is timestamped permanently, and added to the blockchain for verification.

blockchain - Technically a database, but not in the traditional sense since, in most cases, it's not housed in a single location. Blockchains rely on huge amounts of computational power, provided by many individuals, to store the data. Data in blockchains are publicly available to view. When blockchain data is not stored in a single location, it is decentralized.

miners: Individuals or groups who make all or part of their computer(s)' processing power available to decipher block transaction data. They can be rewarded with tokens of that specific cryptocurrency's blockchain if their computer processes the information of that block. There are other methods of of mining and rewards that are becoming more popular, but let's keep it simple for now.

Now that we've covered the basics of foundation terms, stay tuned for Part 3 - Crypto Speak: Crypto Exchange Types and Terms.

Oooh! Let's talk about cryptocurrency. I've seen a lot of chatter about several cryptos in the news, financial newsletters and on social media lately. In my experience, people tend to avoid cryptocurrency because they don't understand it. So, we are starting a crypto-series. YAY!

Let's start with a few fun facts:

- As of January 2021 there are over 4000 cryptocurrencies! Some popular cryptocurrencies you may have heard of are: Bitcoin, Ethereum, Litecoin, and Dogecoin.

- Due to Bitcoin's success and popularity, other cryptocurrencies are often referred to as "altcoin". The term is a combination of "alternative" and "Bitcoin".

- Cryptocurrency transactions are sent in "blocks". These blocks are secured with extraordinarily complicated mathematical equations.

- Cryptocurrency transactions happen 24 hours a day 7 days a week.

- Transaction information and records are not kept in a single location. This is why you will often see the term "decentralized" referring to crypto.

Stay tuned for part 2 - cryptocurrency terminology!

In order for PPPs loans to be forgiven, certain supporting documents must be supplied to your lender. The post picture is a snippet from sba.gov that lists exactly what you need. The entire forgiveness process and additional information can be found here:
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/ppp-loan-forgiveness -header-8
The required tax forms your business needs to supply are based on your business entity's structure, which determines which tax forms are filed. ex) 1040, Schedule C, etc.,

These links show which documents you need to supply to verify calculations for maximum PPP loan amounts - again, these will vary depending on business type:

First Draw PPP:
https://www.sba.gov/document/support-how-calculate-first-draw-ppp-loan-amounts

Second Draw PPP:
https://www.sba.gov/document/support-second-draw-ppp-loans-how-calculate-revenue-reduction-maximum-loan-amounts-including-what

If you are unsure which application, documentation, etc., to use/supply, we recommend that you check with your accountant/tax preparer, bookkeeper, lender, and/or the FAQ links associated with the appropriate area at sba.gov

Let us know if you have additional questions, or how we can help!

We've been getting a lot of questions about PPP lately. Below, are some great resources for questions specific to your business:

- sba.gov (across the top hover over "Funding Programs > on the left side of the options box click on "Coronavirus Relief Options" > scroll down and "Paycheck Protection Program" will be the first option on the left, under the "Relief Options" header) They provide all the precise information governing PPP. Here, you can also see which lenders are offering PPP loans.

- Your lender. Once you have found a lender that offers PPP loans, they will be able to help you with most questions you may have. Trust me, they have been working on these for months now and are well versed in the ins and outs, exceptions, and unique circumstances.

- Your bookkeeper and/or accountant. PPP loans require specific financial figures to make determinations like, if your business qualifies, the amount you are eligible to receive, and supporting documentation for forgiveness.

That being said... let's get to it! First up: Second draw PPP loan qualifications state that you may be eligible if you can "demonstrate a 25% reduction in gross receipts between comparable quarters in 2019 and 2020". So what exactly are "gross receipts"? Well, for the purpose of PPP loan reporting, that depends. For a typical for profit business, this is how the SBA defines it, "gross receipts generally are all revenue in whatever form received or accrued (in accordance with the entity’s accounting method, i.e., accrual or cash) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances but excluding net capital gains and losses. These terms carry the definitions used and reported on IRS tax return forms."
In very basic terms, this means they want to compare the revenue your company generated during any quarter (which can be defined by your accounting fiscal year or calendar year - whichever your business uses) of 2020 with the same quarter of 2019.

