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Bank Reconciliation and the Benefits of Reconciling your Account.

Posted on August 18, 2020 at 2:57 PM Comments comments (16)













 YESSSSSS!!! That Beautiful Moment when you finally reconcile an Account, especially after battling with the Account for a while - PRICELESS!!! In Case, you are wondering what Reconciliation is. Reconciliation is the Process of ensuring that your Accounting Record agrees with your Bank Statement. 
 
 Performing Bank Reconciliations helps you spot out Fraud and Reduce the risk of transactions, that can cause late fees and penalties. The Following are the Advantages of Bank Reconciliation:
 
   1) It makes Accounts to be in Good Standing - It makes your Account to be in Good Standing. When you reconcile your Bank Account, it helps you to be aware about the Amount that you can spend in your Account, so that you are less likely to overdraw your Bank Account. You need to keep in mind, that overdrawing will negatively affect your Credit Score and can prompt the Bank to charge you fees. 
 
  2) It Prevents Theft - Recording Bank Fees is a Standard Practice as you process your Reconciliation and it may reveal a transaction, that you have overlooked to record. By examining further, the available original documents, these discrepancies will be revealed. Most Importantly, it will reveal the Bank transactions, that were initiated by unauthorized individuals, who try to steal money from your Bank Account. 
 
  3) It Helps you detect Accounting Errors - There can be some cases, where your Bank commits an error in your favor, and this will make you liable to return that money, even if you've already spent it. By Reconciliation, you will be able to detect accounting errors that commonly occurs in Business, such as Double Payments, Addition and Subtraction Errors, Missed Payments and Lost Checks. 
 
  4) It keeps Mistakes in Check - Banks are usually responsible for implementing procedures to avoid making mistakes in your Bank Account; unfortunately, mistakes do happen sometimes, with the most common being a Simple entry error. Nevertheless, Banks will be able to correct these mistakes when you point them out, after you complete your Bank Reconciliation. 
 
  5) Need to Record Interest Earned - Businesses may think, that they are Small, so recording their Interest maybe minor. It is important to keep precise track of smaller details, since these can add up over time. Also, It may not seem important now, but as you earn more money and your Principal grows, your interest may become significant enough that it affects your bottom line. 
 
 6) It reduces Missing Transactions - We have seen several instances, where Banks may refuse to deposit your Check for reasons like you have drawn on a Foreign Bank Account. This may require them to reverse the original entry on a Deposit. Bank Reconciliation is carried to introduce transparency and efficiency into a Business's Accounting System. 
 
 7) It helps to identify Duplicate Charges - Reconciling your Bank Account helps to identify duplicate charges, that may be erroneously charged in your Bank Account; It also helps you to recognize unauthorized charges and incorrect posting amounts, thereby reaching out to the Merchant Companies and informing them to refund these charges. 
 
 8) It detects and prevents Embezzlement of Funds from your Company - Reconciling your Account helps to detect Fraud and embezzlement of funds from your Company. You are able to track every transaction and determine, where they are coming from, where the funds are being allocated to and if they were wrongly allotted. 
 
 9) It Helps Business Owners make Sound Financial Decisions - Reconciling your Bank Account helps Business Owners to make sound financial decisions about the growth of their Company and helps to identify particular product lines, that maybe non-profitable. 
 
 10) It helps you track your Accounts Receivables - Cash is King. Reconciling your Account keeps you on top of your Account Receivables; It helps you know the true Amount, that your Debtors are owing you. Reconciling your Account allows you to track your Invoices and reach out to your Debtors to make Payments promptly. It helps to ensure that you always have Cash available in your Bank Account. 
 
 11) Reconciling your Account helps you produce Accurate Financial Reports, needed for your Loan Application - Due to the Pandemic, a lot of Businesses have to rely on SBA Loans and Government Stimulus to help their Businesses stay afloat. Having a Reconciled Account helps you produce Accurate Financial Reports, that can help you obtain these Loans easily, without hassles. 
 
  Are you Reconciling your Account Regularly? Are you overwhelmed with your Reconciliation? We have the latest Accounting Software to help you and Guess What? We can set one up for you as well.
 
Give us a Call on 202-422-4586 and We'll help you out. 
 

 

Congratulations, You got your PPP Loan, What Next?

Posted on May 6, 2020 at 1:00 PM Comments comments (1)

 
      
  Congratulations, you filed all the Paperwork for your PPP Loan and you have received your Grant and Loan. Now is the time to start planning on how you are going to ensure you use the Funds correctly. During this Pandemic, the SBA has made efforts to make funding accessible to Small Businesses and it is important to use the Funds appropriately. 

    The PPP Loan is designed to provide a direct incentive for Small Businesses to keep their workers on Payroll. SBA will forgive Loans, if all employees are kept on the Payroll for eight weeks, starting from when the Loan is received and the Money is used for Payroll, Rent, Mortgage Interest Payments or Utilities. It is important to note that not more than 25% of the forgiven Amount maybe for Non-Payroll Costs.
 
  Now, that you have your Loan and have identified the time period, it's time to calculate the monthly payroll cost, to ensure your Loan Forgiveness. The Items below are the Payroll Costs to include, as well as the Non- Payroll Costs. 
 
        Payroll Costs: 
 1)   Salary, Wages, Commissions, Tips and Bonuses.
 2)  Owner's Draw Payments for Sole Proprietors.
 3)  Severance Pay
 4)  Paid Leave Payments (No FFCRA Paid Leave)
 5)  Employee Payments for State and Local Taxes.
 6)  Employee Payments for Federal Income Tax and FICA.
 7)  Employee Contributions to Retirement and Group Health Plans ( Health Insurance & Dental Coverage).
 8)  Payments of Interest on Mortgage Obligations. 
 
  Non-Payroll Costs: 
 1)  Contractor Pay
 2) Payroll Reimbursement.
 3) Owner's Draw Payments (Except for Sole Proprietors).
 4) Workers' Compensation Fees.
 5) Fringe Benefits. (Commuter Benefits, HSAs).
 6) Ancillary Benefits (Short-Term Disability, Group Life Insurance).
 
  Important Notes:
 
  • The SBA recently clarified that the 8 Weeks Period begins on the date, the borrower receives the disbursement of the Loan, and regardless of whether your Business has resumed operations.
  • No More than 25% of the Forgivable Amount of a PPP Loan can be attributable to Non-Payroll Costs.
 
   Actions to take immediately:
 
  • Open up a Separate Bank Account and Deposit the Loan Amount in the Bank Account. It would make it easier to track the use of the funds precisely. 
  • Order Check Books for this Account and Ensure the Check Payment is made from this Account.
  • Hire Back Employees and Restore Headcount and Wages to Prior Levels.
  • Maintain a Paper Folder or Electronic Folder for all PPP Expenses and Cancelled Checks. Remember you have 8 Weeks of Funding to track these costs.  Not 2 Months but 8 Weeks, from when you got the Funding. 
  • Ensure to pay your Rent on time. Get your Lease Agreement and Have it ready to produce, when it is requested.
  • Ensure to pay your Utility Bills on time and save all Bill Payments.
  • Make Sure to Pay ALL Interest on your Loans when Due. Although, Principal Payments are required, you are required to keep track of the Interest Payments, either with Statements or an Amortization Schedule. 
  • Keep a Record of the Exact Amount of Health Benefits and Pension Contributions due for the 8 Weeks. Ensure to find them, before the end of the 8 Weeks.
  • Get a Bookkeeper, CPA and Accountant NOW. 
 
         The PPP and EIDL Loan Program is one of the Greatest Investments, you have ever made as a Small Business. The Secret is knowing how to play by the Rules and is essential in using it to your Best Advantage.
       
     You may be proud of the fact, that you do your own Tax Filings, Payroll and Bookkeeping, but the PPP Loan and EIDL Loan is not an area, where you want to risk making a wrong decision. The Guidance for the PPP seems to be changing daily. Be Aware that Little Mistakes can cost you Big.  Whatever you do, be sure to do it under the Guidance of a Financial Advisor/Bookkeeper to help you maximize your Benefit from the adherence to the PPP Loan Terms.
 
     Feel Free to Reach Out to us and Let Us know, how we can assist you. We are available to help you with your Bookkeeping, Accounting and Payroll Needs. Call 202-422-4586 for More Information. 
 
 
 

     

All you Need to Know about the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL).

Posted on April 6, 2020 at 11:58 PM Comments comments (1)

All you Need to Know about the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan  (EIDL).

Paycheck Protection Program , Economic Injury Disaster Loan Program, SBA Loan




The Trump administration announced a $349 Billion Relief Package for small businesses that are being impacted by the effects of the coronavirus. Many are having to close their doors to prevent the spread of the virus. This situation, in turn, has led to companies having to reduce the hours of workers or even let them go altogether. 

The Relief Package Program is a Part of the Coronavirus Aid Relief and Economic Security (CARES) offered in Government - backed Forgivable Loans to help Small Businesses continue paying payroll costs and certain operating expenses.

If you're a Business Owner, these are Two (2) Main Options, that are available for Small Businesses and Non- Profits to obtain financial support during the coronavirus outbreak. They are:

  •         CARES Paycheck Protection Program (PPP) 
                                 And 

  •       Economic Injury Disaster Loan Program (EIDL)   

 
  Paycheck Protection Program (PPP) Loan:

  The Paycheck Protection Program (PPP) Loan is dedicated to guarantee Businesses, the loans they need to cover 8 Weeks of Payroll Expenses, along with some Utility and Rent Costs, as well as Payments of Interest on any Mortgage Obligation. Businesses will have to maintain Payroll fully for the Next 3 Months. It is important to note that the Loans can be fully forgiven, if the Businesses keep employees on Payroll or re-hire them by June 30th. 

         Important Facts about PPP:

  • To Apply for this Loan, Businesses can request 2.5 times their Average Monthly Payroll Costs. The Average Costs is based on the Total Payroll Costs for the Year 2019. 

  •  Organizations can apply for the Paycheck Protection Program (PPP) by calling their Banks and Other Lenders directly after completing the Form/Link below on the SBA Website:

  •  The Paycheck Protection Program (PPP) Loan is forgivable, depending on whether Businesses lay off workers and how they use the Money. 

  •  Repayment of Loans are deferred for 6 Months, with an Interest Rate of 0.50 % Fixed Rate and the Maximum Repayment Term is 2 Years.     

    
    Economic Injury Disaster Loan Program ( EIDL):

   This Loan is to provide Economic Relief for Businesses experiencing a Temporary Revenue Loss due to COVID-19. This Loan will guarantee a Bushiness/Non-Profit Organization, a Grant of $10,000  which is considered as " Advance", that you don't have to pay back. It funds low- interest Loans, that your Business can use to cover operating expenses, which you will need to repay back. 

        Important Facts about EIDL:

  • The Loan Request Amount will be based on the Amount of             " economic injury" that you have sustained, because of the COVID-19 Pandemic. 

  • The EIDL Loan can be used for a Broader Array of Costs, including Rent and Mortgage Payments, Salaries, Workers' Paid Leave and the Business' Operational Needs.

  • Organizations can apply for the Economic Injury Disaster Loan Program and Advance(EIDL) directly through the SBA Website Link below: 

  • Once you submit your Application for the Loan, you can indicate that you are interested in the emergency Grant at the same time. Businesses who request for this Grant Advance, when approved will not need to pay it back, but the rest of the Disaster Assistance Loan will need to have to be repaid.

  • Repayment of Loans are deferred for 6 Months, with an Interest Rate of 3.75% Rate for Small Businesses and 2.75% Rate for Non-Profits. The Maximum Repayment Term is 30 Years.        

        Additional Information: 

  • No Collaterals or Personal Guarantees is Needed for the Application for each of these Loans. However, if the Proceeds are used for fraudulent purposes, the United States Government will pursue criminal charges against the Business/Organization Owner. 

  • One can apply for Both Loans, if you need to, but you cannot use both Sources of Funds for the Same Purposes. 

  • The $10,000 grant is a Loan Advance and does not need to be paid back, BUT If you also apply for the Paycheck Protection Loan Program, the $10,000 will be subtracted from the Loan Forgiven Amount, under the Program.

  • If you apply for both Loans, it is advisable to let your PPP Lender/Banker, know that you have applied for the EIDL Loan. 

  • To get the Average Monthly Payroll Costs for the PPP Loan, it is advisable to use the Average of the last 12 Months' Payroll Costs. For New Businesses/Organizations, use the January - February 2020 Payroll Costs. 

  • You need to provide the Lenders, documentation that verifies the Number of Full Time Equivalent Employees on your Payroll Costs, Covered Mortgage Interest Payments, Rent Payments and Covered Utilities for the 8 Weeks Period, once the loan is Granted. 

  • The Loan Forgiveness will be based on the Sum of the Documented Payroll Costs, Covered Mortgage Interest Payments, Covered Rent Payments and Covered Utilities Documentation Provided. 

  • Due to the Likely High Subscription, it is anticipated that not more than 25% of the Forgiven Amount may be used for Non-Payroll Costs.

  • The Loan Eligibility Amount will be calculated, using the Financial Documents, submitted during the Loan Eligibility Determination Process. You will need to affirm that the Financial and Payroll Documents submitted are True, Accurate and Correct. 
 
     We are aware that these Applications require submitting your Financial Statements and Payroll Documentation to speed up your Loan Determination Process. We are excited to announce that, we are available to help you with furnishing these Documents and making them available to make this Possible.

     Feel Free to Reach out to us and let us know, how we can assist you. 

IT'S TAX SEASON.

Posted on January 31, 2019 at 3:59 PM Comments comments (0)
    
  IRS Begins Accepting Tax Returns on Monday, January 28th 2019.
  It's Official; Tax Payers should not worry about their Refund Status being affected by any Happenings within the Government.
  It is also important to note that Monday, April 15, 2019 still remains the Individual Filing Deadline for the majority of the Country, though the Deadline in Maine and Massachusetts is April 17 due to the Emancipation Day Holiday.

     Important Points to Note:

  • The First Refunds will go out in the First Week of February and Many Refunds will be paid by Mid- to Late February.
  • The IRS expects about 90 Percent of the Tax Refunds to be filed electronically. Choosing E-File and Direct Deposit remains the fastest and safest way to file an accurate Income Tax Return and Receive a Refund.
  • The Form 1040 has been re-designed for the Tax Year 2018. The Revised Form consolidates Forms 1040, 1040A and 1040- EZ into one Form, that All Individual Tax Payers will use to file their 2018 Federal Income Tax Return.

  We are Here to Help you with Organizing your Documents and Getting all your Business Expenses correctly and accurately deducted. This will help to reduce your Tax Liability.
 
 Keep Checking for Weekly Updates and Important Information, regarding your Tax Filing.

  Let the Tax Season Begin ......................................................