Questions
Answers to questions small business owners ask about bookkeeping, taxes, and keeping financial records in order.
What does full-service bookkeeping include for a small business?
Full-service bookkeeping includes transaction categorization, bank and credit card reconciliation, and monthly financial reports. Pricing typically starts at $199 per month and depends on your transaction volume.
Read answerHow often should a small business reconcile bank and credit card accounts?
Monthly is the standard for most small businesses. Bank feeds pull transactions automatically but don't catch duplicates, uncategorized items, or missing entries. Monthly reconciliation is the checkpoint that keeps your books accurate.
Read answerWhat financial reports should a business owner review every month?
Every business owner should review the profit and loss statement, balance sheet, and a cash flow or cash position report each month. Add accounts receivable aging, accounts payable aging, and budget-versus-actual if you work with a budget.
Read answerHow do I know if my books are too messy to file taxes?
Warning signs include unreconciled bank accounts, mixed personal expenses, old undeposited funds in QuickBooks, negative balances, and unexplained loans or transfers. If you can't trust your financial statements, a tax preparer won't be able to work with them without cleanup first.
Read answerHow far back can catch-up bookkeeping clean up old QuickBooks records?
Catch-up bookkeeping can cover months or years of old records. The real limit isn't time but documentation. Bank statements, receipts, the condition of your QuickBooks file, and tax deadlines determine what's possible.
Read answerWhat records should I gather before hiring a bookkeeper?
Gather your bank and credit card statements, any accounting software access, prior tax returns, and supporting documents for income and expenses. Having these ready helps your bookkeeper get started faster and keeps costs down.
Read answerHow can a bookkeeper separate personal and business expenses after they are mixed?
A bookkeeper separates mixed expenses by reclassifying personal charges as owner draws or distributions rather than business deductions. Legitimate business expenses paid personally get documented as reimbursements with proper support.
Read answerShould my small business use cash or accrual accounting?
Most small service businesses use cash basis for taxes because it's simpler. Businesses with inventory, significant receivables, or lender reporting requirements may need accrual-basis books.
Read answerWhen should I move from DIY bookkeeping to a monthly bookkeeping service?
Move when DIY starts costing more than it saves. Signs include falling behind on reconciliations, not knowing your actual profit, tax deadline panic, and spending hours on bookkeeping that could go toward running your business.
Read answerHow are monthly bookkeeping prices usually based on transaction volume or expenses?
Pricing typically reflects transaction volume, account complexity, and reporting needs. Many firms use expense amount as a benchmark because it correlates with how much work your books require. At SRC, full-service bookkeeping starts at $199 per month based on expense amount.
Read answerWhat can cause my profit and loss statement to look wrong?
Common causes include uncategorized transactions, duplicate bank feed entries, owner transfers recorded as income, missing cost of goods sold, and payroll misclassification. Most of these stem from setup issues or inconsistent review of transactions.
Read answerHow do I catch duplicate income or expenses in QuickBooks Online?
Duplicates usually come from bank feed rules, invoice-deposit matching issues, repeated manual entries, or merchant processor payouts. Regular bank reconciliation and source document review are the most reliable ways to catch them.
Read answerWhy does my bank balance not match my bookkeeping reports?
The difference usually comes down to timing. Your bank shows cleared transactions while your books include everything you've recorded, even checks that haven't been cashed yet.
Read answerHow should I track owner draws, distributions and reimbursements?
Owner draws and distributions are equity transactions, not expenses. Track them in a dedicated equity account, keep documentation, and understand that proper treatment depends on your business entity type.
Read answerWhat bookkeeping cleanup is needed before applying for a business loan?
Lenders expect current, reconciled financial statements before approving a loan. You'll need clean bank reconciliations, an accurate balance sheet, a schedule of existing debt, properly documented owner compensation, and a profit and loss statement that supports your cash flow capacity.
Read answerDo Texas LLCs still need to file a franchise tax report if no tax is due?
Yes. Texas LLCs must file a No Tax Due Report by May 15 each year even when they owe nothing. Skipping this filing can result in forfeited good standing and penalties.
Read answerWhat bookkeeping records do I need for a Texas franchise tax report?
