It's our goal to have your reports to you by the 15th of each month, or the business day prior.

Ideally, we will have accountant read only access to all of your bank accounts so we can pull statements on your behalf.

We aim to have questions to you as early as possible. 

Your timely response allows us to turn your books around by our promised date of the 15th of each month.

Delayed responses lead to delayed reports.

Please do your best to answer promptly so we can ensure timely reports so you can make better business decisions.

If you prefer one form of communication over another, just let us know and we'll do our best to honor that.

Delays:

If reports are delayed beyond our internal deadline of the 15th, we will send a status update. If the reason is due to incomplete information from the client, we will let you know what is missing. 

Once this status email is sent, we won't send any additional follow ups and we will be waiting for the information necessary to complete your books.

The first half of each month is when we are laser focused on our clients and getting their reports turned around. The last half of each month is when we focus on the aspects of the business outside of existing client work. We can be busy in other projects or even off during this time.

Because of this, if information is received during the last half of the month, it may take up to 5 business days for us to turn the information around.

Alert us if you:

• Open a new credit card or bank account
• Change banks
• Begin selling physical products
• Hire any new staff
• Apply for or receive new loans
• Accidentally pay a personal expense from the business
• Accidentally pay a business expense personally

Our rates are based on the time it takes to complete your books, and not your income.

Rates are subject to increase with written notice and upon your acceptance. In the event of an increase, you will be notified of the amount and the date it goes effective in advance and with your consent.

We dislike busy work, so most of the time, we will be happy to brainstorm ways to work faster and keep your bill down. To make that work, we need your flexibility and willingness to implement efficient systems.

However, we do understand when the priority is in maintaining your system and dealing with the inefficiencies on the books. And we're open to doing that work, but absent an efficient system, the bill is subject to increase and we will discuss the increase then.

Things that can trigger rate increases, aside from general inflation, are:

• manual processes (example: keying in each transaction versus a bank feed, coding items of income one at a time in a separate platform)
• increases in volume of transactions that adds time (sometimes an increase in volume doesn't add time)
• granular detail of reporting (example: showing you detail by project or division)
• an increase in how many accounts you have
• management of inventory, payroll, or sales tax

In addition to regular bookkeeping, I offer a CFO service on a limited basis.

This service includes:

• a monthly 45 minute 1:1 Zoom call,
• unlimited Voxer access,
• templates plus the creation of custom templates as needed to help you meet your goals
• monthly visual reporting with goal and income tracking as well as comparisons to prior periods

We also offer visual reporting as a stand-alone upgrade to bookkeeping.

If you're interested in either of these, send me a Voxer or email.

It's important to keep business and personal separate for several reasons.

The one that affects our relationship most is that it makes it exponentially easier to track. That means fewer questions, less guesswork, reduced room for error, and time saved which means a lower fee and more accuracy.

But it's also a good practice and would really help you in the event of an audit.

That means you should pay personal expenses from your personal accounts and business expenses from your business account. If cash is tight on either side, transfer between accounts.

If you use PayPal, you should have a separate profile for business and personal. Your business profile should only be linked to business accounts. You can edit this in PayPal under Pay & Get Paid > Banks & Cards > and then delete any accounts that are not business.

If you accidentally pay a personal expense from a business account:

We will typically code it as owner's draw and it will not count as a business deduction. If this is an autopay item, please correct the billing account.

If you accidentally pay a business expense from a personal account:

We have no way of knowing unless you tell us. That means you miss the ability to deduct what you spent... which is a no bueno. So just shoot us an email letting us know the date, amount, and vendor and we will enter it in your books. You can also reimburse yourself by writing a check or transfering from your business to your checking with a memo and telling us it is a reimbursement. If you don't tell us this was done, it may accidentally get coded to owner's draw which means you miss the deduciton.

We kindly request you keep this to a minimum as it creates more work and an inefficient process with more room for error.

Fun Fact: estimated tax payments and payments on your personal tax return are actually personal expenses and are not deductible. If you pay them from your business we will treat them as owner's draw.

