If you’re searching for tax and accounting services near me and aren’t finding what you need near you, a solution to your problem is available if you keep reading. For tax services San Diego and the surrounding communities can depend on, you need an experienced professional willing to provide courteous, personalized service.

So which is the bookkeeper and tax preparer San Diego businesses can trust? Which company can provide the service of a CPA San Diego can rely on without the high cost of an accountant? The answer may surprise you.

Skill, Technology And More

The right bookkeeper brings together a strong background with numbers and the best technology to provide customers a top-level experience at a price that makes sense. Expect the bookkeeper you choose for your small to mid-sized business to help you decide between single-entry and double-entry bookkeeping and use QuickBooks or a similar software package to keep track of credits, debits and provide the information necessary for tax preparation. The right choice also has references and testimonials.

Services in addition to tax services in San Diego that you can expect from your CPA alternative and bookkeeping tax preparer include:

• General accounting and bookkeeping
• Record-keeping to help prevent and deal with IRS tax problems
• Advice and consultation services
• And more.

What You Should Expect From Your San Diego Bookkeeper And Tax Preparer

When you make a smart choice of bookkeeper to handle your records and tax prep, you should expect:

An enjoyable experience. Above all else, the right person to work with you is one that’s pleasant, gets along with your team and understands your needs. You won’t have to worry or micromanage when you make the right choice.

Smart advice. In addition to efficient and effective transaction recording and tracking, expect a good bookkeeper to provide useful, honest advice in good times and bad. Your bookkeeper can help you see potentials risks and avoid them if possible.

Professional expertise. An experienced professional should know how to manage your accounts with skill and precision. And more than that, they should be experts at navigating the technology necessary to keep books in today’s world.

When you depend on your San Diego bookkeeper for your tax preparation services as well, expect an updated understanding of tax compliance and the latest tax regulations that impact your business. Regulations and expectations change every year and sometimes multiple times within a year, and you don’t want someone whose knowledge is from last year or worse.

Your bookkeeper should also provide the flexibility of handling services when and where you like, compliance with privacy laws and be open to your questions, feedback and concerns. No matter what’s happening in your business, theirs or the world, you should also expect smooth and secure communication too.

Will The Best Choice Surprise You?

So what’s the best choice for tax services San Diego businesses can afford and rely on? What’s the smartest company to choose when you need an alternative to the expensive CPAs who operate in San Diego? Which tax preparer can meet the needs of your San Diego business?

Perhaps the answer won’t surprise you at all. It’s AD Bookkeeping Services, a company founded on a decade and a half of professional experience that you can put to work for you. Affordable monthly packages are available at a flat rate so you always know what you’re paying.

When you put your business finances and tax preparation in the hands of AD Bookkeeping Services, you’re making the best choice for affordability, quality of service, professionalism, friendliness and flexibility. You’re also making the best choice for the future of your business.

For double-entry accounting, every transaction on a balance sheet and income statement needs to have at least a debit and a credit. Different types of accounts have a debit or credit balance depending on what type of account they are. Simple, right?

It’s no surprise that even people who have been in business for a while go looking for an accounting cheat sheet to help them understand – a sort of debits and credits cheat sheet to remind them which is what. You could also call it a T accounts cheat sheet since double-entry accounts are sometimes called T accounts because of how they look on the page: The title of the account is at the top with a line under it, then debits are on the left and credits are on the right, separated by a line down the middle. This method of bookkeeping is also called a ledger account.

Your Accounting Cheat Sheet

Here are some important details that can serve as your debits and credits cheat sheet:

• Debits are what you’ve gotten or what you’ve bought. They’re how you’ve used your funds.
• Credits are where you got money or your sources of income.
• Every transaction involves a debit for what you received and a credit for how you paid for it.
• Assets like a desk or computer usually have a debit balance because they’re things you have to buy. Expenses like phone service or copy paper also have a debit balance because they’re things you’ve received.
• Liabilities and equity have a credit balance in most cases because they’re where you got money to purchase things. Sales revenue also has a credit balance because you got cash for some product or service.

Let’s Say It Another Way

If you’re still a bit confused – and we can understand why you would be since this is confusing stuff – let’s try to say the same thing in a different way while adding in a little about colors. Those who have learned color accounting sometimes color code transactions, and it helps to understand how they do that. Here’s a different sort of accounting cheat sheet that you may find easier to understand:

• One type of debit is an asset where what was received increases an account and where it came from decreases an account; color accounting records the transaction in green.
• One type of credit is a liability where what was received decreases an account and where it came from increases an account; color accounting records the transaction in yellow.
• One type of credit is equity where what was received decreases an account and where it came from increases an account; color accounting records the transaction in yellow.
• One type of credit is sale revenue where what was received decreases an account and where it came from increases an account; color accounting records the transaction in yellow with a purple outline.
• One type of debit is an expense where what was received increases an account and where it came from decreases an account; color accounting records the transaction in green with a purple outline.

