August 8, 2022
6 Best Receipt Scanner Apps in 2022
The best receipt scanner app must have built-in cloud storage, document management system, outstanding optical character recognition (OCR) features for high-quality image capture, and automatic data capture to reduce data entry time. You may also consider accounting software integration as a necessary feature if the receipt scanner isn’t part of an accounting software, like QuickBooks Online. Our choices for the best receipt scanner apps are: : Best overall receipt scanner app with unlimited scans and receipt storage at a fixed monthly cost : Best receipt scanner for Zoho Books users : Best receipt scanner within an accounting software : Best receipt scanner for accountants and bookkeepers : Best receipt scanner for assisted receipt processing : Best free receipt scanner Best Receipt Scanner Apps Compared See fullscreen table × *Billed annually. **Document processing features include automatic line item extractions and assisted data capture services. NeatFiles: Best Overall Receipt Scanner App With Unlimited Scans & Receipt Storage at a Fixed Monthly Cost is our leading receipt scanner because it combines receipt scanning and online cloud storage, solving two common office problems in one app. You can use the mobile app or any third-party scanner to scan physical documents. For desktop users, you can use the Desktop Utility Scan software to edit scanned documents. Every subscription includes all the features of NeatInvoices, Neat’s invoicing app. Standout Features Multiple ways to import documents: You can directly upload, send through email, or use the mobile app to upload documents. Moreover, you can immediately classify these documents before uploading them. Item filters: You can look for files quickly based on item type or any filter category on the dashboard. There’s no need to go over each item one by one. Invoicing: You can enjoy NeatInvoices features with a NeatFiles subscription. It has invoicing capabilities, plus invoicing reminders to remind customers to settle their obligations. Our Expert Opinion NeatFiles can help you keep your business documents organized, categorized, and archived. It’s a great solution for small businesses looking for unlimited receipt scanning and online cloud storage. We recommend it because it’s cost-effective and you don’t need to subscribe to another cloud storage provider to store documents. Zoho Expense: Best Receipt Scanner for Zoho Books Users , which is part of the Zoho product suite, has receipt scanning and storage capabilities within its expense management platform. You can auto-scan receipts or upload them directly through drag and drop. Employees can also scan, upload, and attach receipts when making an expense record for a faster and more efficient reimbursement system. Standout Features Dashboard: The admin dashboard provides useful insights about your expenses and pending reports. It shows you the status of payments, reports, and other items. Reporting: One of Zoho Expense’s best features is the expense approval flow. You can evaluate and review submitted expenses one by one and approve those allowed under company policies. Receipt scanning comes in handy here because the approver can reject reports without receipts attached. Security: Zoho uses secure sockets layer (SSL) encryption and multifactor authentication to prevent any unauthorized access. If you have a Zoho account, there’s no need to create a new one because it has a single-sign-on (SSO) feature. Our Expert Opinion We highly recommend Zoho Expense to Zoho Books users. It’s also a great auxiliary app to your other accounting software and a great preaccounting platform because it helps you scrutinize and process expenses before recording them in the books. It even reduces the workload of accounting personnel and ensures proper control over expenses. QuickBooks Online: Best Receipt Scanner Within an Accounting Software has built-in receipt scanning capabilities that work with its advanced accounting features, like inventory management, profit tracking, and financial reporting. It lets you capture receipts via its mobile app, attach them to accounting records, and send them using a customized email address. You can also upload files from your desktop or Google Drive account. QuickBooks Online supports PDF, JPEG, JPG, GIF, and PNG images. Standout Features Track mileage: Through the QuickBooks Online mobile app, you can track your mileage using smartphone GPS and record driving details automatically on QuickBooks. Moreover, you can also add mileage manually in case you forgot to track it. Reporting: You can generate standard financial statements and other reports like accounts receivable (A/R) summaries, aging schedules, tax reports, accounts payable (A/P) summaries, and inventory reports. Full bookkeeping: QuickBooks Online offers full bookkeeping features, including inventory tracking. Collect and track sales tax: QuickBooks Online can help you track and set sales tax rates based on the address of invoices. You’ll like this feature if you have customers across jurisdictions like cities or states. Our Expert Opinion QuickBooks Online is our top-recommended small business accounting software because it can accommodate the needs of small businesses in all industries at an affordable price. Its receipt scanning functions work seamlessly with its accounting functions because the platform enables you to use scans when making records and ledger entries. If you need full-fledged accounting software in addition to receipt scanning features, this is a cost-effective solution. Dext Prepare: Best Receipt Scanner for Accountants & Bookkeepers (powered by Receipt Bank) has receipt scanning alongside simple bookkeeping, expense reporting, and analytics tools. Its mobile app lets you scan receipts, bills, invoices, and bank statements. Then, its OCR technology analyzes the data, sends it to your accounting software, and categorizes it, such as by tax and region. We recommend it for bookkeepers and accountants because it offers Partner Accounts, a special program for bookkeepers and accountants, which makes it easier for them to manage clients in one space. Standout Features Data extraction: Dext Prepare can extract information from bank statements and receipts and appropriately classify or include them in fields. The extracted information is searchable within the app, and you need not go over the scanned receipts and bank statements manually. Classify documents into cost, sales, or bank: Documents can be segregated based on their source. If it’s a disbursement document, add it to the cost. If it’s an invoice, add it to sales. For bank documents, add them to the bank. Our Expert Opinion Before forwarding scanned documents in your accounting software, you can process them on Dext through its line-item data extraction, document classification, and expense classification capabilities. Accountants and bookkeepers can use Dext to process client invoices before sending them to their respective accounting software programs. Shoeboxed: Best Receipt Scanner for Assisted Receipt Processing is a cloud-based receipt scanning and expense tracking app with cloud storage. You can use its mobile app to scan receipts or mail receipts to Shoeboxed and let it scan the receipts on your behalf. All receipts will fall in a convenient document management system where you can organize them into folders. The documents you scan can be used for IRS audits and tax compliance. Standout Features Magic EnvelopeTM: Magic Envelope is a special service that allows Shoeboxed employees to perform scans on your behalf and is included in all plans. You just have to place your receipts in the Magic Envelope, and then wait for your documents to appear on your Shoeboxed account. You can also choose to have the receipts returned after processing. Scan business cards: You can also scan business cards and extract information from them. This way, you can search for contacts effortlessly without going over physical cards. Mobile app: This can be used to scan receipts and submit them for processing. The app is available on the App Store and Google Play. Our Expert Opinion Shoeboxed is a great software if you need assistance in scanning receipts. You can save time and focus on more important tasks by letting Shoeboxed scan receipts for you. All you need to do is wait for receipt information to be uploaded to your account for expense reporting. Wave: Best Free Receipt Scanner App With Accounting Features is free cloud-based accounting software with invoicing features, and it includes a receipt scanning feature on its mobile app. Alternatively, you can upload an image or PDF file of the receipt. Standout Features Basic accounting features: Wave can manage your sales, purchases, and banking transactions. You can also generate standard financial statements and specific reports. Recurring invoices: Wave can generate invoices automatically to recurring invoices to save time in the billing process. You can use this feature for customers that pay a standard monthly fee. Payroll: For an affordable price, you can outsource payroll to Wave and comply with tax regulations as well. Integrations: Wave has an extensive list of integrations with third-party apps like Shopify, Mailchimp, and Slack. Our Expert Opinion We highly recommend Wave if you’re looking for very basic receipt scanning capabilities. It’s free accounting software, making it suitable for new businesses, businesses on a tight budget, and freelancers. You can upload a receipt by taking a photo of it or uploading a PDF or image file. How We Evaluated Receipt Scanner Apps We examined the core features of a receipt scanner to guide us in reviewing its suitability for your business. These features are: Multiple capture options: The app must have multiple ways to capture information from receipts. It can either connect to a scanner or use your smartphone’s camera to scan images. OCR-ready for line item extractions: Capturing data from receipts is a tedious thing to do manually. Hence, receipt scanners must have OCR capabilities to extract information from receipts. Moreover, it must have intelligence features to include extracted information into fields or categories correctly. Easy to review and modify: Aside from scanning features, the app must also provide a dashboard, analytic tools, and search functions to quickly review, track, and modify entries. Moreover, categories and tags must be present to improve data filtering. Cost: Some bookkeeping and expense tracking apps have a built-in receipt scanner. However, you may choose a third-party scanner as long as it gives more benefits amid an additional charge. Document management system: For standalone receipt scanning software, we checked if it has a document management system that can help you organize scanned documents into folders and tags for easy access. Accounting software integration: The receipt scanner app must integrate with your accounting software to transfer reports and documents for accounting for a more efficient workflow. (Note: we didn’t apply this criterion in evaluating QuickBooks Online and Wave because they’re accounting software systems.) When To Use a Receipt Scanner App Your team works remotely: Do you allow remote employees to buy their own supplies and charge them to your business? Using a receipt scanner can help you process expenses even if you work remotely. You want to reduce paper use in your business: Traditionally, you’d have to prepare vouchers for reimbursements, which only means using more paper. With a receipt scanner, you can eliminate paper use and process everything from expense recording to reimbursement through the receipt scanner app. You want to declutter your office: The sight of receipts piling on your desk isn’t a pleasant view. Almost all professionals would hate to go over hundreds of receipts daily. Instead, you can scan these receipts and throw them away afterward. You want a faster and easier way to keep track of receipts: After you scan receipts, you can usually attach them to transactions. This makes the receipt very easy to find if the transaction is ever questioned. Bottom Line Choosing the best app to scan receipts requires a deep analysis of your business process and requirements. Each app in our guide has promising features and functions. In choosing software, don’t forget to consider relevant factors and considerations, such as whether it meets your most crucial needs and your budget and the overall benefit it can bring to your company as a whole. Then, go back to this list and find the software that best fits the bill.
August 8, 2022
Top 14 QuickBooks Online Tips (Including Keyboard Shortcuts)
We prepared some QuickBooks tips and tricks that can save you time by reducing repetitive tasks and minimizing scrolling for the data you need. Discover how to work more effectively by using keyboard shortcuts, automating some of your work, displaying data in different ways, and making your files more accessible. Most of these tips are explained in detail in our free QuickBooks Online tutorials. QuickBooks Online is one of the most comprehensive accounting software on the market, well-known for its ease of use and robust accounting features, including bank integration and advanced reporting. We hope that you already have a QuickBooks Online account so that you can try these tips right away. Otherwise, visit Intuit to request a 30-day free trial or get a 50% discount for three months. 1. Open Multiple Browser Windows When using QuickBooks Online, opening multiple windows is a huge timesaver as it allows you to flip back and forth between screens. It’s also an easy way to make comparisons across multiple reports or QuickBooks features. For changes to appear, you may need to update the window by clicking Refresh on your browser. You can open multiple browser windows within the same company file by duplicating the tab you’re working on (right-click your browser tab and select Duplicate). If you’re using Internet Explorer, you can hit Ctrl + K to duplicate your tab. Now that you have two tabs logged in to your account, you have the option of pulling one out of the window so that you can work on two different screens side-by-side. You can only use this simple method of opening multiple tabs if each tab is viewing the same company. For viewing different companies simultaneously, you have two options: incognito mode (or private browsing) or multiple browsers. Incognito or Private Browsing There are a few ways to open separate windows for different companies for one of the windows. This depends on which browser you’re using. Google Chrome: Ctrl + Shift + N Firefox, Internet Explorer, and Microsoft Edge: Ctrl + Shift + P Safari: Command + Shift + N After opening an incognito window, log in to QuickBooks as normal and select the company you wish to view. This won’t affect any other tabs with QuickBooks open. Without using a private browser, navigating to QuickBooks Online will open whatever company is already open in that browser automatically. Different Browsers You can also use two different browsers to view multiple companies in separate windows. For example, try logging into QuickBooks Online through Chrome and open your company file. Then, log in to QuickBooks Online through Microsoft Edge and open your second company file. QuickBooks should work independently for each company. 2. Connect Your Bank & Credit Card Accounts Online banking, also known as bank feeds, is one of QuickBooks Online’s most helpful and time-saving features. When you connect an account, QuickBooks downloads and categorizes bank and credit card transactions for you automatically―you only need to approve the work. You can connect as many accounts as necessary. To connect bank transactions and credit card accounts in QuickBooks Online, select Link Account on the Banking tab, add your account, and then follow the onscreen steps to link your account information. You may read our guide on how to connect your bank accounts to QuickBooks Online and how to connect your credit card to QuickBooks Online for the in-depth processes. 3. Memorize These Handy Keyboard Shortcuts Keyboard shortcuts help save you time and allow you to keep your hands on the keyboard as you enter information. Use the keyboard shortcuts summarized in the table below when working in a transaction window: 4. Set Up Items for Every Product or Service You Provide QuickBooks Online has two basic sales items: products and services. We recommend creating items for every product or service you provide so that issuing invoices and entering purchases will be much quicker. This will also give you more detail with reports, allowing you to track financial info by product or service. Read our guide to learn how to set up your products and services list in QuickBooks Online. When creating an item, you will have four types to choose from Noninventory, Service, Bundle, and Inventory. Bundles and Inventory tracking are only available with QuickBooks Online Plus and Advanced. Bundle allows you to package and sell multiple items as a single product or service while Inventory allows you to track exact quantities and costs of products on hand. 5. Use the Undeposited Funds Account When Making a Deposit The Undeposited Funds account keeps a record of payments in QuickBooks until you deposit the same payments at your bank. Banks often combine all of the payments you deposit into a single transaction. Once you have your deposit slip and know which payments your bank combined, you can do the same in QuickBooks. This makes reconciling your bank accounts much easier. You can think of the Undeposited Funds account as a virtual “lockbox” that you store your payments in until you’re ready to take them to the bank. For more information, check out our tutorial on how to record bank deposits in QuickBooks Online. 6. Reconcile Your Bank Account at Least Monthly To ensure accurate financial data, you must reconcile your bank accounts monthly, ideally when you receive the alert that your bank statement is available. The process can be done quickly if you connect your online bank accounts to QuickBooks Online and perform regular upkeep throughout the month. By reconciling, errors like duplicate entries and incorrect amounts can often be identified because you’re matching transactions entered in QuickBooks Online against transactions shown on the bank statements. To reconcile your bank account: Step 1: Click on Accounting from the left menu bar and select Reconcile. Step 2: Choose the account you wish to reconcile. Step 3: Enter the ending account balance and date from your bank statement. You may also enter the service charge or interest earned if needed. Step 4: Match your transactions until the bank reconciliation has a difference of zero. Step 5: Click Finish now to save your changes. For a detailed explanation of the process, head over to our tutorial on how to process bank reconciliations. 7. Use Class & Location Tracking Classes represent different aspects of your business like departments or product lines. You can use classes to obtain deeper insights into the sales, expenses, and profitability of each part of your business. Once you turn on the feature, you can assign classes to transactions. Here’s how to enable class and location tracking: Step 1: From your dashboard, click on the gear icon and select Account and Settings. Step 2: Select Advanced, then choose the Categories section to edit. Step 3. Toggle the Track classes and Track location buttons to on. Step 4: Under Assign classes, select One to entire transaction or One to each row in transaction, whichever you prefer. Check Warn me (not shown) when a transaction isn’t assigned a class. This is optional, but it’s good to turn it on so that when you look at reports, you know that everything has been classified. Step 5: Select Save and then Done. After completing the steps above, class and location fields or columns are added to your forms, so you can assign each transaction a class and location. After assigning transactions, you can print many reports separately for each class or location. You may also want to see our guide on how to set up advanced settings in QuickBooks Online—class and location tracking setup can be found in Step 4. 8. Use Attachments QuickBooks Online lets you upload and save attachments to any transaction. This makes referencing source documents easier and more efficient. To add an attachment, follow the steps below. Step 1: Open an invoice or other transaction. Step 2: Click the Attachments icon in the bottom left corner. Step 3: Browse for the files you want to attach. Step 4: Click Save. QuickBooks Online lets you view the source document when viewing the transaction. This is helpful for receipts, bank statements, copies of transactions, and so on. 9. Set Up Recurring Transactions Rather than entering individual transactions manually that occur repeatedly, you can automate the process by setting up recurring transactions. These include bills, rent payments, income, and purchase orders from suppliers. It helps save you time and also serves as a reminder for upcoming transactions. Recurring transactions are available with QuickBooks Online Essentials and Plus, and you can create them by following this process: Step 1: Select the Gear icon at the top right of the screen. Step 2: Under Lists, select Recurring Transactions. Step 3: Click New. Step 4: Select the type of transaction to create and select OK. Step 5: Enter a template name. Step 6: Choose a type, such as scheduled, unscheduled, or reminder. Step 7: Enter the necessary information. Step 8: Save the template. You can also set up recurring invoices by clicking Make Recurring at the bottom of the invoice window. 10. Pay Bills Online Directly From QuickBooks Instead of using separate software to pay your bills online, you can pay directly without having to leave QuickBooks. Using Online Bill Pay, you can pay bills and send checks easily without asking your vendors to set up anything on their end. It lets you use a credit card to pay a bill, and then QuickBooks Online will send a check to your vendor. You can also pay 1099 contractors with paper checks and bank transfers, pay invoices, and schedule bill payments in real-time. You need to activate Online Bill Pay from your QuickBooks Online account before you can use it. To do this: Step 1: Click on +New. Step 2: Select Pay Bills Online. Step 3: Set up your bank account information. Step 4: Follow the prompts to connect your bank account then save your changes. Note that QuickBooks Online Bill Pay is available in all versions of QuickBooks Online, except Accountant. 11. Set Up Your Favorite Reports To view available reports, click on the Reports menu item on the left navigation bar. On the Reports page, you’ll see that it’s divided into three tabs: Standard, Custom, and Management Reports. At the top of the Standard page is the Favorites page. You can add any report to this list by clicking the star button next to it. 12. Find a QuickBooks ProAdvisor If you’re new to QuickBooks Online, you can benefit from the QuickBooks Online ProAdvisor program. One of the reasons QuickBooks Online is so popular is that it sets you up with Intuit-certified local bookkeepers and accountants—experts who have demonstrated their proficiency with QuickBooks products by passing a series of exams. With the program, a local certified public accountant (CPA) or bookkeeping expert will help you accomplish various tasks in QuickBooks, such as setting up your QuickBooks company, reconciling bank and credit card transactions, and generating the reports you need to file tax returns. To find a QuickBooks ProAdvisor, you may browse through Intuit’s directory to find an accountant near you, depending on your city, state, and ZIP code. You can narrow your preferences down by specifying the type of services you need and the industry you’re in, such as manufacturing, construction, property management, and nonprofit. Alternatively, you can sign up for QuickBooks Live, which connects you to a QuickBooks ProAdvisor, but you’ll have to work with them directly within the QuickBooks platform. 13. Add an Accountant User Another huge advantage of using QuickBooks Online is the ability to easily share your data with your accountant or bookkeeper by adding them as an accountant user—and this doesn’t count toward your standard users. By doing this, they can access your company files without the need to create a backup or send an accountant’s copy. This means they can open and review your files and adjust journal entries if needed. To add an accountant user: Step 1: Sign in to your QuickBooks Online account as a primary administrator. Step 2: Click the gear icon and select Manage Users. Step 3: Select the Accounting firms tab. Step 4: Enter your accountant’s email address. Step 5: Send the invite. 14. Install the QuickBooks Online Mobile App With mobile accounting becoming a norm among modern businesses, it’s crucial to have a mobile app that lets you access your favorite accounting features from your smartphone. The QuickBooks Online mobile app includes nearly all of the features found in the desktop interface, with some added functions, like receipt capture and mileage tracking. It can be downloaded on Google Play and the App Store. Bottom Line As our best small business accounting software, has a variety of tricks to make your experience more efficient. Some features, such as setting up recurring transactions, creating a product and services list, and automating transactions, save you time. Using keyboard shortcuts allows you to keep your hands on the keyboard while you’re entering transactions while connecting your bank and credit card accounts and using the Undeposited Funds feature assists you with reconciling your accounts. Information on how to perform many of these functions can be found within our free QuickBooks Online tutorials.
August 5, 2022
The Accounting Equation: What It Is & The Effects of Common Transactions
The accounting equation is the fundamental formula in accounting—it shows that assets are equal to liabilities plus owner’s equity. It’s the reason why modern-day accounting uses double-entry bookkeeping as transactions usually affect both sides of the equation. The accounting equation is an accounting fundamental that bookkeepers need to master to be proficient. We express the accounting equation as: Assets = Liabilities + Owner’s equity Components of the Accounting Equation There are three major components in the accounting equation: assets, liabilities, and owner’s equity. These also represent the major account groups in the chart of accounts. Assets Assets in accounting are resources that a company owns and uses to generate income and future economic benefits. They can be classified as operating or nonoperating, tangible or intangible, and current or noncurrent. Liabilities Liabilities are amounts owed to other persons or entities as a result of a past event and involve a future settlement using cash, goods, or services. Customers and vendors can be sources of liabilities for operations. Paying taxes, fees, permits, and salaries are liabilities once they become due but aren’t yet paid. Businesses use their assets to pay liabilities. Owner’s Equity Owner’s equity is the residual interest or amount that assets exceed liabilities. It also represents the amount of paid-in capital and retained earnings as a result of doing business for profit. Calculating Owner’s Equity Deducting total liabilities from total assets is the way to calculate owner’s equity when a business is formed initially. After that, owner's equity should be rolled forward from the prior period using this equation: Ending owner’s equity = Beginning owner’s equity + Investments - Distributions + Net income After calculating the owner's equity with the formula above, you should plug it into the accounting equation and make sure the equation balances. In other words, the ending owners’ equity from this equation should equal assets minus liabilities at the end of the year. If it doesn’t, then your books are out of balance, most likely because there was an entry made to an owner’s equity account that isn’t reflected in your calculation above. Debits & Credits in the Accounting Equation Double-entry bookkeeping is based on debits and credits. A common misunderstanding of most people is that debits always pertain to increases, while credits always pertain to decreases. But, in simple terms, debits and credits are merely the two sides of the accounting equation. Debits increase the left side of the equation (assets) or decrease the right side of the equation (liabilities and owner’s equity). A useful tool for analyzing how transactions change an accounting equation is the T-account. The left side of a T-account is for debits, whereas the right side is credits. However, the effect of debits and credits on the balance in a T account depends upon which side of the accounting equation an account is located. Revenues & Expenses in the Accounting Equation Revenues and expenses are subcomponents of owner’s equity. However, these two aren’t directly added and deducted to owner's equity. Only the net income (revenues > expenses) or net loss (expenses > revenues) is reflected in owner's equity. The image below shows the relationship of revenues, expenses, net income, and owner’s equity. Effects of Transactions on the Accounting Equation Since the accounting equation depicts a mathematical equality, it also goes that all debits must always equal all credits. In other words, a journal entry should have a minimum of at least one debit entry and one credit entry, and the total of those entries must be equal. Legend: = Increase = Decrease = No Effect Let’s illustrate each transaction using sample transactions. Frequently Asked Questions (FAQs) What’s the difference between a T-account and ledger? A T-account is a visual representation of the general ledger, whereas the general ledger is an accounting record that shows more detailed information than a T-account. Accountants and bookkeepers use the T-account to analyze transactions and spot errors easily without going through detailed ledger information. What is double-entry bookkeeping? Double-entry bookkeeping is a fundamental accounting concept that requires every financial transaction to affect at least two different accounts. It also requires that all entries must have equal debits and credits. Bottom Line The accounting equation is the most fundamental concept in accounting. It’s the compass that guides all accountants and bookkeepers, even if transactions get complex. For small businesses, knowing how the accounting equation works can help you better understand financial statements, along with how bookkeepers do their jobs.
August 5, 2022
How To Void a Check in QuickBooks Desktop
In this tutorial, you’ll learn how to void a check in QuickBooks Desktop for bill payment checks and payroll checks already issued but not yet cashed or deposited. We’ll also cover the instances when you should void a check. This tutorial is more useful if you follow along in your QuickBooks Desktop account. If you don’t have one, you can purchase QuickBooks Desktop, one of our best small business accounting software, with a 60-day money-back guarantee. How To Void a Bill Payment Check in QuickBooks Desktop How To Void a Payroll Check in QuickBooks Desktop Voiding a payroll check is a bit more complicated than voiding general checks, especially if all payroll tax returns have been filed. Doing this can have a significant effect on your books and payroll records. The best way to reissue a payroll check isn’t to void it but to reprint it with a new check number. You can then create a new check, assign it the old check number, and void it to leave a paper trail. When To Void a Check in QuickBooks Desktop You’ll need to void a check in QuickBooks Desktop when A check was issued to the wrong person A check is lost or stolen Incorrect details, like in the amount or date, were entered Incorrect work locations (tax jurisdiction) for paychecks were input There are duplicate checks Other than for duplicate checks, you’ll generally want to void checks and then issue a corrected replacement. As stated above, doing this can be straightforward for regular checks, but reissuing paychecks can be tricky. Wrap Up You now know the process for voiding a bill payment check, as well as how to void and reissue a payroll check in QuickBooks Desktop. If you’re considering a switch to QuickBooks Online, check out our tutorial on how to convert QuickBooks Desktop to QuickBooks Online.
August 4, 2022
What Is a Cash Flow Statement in Accounting? (Examples & FAQs)
The cash flow statement in accounting is one of the four basic financial statements. It presents the cash inflows and outflows of a business’s operating, investing, and financing activities. Reviewing it can give you information about your cash flow as opposed to net income. Below is a cash flow statement example: The cash flow statement above uses the indirect method in computing the net cash flow from operating activities. In this article, we’ll explain each part of the cash flow statement, go over the difference between the indirect and direct method, and illustrate an example for good measure. What Are Operating Activities on a Cash Flow Statement? The operating activities section of the cash flow statement shows the cash flow generated or used in the core operations of the company. These activities involve actual cash receipts from sales and actual cash payments to suppliers and employees. There are two ways to present the operating activities section: the indirect or direct method. The indirect method presents operating activities starting with net income and followed by reconciliation adjustments. The reconciliations consist of two types. First, adjustments must be made to convert the accrual-basis net income to cash flow. Second, gains and losses included in net income that aren’t related to core operating activities must be removed. On the other hand, rather than starting with net income and making adjustments, the direct method reports the cash receipts and disbursements of operations, not increases or decreases in certain accounts. This method explicitly shows where cash came from and where it went. What Are Investing Activities on a Cash Flow Statement? The investing activities section presents all purchases and disposal of long-term assets, including loans and investments. Investing activities often include Purchase and disposal of property, plant, and equipment (PPE). Sale or purchase of debt and equity securities of other companies. Collection of loans extended to other companies. Provision of loans to other companies. What Are Financing Activities on a Cash Flow Statement? The financing activities section involves liability and equity items. It presents cash inflows from new issuances of stocks or loans and cash outflows from payment of dividends or settlement of liabilities. Financing activities often include Issuance of common or preferred stocks. Issuance of debt securities, like bonds and notes. Payment of dividends to stockholders. Principal payments of long-term debt. Reacquisition of capital stock or treasury stock. Cash Flow Statement Example & Illustration Let’s use the information from Infinity Stones Inc., a fictitious company selling jewelry, in making a statement of cash flows. Below is the company’s income statement and comparative balance sheet. Additional information: Operating expenses include depreciation expense of $16,500 and expiration of prepaid expenses of $1,000. Land was sold at its book value for cash. The company declared and paid cash dividends of $27,500. Equipment was purchased for $83,000 using cash. Another piece of equipment was sold for $17,000 while its book value was $18,000. Uses of a Cash Flow Statement A cash flow statement shows the amount of cash your business generates. Even if you have a large net income, the income statement doesn’t depict your business’ cash generation ability entirely because it uses the accrual basis of accounting. Gauges the business’ ability to generate future cash flow: It can provide information about the timing and uncertainty of future cash flows. You can see the relationship of cash flow and sales to create predictions of future cash inflows and outflows. Assesses the business’ ability to pay liabilities: It shows how the business generates and uses cash. