Transactions and Using Reports
We'll start with just a few slides on the screen. And this is the segment where I'm trying to go back into QuickBooks and I'm gonna do quite a bit. Maurin this segment in QuickBooks. So we call it transaction and using reports. Now, there's been a lot of talk not only in the room but outside the room that it's getting close to tax season. So obviously there are reports that you need for tax purposes. I'm actually gonna jot a few things on the board for that one I mentioned in prior sessions. We calling obsessions, courses or workshops. We have that discussion to documenting and documenting your process and training your staff. I can tell you that big companies neglect to do this. They either don't write down the procedures or when they don't know when they do write them down. They don't update them when they change. And when people leave your business, even if it's just in your case, a freelancer, a part time person who's helping you that institutional knowledge going out the door is a...
problem if you haven't written down how you do things, because the person leaving may be the only person who knows how to do it. The big issue. Finally, we'll talk about using reports as well. So I'm gonna do start with a little bit on the board. Let me click to the next slide so you gotta do your tax return. Now, as mentioned before, most people in the audience probably are sole proprietors for the most part. Okay, what's your accountant going to need? He's gonna need the profit and loss, obviously, from your business. QuickBooks again calls it profit and loss while accountants in Accounting World call in an income statement. So they're going to need that if you have. If you have ownership, particularly with other people in a partnership, they're gonna need to know who owns what. I'm gonna get into that in just a minute if dividends were paid. If it's corporation, we're gonna need to know about dividends because dividend is attacks. What we call in accounting a taxable event to the person getting the dividend Number three adds on a little something else, which is for a sole proprietor or partnership. And I'm gonna do this in a T account because I think it's a good explanation. Capital contributions putting cash or equipment into the business share a profit and loss, which we again said can be uneven. And that was causing some confusion. The fact that in a partnership the percentage of ownership or who puts in what into the business can be a different percentage combination than profit and loss. Your account needs that corporation any additional shares that you issued if you added on shareholders dividends paid to shareholders. Okay, let me just talk about on the board first this tax issue one more time, because this gets a little complicated, and I think the way to do it is to put a personal 10 40 form in the middle of the page like this. And I mentioned before that there's a section on page one of a tax return that has income, so your accountant's gonna need a few things. Many people in this audience may have a full time job, get a W two but also do things on the side as freelancers, so you may have a W two for full time work. F slash t. You get a W two, which has benefits taken out and, more importantly, taxes taken out or more specifically, taxes withheld. W two You may have a 10 99 If you work as a contract employer for somebody else. I get a lot of these again to 90 nines we mentioned prior segment do not have tax withholdings on them. No tax withheld, abbreviating. And finally, for that individual business for that business that you have the profit and loss from your business in this case, image photography. I mean abbreviate. And I'm going to say image profit is going to be a line here on the first page of that 10 40 tax return. So this number, the image profit, is going to calm, possibly from a QuickBooks quick, be p slash l profit and loss. This is gonna come when you generate at your end QuickBooks profit and loss. So that's what your accountant needs. W 2 10 99 the profit or loss from the business. And again, you need to consider your with holdings before year end. And this is some of this is one of the things that folks it creativelive and I have been talking about during breaks occasionally is this whole withholding issue. You need to plan this before year end, and the way to plan for it is Have someone help you. An accountant? Preferably. But maybe somebody who's a business person help you plant estimate your taxes. Now there's two ways to handle the tax gathering those tax dollars, if you will, One way is getting it withheld from a W two right here. The other way is to make estimated payments, so I'm gonna say estimated taxes and payments. Now, I do understand that if you're in a cyclical business that most of you are where you get a big project, you have a dry spell. You're working like crazy. It may be difficult to estimate your revenue, which means it's gonna be difficult to estimate your profit. And I get that to the best of your ability. You want to estimate your taxes in these businesses the 10 99 work you do and the image photography the business that you do because you need to make estimated payments for that income for which there is no withholding. You need to make estimated payments for the 10 99 and the image photography income for which there is no withholding okay, stuff you need for your tax return. I want to switch gears and I'm going to talk about documenting the staff, the training documenting staff in the process of training people. Now, let me give you a good reason to document this. Let me give you a why. I'm suggesting that you do this. That's actually kind of exciting. Your process of doing things, maybe your secret sauce, the thing that you do so well or so uniquely that you could go out and make money from doing it. That might be your secret sauce. You have a better way of doing something that other people do in the way you run your business in the way you deliver your product of service. Now we do understand that we've got a document records to train people. But a better reason. Maybe we want a document records because this is the value of what you do. Using myself as an example, I found out after about a year of fiddling with it that the best way to teach people accounting is an excel. So when I teach online on YouTube, all of videos that you see me do other than the first ones that I did at the very beginning are all driven by excel because an excel you can click around and see all the relationships. That's why I'm doing it on the white board here. But you can see how things relate. So I guess maybe that's my secret sauce that I do everything in excel. There are college professors doing accounting in Power Point. That doesn't make any sense to me at all. You can't see how the numbers are connected. Is that my secret sauce? I don't know. I think that's an advantage. So I document how I do that to some extent, Yes. So can I have a question like when I first went into business and started my first company? I spent a lot of time studying like Toyota and process because I was doing a lot of manufacturing and creating textiles, etcetera. But one of the things that became important to me as my business grew was how to protect that quote unquote secret sauce. So when people are coming in and out, that secret sauce is not going out, and how do you do that? OK, good question. Hang on to that. Let me make one more point and I'm gonna I'm gonna comment on them. Let me do this. I'm gonna call it procedures so And hold that, Jackie. Or just for a second before I lose my train on this one. How do you do it? You got to write it down and some some type of document. We accountants love it. If you have an operations manual, I don't care how you do it. Just write it down somewhere. Have Emanuel of how you do things. It's not a formalized man will just have a document. So, for example, it's been fascinating to be here a creative live. I was looking in the other studio where classes going on and they have this very, very unique camera. That's all this long, long metal stand that you could move this way and up and down. Okay, There's gotta be some training that goes on and involved involved in using that camera because it looks like it's got to be really expensive. You don't wanna whack it into something. So whether it's written down or not, there's got to be a process that you learn for handling that kind of unique camera I thought was kind of unique. It was unexpected. Okay, now, eso I'd like you to write down the procedure. And not only would I prefer, if you write it down as the procedure changes work with whomever is you doing that process to help them update that document often times people that you are working for. You change and improve what they do for you, but it never gets documented. Oh, yeah? We've been doing it this new way for months. You need to document that. Okay, So document it. And updated, which may include asking that person who's working with you, even a freelancer. Hey, are you changing the way that you're doing this? Because a lot of it, we do things intuitively, and, um, we don't write it down, so make sure it gets updated. Now, let me address Jackie O's question. Which is how do I protect somebody from walking out the door with my secret sauce? Essentially, um, one way to do it and this is a question for an attorney is to have people signed a non disclosure document. I mentioned the person who approached me, who was starting a on online education company, and I said, I want to see your business plan. I said, I'll sign a non disclosure document. I'm not going to steal your secret sauce, But I'd like to see your document, because again, this is the skin in the game thing. I want to see if the guy serious, it turned out he wouldn't send it to me. Maybe he's serious, I don't know, but he wouldn't send it to me. So a non disclosure document. And again, this is a legal question. But this is a way of going to the freelancer that you hire the part timer and saying, You know, you understand that this this process is value to me and I don't want you to go steal it perfectly reasonable. Another thing you have to remember, and I'm just gonna go down this road just a couple of steps is not every secret sauce can be protected legally. I'll tell you what I mean. Um, I'm in a meeting with a group of people on Tuesdays when we're going through a process of writing very detailed, complex business plans and one of the people in the meeting. There's three lawyers in the meeting with me. The guy sits next to me is a patent war. So patents is the process of legally protecting something that's unique. So I'll patent lawyers are all about things being unique. Okay, so there's a process of getting a patent. You need to talk to an attorney about it, which could be very expensive, applying like many legal things. It takes a long time, and it's expensive. But even if you go through that process and you may talkto an intellectual property attorney who says, You know what you're doing is not unique enough to be protected ble. Whether it's a copyright trademark, patent, whatever, even if it is something that can be protected, you then have to defend it. Here's what I mean by that Ah, good friend of mine came up with a slogan that a travel company uses and that all of you know the problem is my friend came up with it first and was using it for a consulting business and the big company that all of you know, started using it. Even though he had a patent on it and it filed the patent and had paid a lot of money, they started using it. So again, this is a question for an attorney. But in order to maintain the patent, if somebody starts infringing on it, you have to have an attorney approached them and asked them to stop using it. Because if you don't you end up losing the pattern in so many words. So it's a very expensive process. And again, a lot of you were in technology fields, and you may be familiar with this issue. Not only do you have to file a patent, but you also have to defend a patent, which is very expensive. Okay, less expensive. You could do a cease and desist order or a letter. Sure, and you could say, Please stop using this. But if they just continue to, then you know it's the question is how far are they willing to take it? So here's what happened, my friend. They started using Hiss, patented. I know it was a copyrighted or patented. I don't remember slogan, and he asked him to stop and they wouldn't. So he took him to court, and eventually what happened was he ended up settling and selling them the naming rights to the slogan that all of you know and I'm not going to say, say, on the air, but he ended up throwing in the talent, not defending it and just selling it to the people that wanted to use it. This is really this is really expensive. Really complicated. Just a caution. All right. Now, why would it be value mood valuable to protect your secret sauce? Because that the secret sauce again, maybe the thing that gets investors and lenders and partners to fund your business. So you've got to make a decision through an attorney about how much of this do I want to do to protect my secret sauce, And that also has an impact on. Can I go out and get investors and lenders and partners? Okay. My friend decided he could do business without owning that slogan. So he sold it. He sold it to him as a settlement. Okay, so the chart says the operations manuals, how you do things, it documents your company's procedures. Why is it important? It allows you to think about your processes and consider improvements. By writing down a procedure, you may decide there's a better way to do it that you hadn't thought of until you actually invested the time to write it down. Explain your business to investors, lenders and partners. I mean, it's clear from creativelive that get, you know, part of the secret sauce is we do these things live, Okay? Every company has that, you know, thing that they promote. So now that we've talked about procedures, generally let me talk about a building procedure, and then I'm gonna go do it in QuickBooks. One more. There we go. Bear with me. Yeah, well, the next, Like, Okay, billing, billing procedure. And again, this so closely relates to cash flow, which we talked about in the last segment. You complete some photos for a client, you create a pre numbered invoice for that client again. When I told that story the fictitious pay and separating duties I mentioned you need you as an owner need to control the invoices, and they need to be numbered, so you could account for all of them and find out where they are. You can create a free number invoice for a client using QuickBooks. We're gonna create invoice in a bit. You post in accounting entry. We've done that several times, so I'm not gonna do it on the FLIPBOARD. You're gonna debit accounts receivable. You're owed money. That's an asset. You're gonna increase it by deboning you're gonna credit account called revenue or sales $200. We've seen that several times. You need to write that procedure down. Excuse me again. Not only a written procedure, but something that relate so closely to cash flow hand deliver the product with an invoice or send the photos electronically along with electronic invoice. When I tutor people, I usually pull up Excel templates that I already have and I change him for the student and I save it under their name. And then at the end of the session, I sent him all the Excel documents and an invoice electronically remind clients in the payment button on your home page clients. Since the Checker pays be the payback button and all that is written down, all of that is written down again, tying it back to an entry that might be in QuickBooks with indebted to increase cash, which is an asset. $200 we credit to reduce the receivable on the receivable goes away. All right. What? We have not done a few things we a few of the basics that we still have not done. We have not created on invoice specifically. So what I'm gonna do is I'm gonna go to transactions. Sales. Let me do that again. Home page Transaction sale. New invoice. Let's just see what happens when I created Invoice. So this is the invoice template and again I got there from transactions sales. Here's your invoice. You'll notice this is super cool, that the online payment ability is all it's flipped on here for you. And you can work with your bank or pay power. Whomever to get that online payment, things set up. So I'm going to create an invoice. Let's talk about what's on here. I'm gonna say it's Parkside Financial 13 13 Mockingbird Lane. Um, you can see there's a spot where I can write in an email here and remember that Sarah owns image photography. That's so that Sarah is doing some photography work for Parkside Financial. Okay, billing address. Let's look a terms, Josh pointed out earlier, when we were looking at setting up building for a customer that none of these all of these choices just deal with. When the bill is due and what I mean by that is net 15 Means is due in 15 days. 30 days, 60 days is that it does not relate to discounting. It does not relate to discounting. Okay, so the due date here if its Net 30 you'll see the bill is due in 30 days. If it's Net 60 you'll see the bill is due in 30 in 60 days, which is in March. They're basically that change. 60 days is due in March. If I flipped back, make it 15 days. It's due in early February every see how I'm doing them. Okay, What did I sell? What did image photography cell? Parkside? Well, you'll see here, and it's pretty cool because I picked ah photography company when I set up QuickBooks. I have choices of products. I'm gonna say it's event photography, so you're gonna have a choice again. You can set up QuickBooks based on your industry, and one of the great things about that is you're gonna have a choice as to what this product soul was. I'm gonna say event photography. Here's another one of these instances where I would strongly encourage you, even though it's time consuming to write in your own explanation. So I'm gonna say park side anniversary event photos. Okay, I'm gonna say quantity one, because for these service things where you guys are doing a project, I don't think it's really necessary to put quantity down because you're doing one project. All right, there's a rate here. I'm just gonna put the rate for the project. I'm going to say $500.500 delete. And you'll see when I click over, it multiplies the quantity times the rate. So if I had sold three sets of pictures at it would change the 1500 to see that it fills for you. So these auto fill cells is both a blessing and occurs. It's great because it saves you time. But it's also you got You got to be a little careful with it, cause these things auto fill for you. Okay, Look at the bottom of the invoice. Says you can add lines if you wanted to add multiple services on the same invoice. For example, if this was if the data from this invoice was coming from an estimate, you might want to put the estimate data down and go across and put a description and an amount so that the invoice detail ties to your estimate message. Thanks for your business. I always say that, Yes, like certain things like that. You may want standardized in that message or statement. Memo automated. And you would do that through the customer screen. Yes, there's it's way, way down the list. But it's on the customer screen. Yeah, that would save time, wouldn't it? Okay, QuickBooks also has the ability. Uh, and it's beyond. It's beyond the ability of the online version to do statements. Now, let me make a distinction between an invoice. A statement on invoices, single piece of business that you did with somebody. He sent him a bill when invoices. A bill. Ah. Statement, on the other hand, is when you send somebody a statement that shows all the business that they've done. So if we went to Parkside Financial five times in one month and we sent him a month in statement, here is the five things that we did for you. The five invoices you've paid to of, um you owe us for three of them. And here is the total don't be confused when you get paperwork, whether it's hard copy or electronic between a statement and an invoice. I don't want the people with Parkside to think that I'm rebuilding them for five jobs. It's not a bill, it's a statement. Okay, you can. And this is cool to you could make. You can put an attachment here. If you want to save and send now, it would send it to the email address you put in. Okay, save and send. Since I don't have an email address, I'm just gonna put save and close. So it says, because this is the second invoice that I did that It's Invoice 1002 and it's safe. And I like that after you click and that it gives you that big confirmation that comes up in the top of the screen. So recent transactions. There's the invoice. Okay, now, once I hit Click and it posted. Look where it takes me. It takes me back to the sails Transaction screen. Remember, Transactions, sales. That's where I am. And it shows these invoices down here, and it shows in red the status that they're open, which means they have not been paid