Texas franchise tax requires clean revenue records, documentation for any deductions you claim, and current entity information. The specific records depend on which calculation method you use, but all businesses need accurate total revenue tracking as the starting point.
Read answerWhen does a Texas business need a sales tax permit?
You need a sales tax permit before making your first taxable sale in Texas. This applies if you sell physical goods or certain taxable services and have a physical presence in Texas, or if you're a remote seller with over $500,000 in Texas revenue.
Read answerHow should I track taxable and non-taxable sales in Texas?
Configure your POS to flag each item as taxable or exempt, and make sure your accounting software tracks them separately. Keep exemption certificates on file for audit protection and verify local rates are accurate for your selling locations.
Read answerWhat happens if my Texas sales tax filings do not match my POS reports?
The Texas Comptroller can flag discrepancies between your sales tax returns and POS data, bank deposits, or marketplace reports. Mismatches may result in notices requesting explanation or audits that lead to penalties and back taxes.
Read answerWhich vendors need a 1099-NEC at year end?
Any vendor you paid $600 or more for services who isn't an employee and isn't a corporation generally needs a 1099-NEC. The key is collecting W-9 forms from vendors to determine their entity type and get correct taxpayer information.
Read answerHow do I collect W-9s before 1099 season?
Collect W-9s from contractors and vendors before you pay them, not in January when 1099s are due. The W-9 provides the legal name, TIN, and entity type you need for accurate 1099 reporting.
Read answerShould contractor reimbursements be included in 1099 totals?
Usually yes. Reimbursements paid to contractors are generally included in the 1099-NEC total unless you have documented receipts and a formal expense arrangement that meets IRS requirements.
Read answerWhat payroll setup should a small business have before hiring its first employee?
Before hiring, you need a federal EIN, Texas Workforce Commission registration, a clear worker classification, chosen pay schedule, payroll system, and proper withholding configuration. Getting these right from day one prevents penalties and keeps your books clean.
Read answerHow do I know whether someone should be on payroll or paid as a contractor?
The answer depends on the actual working relationship, not what you call the person or what your contract says. The IRS evaluates behavioral control, financial control, and the nature of the relationship.
Read answerWhat tax documents should I give my bookkeeper before business tax return prep?
Your bookkeeper needs reconciled books, payroll reports, sales and franchise tax filings, 1099s for contractors, asset purchase records, loan statements, inventory counts, and prior year returns. Gathering these documents ahead of time makes tax preparation faster and helps ensure nothing gets missed.
Read answerCan one accountant prepare both my personal tax return and my business tax return?
Yes, and for most small business owners it makes sense to use the same preparer for both. Pass-through income, owner compensation decisions, and estimated tax payments all require coordination between business and personal returns.
Read answerWhat bookkeeping mistakes create problems on Schedule C?
Common Schedule C problems stem from mixing personal and business expenses, missing mileage logs, undocumented home office deductions, incorrect cost of goods sold, unrecorded cash payments, and missing 1099 income.
Read answerHow should an S corporation owner track payroll and distributions?
S corporation owners need to track payroll and distributions separately. Payroll is your reasonable compensation subject to employment taxes. Distributions are profit sharing recorded as equity reductions.
Read answerHow do I prepare QuickBooks Online for year-end tax filing?
Start by reconciling every bank and credit card account through December 31. Then clean up uncategorized transactions, verify payroll and 1099 data, review AR/AP for accuracy, and close out stale balances before handing off to your tax preparer.
Read answerWhat chart of accounts should I use for a small business in QuickBooks Online?
Your chart of accounts should mirror how your business makes and spends money. Start with QuickBooks Online's default and customize it to track your actual income streams, direct costs, payroll expenses, owner equity, and taxes without creating so many categories that your reports become unusable.
Read answerHow should I set up QuickBooks Online for a new Texas LLC?
Setting up QuickBooks Online for a new Texas LLC starts with connecting your bank accounts and customizing your chart of accounts. You'll also want to clean up opening balance equity, set up sales tax if applicable, and establish document collection habits from day one.
Read answerWhat QuickBooks Online settings matter most before connecting bank feeds?
Configure your accounting method, fiscal year, chart of accounts, and sales tax settings before connecting bank feeds. These foundational settings are difficult to change later and affect how every transaction gets recorded.
Read answerHow do I train staff to enter bills without breaking the books?
