Bookkeeping Questions from the Road!: A C&P Q&A
Hi everyone,
As you may know if you’ve been following my Linkedin, I’ve been traveling a lot recently around the state of Florida to attend Business Expos. I’m grateful to have met a lot of small business owners along the way.
Speaking with small business owners across the state, I’ve heard certain questions come up more than once. While I’m happy to answer questions in person, I thought it would be good to post here some of the common questions I’ve been asked, along with my responses.
Running a small business comes with many challenges, and bookkeeping is often one of the biggest pain points. My goal is to provide clear, actionable advice to help you stay on top of your finances.
So let’s jump right in with a top 10 Q&A!
1. "How do I separate personal and business expenses?"
Mixing personal and business expenses is a recipe for confusion (and potential IRS trouble). Here’s how to keep them separate:
Open a Business Bank Account: Use it exclusively for business income and expenses.
Get a Business Credit Card: Helps track deductible expenses cleanly.
Pay Yourself a Salary (If Incorporated): Instead of dipping into business funds, set regular owner draws or payroll.
Choose a Card, not just any card: You may use a service like Amazon to buy personal things. You may also use the same Amazon account to buy things for your business. Make sure that you keep your personal card and business card on file. Then when checking out, select the appropriate card. Try not to purchase business and personal items together in the same order.
2. "What’s the easiest way to handle sales tax?"
Sales tax can be tricky, but these steps simplify it:
Know Your Obligations: Sales tax rules vary by state and product/service type. Check your state’s revenue department website.
Charge Correctly: Set up tax rates in your POS or accounting software.
Track Separately: Don’t commingle sales tax collected with revenue—it’s not your money!
File on Time: Deadlines vary (monthly, quarterly, or annually). Missing filings lead to penalties.
3. "Why do I need a bookkeeper if I already paid for QuickBooks?
Congratulations on making the investment in QuickBooks! But just buying QuickBooks isn’t enough. You need to maintain it. Or you can pay someone else to manage it for you.
Think of it kind of like a house. You may have bought the house, but that’s not the end of the story. You need people to clean it, repair it, install HVAC, fix the plumbing, etc. Now you could try to do all of those things yourself, but that will be very time consuming. And worse yet, if you don’t have the proper training, you could end up making things worse rather than better.
If it is worth investing into purchasing a house, it is worth investing in people to maintain the house. Similarly, if it is worth investing in QuickBooks for your business, it is worth investing in someone to maintain QuickBooks so it can function properly.
4. "How often should I update my books?"
I actually have a whole other blog about this, which I’ll link to here [link].
Long story, short: At a minimum, monthly updates are essential. However, I recommend at least weekly check-ins for the best results. The ideal timing also depends on how active your business is, and how tight the cash flow is.
And if you need to submit sales tax, states typically require payment at about 15 days after the end of the previous period. So of course you want to make sure you are keeping up to date ahead of any tax deadlines. Nobody wants to scramble to do an entire financial quarter of bookkeeping in two weeks to avoid tax penalties.
Personally, I like to set a recurring time (e.g., every Friday) to review transactions, send invoices, and follow up on overdue payments.
5. "What’s the best way to track unpaid invoices?"
Late payments hurt cash flow, so staying on top of receivables is key to success. The best way to do this is to run a regular accounts receivable aging report. This report will alert you to any overdue invoices. Remember that overdue invoices are best handled as soon as possible for the best chance of successfully collecting payment.
While procedure varies from company to company, a pretty standard practice is to escalate attempts at collection at 30+ days past due date. That might mean reaching out to the customer directly, adding a late payment fee, or possibly even stopping service until payment is collected.
Personally, I like to automate emails that remind customers about past due invoices. I also recommend sending customers a monthly statement of their balance.
Pro Tip: Require deposits or partial payments upfront to reduce risk.
6. "Should I use cash or accrual accounting?"
The right method depends on your business size and goals. Generally, most of my clients get by just fine using cash based accounting.
Cash Accounting is when you record income/expenses when money changes hands. It works best for small businesses with simple finances. Taxes are generally paid based on cash accounting.
Accrual Accounting is when you record income/expenses when earned/incurred (even if unpaid). This kind of accounting is generally best when businesses with inventory or credit sales, or those needing GAAP compliance.
Something to note is that a business doesn’t need to strictly commit to one method or the other. Oftentimes you can change a setting in your reports that will switch between cash basis and accrual basis reporting.
7. "How often should I pay myself as a business owner?"
It depends on your business structure:
Sole Proprietors/LLCs: Take owner draws as needed, but keep them consistent to avoid cash flow issues.
S-Corps/C-Corps: Pay yourself a regular salary (required by the IRS) with payroll taxes withheld.
Golden Rule: Never drain the business account—ensure enough remains for operations and taxes.
8. "How can I improve my cash flow through bookkeeping?"
Healthy cash flow is about timing. Try these strategies:
Invoice Quickly: Send invoices immediately after delivering a service.
Offer Early Payment Discounts: Example: "2% off if paid within 10 days."
Track Upcoming Bills: Schedule payments to avoid late fees but keep cash as long as possible.
Build an Emergency Fund: Aim for 3-6 months of operating expenses.
Pro Tip: Run a cash flow statement monthly to spot trends.
9. "When should I consider upgrading accounting software?"
QuickBooks Online isn’t a singular product. It comes in many different flavors. Your individual business needs determine what level of QuickBooks you need. And as your needs change, your QuickBooks can change too.
A breakdown of the exact packages available for QuickBooks is outside the scope of this blog, especially since the packages are updated frequently. But if you are having trouble with any of the following, it might be time to make a change:
Spending hours manually entering data.
Trying to add multiple users to your QuickBooks.
Ensuring accuracy in employee timesheets.
Tracking inventory.
Managing multiple currencies.
10. “How can I get started working with you?”
Easy! Just schedule a free consultation at this page. I’d be happy to help.