Long story short: receipts are a client responsibility and used to back yourself up should you ever get audited. We don't manage your receipts and we won't ask you for them. Here is more info on receipts, including how to manage them and why.

If you're feeling cash poor, my first recommended step is to look at your profit and try to find ways to increase sales or cut back expenses.

If that is not possible in this exact time frame and you have a clear amount you need to borrow and a plan to pay it back, you may need a loan.

Discuss it with me before applying and also discuss with your CPA, especially if you are an S Corp.

When possible, a 0% credit card is a great way to go. I prefer Chase Ink Cards. 

I also have a podcast episode on how to use credit to your advantage. Listen here.

Searching grants are also a great idea. Advise with your CPA about the taxability of one and message me in Voxer if you have questions.

If you really need funding, you can check rates here.

Determining if a new hire is an employee or contractor is not a choice. It's a matter of which one the IRS would determine them to be and ultimately it comes down to control.

The IRS has a 20 point test to determine if someone is a contractor or employee.

The 20 factors are listed below (reference this article):

1. Level of instruction. If the company directs when, where, and how work is done, this control indicates an employer-employee relationship. 

2. Amount of training. Requesting or requiring workers to undergo company-provided training suggests an employment relationship since the company is directing the methods by which a worker performs their duties. 

3. Degree of business integration. Workers whose services are central to the business operations or significantly affect business outcomes are likely to be considered employees. 

4. Extent of personal services. Companies that insist or demand that a particular person performs the work have asserted a high degree of control, which indicates an employment relationship. In contrast, independent contractors are typically free to assign work to anyone. 

5. Control of assistants. If a company hires, supervises, and pays a worker’s assistants, this control suggests an employment relationship. If the worker gets to control the hiring, supervising, and paying of assistants, they could be defined as an independent contractor. 

6. Continuity of relationship. A continuous relationship between a company and a worker indicates an employment relationship. However, an independent contractor arrangement can also be an ongoing relationship that spans multiple, sequential projects. 

7. Flexibility of schedule. If a company gets to dictate a worker’s days and hours of work, this degree of control suggests an employer-employee relationship. 

8. Demands for full-time work. Workers who work full-time hours suggests a company has control over most of their time, which indicates an employment relationship. 

9. Need for on-site services. Requiring someone to work on company premises —  particularly if the work could be performed elsewhere — suggest an employer-employee relationship. 

10. Sequence of work. If a company requires work to be performed in specific order or sequence, this type of control suggests an employment relationship. 

11. Requirements for reports. If a worker has to regularly provide written or oral reports on project status, they could be viewed as an employee. 

12. Method of payment. If a worker is paid hourly, weekly, or monthly, this could suggest an employment relationship, unless the payments simply are a convenient way of distributing a lump-sum fee. It is more characteristic to pay freelancers upon project completion or commission.

13. Repayment of business or travel expenses. Independent contractors are typically responsible for paying for travel or business expenses, and most contractors set their fees high enough to cover these costs. In contrast, reimbursement of travel and other business expenses by a company suggests an employment relationship. 

14. Provision of tools and materials. Workers who use company-provided equipment, tools, and materials to perform their work are more likely to be considered employees. Work largely done using independently obtained supplies or tools supports an independent contractor classification. 

15. Investment in facilities. While independent contractors and freelancers usually pay for their own work facilities, most employees rely on their employer to provide work facilities. 

16. Realization of profit or loss. If a worker’s earnings are predetermined and have little chance to realize significant profit or loss through their work, they are generally considered to be an employee. 

17. Work for multiple companies. Workers who provide services for multiple companies concurrently are likely to qualify as independent contractors. 

18. Availability to the public. If a worker regularly makes services available to the general public, they could qualify as an independent contractor. 

19. Control over discharge. If a company has the unilateral right to discharge a worker, this suggests an employment relationship. In contrast, a company’s ability to end an independent contractor relationship generally depends on the terms specified in the contract. 

20. Right of termination. Most employees can terminate their work for a company unilaterally without liability. Independent contractors cannot quit their work engagements without liability, except as permitted under their contracts.