Train staff on vendor setup, bill coding, approval workflows, attachments, due dates, and duplicate checking. Consistency in how every bill gets entered keeps your books clean and prevents costly errors.
Read answerShould I use QuickBooks classes, locations or projects?
Classes track departments or service lines, locations track physical sites, and projects track individual jobs over time. Which you need depends on what questions you want your financial reports to answer.
Read answerHow can bill payment tracking prevent missed vendor payments?
Tracking every bill with its due date, approval status, and payment record creates visibility into what you owe and when. This prevents late fees, catches duplicates before they go out, and eliminates cash flow surprises.
Read answerWhat is the best way to track unpaid customer invoices?
Track unpaid invoices by sending them promptly, setting clear payment terms, reviewing aging reports weekly, and applying payments to specific invoices rather than just recording deposits. A consistent follow-up system handles the rest.
Read answerHow do I clean up old accounts receivable balances in QuickBooks?
Cleaning up old AR requires reviewing each invoice individually. Look for unapplied payments, duplicate invoices, bad debt that needs to be written off, and payments received outside QuickBooks that were never matched.
Read answerWhat cash flow forecast should a business owner review before making a large purchase?
A cash flow forecast shows whether you'll have money when you need it, not just whether you're profitable. Review projected receipts, payroll, vendor bills, tax payments, loan payments, and owner draws before committing to a large purchase.
Read answerHow can budgeting help a seasonal business in Montgomery County?
Budgeting helps seasonal businesses plan for months when revenue slows but expenses continue. It lets you set aside money during peak season for property taxes, insurance, and equipment needs, and shows you potential cash shortfalls before they become emergencies.
Read answerWhat should be included in a monthly financial review with an external controller?
A monthly controller review should cover the month-end close, variance analysis against budget, AR/AP aging reports, internal controls check, and management-level reporting. The goal is catching issues early and giving you confidence in your numbers.
Read answerWhen does a business need fractional CFO support instead of basic bookkeeping?
Bookkeeping records what happened. A CFO helps you decide what should happen next. When you're facing major decisions, pricing questions, or growth challenges, you've likely outgrown basic bookkeeping.
Read answerHow do I use bookkeeping reports to decide whether to raise prices?
Clean books let you analyze margins by service, product, or job type rather than just looking at overall profitability. This shows you which specific offerings need price adjustments instead of raising everything across the board.
Read answerWhat financial strategy reports help identify unprofitable customers?
Customer profitability reports, gross margin analysis, AR aging, and recurring vs one-off revenue breakdowns reveal which customers drain your resources. Together these reports show who costs more to serve than they're worth.
Read answerHow do I set up internal controls for bill payment in a small business?
Separate bill entry, approval, and payment when possible. Use vendor verification, documentation requirements, and monthly bank reconciliation to prevent errors and catch fraud early.
Read answerHow should a general contractor track job costs by project?
Every dollar in and out gets assigned to a specific job. Track labor, materials, subcontractors, equipment, and overhead by project so you can see which jobs actually make money and which ones lose it.
Read answerWhat is the best way to track materials, labor and subcontractors for construction jobs?
Assign job codes to every material purchase, labor hour, and subcontractor invoice before recording or paying them. Daily tracking and coding at the point of transaction keeps your job cost reports accurate enough to know true profitability by project.
Read answerHow should Houston contractors handle retainage in their bookkeeping?
Track retainage in a separate Retainage Receivable account, distinct from standard accounts receivable. This separation shows what you can actually collect now versus what's held until project completion.
Read answerHow can a home builder see profit by subdivision or project?
Set up your accounting software to track income and expenses by subdivision using classes, locations, or projects in QuickBooks. When every transaction is coded to a specific development, you can run reports showing profitability for each one.
Read answerWhat bookkeeping reports help remodelers avoid cash flow gaps?
Job cost reports, work in progress reports, and cash flow projections are essential. These show whether you're actually making money on projects and whether cash will be there when you need it.
Read answerHow should plumbers, electricians and HVAC companies track parts and truck expenses?
The key is separating direct job costs from overhead with distinct categories for job parts, warranty parts, truck stock inventory, and tools. Tracking what goes on each job versus what's general overhead determines whether you know your true profitability.
