10 Minute Payroll is now going back to it’s old name Van Cleve Payroll. We have a new website at:

www.vanclevepayroll.com

Still at 2800 West 21st Street, Erie, PA

It was Reagan’s favorite joke. Worried that their son was too optimistic,

the parents of a little boy took him to a psychiatrist. Trying to dampen

the boy’s spirits, the psychiatrist showed him into a room piled high with

nothing but horse manure. Yet instead of displaying distaste, the little

boy clambered to the top of the pile, dropped to all fours, and began

digging.

“What do you think you’re doing?” the psychiatrist asked.

“With all this manure,” the little boy replied, beaming, “there must be a

pony in here somewhere.”

I’ve always believed we choose our destiny, that we could plan our lives. I thought I could have long term life goals and through shear determination, anyone could accomplish anything. It’s taken me a while, but I now realize life does not work like that at all. Thinking back to the things in my life that I am most thankful for, none of them happened as a result of my planning. What you CAN do is look for the pony in the pile of manure, keep your mind open to the opportunities that only present themselves in the midst of bad circumstances that life throws at you.

Another man who knew a thing or two about getting things done, Dwight Eisenhower said “…plans are useless, but planning is indispensable.” by which he meant that the exercise of planning prepares you to meet opportunities but don’t delude yourself into thinking your one plan for success will win.

What does this have to do with my payroll service? Nothing directly. Sometimes we delude ourselves by thinking we have control, that we are in charge, you need to re-think that, I’ll admit I was wrong about that. The place I find myself in life and in business has had nothing to do with my planning it that way and everything to do with keeping my mind open to possibilities. This can be fostered by simplifying your life, getting rid of chores, worries, stresses that distract and occupy your mind. Free yourself, you just might discover something wonderful.

]]> http://10minpay.com/2010/04/goal-setting-mea-culpa/feed/ 1 http://10minpay.com/2010/02/fraud-by-bookkeeper-its-only-a-million-dollars/ http://10minpay.com/2010/02/fraud-by-bookkeeper-its-only-a-million-dollars/#comments Tue, 02 Feb 2010 11:32:08 +0000 bruce http://10minpay.com/?p=403

Here we go again. Another case of fraud. http://www.insurancejournal.com/news/southeast/2010/01/25/106812.htm

How could this have been prevented? Owners need to either open their own checking statements and look through the cancelled checks or go online and click on checks to view them. I know many banks have gotten away from returning the cancelled checks and make you pay dearly for that but it might be worth it. I’ve also heard of banks charging a fee just so you can view the checks online. Find out, make some changes, or switch banks today. As the owner of a small business it is your job to look for someone creating bogus checks. A million dollars went out the front door, right under the nose of the owner!

You run your own small business. You need your payroll done. Here are the least and the most expensive ways I’ve ever seen to get your payroll done.

LEAST EXPENSIVE PAYROLL: Your wife was a CPA who retired when children came along. You get her to make a spreadsheet that calculates payroll. She works for free. Spouses and family members working for free actually make up a measurable portion of how payroll gets done.

MOST EXPENSIVE PAYROLL: You only have a few employees so you figure you will do payroll in-house. You use QuickBooks. So for your one company with, say, 4 employees, full and part-time, you spend $299 each and every year for their tax table. Every 3 years Intuit forces you (to get the tax table) to upgrade the program itself, another $200. You buy their checks, their envelopes, their support plan because you need help getting the employees taxes, local taxes, garnishments, court orders, 401k set up. You have your CPA help (at $200/hr.) with setup or with the Quarterly tax returns and W2’s (you buy those from QuickBooks too). Now you either pay your receptionist to do it until what everyone makes starts getting around the gossip round, or a IRS tax penalty adds another $670 to the cost. Fact: that’s the average penalty incurred by 25% of businesses. So you take the job away from the receptionist and start doing it yourself because it has to be right. Congratulations, you’ve been promoted to the unpaid company clerk. You have not bothered to add up all the costs but you think this is saving money. You work for less than free. You could be smoozing customers, building your business, collecting receivables, but you are too busy.

I really shouldn’t say “tools” when I mean “people”. Allow me to rephrase: Matching the right person/skill-set to the task of a small business’s accounting function. As an Freelance Accountant for small businesses, I have seen many ways of getting the books done. Here are the major variations:

1.) Owner or owner’s spouse does the bookkeeping and payroll themselves, someone else does the taxes.

2.) Secretary/receptionist employee doubles as the bookkeeper/payroll person, CPA does the tax returns, also the payroll quarterlies.

3.) CPA keeps the books for the owner and does the payroll and the tax returns.

I’ve seen these basic scenarios, jumbled around a bit, but that’s about the way it usually is configured. Now let’s look at what is bad about these methods, because they are not efficient, not cost effective and none of these usual methods produce good results!

Generally, receptionists and owner’s spouses are not trained accountants and do not know how to handle accounting’s sometimes tricky aspects. I don’t want to hurt any one’s feelings  but it’s true. Doing everything with a non-paid spouse or a $8/hr. employee is like trying to bring down an elephant armed only with a BB gun. One of my accounting professors used to remind us that if accounting were easy, everybody could do it! Typically, the books are a mess by the time the CPA gets them and require a lot of adjusting and fixing. By mess, I mean there are lots of errors that have to be corrected, accounts don’t balance or reconcile, and account balances are way off. This can be very expensive! CPA’s charge between $100-$200 per hour. Also, the owner never really knows month-to-month how he/she is REALLY doing and is forced to gauge things by cash in the bank or “gut instinct”. Not good, and I see this situation ALL THE TIME. The owner is forced to have the CPA to clean up the books at $100-$200 per hour, or live with inaccurate information throughout the year.

Sometimes the owner does their own books. That is the worst thing they can do! That is not the owner’s job! In these cases, the owner “owns” a job, not a business. Can’t they find better things to do with their time an an owner? The owner who does everything themselves is likely a bit paranoid, a control type who will never grow beyond a one-person show. It is usually based on not trusting anyone else, but what a waste of their valuable time! I often hear of owners sitting there at 11:00 PM working on their books! Sorry, that’s foolish, they are wasting their energy. Their duty is to build the business, not be a clerk.

Sometimes the CPA handles everything or just the “heavy lifting” work, usually for a monthly flat fee of like $250-$500. That is like killing a fruit fly in your house with a sledge hammer! CPA’s are good, but also expensive, and they don’t like getting a mess handed to them.

The least expensive and best results are obtained for small business by having an employee as a clerk/receptionist type person who does strictly routine data entry; creating invoices, receipting in payments, entering bills and preparing checks only. Payroll should be outsourced to a payroll service. Why? Add up the costs of doing it yourself sometime- tax tables, software upgrades, checks, envelopes, the time it takes, IRS penalties, etc, you’ll see. Then have a freelance degreed accountant (not a CPA) work once a month to reconcile bank statements, balance the books, fix errors, make month-end adjusting entries, sit down and go over the monthly financial statements with the owner and explain everything going on in the business. Their rate is usually $25-$60 per hour, depending on experience and education. Another set of eyes looking at the financials, every month, making recommendations on saving money, is invaluable. Then at year-end, the CPA gets the year-end financials from the freelance accountant, reviews the books, gets any other info needed to do the taxes, books depreciation, and make a few closing entries. The most expensive person’s work (the CPA), is minimized. And yes, a CPA should do the taxes, their job is to keep up on all the constantly changing laws, no one else can do that as well.

A warning; NEVER allow the bookkeeper to sign checks, that IS the owner’s job! Also, when you get the checks to sign to pay bills, get the bills as well, so you can look at them and see who you are paying, and question ones that are unknown. Also, insist that bank statements come to you unopened, open them yourself and look through the cancelled checks for ones YOU did not sign. Don’t assume the bank is going to check this, they don’t anymore. Other things you can do yourself; make the bank deposits and you should be watching accounts receivables. In other words, you should be double-checking the clerk, not BEING the clerk.

The most expensive help is minimized without compromising quality, and the least expensive help is maximized without chewing up time and wasting money on getting errors fixed. The freelance accountant is watching over the clerk, the CPA is watching over them both. Fraud is a lot less likely in this arrangement. The CPA does what they do best- tax returns, with a minimum of adjusting first. Finally, the owner gets timely and accurate financials each month, which is the most important goal!