If you hire an employee you will need to register with your state and begin running payroll, if not already. I recommend using ADP or Gusto. Let's chat in Voxer to determine what is best.

Both have HR packages should you need help with employment contracts, benefits, and job descriptions.

If your hire is a contractor, it's best practice to obtain a W9 from them upfront. You can do this by sending the form and retaining for your records.

You should pay them in a way that either prepares the 1099 for you (a payroll system) or allows you to not need to file one.

Message me in Voxer to help you decide, but here are my general recommendations.

Payroll systems will handle the 1099 for you and allow you to send payment to your contractor. They have monthly fees. If you're paying yourself a salary as an S Corp owner anyway and this person will be ongoing, this is a good way to pay.

I prefer ADP and can connect you to my rep or you can fill out this form.

Gusto is also great and I sometimes recommend it. Chat with me in Voxer or use this link.

To avoid having to issue a 1099 at all, pay via a third party processor. This may happen if you contractor invoices you through a payment processor like Stripe, PayPal, Dubsado, Honeybook, Wave, QBO, or Xero. In this event you do not need to file a 1099-NEC because the payment processor will issue a 1099-K if requirements and thresholds are met. This is my preferred method though your worker may get confused. See the next question.

If you have a client who paid you via cash, check, bank transfer, or a personal app (Zelle, Venmo, PayPal friends & family), then your client is right to ask you for a W9. If you need help filling that out, just ask.

However, most of my clients should not receive 1099s from their clients because they accept payment via a third party processor (Stripe, PayPal goods and services, Wave, Honeybook, Dubsado, etc etc etc).

Below is the swipe copy you can share with your client who is making this request. 

—

Per our accountant, a 1099-NEC is not required because we were paid via a third party payment network that will issue a 1099-K instead.

Please reference the 1099 instructions, page 3 bottom right that reads “Form 1099-K. Payments made with a credit card or payment card and certain other types of payments, including third-party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K.”

https://www.irs.gov/pub/irs-pdf/i1099mec.pdf

—

Sometimes you will still receive pushback saying they want to file "just in case". I just keep pushing back because you don't file returns you aren't required to file "just in case". Since your income received from a third party processor is reported on a 1099K, if your client also reports it then it is double reported. If you are having trouble, just reach out.

For the most part, you are able to deduct expenses you pay from your business for the purpose of generating income that are necessary and ordinary in your line of work.

It gets tricky when the expense can double as a personal expense.

If you have a question about deductions, message me and ask. I will likely defer to your tax preparer for the final decision but am happy to chat it through specifically.

If you tell us something is a business expense, we will take your word at faith.

Our engagement does not have us auditing your books - we are simply recording the information and answers you provide to us.

That means if you tell us something is a business expense but it is not, the onus lies with you.

If you take the standard mileage deduction (see Business Mileage below) you cannot also write off gas.

Clothing for photoshoots is not a business expense if it can be worn personally.

Your Amazon purchases can be written off if you are purchasing office supplies or other business expenses, but your personal Amazon charges should be paid with your personal card.

Apps used for business can be purchased on your business card, but your personal apps should be paid personally.

Meals can be deducted if there was a business purpose, but a family and friends dinner or your morning coffee or afternoon Ubereats cannot.

We have no way of knowing if your Amazon, Apple, Target, Meals, or Travel purchases are truly for business.

Most of the time we have this conversation upfront and ensure you know that if you are paying for any of the above on your business cards, we are going to treat it as a business expense unless otherwise notified.

If these expenses are not for business, and you get audited, it is your responsibility to have receipts to back up your deductions.

If you have taken non-business expenses as business expenses and therefore underreported your taxes, you may be subject to having to pay the tax you should have paid, plus penalties, interest, and the cost of representation under audit. You should consult with your CPA regarding deductions and also understand your responsibility and risk.

There are two ways to deduct auto expenses

The actual method - allows you to deduct the business use percentage of actual auto expenses including gas, maintenance, insurance, and lease payments or depreciation (a specialized calculation of the cost of your vehicle over time). The business use percentage is found by tracking all miles and dividing business miles by total miles driven.