Read answerWhat should a contractor include on invoices for progress billing?
Progress billing invoices should include the original contract amount, approved change orders, completion status, previous billings, deposits applied, and retainage held. This clarity prevents confusion between revenue earned and cash collected while reducing client disputes.
Read answerHow do I track subcontractor payments for 1099 preparation?
Collect W-9s before making the first payment, then track every payment by vendor name in your accounting software. Separate labor from materials reimbursements and remember that credit card payments don't need to be reported by you.
Read answerWhat job costing setup works best in QuickBooks Online for contractors?
QuickBooks Projects works well for smaller contractors tracking a handful of jobs. Larger operations with multiple job types or detailed cost breakdowns benefit from adding classes, items, estimates, and progress invoicing.
Read answerHow should roofers in the Houston area track storm-related jobs and deposits?
Set up each storm job as a separate project and track deposits as liabilities until work is complete. This lets you match insurance proceeds, material costs, and subcontractor payments to specific jobs and know your actual profit per project.
Read answerHow can landscapers track recurring maintenance billing and seasonal cash flow?
Set up recurring invoices for maintenance customers organized by route or service day. Track materials and crew costs separately to understand profitability, then use that data to build cash reserves during peak months for the slower season.
Read answerWhat bookkeeping setup works for pool service routes in The Woodlands?
Pool service bookkeeping needs to separate recurring maintenance from repairs, track chemical inventory, and handle prepaid service agreements. A chart of accounts built for route-based service work keeps everything organized.
Read answerHow should pest control companies track prepaid service agreements?
Prepaid service agreements create deferred revenue that you recognize as income only when services are performed. Track each contract separately with service dates, and record revenue monthly as technicians complete scheduled visits.
Read answerWhat is the difference between job costing and regular expense categorization?
Regular expense categorization shows total spending by type. Job costing assigns those same expenses to specific projects so you can see profitability per job, not just overall.
Read answerHow can a contractor know which jobs are actually profitable?
Profitability by job requires tracking from estimate through closeout. You need the original bid, change orders, all direct costs coded to the job, overhead allocation, and a closeout report run while details are fresh.
Read answerWhat should a Texas restaurant track for sales tax and mixed beverage tax?
Texas restaurants track regular sales tax on food plus two separate mixed beverage taxes on alcohol. Mixed beverage sales tax is collected from customers while gross receipts tax comes from your revenue.
Read answerHow should a Houston bar separate food, beer, wine and liquor sales in bookkeeping?
Create separate income accounts for each category because Texas taxes them differently. Mixed drinks and wine by the drink face both 8.25% mixed beverage sales tax and 6.7% gross receipts tax, while beer and food follow standard sales tax rules.
Read answerDo Texas restaurants need separate reports for mixed beverage sales and gross receipts tax?
Yes, Texas restaurants selling mixed beverages must file two separate monthly reports with the Texas Comptroller. The mixed beverage sales tax covers the 6.25% collected from customers, while the mixed beverage gross receipts tax is a 6.7% tax on your business's alcohol sales.
Read answerHow should restaurants track tips, payroll and merchant fees?
Start with POS reports rather than bank deposits to capture gross sales and tips. Record merchant fees separately, reconcile tip payouts to what was owed, and make sure payroll tip reports match what your POS shows for credit card tips.
Read answerWhat bookkeeping reports help restaurants control food cost and labor cost?
Prime cost reporting combines your food cost and labor cost into one metric that should stay between 55% and 65% of sales. Weekly food cost reports, labor percentage tracking, waste logs, and comp/void reports give you the visibility to spot problems before they drain your margin.
Read answerHow should food trucks track cash sales and sales tax in Texas?
Use a mobile POS system to record every transaction and separate cash from card sales. Reconcile your drawer daily, deposit frequently, and track sales by location. Texas sales tax applies to prepared food at 6.25% plus local rates.
Read answerHow should retail shops track inventory and cost of goods sold?
Proper retail inventory tracking starts with recording every purchase at cost, then adjusting for customer returns, vendor credits, and shrinkage. Regular physical counts verify your numbers and catch problems before they compound.
Read answerHow should boutiques reconcile POS deposits, refunds and gift cards?