If you’re still confused, perhaps you’re beginning to understand why the world has bookkeepers with specialized knowledge in double-entry accounting and other ways of keeping track of your business.

For San Diego bookkeeping services to help your business keep accurate records that allow you to always know where you stand financially and how you’re doing, reach out to AD Bookkeeping Services, providers of bookkeeping San Diego businesses can trust for accuracy. For personal service from an honest, experienced professional who doesn’t get confused by things like credits and debits, reach out now to AD Bookkeeping Services for a consultation and quote. You’ll be glad you did.

Today’s gig economy brings with it good news for independent contractors considering what’s deductible and what isn’t: Write-offs for 1099 contractors abound. If you’re a freelancer, you need to be in the know so you can get all the deductions you deserve.

An independent contractor is anyone – person or business – that offers goods or services to some other entity, either under written contract or through a verbal agreement. This category of workers includes professionals from web designers and writers to real estate agents, truck drivers and more. All these people and many others need to keep invoices and receipts to prove deductible expenses at tax time.

What Can I Deduct As A Contractor?

So what expenses can I deduct as a 1099 contractor? The list is long. It generally includes all the ordinary and necessary expenses related to doing your work. Some of the specific items an independent contractor may be able to deduct are:

• Advertising and operating expenses, including web hosting costs and other internet services, phone lines, business cards and other promotional expenses
• Materials and supplies, including electronics, cameras, printers (depreciation rules may apply to some of these) plus pens, paper, ink greeting cards sent to customers and business-related newspapers, magazines and books
• Home office expenses, as long as the room or area is not used for any other purpose and you follow the rules about what percentage of home expenses like mortgage, homeowner’s insurance, repairs and remodeling can be deducted for a home office
• Travel, including hotel, airfare and usually 50 percent of meal costs (but remember that more days must be spent for business than pleasure and that this category may be heavily scrutinized during an audit)
• Coffee and snacks provided to employees while working when there is a business reason why you need to be eating at work (and there are rules on whether food, which does not include meals, is 50 percent or 100 percent deductible)
• Limited business entertainment if food is included in the price of the ticket, but itemization of what the ticket includes is required (most business entertainment is not deductible)
• Cleaning services for a home office or rented office, and this can sometimes include paying a reasonable amount to a relative to do it
• Childcare for each employee up to $5,000, which can benefit you personally if you have children and your spouse is your employee
• Medical costs, including health insurance, which is deductible for all independent contractors, as well as out-of-pocket costs for glasses, hearing aids, medications and more
• Retirement plan contributions when you choose the right plan and contribute according to specific rules
• Car mileage using the standard deduction or itemizing actually expenses like tolls, parking fees, repairs and more (as long as you really do travel by car as part of your work).

Remember, the IRS won’t correct your return if you fail to claim a deduction to which you’re entitled. Instead, you’ll simply pay more.

A Bookkeeper Is A Great Idea

Every small business – no matter how small – can benefit from the assistance of a bookkeeper in determining what expenses you can deduct as a 1099 contractor and in keeping track of your independent contractor expense account. To make sure you’re on the right track with your deductions, be sure to do your own research or let a bookkeeper or other professional help you make smart decisions. The most important thing is to keep good records, no matter who handles them.

For San Diego bookkeeping services tailored to meet the needs of your business, reach out to AD Bookkeeping Services now. It’s the right decision to keep you well-organized and help you stay on the right side of tax intricacies.

As you’re ramping up your small business, you may be ramping up your personal style as well – perhaps choosing nicer clothes or at least things that more perfectly fit the image you’re trying to cultivate. And, of course, the right clothes can be expensive. It’s natural to wonder: Can you write off clothes for work? And how much can I claim for laundry expenses and dry cleaning?

You may think that your clothes are part of your business – you would never have bought those kinds of clothes otherwise – and therefore should be tax-deductible. In most cases, however, they aren’t. There is more to the story, however.

Can I Write Off New Clothes For Work?

In general, the answer is no, you can’t write off new clothes that you buy for work, even if you wouldn’t have bought them otherwise. But in very specific circumstances, work clothing is tax-deductible. To meet the requirement to claim clothing in the “other expense” category on your self-employment Schedule C it must be:

• Something you’re required to wear as a condition of employment (like a uniform or other clothing with the company logo)
• Something that is not suitable for use as everyday clothing.