The standard mileage - allows you to deduct 58.5 cents per business mile driven. This means that for each 2 miles you drive you can deduct more than $1 worth of income and save money on your taxes. This adds up!

My recommended method

I recommend the standard mileage method because it's less complex and less likely to get audited if you're doing it yourself. If you're working with an accountant, it's a good idea to ask them which one is right for you and exactly what you need to do to take the deduction.

My recommendation is based on the fact that my audience is mostly solopreneurs who might still be DIYing their taxes, and this way is the least likely to mess up while also still saving you money in taxes.

You need to log miles in either scenario

Tracking your miles is simple. You just need to note the date of your trip, where you went, the business purpose of the trip, and the miles driven.

As a client, just message me and I will share my downloadable mileage log that can be accessed on your smart phone and allows you to easily track miles without needing to pay for an app. It does all the calculations for you, whether you choose the actual method or the standard mileage.

The best time to log miles is when they actually happen so you don't forget or have to go back and figure it out later. I drop my destination in my GPS and take the calculation from the round trip and drop them in my mileage log and then forget about it until tax time when I can take the information off my log and use it to save money in taxes.

Easy!

What counts as business miles?

Simple! Anything that you're doing for business! 

Examples are:

• business meetings
• networking events
• shopping for office supplies
• trips to the post office

What doesn't count as business miles?

Commuting does not count as business miles. Commuting is going from your home to your regular place of work. So if you rent an office or work for one client and make the same trip daily, unfortunately that is not counted as business miles. Traveling between clients or to different clients does count.

Something to be aware of

If you're choosing the standard mileage method, you don't pay for gas, oil changes, auto tag renewals, or car payments from your business. Those are all included as an estimate in the 58.5 cents per miles that you are allowed to deduct and claiming both can get you in trouble.

What is NOT included in the standard mileage rate that can be included is parking and tolls so be sure to pay for those from your business account when traveling for business.

You should save 25% or more of your profit for taxes. We recommend setting this aside in a high yield savings account so the money is set aside but also earning interest. You can then use this account to make your tax payments both when quarterly estimates are due and at tax time.

You should work with your CPA to determine what your estimated taxes should be and when you should file.

Here are some general tips:

Who needs to file: Sole proprietors who have a profit in their business.  Sole proprietors file their business income on Schedule C of their 1040.  Sole proprietors are either doing business by themselves with no business registered, as a registered sole proprietorship, with a DBA, or as a single-member LLC.

What estimated tax payments are: An estimate of taxes that allows you to avoid penalties and avoid paying in taxes all at the end of the year when they money may have been spent already.

Ways to look for the minimum estimated payment: Check last year's 1040 and search for 1040-ES vouchers. These are the minimum you need to pay, with rare exceptions.

How to calculate your payment: by providing our reports to your CPA and asking for their support determining if you should file estimated taxes, and if so how much. They may also file these for you.

How to file your estimated payment: Either online or by mailing a check and a paper voucher. Your CPA can help with this and should be involved.

How we calculate the 25% of profit that is included in your report: This is calculated on business profit, after the expense for your officer's compensation paid on a W2 is deducted, if there is any. This assumes your withholdings on wages are appropriate, and estimates you owe 25% on the profit after paying yourself wags.

Podcasts: I love to share tips and stories on podcasts. I'd love to be on yours or have you on mine!

Expert Trainings: I'd be happy to speak inside of your program, whether live or prerecorded, to answer financial questions your members have.

Affiliating for my Starter Kit: You may have biz besties or clients who need a bookkeeping resource but aren't ready to hire. My Starter Kit is perfect for that. You can sign up as an affiliate and earn 30% on purchases made through your link. Sign up automatically here.

The greatest way to say "I love you" is by referring your friends who could use a good bookkeeper!

Just send them to my quote form at www.orderlyaccounting.com/quote and tell them to put your name in the field for "how did you hear about working with Katie?"

If they sign on for monthly bookkeeping services I'll send you a $100 referral fee via PayPal when their first payment is made.