WELCOME TO OUR
Client Accounting Manual
Reporting
Communication
Expenses
Reporting
Income
Reporting
Payroll
Processing
Other
Information
PART I
Client Reporting
Communicating with our Staff *
We operate as a team to provide you with bookkeeping, payroll, accounting, tax and financial services.
Accounting and Bookkeeping questions should be directed to:
Payroll questions should be directed to:
Complex tax and business questions should be directed to:
When you call our office, you may first reach our voice mail system. Please press the person’s extension that you wish to reach. If you prefer a live operator to take your call, please press 0. We attempt to return all calls within 24 business hours.
Phone: (833) 533-7272
Fax: (218) 736-9085
Please consider creating a policy that instructs your employees not to open mail from our office. There are many times when we send confidential items pertaining to your personal or company finances that you may not want your employees to see. Our policy is to put labels on letters that denote "important" for time-sensitive items and “confidential” for tax return-type information. Working together on this issue will ensure that your privacy is maintained.
Effective Communication
We value effective communication and collaboration. We are part of your business team now and we will need to communicate information and share documents on a regular basis.
We need your engagement in this process in a manner that works for all of us.
To this end, this is how we communicate at Keep The Books:
We "time block". This is how we stay on task and get stuff done on time. Including your stuff! We strive to get back to you by the end of the next business day, but keep in mind there is no such thing as an "accounting emergency" that an instant response can solve.
- Any and all day to day actions, questions and request are by email. This is how we track, document and action what you need us to accomplish for you.
- We welcome phone calls or Zoom meetings by appointment if it is a more efficient medium for discussion or to explain a situation or scenario. Simply click on the link on that last page of this document, on our website or at the bottom of any of our emails to access our calendar and select a time for us to talk.
- Please do not communicate with us through text, voice mail, social media messaging or chat. We cannot turn these request into actions nor can we track these communications well.
To ensure messages from known addresses or domains don't get moved to your Junk Email folder, add us to your safe senders list:
Monthly Reporting *
We consider the monthly maintenance of your books and records to be a serious matter, and as such, we require that you provide complete and accurate information to us by the 5th of each month. You will receive a Monthly Checklist from us with the prior month’s financial statements, listing the information you are required to send us. Please return the checklist along with all of your current monthly information. (See Appendix A-9 for a sample monthly checklist). Postage paid envelopes are provided for your convenience in the back of this book. When you need more, please request them from our office. We also ask that you respond to our requests for information in a timely manner. Late and poor reporting may result in additional fees.
Bank Statements
For Paperless Statements/Online Banking:
If possible, we ask that you set our company up with an Accountant’s Read-Only Login to your online bank account. This allows us to process your account as quickly as possible and view all check images we may need to reference, while saving you from having to send the statements to us separately. If your bank does not offer this option, you will need to download the bank statements and check images yourself and send them to us via email or upload to our secure online portal.
For Paper Statements:
In order for us to better serve you, we ask that you sign a Bank Statement Change of Address Authorization Form. (See Appendix A-5 for a sample). This gives the bank the authority to mail your bank statement and cancelled checks directly to us and also helps us speed up the time in which we are able to reconcile your bank account. When we have completed the bank reconciliation process, we will mail your bank statements and cancelled checks to you along with the bank reconciliation. The bank reconciliation will tell you if you need to make any adjustments to your bank balance.
Adjusting Your Bank Balance
If you maintain an ending balance, your Bank Reconciliation will include any adjustments you need to make. When you receive your bank reconciliation it is very important you make adjustments correctly. Please review each reconciling item to be sure you have not already recorded it on a subsequent check stub. We will make a reasonable attempt to find differences between your balance and ours. Any immaterial differences will be listed as “unallocated differences.” See Appendix A-4 for a sample bank reconciliation.
If you keep your bank balance on your check stubs, go to your current check stub and make the adjustment there. Do not go back to the prior month to make the adjustments.
If you are using a QuickBooks check register, make the adjustment in the register at your last entry for the current month. Do not go back to the prior month to make the adjustments.