That means a real estate agent can’t write off designer suits which may be expected as part of their business but are not distinctive clothing that cannot be used as everyday clothing. Note that clothing must be both distinctive and something you’re required to wear to qualify, so a company logo shirt that you have purchased cannot be written off unless you are required to wear it while or as part of doing your job.

You can’t even claim that clothing is deductible if you say you don’t wear it away from work. Part of the stringent distinctiveness test requires that the clothing is not suitable for wearing as regular clothing. You can walk down the street in a designer suit, so it isn’t deductible, even if that suit isn’t your usual style or is something that you don’t normally wear.

If you’re a medical worker, you can usually deduct scrubs from your taxes because they are distinctive clothing that identifies you as part of the medical profession and is required at your job – even though everyone has seen people walking down the street in scrubs, just as you have seen people in company uniforms wearing them when not in their workplace.

Additionally, you can usually deduct protective clothing from your taxes, including safety glasses, hard hats and work gloves. Your return, however, would need to show your profession as one that requires that type of clothing.

That’s What Bookkeepers Are For

Are you clear now on whether or not you can write off clothes for work? Confusing, isn’t it? What about the other question: How much can I claim for laundry expenses and dry cleaning? You can deduct costs associated with washing or dry cleaning items of clothing that qualify as deductible, but not other items. You may be able to deduct a small amount that represents a portion of each load of laundry you do at home or at a laundromat that includes deductible items, but you should speak with a professional for more information.

In fact, if you’re not sure about any aspect of your personal or small business deductions, the right professional can help. In the case of income, expenses and taxes related to a small business, a bookkeeper is the right professional to contact. AD Bookkeeping Services offers bookkeeping San Diego businesses can trust. Learn more by reaching out. It’s the right thing to do for bookkeeping services and personal attention from an experienced professional who’s on your side.

Among the many stresses of starting and running a business is determining which accounting method is best for your situation. What is the difference between cash and accrual accounting? And does it matter which your business uses? Your choice impacts profit and cash flow in important ways, as you’ll see if you keep reading.

Both cash basis vs accrual basis accounting are generally acceptable for financial tracking and for tax purposes, but each method has pros and cons. Cash basis accounting takes notes of income and expenses when it impacts your bank account while the accrued revenue method of accounting takes note of these things when they are incurred or earned.

Cash Basis Accounting

Cash accounting is often used by small businesses because transactions are simple and easy to track. If you use the cash method, you always know where you stand with cash on hand. All you must do is look at your bank balance to see how you’re doing. Revenues are not taxed, in general, until the money is in the bank, although there are exceptions.

There are limitations, however. A company may appear to have plenty of cash but could have many payables not yet paid, so things may look better in your bank account than they actually are. A potential investor might see the cash on hand and believe the company is profitable and growing when it’s actually in poor financial shape because it hasn’t paid its bills.

Accrual Basis Accounting

The accrual method of accounting notes revenue when earned and expenses when billed. This method is more complex and labor-intensive but is often favored by large businesses because it provides an accurate picture of the company’s financial situation at every moment. The largest businesses are even required by law to use it. It also makes sense for companies with a lot of inventory on hand.

Using the accrued revenue method, a company records money that is due to it as revenue once the invoice is sent, even if the money hasn’t been collected yet. Expenses are noted even if they aren’t paid yet, and this includes payroll. Because revenue and expenses are tracked in this way, cash flow is not tracked, and a business could end up with a cash shortage, causing it to try to spend money it has not yet collected. To prevent cash flow problems with the accrued revenue method, cash on hand must be tracked separately.

Additional Considerations

Cash vs. accrual accounting yields different results when determining profit. Over accrual of revenue using the accrual accounting method could result in the appearance of high profit in the period during which the entries are recorded. Over accrual of expenses using this method could make profits appear less in a period than they really were.

Some businesses use a hybrid accounting system, but specific rules apply on when this is allowed and when it isn’t. In a hybrid system, major financial decisions and loan applications are based on accrual accounting while taxes are computed based on cash method accounting.

A Bookkeeper Can Help

So what is the difference between cash and accrual accounting? It’s all about when transactions are recorded, and each method has its positive and negative points. A bookkeeper can help you decide which method to use and help you keep your books in order, no matter your choice. Choosing a system and sticking with it is the most important thing for keeping your business finances healthy.

For bookkeeping San Diego businesses can rely on, reach out to AD Bookkeeping Services. There is no better choice for bookkeeping services from an experienced professional who offers personalized attention.