As you can see, it is difficult to generalize, since, depending on your exact business structure, there can be several nuances. In order to simplify, let's give a basic example.

Mom & Pop's General Store only receives revenue from product sales. They base their accounting on the accrual method (realizing revenue and expense as they are earned and incurred) on a calendar year (Jan 1-Dec 31) basis. Mom & Pops General Store would calculate their sales revenue (gross receipts) for 1st (Jan-March), 2nd (April-June), 3rd (July-Sept), and 4th (Oct-Dec) quarters of both 2019 and 2020. They notice that 2nd quarter 2020 was rough - they had to close for 5 weeks during that period. During 2nd quarter 2019, their sales revenue was $10,000.00, but in 2nd quarter 2020 it was only $7,000.00. 25% of $10,000.00 is $2,500.00 (10,000 x 0.25), so they know they had a greater than 25% reduction. To calculate the exact percentage of reduction (2020 is LOWER than 2019): start with 2019 revenue (gross receipts) > subtract 2020 revenue (gross receipts) > divide that sum by 2019 revenue (gross receipts) > multiply the product by 100.
So in our example it would look like this:
10,000 - 7,000 = 3,000
3,000 / 10,000 = .3030 x 100 = 30
Mom & Pop's can show a 30% reduction in gross receipts when comparing 2nd quarter 2019 to the same quarter of 2020, so they may qualify.

In the next post, we will discuss supporting documentation.

BAM Bookkeeping LLP updated their phone number.

Calling all fellow investing fans: I recently found an app that I'm full on nerding out over! The M1 finance app - available on Google Play and Apple app store. The basic functionality is free, but they also offer M1+ membership ($125 annually, but available free for a year) and that is where the real magic lives. Custodial investment accounts (I opened 2)!! Not to mention Traditional and Roth IRAs. 😍😍
Heads up, there is a slight learning curve with how to set up and structure "pies", but it is well worth the time spent figuring it out. Also, M1 does not offer real time trades - only 9:30am and 3pm windows.
*We are not affiliated with, nor receiving any compensation from M1. Just super amped about a product that is one more step in investment (r)evolution!

In 2019, Banks across the United States profited on $11 Billion in overdraft charges. In 2020 this amount almost TRIPLED to $30 Billion. The average Overdraft charge in 2020 was $34.50 AND banks charge this, on average, 4-6 items PER DAY. There are steps you can take to protect yourself from unexpected or early charges.
- Know your bank's order of posting (typical order of posting is: deposits, bank owed amounts (loan payments), then highest to lowest amounts)
- Many banks now offer Overdraft Protection for little or no fee. That means you can link an account (usually a savings, but can also be a credit card or line of credit), and they will transfer funds to cover the insufficient balance.
- Don't be fooled by "Overdraft Privilege" services. This only means that they won't decline a charge if you don't have enough in your account to cover the charge. It does not protect you from excessive overdraft charges.

PRO TIP: Anytime you pay more than the regular payment on any loan, make sure the excess is being applied toward the principal balance (the original amount borrowed, as opposed to being applied to the interest or the next payment). Paying more on the principal will reduce the interest over the life of the loan AND shorten the length of the loan - potentially a considerable amount, if you do this on a regular basis. Most (if not all) lenders will NOT apply the surplus payment to the principal balance by default... you have to specify how you want it applied. For online loan payments, there is usually a setting in your account payment preferences that will allow you to select "apply extra toward principal".

You Should Know - On December 27th Congress decided that your PPP loan (if forgiven) is NOT taxable income PLUS you can still claim the expenses to reduce your net profit!! 🤩🥳🙌

STAY TUNED - COMING SOON! We are going to be posting articles, links, content, tips and tricks to help you with money management and account maintenance.

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