Reconcile POS deposits by tracking gross sales, discounts, returns, gift cards, and sales tax separately before comparing to your bank deposit. Gift cards sold are a liability until redeemed. Merchant fees need to be tracked as expenses whether deducted from deposits or charged separately.
Read answerWhat sales tax issues should Texas Shopify and Amazon sellers watch for?
Texas marketplace facilitator laws mean Amazon collects and remits sales tax on your behalf, but direct Shopify sales are your responsibility. The bigger challenge is often reconciling marketplace payouts where sales, fees, refunds, and taxes are bundled together.
Read answerHow do I reconcile Amazon payouts to actual sales, fees and refunds?
Amazon deposits are net amounts that bundle sales, fees, refunds, advertising, and reserves into one number. Proper bookkeeping requires breaking these components apart using Amazon's Settlement Report rather than booking deposits as revenue.
Read answerHow should e-commerce businesses track inventory across multiple platforms?
Use consistent SKUs across all platforms, track purchase costs at the item level, and reconcile platform reports to your accounting software monthly. Inventory management software becomes necessary once volume justifies the investment.
Read answerHow should liquor stores and smoke shops track inventory shrinkage and sales tax?
Configure your POS to separate different tax categories at the point of sale. Track shrinkage by comparing physical inventory counts to your system's records. Reconcile cash daily since these businesses handle significant cash transactions.
Read answerWhat bookkeeping setup works for salons with booth renters and employees?
Keep booth rental income separate from service revenue in your chart of accounts. Booth renters are tracked as rent payments received while employees go through payroll with proper withholdings and W-2s.
Read answerHow should salons and spas track product sales separately from services?
Set up separate income accounts for service revenue and retail product sales in your accounting software. This separation is essential for accurate sales tax calculation, inventory tracking, and understanding profitability by revenue stream.
Read answerWhat records should a med spa keep for payroll, inventory and sales tax?
Keep time records, commission calculations, and employment documents for payroll. Track retail inventory separately from treatment supplies with regular counts. Document taxable product sales versus non-taxable services for Texas sales tax compliance.
Read answerHow should manufacturers track raw materials, work in process, and finished goods?
Manufacturers need three separate inventory accounts that track costs as products move through production. Raw materials hold purchased materials, WIP accumulates materials plus labor and overhead, and finished goods hold completed products until sold.
Read answerWhat bookkeeping reports help metal fabrication shops understand job profitability?
Job cost summaries, work in progress reports, material usage tracking, and labor hour reports by project. These reports only work if every cost gets coded to the correct job as it happens.
Read answerHow should small manufacturers track deposits, progress billing and inventory purchases?
Record deposits as deferred revenue until the product ships. Match progress billing to work completed, track materials in inventory until delivery, and use purchase orders to see committed costs before invoices arrive.
Read answerHow should auto repair shops track parts, labor and shop supplies?
Track every expense by repair order and keep parts, labor, shop supplies, sublet repairs, and warranty work in separate categories. This separation shows you true job profitability and keeps your books ready for tax time.
Read answerWhat bookkeeping setup helps an auto shop see profit by service type?
Auto shop bookkeeping needs to separate labor from parts revenue, categorize by service type, and track parts cost alongside selling price. This setup shows which repairs actually make money versus which ones just keep technicians busy.
Read answerHow should real estate lessors track rent, deposits, repairs and improvements?
Track everything by individual property so you can see profitability per address. Security deposits are liabilities until forfeited. Repairs are deductible immediately while capital improvements must be depreciated over time.
Read answerWhat is the best way to separate rental property repairs from capital improvements?
Set up separate accounts in your bookkeeping for repairs and fixed assets. Code expenses based on whether the work maintains existing condition or adds value and extends life. Have your tax preparer review significant items since the final treatment affects your taxes.
Read answerHow should a landlord track mileage, property management fees and mortgage interest?
Track everything at the property level. Mileage needs contemporaneous logs with purpose documented. Mortgage interest and property taxes come from lender statements, and owner contributions should stay separate from operating income.
Read answerWhat bookkeeping records do farms need for Schedule F?
Schedule F requires documentation for all farm income and expenses. Track crop and livestock sales, government payments, and operating costs like seed, feed, fuel, labor, and equipment. Organized records mean accurate filing and every deduction you're entitled to.