The IRS online tax payment system is called the Electronic Federal Tax Payment System – or EFTPS. All new businesses get an EFTPS letter through the mail in a real IRS letter envelope. Your business will get this letter even if you aren’t required to make estimated tax payments or pay electronically. The letter contains valuable information you may need if you need to make payments in the future.

You will need to set up an EFTPS account if you have to pay estimated tax, corporate tax, self-employment tax, payroll tax or excise tax. Keep in mind that this system should not be confused with Direct Pay, a system that is for paying individual taxes. Both individual taxpayers and companies can use EFTPS for certain tax payments.

So what is EFTPS? It’s an electronic system for paying taxes – which is something businesses must do in many cases, including if they pay salaries or wages to the owner or any employees. If your business expects to owe $1,000 or more in federal income tax this year, you may need to make quarterly estimated payroll tax payments through this system.

Wondering if the letter or email you got is real? Keep reading. You can also visit eptps.gov to reach the EFTPS site directly or search for it at irs.gov.

The IRS And Email

As we said, a letter in the mail in a real IRS letter envelope when you first open a business is to be expected and is likely real. If you get an email, however, you have reason to be suspicious. The IRS does not make unsolicited contact with people or businesses by email, text message, social media or similar means. Any email you receive from the IRS regarding problems with your EFTPS payment is likely bogus. An EFTPS letter by email isn’t something you should expect or interact with.

In fact, the IRS has a notice on its website (although not a recent one) that warns of scam emails related to the EFTPS. These emails say that tax payments made through the system have been rejected and ask the recipient to visit a bogus link to report the problem. When you click the link, according to the IRS notice, malware may infect your computer. This malicious software sends personal information, including financial information already on your computer, to the scammer.

In this case and as always, you should not click on any links or open any attachments in emails that claim to be from the IRS, EFTPS or the Financial Management Service, which is the U.S. Treasury department that operates EFTPS. You should also resist the temptation to reply to this or any unsolicited email since this simply verifies to the scammer, who may have sent millions of emails, that your email address is active. That might open you up to more fake emails or other scams.

Get A Professional On Your Side

If you get an email from the IRS, your best bet is to ignore it. If you get a real letter in a real IRS envelope, you’d better take a look. It might be your EFTPS letter, which is something you should expect.

If you’re still wondering “What is EFTPS?” or are confused about any aspect of your company’s financial or tax situation, you need expert help from a bookkeeper who knows about these things. For bookkeeping San Diego small and mid-sized businesses can depend on, contact AD Bookkeeping Services. You’ll speak with an experienced professional who can provide unmatched skill in bookkeeping services and advice that can help you grow and track your business.

Here’s the thing: Handling your own bookkeeping is a risky, tricky idea unless you have training in how to deal with numbers. But don’t let potential bookkeeping mistakes or snafus hold you back. Instead, get someone on your side who knows bookkeeping so you can spend your time focusing on the things you’re good at.

Don’t believe bookkeeping is really all that complicated? Here are 5 common bookkeeping mistakes that serve as examples of how difficult dealing with business numbers can be – along with tips on how to resolve those errors if you decide to tackle them yourself:

1. Labeling payments to the owner as an expense.

If your company is a sole proprietorship or one-person LLC, it’s crucial that you don’t categorize payments that you make to yourself as a business expense. This simple but incorrect act lowers your profit and muddies the waters about how much tax you need to pay. You should instead record payments to yourself to an equity account that you label “Owner’s Draw” or something similar.

If your company is an S-corporation, then you do indeed report wages that you pay yourself for salary as an expense.

2. Failing to reconcile your accounts every month.

Just like not reconciling your personal checkbook, failing to reconciling business accounts is a really bad idea. Done properly, the process involves going line by line through each transaction to ensure that the data in your bookkeeping software matches precisely what your bank statement says. If there’s a discrepancy, you have to figure out the reason. It could be a data entry mistake, an import error or many other things.

Today, bookkeeping software and cloud-based solutions include tools to make reconciliation easy. You can also print out your bank statement and go through your accounts by hand. Simply look at the screen, then mark off each transaction you see on the paper statement. If you see that something on the screen and on the paper don’t match, it’s time for some investigation.

3. Considering transfers as income.

Let’s say that your business has both a PayPal account and a checking account. Sometimes, you may transfer funds from PayPal into your checking account. Your accounting software may record this transfer as income. It looks like you made a deposit since your checking account ends up with more money than it had before. But all you did was move the money, not make it.

Accurate bookkeeping means you will need to see if this error is happening in your software, then manually correct it so that it’s categorized as a transfer – something that doesn’t impact your overall business income or have any impact on taxes you owe. While bookkeeping software is the way to go, it’s not perfect, and the choices it makes need to be carefully considered and verified.

