Questions
Answers to questions small business owners ask about bookkeeping, payroll, taxes, and running the numbers side of a business.
Do I Need a Bookkeeper If I Have an Accountant?
Usually, yes. Accountants and bookkeepers do different jobs. Your accountant handles taxes and financial strategy. A bookkeeper keeps your records current so your accountant has something accurate to work with.
Read answerMy Last Bookkeeper Left My Books in Bad Shape. Can You Fix Them?
Yes. Cleaning up after a previous bookkeeper is a significant part of what we do. Misclassified transactions, unreconciled accounts, missing records. We sort it out and get you back to accurate books.
Read answerHow Do I Set Up QuickBooks for the First Time?
Start with the right version, build a chart of accounts that matches your business, connect your banks correctly, and set up a few rules. Get these basics right and QuickBooks actually works. Get them wrong and you'll spend years fixing mistakes.
Read answerWhat's the Best Way to Track Inventory for a Restaurant?
Count weekly, track waste daily, and compare what you should have used against what you actually used. The gap between those two numbers tells you where your food cost is leaking.
Read answerWhat Restaurant Expenses Are Tax Deductible?
Almost everything you spend to run the restaurant is deductible. Food costs, labor, rent, equipment, supplies, marketing, even the music license. The key is tracking it properly and categorizing it correctly.
Read answerHow Do I Set Up Job Costing for My Construction Business?
Track every cost against the job it belongs to. Labor hours, materials, subs, equipment. Compare what you bid against what you spent. Without this, you won't know which jobs make money until it's too late to do anything about it.
Read answerHow often should I update my books?
Weekly is the standard for most small businesses. Monthly is the minimum. Going longer than a month means losing context on transactions and letting errors compound.
Read answerWhat's the difference between bookkeeping and accounting?
Bookkeeping is the recording of financial transactions. Accounting is the analysis and interpretation of those records. Both matter for small businesses, but they serve different purposes and happen at different rhythms.
Read answerHow do I know if my books are a mess?
There are clear warning signs: bank accounts that don't reconcile, surprise tax bills, financial statements that don't match reality, and transactions piling up uncategorized. If you're avoiding your books, that's usually confirmation enough.
Read answerWhat financial reports should I be reviewing every month?
Start with the profit and loss statement, balance sheet, and cash flow statement. Add accounts receivable and payable aging reports to track money coming in and going out. Monthly review catches problems while they're still small.
Read answerShould I use cash basis or accrual accounting for my business?
Most small businesses do fine with cash basis because it's simpler and matches what you see in your bank account. Accrual makes more sense when you need an accurate picture of profitability across longer billing cycles or carry significant inventory.
Read answerWhat records do I need to keep for the IRS?
Keep documentation for all income and expenses reported on your tax return. This includes bank statements, receipts, invoices, payroll records, and asset purchase documentation.
Read answerHow long should I keep business receipts and invoices?
Seven years is the safe default for most business records. IRS requirements vary from three to seven years depending on the situation, and some documents like formation papers should be kept permanently.
Read answerCan I do my own bookkeeping or should I hire someone?
You can do your own bookkeeping. Whether you should depends on your time, your consistency, and whether the hours you'd spend are worth more doing something else. DIY works early on but often becomes a burden as the business grows.
Read answerWhat happens if I don't keep good financial records?
Poor records lead to expensive tax prep, missed deductions, IRS audit risk, and cash flow surprises. Banks won't lend without clean financials, and selling your business becomes nearly impossible.
Read answerHow do I separate my personal and business expenses?
Open a separate business bank account and get a business credit card for business purchases only. The setup is simple. Building the habit of keeping transactions in the right accounts is the harder part.
Read answerWhat's the best way to track business expenses?
The best expense tracking system is one you'll actually use consistently. Separate business and personal finances, capture receipts immediately, and reconcile weekly instead of waiting until month-end.
Read answerWhy do my bank statements never match my books?
Usually it's timing differences, missing transactions, or data entry errors. Outstanding checks, unrecorded bank fees, and duplicate entries are the most common culprits.
Read answerWhat does it mean to reconcile my accounts?
Reconciling means comparing what your bank statement shows against what your accounting software shows, then fixing any differences. It confirms your books match reality.
Read answerHow do I know if my business is actually making money?
Your income statement tells you whether you're profitable, but only if your books are accurate. Cash in the bank doesn't mean the same thing as profit. Look at what's left after all expenses, including paying yourself fairly.
Read answerI'm months behind on my bookkeeping. Where do I start?
Start by gathering all your bank and credit card statements for the missing months. Check for urgent deadlines like quarterly taxes or pending loan applications, then work through reconciliation one month at a time starting with the oldest.
Read answerCan a bookkeeper help me catch up on years of messy records?
Yes. Catching up on neglected books is one of the most common reasons small businesses hire a bookkeeper. The process involves reconstructing transactions from bank records, categorizing expenses, and reconciling accounts month by month.
Read answerHow long does it take to catch up on a year of bookkeeping?
A year of catch-up bookkeeping typically takes one to four weeks of work time, though this varies based on transaction volume, documentation quality, and business complexity. Cash-heavy businesses and those with disorganized records take longer.
Read answerWill I get in trouble with the IRS for falling behind on my books?
Falling behind on bookkeeping itself doesn't trigger IRS penalties. The problem is what happens next. Messy books lead to inaccurate tax returns, missed deductions, and late filings. Those are what create real trouble.
Read answerWhat documents do I need to provide for catch-up bookkeeping?
Bank statements are the foundation. Credit card statements come next. Receipts, invoices, and payroll records help fill in the details, but you don't need perfect documentation to get started.
Read answerHow much does it cost to clean up messy books?
Cleaning up messy books typically costs $500 to $3,000 for most small businesses. The actual price depends on how far behind you are, transaction volume, and whether documentation still exists.
Read answerI haven't done any bookkeeping since I started my business. Is it too late?
No, it's not too late. Bank and credit card statements can be used to reconstruct your records even if you never tracked anything. The longer you wait, the harder it gets, but catching up is almost always possible.
Read answerWhat's the difference between catch-up bookkeeping and cleanup bookkeeping?
Catch-up bookkeeping addresses a time gap when your books stopped being maintained. Cleanup bookkeeping fixes quality issues like miscategorized transactions and accounts that don't reconcile. Many businesses need both.
Read answerCan you help me get my books ready for tax season if I'm behind?
Yes. Catch-up bookkeeping exists specifically for this situation. We gather your records, categorize and reconcile everything, and get your books into shape so your accountant can file your return.
Read answerWhich QuickBooks plan is right for my small business?
The right plan depends on user count, inventory needs, and whether you track project costs. Most small businesses do fine with Simple Start or Essentials. Plus is worth it only if you manage inventory or need job-level profitability.
Read answerCan you help me migrate from QuickBooks Desktop to QuickBooks Online?
Yes, we regularly help businesses migrate from Desktop to Online. The process involves transferring your data, cleaning up historical entries, and getting you comfortable with the new system.
Read answerWhy aren't my bank transactions importing correctly into QuickBooks?
Bank feed issues usually come from broken connections, duplicate handling, or account matching problems. The fix depends on whether transactions aren't showing up at all, appearing twice, or landing in the wrong place.
Read answerHow do I reconcile my accounts in QuickBooks Online?
Reconciliation compares your QuickBooks records to your bank statement. Start with your statement ending date and balance, then match transactions one by one until the difference is zero.
Read answerWhat's the best way to categorize expenses in QuickBooks?
Consistency matters more than the specific categories you choose. Use QuickBooks defaults as a starting point, keep things simple, and match categories to tax return line items for easier year-end prep.
Read answerHow do I set up job costing in QuickBooks Online?
Enable the Projects feature in QBO Plus or Advanced, then configure your chart of accounts to track costs by category. The software setup is straightforward but the structure you choose determines whether your job reports are actually useful.
Read answerCan QuickBooks handle inventory tracking for my business?
QuickBooks Plus and Advanced can track inventory, calculate cost of goods sold, and set reorder points. Basic retail or wholesale operations work well with the built-in features. More complex needs like manufacturing or multi-location tracking may require third-party integrations.
Read answerHow do I fix mistakes I made in QuickBooks?
Most QuickBooks mistakes can be fixed by editing the original transaction or creating a journal entry to correct it. The right approach depends on whether the transaction has been reconciled and whether you've already closed the period.
Read answerShould I connect my bank account to QuickBooks or enter transactions manually?
Connect your bank account. Bank feeds save hours of data entry time and reduce typing errors. You'll still need to review and categorize transactions, but you'll start from accurate data instead of hoping you entered everything correctly.
Read answerHow do I run a profit and loss report in QuickBooks?
In QuickBooks Online, go to Reports and search for Profit and Loss. The report generates with default settings, but customizing the date range and comparison columns makes it far more useful.
Read answerWhat's the difference between QuickBooks Simple Start, Essentials, and Plus?
The main differences are user limits, bill management, and inventory or project tracking. Most small businesses need Essentials or Plus. Simple Start works for freelancers but runs out of room fast.
Read answerCan my accountant access my QuickBooks file?
Yes, and you should set this up. QuickBooks Online includes a free accountant user slot specifically for this purpose. QuickBooks Desktop requires sharing the file directly or sending an accountant's copy.
Read answerHow do I set up classes and locations in QuickBooks Online?
Go to Settings, then Account and settings, then Advanced. Enable class and location tracking there. The harder part is deciding how to structure them before you start.
Read answerWhy is QuickBooks showing a different number than my bank account?
The most common reasons are timing differences, duplicate transactions from bank feeds, or reconciliation issues. Your QuickBooks balance includes transactions that may not have cleared the bank yet.
Read answerHow do I track tip income and tip-outs for my restaurant?
Track tips daily using your POS system or a written tip log, record all tip-outs to support staff, and run tips through payroll since they're taxable wages. Both credit card and cash tips need documentation.
Read answerWhat's the best way to handle cash management in a restaurant?
Start with consistent register banks and count cash at every shift change. Reconcile to your POS daily, deposit frequently, and limit who handles cash to create clear accountability.
Read answerHow do I record daily sales from my POS system in QuickBooks?
Record a daily sales summary from your POS end-of-day report rather than individual transactions. Break out payment types and use a clearing account for credit card sales to match deposits when they arrive.
Read answerShould my restaurant use cash or accrual accounting?
Most small restaurants do well with cash accounting. It's simpler, matches cash flow reality, and the IRS allows it for businesses under $29 million in annual revenue.
Read answerHow do I calculate my food cost percentage?
Divide your cost of goods sold by your food sales, then multiply by 100. The key is calculating COGS accurately using beginning inventory plus purchases minus ending inventory. Most restaurants target 28% to 35%.
Read answerHow do I handle sales from third-party delivery apps like DoorDash and Uber Eats?
Record the full sale amount as revenue and the platform's commission as a separate expense. The deposit will be the net amount, but your books will show true sales and actual delivery costs.
Read answerHow often should I reconcile my restaurant's books?
Daily for cash and POS sales, weekly for credit card batches, monthly for full bank reconciliation. Restaurants have too many transactions and too much cash exposure to wait until month-end.
Read answerDo I need to track tips differently for payroll purposes?
Yes. Tips are taxable wages that require separate tracking, withholding, and reporting. Employees must report tips to you, and you must withhold income tax, Social Security, and Medicare from the total.
Read answerWhat's the best way to track costs for each project?
The best approach is capturing every cost as it happens and assigning it to the right project in your accounting system. This means tracking labor hours, materials, subcontractor bills, and direct expenses separately for each job so you know your actual profit margin on every project.
Read answerHow do I handle progress billing in QuickBooks?
Enable progress invoicing in QuickBooks settings, then create invoices from estimates for partial amounts. The feature is straightforward but only works well if your estimates are accurate and you track costs alongside billings.
Read answerWhat is retainage and how do I record it in my books?
Retainage is a percentage of each payment that clients hold back until a construction project is complete. In your books, it's recorded as a separate receivable asset that gets collected when the job wraps up.
Read answerShould I track material costs separately from labor costs?
Yes. Separating materials from labor lets you see where your money actually goes on each job. Combined tracking hides whether you're losing money on materials, labor, or both.
Read answerHow do I manage cash flow when customers pay in stages?
Structure deposits to cover your initial costs, invoice the same day you hit milestones, and track billed versus received separately. A cash reserve covers the inevitable gaps between completing work and getting paid.
Read answerWhat's the best way to track subcontractor payments?
Collect a W-9 before the first payment, set up each sub as a vendor in your accounting software, and code every payment to the job it belongs to. This setup gives you accurate job costs and makes 1099 filing straightforward.
Read answerDo I need to send 1099s to all my subcontractors?
Not every subcontractor needs a 1099. The $600 threshold, corporate status, and payment method all determine who gets one. Collect W-9s from subs before paying them so you have the information you need at tax time.
Read answerHow do I know if a project is actually profitable?
Track all direct costs against each job and allocate a share of overhead. Most owners miss their own labor value and fixed expenses, making projects look more profitable than they really are.
Read answerWhat financial reports do contractors need to review regularly?
Job cost reports, profit and loss statements, cash flow projections, and accounts receivable aging are the essential reports. Job costing should be reviewed weekly on active projects while others can follow monthly rhythms.
Read answerHow do I record Shopify sales in QuickBooks?
Record gross sales separately from the bank deposit since Shopify deducts fees and refunds before paying you. Use a clearing account to track what Shopify owes you, then match payouts to your bank deposits.
Read answerWhy doesn't my Amazon deposit match my sales total?
Amazon deposits are the net amount after fees, not your gross sales. Referral fees, FBA fees, storage charges, advertising costs, and refunds all get deducted before the money hits your bank account.
Read answerHow do I track fees from Shopify, Amazon, and PayPal?
Record gross sales and fees separately instead of just booking net deposits. Each platform provides settlement reports that break down exactly what they charged you, which you need for accurate margins and proper tax deductions.
Read answerWhat's the best way to handle inventory for an e-commerce business?
Inventory tracking for e-commerce requires systems that sync across sales channels and connect to your accounting software. The challenge isn't just counting what you have. It's making sure your books reflect accurate costs and quantities without manual data entry creating errors.
Read answerDo I need to collect sales tax if I sell online?
If you sell enough online, you probably do. Most states require sales tax collection once you hit certain revenue or transaction thresholds in that state. The rules changed significantly after a 2018 Supreme Court decision.
Read answerHow do I handle returns and refunds in my books?
Returns and refunds should reduce your sales revenue, not create new expenses. Record customer refunds as credit memos or refund receipts, and track vendor returns as credits against future purchases.
Read answerShould I use accrual accounting for my e-commerce store?
In most cases, yes. Accrual accounting matches revenue with the costs that generated it, which matters when you hold inventory and sell through platforms with delayed payouts. Cash basis works for very small stores but starts creating blind spots as you grow.
Read answerHow do I reconcile payments from multiple sales channels?
Each channel deposits differently and bundles fees, refunds, and payouts in unique ways. Reconcile each platform's settlement reports to your bank deposits, tracking gross sales and fees separately rather than just recording net deposit amounts.
Read answerWhat e-commerce expenses are tax deductible?
E-commerce sellers can deduct platform fees, inventory costs, shipping and packaging, software subscriptions, advertising, and home office expenses. The key is tracking expenses properly throughout the year.
Read answerHow do I track cost of goods sold when I sell online?
Track the landed cost of each product including purchase price, inbound shipping, and packaging materials. Use accounting software with inventory tracking enabled so COGS records automatically when items sell.
Read answerWhat business taxes do I need to pay in Virginia?
Virginia business owners deal with state income tax, sales tax, payroll taxes, and local taxes that vary by county and city. The local taxes catch many people off guard, especially BPOL and business property tax.
Read answerHow do I register my business for Virginia sales tax?
Register through Virginia Tax's online iReg system at virginia.gov. The process takes about 15-20 minutes if you have your EIN, business address, and estimated sales figures ready.
Read answerWhat is Virginia's sales tax rate and when do I file?
Virginia's sales tax rate is 5.3% in most areas, including Richmond and the Tri-Cities. Filing frequency depends on your monthly tax liability, with options for monthly, quarterly, or annual returns due on the 20th.
Read answerDo I need a business license to operate in Richmond?
Yes, you need a BPOL (Business Professional and Occupational License) to operate in Richmond. The annual fee is based on your gross receipts, and some industries require additional permits beyond the basic license.
Read answerHow do I file quarterly estimated taxes in Virginia?
Virginia estimated taxes are due April 15, June 15, September 15, and January 15 if you expect to owe $150 or more. Pay online through Virginia Tax's iFile system or mail Form 760-ES with a check.
Read answerWhat payroll taxes do Virginia employers need to pay?
Virginia employers pay federal FICA and unemployment taxes plus Virginia unemployment insurance. Budget roughly 8% to 10% of wages for the employer portion. Virginia keeps it simpler than many states with no state disability or paid leave taxes.
Read answerWhen are Virginia business tax returns due?
Virginia business tax deadlines follow federal deadlines. Partnerships and S-Corps are due March 15, while sole proprietors and C-Corps file by April 15. Extensions add time to file but not to pay.
Read answerDo I need to charge sales tax on services in Virginia?
Virginia generally does not tax most services. The retail sales tax applies mainly to tangible goods, not labor or professional expertise. However, there are exceptions for certain services like accommodations and repair work involving parts.
Read answerHow do I register for Virginia withholding tax?
Register through Virginia Tax's online iReg system. You'll need your federal EIN and basic business information. Registration is free and you'll receive your withholding account number within a few business days.
Read answerWhat's the Virginia unemployment tax rate for new employers?
New employers in Virginia typically pay 2.5% on the first $8,000 of each employee's wages annually. After you build employment history over a few years, your rate becomes experience-based and can drop significantly if you have few unemployment claims.
Read answerShould I run payroll myself or use a payroll service?
You can run payroll yourself with software, but the time investment and compliance risk grow with each employee. Most small businesses benefit from outsourcing once they reach three to five employees or have complex pay structures.
Read answerWhat's the difference between employees and independent contractors?
The core difference is control. Employees work under your direction with set schedules and tools you provide. Contractors run their own business and you hire them for a result, not ongoing supervised work.
Read answerHow do I calculate payroll taxes for my employees?
Payroll taxes include federal and state withholding plus Social Security and Medicare. Some taxes come from employee wages while others you pay as the employer. Most small businesses use payroll software or a service to handle the calculations.
Read answerWhat forms do I need when I hire a new employee?
Every new hire needs a W-4 for federal withholding and an I-9 to verify work authorization. Virginia also requires a VA-4 for state withholding and new hire reporting within 20 days.
Read answerHow do I handle overtime pay correctly?
Non-exempt employees must receive 1.5 times their regular rate for hours worked over 40 in a workweek. The tricky parts are calculating the regular rate correctly and making sure employees are classified properly.
Read answerWhen are payroll taxes due to the IRS?
The due date depends on your deposit schedule. Most small businesses are monthly depositors, which means taxes are due by the 15th of the month following each payroll.
Read answerDo I need to offer benefits if I have employees?
Most employee benefits are optional for small businesses with fewer than 50 employees. Health insurance, retirement plans, and paid time off aren't required under federal or Virginia law. Workers' comp and payroll taxes are mandatory regardless of size.
Read answerHow do I pay myself as a business owner?
The method depends on your business structure. Sole proprietors and most LLCs take owner's draws. S-corp owners must pay themselves a salary through payroll and can take additional distributions.
Read answerWhat's the cheapest way to run payroll for a small business?
Doing payroll yourself costs nothing until penalties add up. Basic payroll software runs $40 to $100 monthly for small teams and handles tax filings automatically. That's usually the sweet spot between cheap and reliable.
Read answerCan QuickBooks handle payroll for my business?
Yes, QuickBooks Payroll handles wages, tax calculations, filings, and direct deposit for most small businesses. Whether it's the right choice depends on your employee count and how much time you want to spend managing it yourself.
Read answerWhich products and services require sales tax in Virginia?
Virginia taxes most tangible goods sold at retail but exempts most services. Groceries have reduced rates while prepared food is fully taxable. The rules vary depending on what you sell and who you sell it to.
Read answerHow do I know if I need to collect sales tax in other states?
You need to collect sales tax in states where you have economic nexus, which usually means exceeding $100,000 in sales or 200 transactions. The rules changed in 2018, so physical presence is no longer required.
Read answerWhat is sales tax nexus and does it apply to me?
Nexus is the connection between your business and a state that requires you to collect sales tax there. Most local service businesses only have Virginia nexus, but if you sell products online or into other states, you may need to collect and remit sales tax elsewhere.
Read answerHow often do I need to file sales tax returns?
Your state determines filing frequency based on how much sales tax you collect. Virginia requires monthly filing if your liability exceeds $4,000 per month, quarterly for lower volumes, and annual filing for very small amounts.
Read answerCan I be held personally liable for unpaid sales tax?
Yes, even if you operate as an LLC or corporation. Sales tax is trust fund money that you collect for the state, and if you don't remit it, Virginia can pursue you personally.
Read answerHow do I calculate how much sales tax I owe?
Multiply your taxable sales for the period by the applicable tax rate. In most of the Richmond area, that's 5.3%. The key is making sure you've correctly identified which sales are taxable and reconciling against what you actually collected.
Read answerWhat records do I need to keep for sales tax audits?
Keep all sales invoices, exemption certificates, tax returns filed, and bank records that show how you calculated what you collected and remitted. Virginia requires you to hold these for at least three years, though four to six is safer.
Read answerDo I need to charge sales tax on labor and installation?
It depends on what you're selling. If you're selling products and installing them, the labor is usually taxable with the materials. If you're providing a pure service without selling goods, the labor is often exempt.
Read answerHow do I handle sales tax when I sell both online and in-store?
In-store sales collect tax at your local Virginia rate. Online sales get more complicated because you charge based on where the customer lives, and you may owe tax in other states once you hit their sales thresholds.
Read answerWhat happens if I forgot to collect sales tax from customers?
You still owe the tax to the state whether you collected it or not. The business absorbs the cost out of what would have been profit. Calculate what you owe, file amended returns, and fix your collection process going forward.
Read answerWhat financial numbers should I review before hiring?
Review your cash reserves, monthly revenue trends, profit margins, and the true cost of employment before hiring. You need enough cash to cover several months of payroll and consistent revenue to support the ongoing expense.
Read answerHow do I know if I can afford to expand my business?
You can afford to expand when your current business generates consistent profit, you have enough cash reserves to cover the gap between spending money and seeing returns, and your existing operations won't suffer during the transition.
Read answerWhat should I look for in monthly financial reports?
Focus on revenue trends, gross margin, expense changes, and cash position. The value comes from comparing current numbers to prior periods and spotting patterns before small issues become serious problems.
Read answerHow do I prepare my books before applying for a business loan?
Lenders want clean, reconciled financial statements that tell a consistent story. Before applying, reconcile all accounts, prepare accurate P&L and balance sheet statements, and make sure your books match your tax returns.
Read answerWhat does a fractional CFO do and do I need one?
A fractional CFO provides part-time strategic financial guidance like cash flow forecasting, budgeting, and financial planning. You likely need one when you're making growth decisions that require more than historical bookkeeping can tell you.
Read answerHow do I set up a budget for my small business?
Start with accurate historical data from your books, categorize expenses into fixed and variable costs, project revenue conservatively, and review monthly against actual results.
Read answerWhat's the best way to track project profitability?
Break projects into labor, materials, and outside costs. Track every expense against the specific job. Compare budget to actual weekly so you catch problems while you can still fix them.
Read answerWhen should I switch from doing my own books to hiring a bookkeeper?
There's no universal trigger point. The signs are usually falling behind on reconciliation, making recurring errors, or spending hours each month on something that pulls you away from actually running your business.
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