Child Identity Theft: Could it Happen to Your Family?

The day started out innocently enough. We had recently changed banks and I stopped in to open new savings accounts for our children. A few minutes into the process, the bank representative looked at me with a puzzled expression and asked to see my oldest son’s Social Security card again. After verifying the number, he told me the news no parent wants to hear – someone had opened an account in another state using his Social Security number. 

After a conversation with a manager, we were able to open the account and the customer service representative provided me with a copy of the information he had discovered. After a quick text to my husband, I sent an email to a friend who is a police officer. I had no idea where to begin and figured he could provide some advice. He told me to call my local police department right away to file a report over the phone. I called the non-emergency number and they sent a uniformed officer to my home. 

I spent the next two to three weeks contacting credit bureaus, the bank where the account had been opened, and anyone else I could think of, in an attempt to determine exactly when and where his Social Security number had been used so we could begin damage control. Through this process I learned some important tips on what to do if you suspect your child’s Social Security number has been stolen.

1. File a police report. Either call your local police department’s non-emergency number or go to the station in person. Do not call 911. Many agencies will not discuss anything with you unless you have a police report or case number.
2. Contact all three credit bureaus (Experian, TransUnion, Equifax) to ask if your child has a credit report. A minor child should not have a report. If a report exists, you will want to obtain a copy to learn what information is contained in the report. TransUnion makes it simple, offering an online inquiry form for parents at here. Equifax can be contacted at 1-877-322-8228 or at www.Equifax.com. Instructions for contacting Experian can be found at www.experian.com or by calling 1-888-EXPERIAN.
3. Be sure to use methods that can be accurately tracked when sending information to credit bureaus.
4. Be patient. This situation will not be solved in a day. Some information cannot be disclosed over the phone so you must wait for reports to arrive by U.S. Mail.

Fortunately our story had a happy ending. Several weeks later we learned that the use of our son’s number had been merely an administrative error. The bank account had been opened in the state where he was born (and subsequently had been issued a Social Security number). The individual opening the account likely had a very similar number to my son’s. The account was closed and I received verification from all three credit bureaus that no activity appeared on his credit reports.

Child identity theft is a growing problem, affecting tens of thousands of children in the United States every year. My hope is that your family is never affected. For more information, please visit www.ftc.gov or www.idtheftcenter.org.

Next time: How can you prevent child identity theft from happening in the first place?

QuickBooks Income Tax Reports and Filtering Options: Target the Right Output

April 15 is getting uncomfortably close.

QuickBooks, of course, can't do your taxes for you. But it helps you lay some of the groundwork. Following up on last month's column on customizing reports, we'll look at the program's tax-related reports and its powerful report-filtering options.

But first, you'll need to make sure that this output will be accurate.

Describe your company accurately

Your tax entity setting should have been established when you first set up QuickBooks, but verify that you've specified the correct one. Go to Company | Company Information. Your Report Information is in the lower left corner. Click the arrow next to Income Tax Form Used to see what's active.

Figure 1: Make sure that QuickBooks is set up for the correct tax entity.

 

QuickBooks automatically assigns some of your accounts to their matching lines on the 1040 and assorted forms and schedules; this is called tax line mapping. So when you create tax reports, related transactions will be grouped by these designations.

This can be a real time-saver – as long as you've specified the correct entity. If:

·         <Other/None> was selected

·         This setting is incorrect

·         You're starting a business and don't know which to choose…

… please contact us. If you switch entities, your existing tax line mapping will disappear and will have to be reassigned.

Dedicated tax reports

Many of QuickBooks' general financial reports provide tax-related information. But there are some that specifically relate to the numbers that will go on your return. Go to Reports | Accounting & Taxes | Income Tax Preparation. Here's an excerpt of what you'll see:

Figure 2: QuickBooks automatically assigns many accounts to the appropriate tax form lines, 

based on your specified tax entity.

 

Here, QuickBooks shows you which tax lines have been pre-assigned to your accounts.  You can specify a tax form line for unassigned accounts, but this is something you should not attempt on your own. This report, though, will give you an idea of how useful your report output will be and where you'll need our assistance.

Other reports provide tax-related data. You can access them by going again to Reports | Accountant & Taxes and clicking:

·         Income Tax Summary. This displays totals for each tax line that's relevant to your particular tax entity. Double-click on any number, and the Tax Line By Account report appears, detailing every transaction related to every tax-related account (you could add a column for Tax Line in Display options and make this quite a useful report).

