As you may imagine, we get asked all kinds of questions at Sound Business Services, and our team strives every day to answer those, and provide solutions, to improve your business.
While every question is relevant, I’ve narrowed down the five most popular questions, along with answers, solutions and advice to address common concerns. Here they are:
1. I received a notice in QuickBooks® Desktop saying I need to upgrade. Is this something I need to do?
It really comes down to what you have, what you need, and the vision and growth you have for your business. For example, are you using QuickBooks add-on services, such as payroll (that runs inside of QuickBooks), live support, online backup or online banking (direct connect)? QuickBooks requires that you upgrade every three years if you are using these services. For more information on QuickBooks discontinuation policy, click here.
Other factors include whether you need or want any of the new features in the latest version, as well as if your version of Windows or Mac OS is compatible with QuickBooks. Also, this decision comes down to if you want to take the QuickBooks Online (QBO) plunge. More on that below ….
2. What’s the difference between QuickBooks Desktop and QBO? They’re the same, except that one is online, right?
Not exactly. To put it simply, QBO is a game changer because it greatly improves workflow and saves time. With the ability to work anywhere, you can access information at your fingertips, allowing you to get answers when you want them. You can automate data for less data entry, automatically schedule and send invoices, capture receipts directly on your phone, share books with your accountant (we like that), and much more.
You also have more than 300 cloud-based apps to choose from, making your business so much simpler and more efficient. And, with automatic backup with bank-level encryption, everything will be secure, wherever you may be. Finding the right app(s) for your business is important, so feel free to let us know if you need help with that.
3. As an S Corp shareholder, do I have to take a salary and, if so, how much?
The IRS says that you have to take a “reasonable salary.” The amount you choose for your salary should be in line with what shareholders of other companies, performing your same job duties, are making.
4. As a S Corp shareholder, I am taxed on what I take out of the business, right?
No. You are taxed on the net profit of your business, regardless whether you take that profit out of your business bank account.
5. What’s the difference between cash and accrual basis accounting?
The main difference between the two is that cash accounting only counts the revenue and expenses when the money is exchanged and paid out, while accrual accounting records the revenue right away, even if the money and goods and services aren’t exchanged at that particular time.
At Sound Business Services, we prefer accrual basis accounting because it gives a more accurate picture in reporting, even though it means more work for us. There is a misconception that people pay more taxes with accrual basis accounting, but that isn’t true. They simply pay tax at different intervals and times, but in the end, they both pay the same amount of tax.
We are Here to Help
Hopefully, these five questions hit home for some of you and your concerns. We know that your business means everything, and we are all about providing actionable information and solutions to take care of all your needs.
For any more information on these questions or any other questions you may have, contact us today. We are here to help.