Lis Lee Accounting LLC

Timing

We are nearing the end of the month so now is the time to start planning your monthly close. If you can block off some time to focus specifically on this during the first or second week of the month, you’ll thank yourself later.

Importance

Having a current set of books is invaluable to you as a business owner for decision-making. Besides your internal decision-making processes, you also need to present a current set of financials to obtain lending from banks or funding from investors.

Aside from the significant functional failings of the recent COVID-19 relief funding options, there were undoubtedly many businesses who missed out because they did not have their books ready to even apply. Don’t let something like this hold you back from making the moves that your business needs when it needs them.

Tasks

To do a simple, soft monthly close (vs. a hard close), do the following:

  1. Record Revenue. Confirm all invoices have been sent to customers or all sales are included in your accounting system for the previous month. Record or send any missing items. This step is to ensure you get all of your income invoiced and documented for that month.
  2. Record Expenses. Check to make sure all expenses have been entered and assigned to an expense category. This is the step where you list what each expense was for which then builds out your income statement expense line items (e.g., rent, utilities, marketing, etc.).
  3. Reconcile your Bank Accounts. Your accounting software should have a tool that enables you to do this. This step ensures that your accounting records (books) matches your bank records. Since you just recorded income (inflows) and expenses (outflows) in steps 1 and 2 above, this is where you check yourself to make sure you didn’t miss anything or double-count anything.
  4. Run Reports. Once you’ve got those three basic steps completed, you’re ready to run your reports! Run an Income Statement (Profit & Loss) to see how much revenue and expenses you had and what your Net Income is. Run a Balance Sheet to see what your cash position is and how much debt and equity you have in the business at the end of the month.

In many cases, there are more advanced parts of a monthly close that an accountant is best-suited to perform (recording fixed asset depreciation, inventory, prepaid expenses, accrued revenue, accrued expenses, and deferred revenue, etc.), but the above steps will get you pretty far to enable better decision-making and clear, timely reporting for outside parties (banks and investors) when needed.

The monthly close ties in closely with the Monthly Review. The process above is a more detailed version of organizing your monthly income and expenses. You can then use the reports you generate to complete the Monthly Review steps of analyzing your spend categories and identifying areas for improvement.

If you’re feeling stuck and keeping up with your financials is just not happening, sign-up for your FREE intro call to see if we would be a good fit to work together to get you back on track!

Lis Lee Accounting is not a financial planner, broker, or tax advisor. Neither Lis Lee Accounting nor the content herein are intended to provide legal, tax, or financial advice. The content and materials are intended only to assist you in your general organization and decision-making for your business or practice. Lis Lee Accounting shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.

Treasury Secretary Steven Mnuchin announced the following this morning:

This is an update to earlier this week when only the payment deadline was moved. Now the filing deadline itself is moved to July 15th!

Lis Lee Accounting is not a financial planner, broker, or tax advisor. Neither Lis Lee Accounting nor the content herein are intended to provide legal, tax, or financial advice. The content and materials are intended only to assist you in your general organization and decision-making for your business or practice. Lis Lee Accounting shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.

The White House announced the following during yesterday’s press briefing:

“We encourage those Americans who can file their taxes to continue to file their taxes on April 15, because for many Americans, you will get tax refunds and we don’t want you to lose out on those tax refunds. We want you to make sure you get them. Many people do this electronically, which is easy for them and easy for the IRS.

If you owe a payment to the IRS, you can defer up to a million dollars as an individual. And the reason why we’re doing a million dollars is that covers lots of pass-throughs and small businesses, and $10 million to corporations, interest-free and penalty-free for 90 days. All you have to do is file your taxes. You’ll automatically not get charged interest in penalties.

Now, of course, any American has the right to extend their taxes. We’re not taking that right.”

Special Considerations

This does not appear to be an extension for filing, but for paying any tax/penalty due. If you need an actual extension, you can still file that by April 15.

Look for updates to the official IRS website soon.

Check your state tax authority for your state’s position. The American Institute of CPAs (AICPA) has provided a state tax development update list here, but check your local state website or speak with your tax accountant as well.

Lis Lee Accounting is not a financial planner, broker, or tax advisor. Neither Lis Lee Accounting nor the content herein are intended to provide legal, tax, or financial advice. The content and materials are intended only to assist you in your general organization and decision-making for your business or practice. Lis Lee Accounting shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.

NOTE/ Applications, tools, and services listed/linked in this post are NOT sponsored.

Keeping a list of resources going here from items I’ve mentioned on Instagram so you can easily grab whatever you need in one go.

Updated 8/3/2020.

Apply for Unemployment for Self-Employed/Independent Contractors

Check with you unique state for their process.  You can find your state unemployment website here.  This list is directly linked on the Department of Labor (DOL) website (CareerOneStop is sponsored by the U.S. Department of Labor, Employment and Training Administration).

Fintech companies currently accepting PPP applications…

PayPal stopped accepting applications at the end of June, but this page has helpful info on applying for forgiveness.

Kabbage still accepting applications. The Paycheck Protection Program resumed accepting applications July 6, 2020, at 9:00 AM EDT in response to President signing the program’s extension legislation. The new deadline to apply for a Paycheck Protection Program loan is August 8, 2020. 

Fundera

Nav

Intuit currently open to existing payroll customers with a coming soon status for non-payroll users.

Square applications closed. Their bank partner is no longer participating in PPP, so they have stated they are no longer accepting applications. They state they are working on an easy loan forgiveness application – the page still has some helpful FAQs.

Consider reaching out to your local community or small business bank to obtain round 2 PPP funding…

https://www.sba.gov/paycheckprotection/find

SBA Coronavirus Relief Options

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options

Sara Blakely and Spanx are gifting $5M to female-owned businesses!!!

https://www.globalgiving.org/redbackpackfund/ The application portal will open at 12 p.m. ET on Aug. 3 and close at 12 p.m. ET on Aug. 10.

Facebook Small Business Grants Program

https://www.facebook.com/business/boost/grants

Intuit QuickBooks® is teaming up with GoFundMe to create a Small Business Relief Initiative to help small businesses raise money to overcome the challenges caused by COVID-19

https://quickbooks.intuit.com/blog/news/supporting-small-businesses-with-the-small-business-relief-initiative-to-put-more-money-in-the-pockets-of-those-who-need-it-most/

Gusto (one of my favorite payroll and benefits processing platforms) has created a valuable and extensive list of current resources for small businesses that they are updating regularly. It includes details and links to all mentioned resources (including state and local).

https://gusto.com/covid-19/small-business-financial-relief?utm_source=resourcesheet

The intro/summary of what’s in the spreadsheet can be viewed here.

Help those in need PLUS get help on editing your content during COVID-19.

https://www.eringreenawald.com/editforme

Lis Lee Accounting is not a financial planner, broker, or tax advisor. Neither Lis Lee Accounting nor the content herein are intended to provide legal, tax, or financial advice. The content and materials are intended only to assist you in your general organization and decision-making for your business or practice. Lis Lee Accounting shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.

Each month it’s an essential practice to complete a monthly review where you assess how your business performed during the prior month and what changes you can make in the current month to strengthen and grow your business.

To get you started, below is a simple template you can follow to initiate this practice for your business so you can become familiar with what’s actually happening with your money.

Add up how much you made last month.

Go through your bank records or sales system and add up how much you made last month. If you have multiple revenue lines or categories, break those out for a clear picture of how your sales are coming in.

Add up how much you spent last month by category.

Go through your bank records and add up how much you spent last month. Group items into like categories. You can Google the most common expense categories or send me a message if you’d like a general list of the most common categories.

Review each spend category to identify areas for improvement.

Review the total amount for each category to start and dig into the detail of that total (the transactions) if you see something that appears different than expected. When you first start, you might not know what to expect or what you’re even looking for. After you’ve done this for a few months, you will begin to become more familiar with your numbers and will be better able to spot areas for investigation.

Select one to three areas for improvement and then decide on one action for each of those areas to make measurable progress on over the next month.

This is the part where you really begin to see the effectiveness of this exercise. This is where you use the information you’ve reviewed to take action in your business. Remember, limit the areas for focused improvement to three max and of those areas you select, just take ONE action-step each over the next month.

For example, you could select one expense category and take the action-step of tracking it on a daily or weekly basis over the next month to be sure you can bring down the spend in that category.

Another example could be revenue driven. You may select one revenue line that you want to double-down on and take action by implementing one strategy to boost sales in that category.

Lis Lee Accounting is not a financial planner, broker, or tax advisor. Neither Lis Lee Accounting nor the content herein are intended to provide legal, tax, or financial advice. The content and materials are intended only to assist you in your general organization and decision-making for your business or practice. Lis Lee Accounting shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.