Read answerHow should Montgomery County farms track crop income, equipment costs and seasonal labor?
Farm income and expenses don't follow normal monthly patterns. Track crop sales by type and harvest date, record equipment purchases separately for depreciation, and maintain detailed payroll records for seasonal workers to stay compliant.
Read answerWhat expenses should farmers track separately for tax time?
Farmers should track seed, feed, fertilizer, chemicals, fuel, repairs, equipment, depreciation items, labor, land rent, and supplies as separate categories. Each has different tax treatment and appears on different lines of Schedule F.
Read answerHow should nurseries or small farms track inventory and supplies?
Separate inventory into categories that match agricultural operations: growing stock, finished plants, supplies, and production inputs. Track losses from weather, disease, and pests with documentation. Physical counts should align with growing cycles, not just calendar year end.
Read answerWhat bookkeeping does a nonprofit need before filing Form 990?
Form 990 requires expense allocation across program, admin, and fundraising categories, plus grant tracking and board-ready financials. Your bookkeeping system needs to track these elements throughout the year, not just at filing time.
Read answerHow should nonprofits track restricted donations and grant expenses?
Restricted funds require separate tracking because donors or grantors specified how the money must be used. Set up your accounting system to tag each funding source, record releases from restriction when money is spent according to donor intent, and align grant expenses to approved budget categories.
Read answerWhat reports should a nonprofit board review each month?
Nonprofit boards should review the statement of financial position, statement of activities, budget vs. actual comparison, cash position, and restricted fund status each month. These reports provide the financial picture needed for proper oversight.
Read answerHow should a nonprofit prepare for an annual audit or financial review?
Audit preparation starts with year-round recordkeeping, not last-minute scrambling. Focus on monthly reconciliations, thorough documentation, proper grant tracking, and reasonable segregation of duties given your organization's size.
Read answerWhat bookkeeping problems cause Form 990 delays?
Form 990 delays usually stem from unreconciled donation records, missing donor restriction tracking, payroll and vendor documentation gaps, and expenses that weren't properly allocated between program and administrative functions throughout the year.
Read answerHow should churches and charities track donations, reimbursements and program expenses?
Churches and charities need to track contributions by donor with any restrictions noted, document reimbursements with receipts and approvals, and allocate program expenses by ministry or initiative. Good records protect the organization and maintain donor trust.
Read answerHow do I know if my nonprofit needs outside bookkeeping help in The Woodlands or Montgomery County?
Signs include approaching Form 990 deadlines without confidence, board questions you can't answer quickly, grant reporting requirements, or an upcoming audit. If your books take time away from your mission, it's probably time for help.
Read answerWhat bookkeeping records should a new business in The Woodlands set up before its first tax season?
Set up a separate business bank account, configure QuickBooks Online properly, and register for Texas sales tax if applicable. Be aware of franchise tax filing requirements and establish a monthly reconciliation routine before tax season arrives.
Read answerWhat should a Conroe business clean up before switching bookkeepers?
Focus on reconciling all accounts through a clean cutoff date, documenting your chart of accounts, and verifying payroll and sales tax filings are current. You'll also need to transfer system access and document any open items.
Read answerHow should Spring and Tomball service businesses track jobs across multiple crews?
Every expense and labor hour needs to be coded to a specific job as it happens. Set up time tracking for crews, integrate your scheduling software with QuickBooks, and allocate truck expenses consistently by crew or as general overhead.
Read answerWhat bookkeeping issues are common for businesses growing from The Woodlands into Greater Houston?
Expansion into Greater Houston creates complexity around sales tax jurisdictions, location tracking, payroll, and financial reporting. What works for a single Woodlands location often breaks down when you add crews, job sites, or storefronts across the metro area.
Read answerWhat reports should a Houston-area business review before opening a second location?
Before opening a second location, review your current location's P&L, labor costs, and cash position. You'll also need projections for the new location including rent, inventory requirements, sales tax complexity, and a realistic break-even forecast.
Read answerHow can a virtual bookkeeper support businesses across The Woodlands and Greater Houston?
Virtual bookkeeping uses cloud-based software like QuickBooks Online, secure document sharing, and regular communication to deliver the same quality as traditional bookkeeping. The physical distance doesn't matter when workflows are built around real-time collaboration and proper security.
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