4. Not bothering to save receipts.

No matter whether a purchase costs a couple dollars or thousands, if it could qualify as a business deduction, you need to keep the receipt. If you purchase online, the digital version of a receipt is fine. There’s no reason to print it out. You can also take photos of paper receipts and save them digitally.

In fact, many modern bookkeeping software choices allow you to capture an image of a receipt with your phone and link it to the expense. While it doesn’t get any easier than that, many people still fail to store receipts. However you choose to do it, you need those receipts stored in an organized fashion so you can access them easily if you happen to be audited. Although advice varies on how long to keep receipts, if you use a paper system aim for at least 3 years and preferably 7 years.

5. Making personal purchases from your business account.

This is an easy mistake to make, especially if your business bank card looks just like your personal one. If you accidentally use your business account for a personal purchase, you can deal with the error in one of two ways: Either reimburse your business account for the purchase and properly record this – or record the purchase as an Owner’s Draw.

Using your business card for personal purchases may seem like a good way to avoid the hassle of having to make a transfer, but all those small personal transactions make for messy and bad bookkeeping and can cause you to begin blurring the line between your business and personal assets – a very bad business decision.

A Bookkeeper Can Help

If you find that you’re making one or more of these mistakes, please keep in mind this top 5 list includes only some of the most obvious business bookkeeping errors. Instead of worrying or stressing out about mistakes you may be making, you have two choices: Study and learn proper bookkeeping procedures and correct your business books – or put your business finances in the hands of a professional bookkeeper.

A bookkeeping service costs less than you might think and is responsible for recording all transactions, reconciling all accounts and providing you reports about where you stand. The best bookkeepers also offer advice and information to help you plan for the future. And when tax time comes, there are no worries when you have a bookkeeping service handling your books because the numbers are mostly prepared and ready to plug into your taxes.

You could say that not having a bookkeeper is actually the most frequent business bookkeeping error.

1. What is bookkeeping?

Bookkeeping is the first step towards financial accounting and reporting of a company. It is the process of recording all the business transactions of an entity occurring throughout the financial year. The main types of entries include sales, purchases, other income, operational expenses, investments, payroll, taxes and loans.

Once the transactions are recorded, they’re posted to ledgers and later systematically summarized into many different financial reports. The four main reports are:

• Income Statement – represents the net profit earned for any given time period.
• Balance Sheet – represents the assets, liabilities and capital owned at any time period.
• Cash flow Statement – represents the movement of cash during any time period
• Statement of Equity – represents movement in owner’s or shareholder’s equity
• Chart of Accounts:

A chart of accounts is the list of all accounting heads used to book entries in the general ledger. It is a tool offered by accounting software to analyze and aggregate the financial information for the annual financial reports. Each entity can customize its COA as per its requirements; however, it typically appears in order of the financial statements. First, balance sheet items are listed and are followed by income statement items in the following manner:

Balance Sheet:

• Assets
• Liabilities
• Shareholder’s Equity

Income Statement:

• Operating Revenues
• Non-operating revenues
• Operating expenses
• Non-operating expenses
• Types of Bookkeeping:

There are two types of bookkeeping systems; single-entry and double-entry.

A single-entry bookkeeping system involves booking of only one journal entry for each transaction. Only one aspect of the transaction is booked leading to incomplete records at the end of the year.

A double-entry bookkeeping system requires you to enter a double entry for each financial transaction. It shows both aspects of a transaction by following the debit credit system. For every debit, there is a credit and vice versa.

• Cash-basis Accounting vs. Accrual-basis Accounting:

There are two types of accounting methods used for financial reporting. As the name suggests, cash-basis of accounting revolves around booking journal entries only when a cash transaction occurs. It disregards the entire credit system. For example, it reports sale on cash-receipt basis only, and no credit sales are reported.  

On the contrary, as per the prudent and matching concept of the generally Accepted Accounting Principles (GAAP), journal entries should be booked according to accrual-basis of accounting. Earned income should be booked regardless of it being received in cash, and accrued expenses should be reported regardless of it being paid.

• Keeping Records:

An essential part of bookkeeping is to document all the evidence of every transaction reported. All invoices, receipts, goods delivery notes, goods received notes, tax invoices and other relevant documents shall be maintained. Documentation is done to provide proof to the auditors about transactions that occurred throughout the year. It may also be requested by tax authorities to verify sales tax and income tax bills.

Conclusion:

Professional bookkeeping is an integral and most basic function of financial accounting and reporting. It not only serves the purpose for preparation of financial statements but also helps in efficient management of money. Hence, success of a business lies in keeping track of cash flow and managing it accordingly.