·         Income Tax Detail. This lists all individual transactions by tax form/schedule line assignment.

Paring it down

Some tax reports can be very lengthy; you may want to filter them to look at various "slices."

Click Customize Report | Filters:

Figure 3: This window displays a powerful set of filtering options.

 

The options listed under Choose Filter are available on other reports; they help you set up incredibly complex searches using multiple filters.

Let's say you want a report that displays your installation labor costs on new residential construction from the last year (you could also throw other variables in). You'd simply choose the filters from the left pane and then select related options in the next pane (usually a list). You'd want to also click on the Display tab to make sure that the appropriate columns appear.

Figure 4: You can apply multiple filters to your reports.

 

QuickBooks reports can shave time off of tax preparation, and filtered views help you scrutinize your data in quite creative – and very useful – ways. The program's boilerplate reports have their place in simple examinations of your financial status, but filters are potent tools. They can facilitate the kind of deep analysis that helps you make critical business decisions.

If you have questions on this or any other QuickBooks feature, call or email us. We’re your partner and we’re here to make your business better.

Why the QuickBooks Class Feature is a Nonprofit’s Best Friend (Part 2)

Most nonprofit organizations use the chart of accounts to capture functional allocations in QuickBooks, resulting in a complicated and lengthy account listing and reports that are at best, difficult to interpret. Without exception, every nonprofit organization that has hired me for QuickBooks support exported financial reports into Excel so data could be manipulated to create a suitable report format. This is unnecessary and can usually be avoided using QuickBooks classes with a streamlined chart of accounts. (Nonprofits seeking a general account listing may wish to use the Uniform Chart of Accounts, which can be downloaded from http://nccs.urban.org/projects/ucoa.cfm.)

Instead of the examples shown last time, let’s now assume our sample nonprofit organization uses classes. The purchase of trophies will now be recorded as:

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And the sponsorship will be recorded as:

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Notice that both entries use the same class. By using classes we can easily filter reports to show only those functional allocations we wish to review. We can also take advantage of the built-in reports in QuickBooks such as Profit and Loss by Class or the Statement of Functional Expenses.

To set up classes, choose Lists>Class List. This screen looks very much like the chart of accounts window. You can create classes by typing Ctrl + N or by Clicking Class > New at the bottom of the window.  To provide more detail, you can also create subclasses. Our sample nonprofit organization might have a class list that looks like this:

Mgmt & Admin

Fundraising  

• General Fundraising
• Golf Tournament
• Annual Dinner & Silent Auction

Program Services

• Community Outreach
• Education Programs
• Medical Services
• Research

An even more useful feature is the ability to record budgets by class. Suppose our nonprofit organization has developed a budget specifically for its golf tournament. When recording the budget, we can segregate the budget into specific classes so we can report on them later. Wouldn’t it be much easier to generate a Budget vs. Actual report for just the golf tournament, rather than exporting the report for the entire organization into Excel and picking it apart to separate out the items relating to the golf event? Using the built-in reports also reduces human error. Too many times I’ve seen an organization create a report in Excel that contained data entry errors or problems with formulas.

The Budget vs. Actual report in QuickBooks allows the user to view data as “Account by Class.” This option generates a report with columns for all classes, with budget and actual data presented for each.

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Switching to a class structure in QuickBooks may require some adjustment at first, but I have yet to encounter a nonprofit organization that didn’t benefit from this change. There are many benefits to the organization, more than can be outlined in a few blog posts. If you work with a nonprofit organization and would like to speak with me directly about how your organization might use classes, please contact me at lori <at> myshoeboxbookkeeper.com to arrange for a consultation.

Why the QuickBooks Class Feature is a Nonprofit’s Best Friend (Part 1)

Over the years I’ve worked for numerous not-for-profit organizations. Their services vary tremendously – companies serving children with disabilities, legal aid groups, animal rescue organizations, research and education firms, religious organizations, the list goes on and on. What each company has in common is the need to track expenditures by their functional classification. 

Let me back up for those of you who are not part of the 501(c)(3) world.

Every not-for-profit organization needs to know what portion of its expenses went towards program administrative, or fundraising costs. In other words, for an organization dedicated to finding a cure for a disease, how many cents from each dollar donated were actually put towards research? How many cents were used for fundraising events or solicitation letters? How many cents from each dollar were used to pay for the executive director’s salary and benefits? These are numbers not-for-profit organizations need to know and must manage well if they want to be successful. An educated donor will not contribute to an organization that spends only 20% of revenues on its programs.

That’s easy enough to understand, right? Then why is it so difficult for most not-for-profit organizations to monitor those numbers? The answer is that most organizations who use QuickBooks are trying to capture this information solely through the Chart of Accounts. Nearly every not-for-profit organization I’ve encountered has had a Chart of Accounts that includes items such as:

Income:

General Donations

Donations from 5^th Anniversary Event

2009 Golf Tournament Sponsors

2010 Golf Tournament Sponsors

2011 Golf Tournament Sponsors

Walk-a-Thon Registration – 2008

Walk-a Thon Registration – 2009

Walk-a-Thon Registration – 2010

Interest Income

Expenses:

Office Supplies

Telephone

Postage – general admin

Special Event Supplies

Golf Tournament:  Food and Beverage

Walk-a-Thon: Refreshments

Golf Trophies

General Fundraising Expenses

Annual Solicitation Letter - postage

Walk-a-Thon Ribbons and Certificates

Salaries and Wages

Payroll Expenses

Board Meetings

Sound familiar? Most not-for-profit organizations don’t have a concise, well-organized Chart of Accounts, and most are trying to capture functional expense allocations within that account listing.

So, how do we fix it?

The “class” feature in QuickBooks, in conjunction with a well-designed Chart of Accounts, can make a world of difference for not-for-profit organizations when it comes to managing their finances. Using classes adds another dimension to financial reporting. While the Chart of Accounts is used to classify income and expenses into their natural categories (i.e., postage, telephone, payroll expenses), classes can be used to further sort those expenses into functional allocations (program service, administrative, fundraising). Let’s look at an example.

Our organization is holding its annual golf tournament and has received a $250 invoice for trophies, along with a check to pay for a $500 sponsorship of the event. In the past, the bill for the trophies would have been recorded as:

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and the sponsorship would have been recorded as:

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In this setup, it is difficult to determine the net income from the event without exporting the data or filtering the report for the necessary accounts. One solution might be to memorize a report using only the accounts relevant to that particular event. This works, but what if the organization decides to add a silent auction to the event? It’s easy enough to add a new income account, but the person preparing the reports must remember to add that account to the memorized report. 

Coming up next: The easier way.

Tracking Your Business Mileage

Do you use a vehicle for business purposes? If so, you may be missing out on an easy deduction on your income taxes. The IRS currently allows a deduction of 55.5 cents* per business mile driven. However, if you can’t prove it, you can’t claim it, so you must maintain a timely and accurate record of all miles driven.

Mileage tracking doesn’t have to be complicated. A simple log book can be purchased at any office supply store for two or three dollars, or a blank notebook can serve the same purpose. For those who prefer to maintain a log on the computer, it is easy to set up a spreadsheet in Excel. At a minimum, you want to record the date of travel, purpose, starting mileage, and ending mileage. You may wish to include amounts paid for parking or tolls. It is a good idea to also make note of your car’s odometer reading on January 1 and December 31 each year. This log should be filed with your other business receipts for audit purposes. 

A sample mileage log, freely available from www.microsoft.com

I currently use an app on my Android phone called “Trip Log – GPS Mileage Tracker,” which uses GPS tracking to calculate the miles I’ve driven. I can even pause GPS tracking during a trip. This is especially useful when I have multiple stops to make, not all of which are business-related. I can then email a monthly report to myself for my tax records.

In addition to business mileage, remember that miles driven for charitable organizations, medical purposes, or for moving are all expenses you can claim as deductions on your personal income tax return. 

No matter what method you use, maintaining a mileage log is a necessity if you plan to claim automobile expenses as a business deduction. It’s never too late to begin tracking. Once again, the mantra is, if you can’t prove it, you can’t claim it. Start today!

For more information, please refer to IRS Publication 463 or visit www.irs.gov.

*The IRS adjusts rates periodically. Please visit www.irs.gov for the most current standard mileage rate.

Welcome!

Welcome to my blog! I hope you will find this to be a useful resource for your QuickBooks and general accounting problems.

Many people have asked me how I came up with the name “My Shoebox Bookkeeper” for my company. It’s simple, really: how many small business owners do you know who are wildly successful at what they do, but can’t seem to balance a checkbook? How many of them have a shoebox filled with receipts but no idea how much money is in the bank? That is where My Shoebox Bookkeeper comes in. My goal is to free you from the stress of the shoebox. You give me that messy pile of the bank and credit card statements, receipts, and check stubs, and I return to you a binder organized by month, including a complete set of financial statements for your business. I also provide a copy of a QuickBooks file for your company, which you can use to generate your own reports or to pass along to a CPA for tax preparation. It’s that simple. One call to My Shoebox Bookkeeper can free you from the shoebox forever!