Reporting Using Secure Online Portal
For your convenience and security, any file or document you have in electronic format can be uploaded easily to our secure online portal. Your username and password will be emailed to you when your Company’s portal has been set up. This will also be where you retrieve your financial statements, tax returns, and any other documents we need to send to you electronically, as email is not secure enough for sensitive financial information and does not conform to electronic security laws. You may choose to not to use the portal and receive all of your information on paper. This will, of course, slow down the delivery of your information and your tax returns. If you encounter problems using the portal or need a password reset, please contact our office.
To access the portal:
- Go to our website, (www.keepthebooks.com) and click on 'Client Login'
- Login with your Username and Password
- This will take you to where we display your documents in .pdf format for your review (financial statements, tax returns, etc.) and File Exchange is the area where you upload files to us.
Software Users Reporting
PART II
Reporting Expenses
Chart of Accounts and Coding of Checks *
We use a standard chart of accounts that can be modified to fit your individual needs.
If you are using a manual bookkeeping system, we will have you change to use duplicate checks. Duplicate checks come three to a page. Each month you will send us the carbon copies of the checks you have written during the month and keep the original register stub in your checkbook. You will also need to write the general ledger account code in the box next to the date. If the check goes to more than one account, you should use the code boxes in the lower left corner of the check. If you are not sure what account code to use, write a description on the check stub so that we can code the check for you.
If you are using QuickBooks or another accounting software system, we will provide a chart of accounts for you to use with your software. You will need to enter a general ledger account code in the stub area of the computerized check. There is a drop down box with the general ledger codes that you can click on or you can just type in the code. A memo area can be used for typing in descriptions for those checks that you are not sure how to code. If you are unsure about how to code a check, please put a detailed description in the memo area and code the check to 680-miscellaneous expense.
Example 1 – Single Expense
This is an example of a check coded to a single general ledger expense account, 612 Telephone:
Coding Procedure:
Write the account code in the code box next to the date.
Example 2 – Split Check
A split check is a check coded to more than one general ledger account. This is an example of a split check coded to two general ledger account codes:
$1,000 to account 504 Purchases, and $250 to account 658 Freight.
Coding Procedure:
- Draw a line from the code box next to the date to the multiple code boxes in the lower left corner of the check.
- Write in the various general ledger account codes.
- Total the amounts in the code box. They should equal the amount of the check.
Retention of Records
Bank statements, all cancelled checks and bank deposit records should be kept for three years. Cancelled checks for taxes and contracts should be retained permanently. Cancelled checks for asset purchases should be kept for the life of your business plus three years.
Record Keeping Retention Rates (download)
Debit Cards
Debit cards are highly discouraged for business use for various reasons:
- It is extremely difficult to maintain an accurate checking account balance throughout the month when using debit cards and financial control is greatly diminished.
- Using a credit card instead of a debit card frees up an entire month of cash flow.
- Debit cards do not help when attempting to enhance your credit score.
- Debit cards generally do not provide the perks (airline miles, cash back, etc.) that credit cards provide.
- Debit card usage in a business environment causes numerous extra transactions leading to significantly higher accounting fees.
- More time is spent communicating each month to code these transactions, resulting in more processing time and higher accounting fees.
However, if debit cards are used, details will have to be reported to us as follows:
Manual System: Please print a copy of your bank statement and code each of the debit card transactions and send it to us via your normal reporting method.
Software Users: Please enter the debit card transactions into your software using the appropriate account codes.
Electronic Transactions
Electronic transactions include electronic bill payment systems and vendor generated debits to your account. Details for these transactions need to be reported as follows:
Manual System: Please print a copy of your bank statement and code each electronic transaction and send it to us via your usual reporting method.
Software Users: Please enter the electronic transactions into your software using the appropriate account codes.
Credit Cards
You must use a separate business credit card for business purchases. Do not use your personal credit card. The IRS does not approve of mixing business and personal purchases on the same credit card. Please provide a copy of the credit card statements to us and follow these guidelines:
- Create a separate envelope or manila folder for each credit card the business uses.
- For each credit card purchase, obtain a receipt. Record what the expense is for on the receipt and file it in the appropriate credit card envelope or folder.
- At the end of each month (or whenever you receive your credit card statement):
- Code each line on the credit card statement with the appropriate account code. Don’t forget to include any finance charges!
- Code the check. To do this, use the credit card statement detail to summarize the charges by account code and list the code and the respective amounts on the check stub. If the balance is being paid in full, the total charges will equal the payment amount. If you are paying more or less than the charged amount, simply code the difference to the credit card liability account. Send us a copy of the coded credit card statement.
- Staple the receipts to the original credit card statement and file them accordingly.
Accounts Payable
If you are an accrual basis taxpayer or need accounts payable listed on your financial statements for your bank, you must provide us with a list of your accounts payable at the end of each month.
If you are on a manual bookkeeping system, we will provide you with a form to list the accounts payable. See Appendix A-7 for a sample Accounts Payable Report. Review all checks that you have written within the first 10 days of the next month along with all bills on hand. If you are paying an invoice or bill that relates to a product purchased or service provided in the prior month, then that invoice or bill is accounts payable. List that invoice or bill on the provided form and code to the proper general ledger account(s).
If you use QuickBooks or other software, you must track accounts payable within the vendor section of your software so that it can be properly accounted for.
Expense Reports
Expense reports are used to account for and record business expenses paid personally. This would include business expenses paid by personal cash, from personal checkbook, or by personal credit card. List the items by category on the Expense Report and write a company check to yourself. The check will be coded to the various expense categories. Staple receipts to the report and keep this in your paid bill file. See Appendix A-8 for a sample Expense Payable Report.
Vehicle Expenses *
If your corporation owns the vehicle that you drive, then the corporation should pay all expenses on the vehicle, including gas, oil, repairs, insurance, etc. You will need to report your mileage information to us by November 30th of each year. This includes miles driven for personal, commuting and business use. Any personal or commuting use will be included in your year-end W-2.
If you own the vehicle, then the corporation should not pay any of the expenses. All loan payments, gas, oil, etc., should be paid from your personal funds. The number of business miles driven should be listed on your expense report and reimbursed at the standard mileage rate.
Vehicle expenses are "hot" items during audits, so be sure you have written evidence supporting your business and personal mileage. Without this written proof, you could lose your entire deduction for vehicle expenses.
Meals and Entertainment Expenses *
Entertainment expenses incurred to entertain a client, customer, or employee may be deductible if the expense meets two tests. First, the entertainment expense must be ordinary and necessary (those that are normal, usual or customary and are appropriate and helpful in the development and maintenance of your business). Second, it must pass the directly related or the associated test. This is a four-part test:
- You must at the time of making the expenditure have more than a general expectation of deriving income or other specific business benefit at some time in the future.
- During the entertainment period, you must actively engage in a business meeting, negotiation, discussion or other bona fide business transaction.
- The principal character or aspect of the combined business and entertainment must be the active conduct of your trade or business.
- The entertainment expense must be allocable to you and the person or persons with whom you are engaged in the active conduct of your business during the entertainment. (The expenses of entertaining spouses and other non-business guests are not directly related).
Generally, the deduction for business related meals and entertainment is limited to 50% of the expense. However, you may deduct 100% of the cost of meals that are furnished to employees at company picnics or holiday parties. Meals furnished to employees at the site of an employer’s restaurant or catering service are also 100% deductible. Meals that qualify as a de minims fringe benefit (expenses that have a value so small as to make accounting for them unreasonable or administratively impracticable) are also 100% deductible.
You must keep adequate records to substantiate these expenses. Adequate records will show the name and location of the restaurant, dates, charges for the meals or entertainment, the number of people served, and the business purpose.
Asset Purchases *
Items purchased that have over one year of useful life and are over $_____ in value are typically considered depreciable assets. This includes such purchases as furniture, computers, equipment, vehicles, and leasehold improvements. When you purchase anything that falls under this description, you will need to provide us with a copy of the receipt for the item as well as any lease or finance agreement associated with it. Invoices for assets being depreciated should be kept in a separate file. This file is required to be maintained for audit purposes.
When you dispose of or sell any asset, please notify us so we can update our records. Additionally, at the end of each year, we will ask that you verify all assets we have listed for your business are still in use. Please be sure to respond promptly to our request. Keeping this information up to date will save you money in personal property taxes and keep your business tax return accurate.
Record Retention
Make sure that you have receipts for all expenditures related to your business. A cancelled check is not sufficient. Be prepared, in case of an audit, to explain the business reason for expenditures. For unusual items, it is a good idea to make a notation on the invoice while the information is fresh in your mind.
Also, maintain your leases, bank loans, and other permanent long-term legal documents in files easily accessible at all times. Regular invoice and receipt files along with income records and reports should be maintained in annual files. These annual files should be archived at the end of each year and new ones set up at the start of each new year. See Appendix A-14 for a record retention guide.
Petty Cash System
Begin the petty cash system by placing an appropriate amount of cash ($50, $100, $200, etc.) in an envelope (or cash box, drawer). When an expense needs to be paid, cash is taken from the envelope and a slip indicating who took the money is placed into the envelope. Any change and a copy of the receipt from the purchase are placed back in the envelope. Remove the original slip.
At all times the total of receipts, slips and cash should equal your designated petty cash amount.
When petty cash runs low, simply write a check for the total of all receipts. Cash the check and put the cash in the envelope. This should bring your cash back up to its designated level. Total each category of expenses as shown to the left and code the check accordingly. Staple the receipts and petty cash summary together, indicate the date and check number, and file it in paid bills.
PART III
Reporting Income
Sales / Accounts Receivable *
It is very important that you report your sales to us by the 5th of each month on a standard reporting form. See Appendix A-6 for a sample Sales Report. Reconciling differences between sales and bank deposits may be posted to a Suspense Account on the Balance Sheet until they can be resolved. Please review this account monthly. If you have sales on account and are an accrual basis taxpayer, you must provide us with an accurate accounts receivable balance at the end of each month.
If you use QuickBooks or other software, you must track accounts receivable within the customer section of your software so it can be properly accounted for.
Bank Deposits Other Than Sales *
It is important that you let us know if you are making deposits other than sales or revenue-related deposits. These could take the form of personal loans, bank loans, vendor rebates, tax refunds, etc. Please indicate this on one or more of the following: check stubs, sales sheets or the monthly checklist. We assume all unmarked deposits are revenue.
Sales Tax *
Depending on your sales tax volume, you will be required to file monthly, quarterly or annually. We can file these for you if directed. Be aware that you may be required to collect and file sales tax in other states where you do business. For questions about your state’s sales tax, call the local number or visit the official website. Please also contact the other states regarding their sales tax collection policies. If you purchase products from out-of-state vendors and they do not charge you sales tax, you are required to file a use tax return with your state and remit tax on those purchases.
PART IV
Payroll Processing
Using Our Payroll Services *
We offer full service payroll in addition to our bookkeeping and tax services. This includes live checks and direct deposit as well as same-day payment of tax liabilities, filing of all government documents, and year-end W-2 services.
After-the Fact Payroll Services *
If you calculate and write your own payroll checks, you are an after-the-fact payroll client. You will enter the gross pay and related payroll tax withholdings into the payroll section of the duplicate check. If you are deducting miscellaneous deductions (i.e., insurance, advances) from employees’ checks, write the amounts and account codes in the blank areas below state tax. Follow the same procedure for reimbursing things such as mileage and supplies and add the reimbursements to the check.
We will calculate your required payroll tax deposits for federal and state taxes. You must deposit the federal income taxes and the employee and employer FICA taxes by electronic funds transfer (EFTPS). Please see below for more details.
In order to prepare your payroll tax deposits in a timely fashion, you must forward us your duplicate checks or QuickBooks files as soon as possible. If you are a monthly depositor, we must have your information no later than the 5th of the following month. If you are a semi-weekly depositor, you must send us your information immediately following each pay date.
We will also prepare your payroll tax reports on a quarterly basis and your W-2s at the end of the year.
Outside Payroll Processor
You are a client with an outside payroll processor if a payroll company such as Paychex, ADP, etc. calculates and writes your paychecks for you.
We will require duplicate payroll reports from your payroll processor in order to enter the payroll information to your general ledger. Your payroll processor will calculate all payroll tax deposits and prepare all payroll reports and W-2s. We also need copies of your monthly, quarterly, and annual government filings such as 941, 940, State Withholding, SUTA, and W-2s. This is generally an inefficient process for both you and us because it takes almost as much time for us to record your payroll as it would to just do it.
Taxes Withheld
Never use the tax money withheld from employees for other business purposes, and always pay these taxes on time. Even if the business files for bankruptcy, you are still personally responsible and liable for these taxes. The IRS is merciless in collecting these taxes. You may want to avoid this hassle by utilizing our payroll service, which involves having us schedule these tax payments for you.
Employee Advances
We strongly discourage employee advances. If you advance an employee’s pay with a check written prior to a regularly scheduled pay date, code this check to account 109. Deduct this amount from the next paycheck in its entirety or form a schedule of repayment that you have agreed to. It is your responsibility to track these advances. If employees reimburse you with personal checks or cash, please make a separate bank deposit and describe these transactions as an “employee advance being repaid.”
"Under the Table" Payments *
Never pay anyone “under the table.” For one thing, you will not get a business deduction for the payment. This means you end up paying the federal, state and local income taxes, as well the social security tax. In essence, it ends up costing you up to 50% more! In addition, you are also setting yourself up for a lot of potential problems. Remember, the person you make this kind of deal with today may be the person who will report you tomorrow. It is just not worth it.
Payroll Tax Deposits
Deposit Schedules
Monthly Deposit Schedule:
If you are a monthly depositor, payroll taxes must be deposited by the 15th day of the following month. For example, payroll taxes for the month ending July 31, 20xx are due on August 15, 20xx. Should the 15th day of the month fall on a weekend or bank holiday, the deposit will be considered timely if made by the close of the next banking day.
Semi-weekly Deposit Schedule:
Semi-weekly depositors will make payroll tax deposits based on the day their employees are paid. For paydays falling on Wednesday, Thursday and Friday, payroll tax deposits are due the following Wednesday. For paydays falling on Saturday, Sunday, Monday, or Tuesday, payroll tax deposits are due on Friday.
Should the due date fall on a bank holiday, the deposit will be considered timely if made by the end of the next banking day. In addition, you have at least three banking days from the end of a semi-weekly period to make a deposit. If a bank holiday falls during the three days after the end of the semi-weekly period, you will have on additional banking day to deposit. For example, your employees are paid on Friday and Monday is a bank holiday. Your deposit is not due until Thursday. This allows three banking days to make the deposit. However, if your payday is on Thursday and Monday is a banking holiday, your deposit will be due on its normal day, Wednesday.
$100,000 Next-day Deposit Rule
If you accumulate a tax liability of $100,000 or more on any single day during a deposit period, you must deposit the appropriate tax by the next banking day. This is a requirement regardless of what deposit schedule you normally use.
In addition, if you are a monthly depositor and accumulate a $100,000 tax liability on any day during a month, you automatically become a semi-weekly depositor on the next day. You will remain a semi-weekly depositor for the remainder of the current year and also for the following year.
Note: If you are on our tax pay service, we will pay all of your taxes and you will not need to worry about depositing rules.
How Do I Make a Payroll Tax Deposit?
Electronic Deposit Requirements
All deposits must be made electronically through the EFTPS system. To enroll in EFTPS, call 1-800-555-4477 or visit the IRS website: www.eftps.gov
Deposits made electronically must be initiated at least one business day in advance of the due date. Deposits initiated on the day they are due are considered late.
Note: If you are on our tax pay service we will pay all of your taxes and you will not have to worry about making tax deposits.
Payroll Records
Records related to the payment of salaries and wages (including all deductions and adjustments from gross pay), records related to reporting hours worked and time sheets, original W-4, W-2 and I-9 forms, employment tax returns and payroll journals should be kept for seven years.
New Employees
Each new employee must fill out a “New Employee Packet” consisting of form W-4, state withholding form, form I-9 and state new hire forms. Call our office at any time to get a packet. Completed packets (except for form I-9) must be returned to us at least three days prior to the employee’s first pay day. If this is your first employee, you will need to contact your insurance agent and obtain worker’s compensation insurance. It is important that the new-hire form be filled in as completely as possible. We can fill in the identification numbers. It is extremely important that the employee fill out the I-9 and that you receive, review and copy the documents as required in section 2. Please keep the I-9 and copies of the documents in your employee file. For a sample of the complete employee packet, see Appendix A-17 through A-20.
The Difference Between an Employee and an Independent Contractor
An employee performs work for you under your direct or indirect supervision, during hours that you specify and conditions you control. You also withhold payroll taxes from the wages you pay him or her. As an employer, you pay certain taxes that are an expense to you on the employee’s behalf.
Independent contractors are individuals who perform a service for you, usually at a pre-arranged fee, and who also meet the following criteria:
- They have a business card.
- They submit an invoice to you for each occurrence of services rendered.
- You have no control over the hours worked, or the tools used.
- They perform similar services for others.
- They do not have any major responsibilities within your organization, such as management or supervision of employees.
- A contract or work order exists between you and the independent contractor.
- They supply you with a business license number (issued to them by the city in which they work).
- They may also show evidence of being licensed by the state; for example, doctors, lawyers, electricians, etc.
The above items are intended to be a quick guideline and are only a portion of what determines worker status.
Some examples of independent contractors include:
Janitors, Plumbers, Accountants, Lawyers, Electricians, Landlords, Painters, Consultants, Salespeople, etc.
It is important to properly classify the people you pay. If you pay someone as an independent contractor and he or she is in fact an employee, an audit by state and/or federal agencies may prove costly to you. Back taxes, which should have been withheld, could be assessed against you. Penalties for failure to report employee earnings could also be assessed, as well as penalties and interest for delinquent withholding payments.
Internal Revenue Service 20 point Checklist for Independent Contractor (download)
What Are You Required To Do? *
For Independent Contractors:
- Have each Independent Contractor fill out a W-9 prior to paying them. (See appendix, page 32 for sample) If the contractor will not fill out the form, or if for any other reason you cannot get his or her identification number, you are required to withhold 28% of each payment. This is called Backup Withholding and the money is forwarded to the IRS, just like payroll taxes. Once it is withheld from the payment, you do not refund it to the contractor or pay it back to him or her in any way.
- Consider entering into a written agreement with your sub-contractor. (See appendix page 33 as an example). Please review the particulars of this agreement, and consult with your attorney regarding modifying the agreement to meet your specific requirements.
Example:
An electrician does some work for you and hands you an invoice for $800.00. You ask him to fill out a W-9. He says he doesn’t have the information on him. You should now offer the electrician a choice. He can wait to collect his payment until the W-9 is supplied, or he can be paid $640.00 immediately, with $160 to be sent to the IRS.
Forms W-9 and 1099
We recommend taking a firm stand that any independent contractor must supply you with a W-9 before you make any payment. This will protect you from penalties at the end of the year when you are required to submit a 1099 to the IRS. There is a $50.00 penalty for each ID number missing from the 1099 and a $50.00 penalty for any 1099 not submitted.
When you issue a sub-contractor’s first check we will need a copy of the W-9 form, including:
- Name and address
- Federal Identification Number or Social Security Number
See Appendix A-15 for a sample independent contractor agreement, and Appendix A-16 for a W-9 form.
Any non-corporate service provider that receives $600.00 or more will be provided with a 1099. If you give us all the necessary information, we will prepare these 1099s for you.
You are not required to issue the 1099 to corporations, but it’s in your best interest to have anyone claiming to be a corporation complete a W-9.
Exception: You are required to issue a 1099 to all attorneys for any amount, whether incorporated or not.
Client Accounting Manual Download
This entire manual, including the exhibits, is posted on our website so it can be downloaded and accessed as needed.
PART V
Other Business Information
Financial Statements
Financial statements will generally be prepared on the basis of accounting that is used for tax purposes. A sample Accountant’s Report required to be included with the financial statements is in Appendix A-11.
We will go over your financial statements in depth during our second strategy session. Learn to read and understand your financial statements; however, please do not hesitate to call us with any questions about your financial statements. This is your management tool. Use it. Help us to put it in the format that is most useful to you. Allow us to spend some time with you to help you learn how to use it.
This engagement is not intended for, nor can it be relied upon, to detect errors or irregularities occurring with your financial records.
Sale or Purchase of a Business
If you are thinking of selling your business or buying another business, please call us. We can help you determine the selling or purchase price and how to make the business more valuable.
Sales that involve corporations either involve sale of the stock or sale of the corporate assets. The sale of the corporate assets requires allocation of the purchase price to each asset that is sold to determine the buyer’s basis in each acquired asset and the seller’s gain or loss on the sale of each asset. The sale price is allocated to cash-type assets, inventory, furniture and fixtures, land, buildings, equipment and accounts receivable with the balance being assigned to goodwill.
It may be advantageous for the purchaser to obtain a professional valuation/appraisal of assets. Improper allocation can mean the difference between writing off the amount in one year (cost of goods sold) vs. seven years (furniture, equipment, etc.) vs. 39 years (buildings). Goodwill is written off over 15 years. If there is no agreed upon allocation in the purchase agreement, we can negotiate this.
Both the seller and buyer must file form 8594, which requires the name, address and federal EIN number of each party.
Our time spent on the sale of a business and issues relating to this sale are billed as extra charge items, even if tax-related.
Respecting the Corporate Form *
Please note that this is a general discussion and should not be viewed as legal advice for your particular situation. Please discuss these items with your attorney before deciding on a course of action.
Set-up
Be sure that your entity is set up properly. It is not enough to simply file your articles with the state. There are many other items that need to be addressed, including an organization meeting, issuance of stock, preparation of by-laws, officer designations, etc.
Maintenance
Depending on what type of corporation you have, you must maintain at least two officers and conduct at least one annual meeting to document the activities of the corporation. Always remember that you are a separate and distinct entity from your corporation and that there has to be a structure for every transaction you have with the corporation. Never pay personal bills from a corporate checkbook. See Appendix A-13 for information on respecting the corporation and keeping minutes.
Pricing *
The price quoted in our engagement agreement was based on the transaction level (number of checks including splits, deposits, number of employees, etc.) that you provided. After 90 days, we will re-evaluate our pricing based on actual activity. Accounting fees are also based on the promise that you will provide us with accurate information by the 5th of each month. If you habitually report late or inaccurately, your price, without regard to other factors, may increase by 15%. We may also consider terminating the engagement. At a minimum, we will evaluate all fees annually and send a notification indicating the new accounting fees. See Appendix A-10 for a sample letter. If your business is growing quickly, additional pricing reviews may be necessary.
The engagement agreement provides a listing of all included services. Services specifically outside the scope of this agreement include:
- Individual tax preparation.
- QuickBooks consulting.
- Representation of the taxpayer due to an IRS or other governmental agency audit.
- Preparation of financial statements for outside parties.
- Preparation of financial projections.
- Response to IRS notices that were not caused by the accountant.
- Consultations regarding the sale, purchase or financing of a business.
- Special request activities.
You will receive an invoice for additional services.
Referrals *
We truly appreciate your referrals. If you are receiving good service from us, please do not hesitate to recommend us to other small business owners. If for some reason you are not happy with our services, please contact us as soon as possible to discuss your concerns.