I have met many business owners who are excellent at what they do – doctors, attorneys, marketing professionals, artists – but who simply do not have the time or desire to keep up with the shoebox of receipts. Either the business suffers because bookkeeping takes time away from the mission of their company, or they simply ignore the bookkeeping altogether. Too many times I’ve seen business owners who are wasting precious dollars on late fees, overdraft fees, and bank errors because their bookkeeping is not being done on a regular basis. The look of relief on their faces when they realize they can afford to have someone else take over their accounting nightmare is gratifying.

I am a Certified Bookkeeper through the American Institute of Professional Bookkeepers, as well as a Certified Intuit QuickBooks ProAdvisor. In addition to general bookkeeping services, I provide QuickBooks installation, setup, and training. I am also a Notary Public for the state of North Carolina, and existing clients never pay a fee for notary services. In early 2012 I plan to begin offering payroll preparation services.

No job is too small! I cater to small businesses and not-for-profit organizations and my hourly rates reflect that commitment. (501c3 not-for-profit organizations receive a 25% discount off my normal fees.) 

Now that you know why I do what I do, isn’t it time you called for a free consultation? Click here to send an email or call me at (919) 308-2470.

Modifying QuickBooks Reports Gives You Better Insight Into Past, Future: Part 1

If you make one resolution about improving your accounting procedures in 2012, it should be this: Make extensive use of the tools that QuickBooks offers for report modification. Comprehensive, meticulously-shaped reports that flow out of your carefully-constructed records and transactions are your reward for pounding on the keys every day, conscientiously recording income and expenses.

QuickBooks supplies you with a wide variety of pre-formatted reports whose modification options can help you do focused, critical analysis of your financial data. The right set of numbers will help you understand your history and plan for the future more effectively.

Note: The reports discussed and pictured here show only one possible set of customization options. There are many variations. We can answer your questions.

Check your preferences

When you created your company file in QuickBooks, you chose between reporting on a cash (income and expenses are recorded when money changes hands) or accrual (recorded when you invoice or receive a bill) basis. This affects summary reports, but not those that break out individual transactions or are simply lists.

If you want to change this, click Edit | Preferences | Reports & Graphs | Company Preferences and click the desired button:

Figure 1: You can establish a preference for your summary reports' basis here.

You can set other preferences in this window that will affect your report output here, too, as you can see.

Altering the display

Open the Income by Customer Summary report (Reports | Company & Financial). Change the dates to reflect a range you'd like to see. Want the data displayed by different time increments – like week or quarter – instead of just the total? Click the arrow next to Columns and select Four week.

Figure 2: You can do some report display alterations from this toolbar; the options it offers vary by report.

By default, your report rows display alphabetically. If you want to view a column by total in ascending or descending order, select the column by hovering over the top number until the magnifying glass appears, and click on it. Click the arrow next to Sort by and choose Total, then click the AZ [down arrow] icon (in some reports, there will be other options here).

Additional options in this toolbar let you:

·         Memorize the report

·         Print, email or export it to Excel

·         Hide or Show the Header

·         Collapse or Expand the columns

·         Refresh the report if you've made changes that will alter data

More display options

Click Customize Report to open this window:

Figure 3: This window outlines your report's content options.

Some of the options here duplicate what you saw in the toolbar. In addition, you can switch between Accrual and Cash for just this report, and add subcolumns in some. The latter is a complicated operation, one that you must understand well in order to glean any insight from it. We can help you with this.

Sometimes the subcolumns are generic, as shown in the screen above. In other reports, they're very specific to that group of data.

Clicking on Revert takes you back to the default format, and Advanced opens additional options specific to the current report.

More customization = more insightful results = more informed financial choices

Transaction reports have many similarities and two major differences. You can change the column order by hovering your cursor over the column label until a hand appears. Click, hold and drag the column to the desired spot and let go. You can also add or delete columns by clicking Customize Report and checking or unchecking labels.

Figure 4: In transaction – or detail – reports, you can alter the column structure.

Learn the mechanics of report display modification well, and your company's finances will come into much sharper focus, improving the wisdom of future choices. Up next month: filtering your reports for additional clarity.

If you have questions on this or any other QuickBooks feature, call or email us. We’re your partner and we’re here to make your business better.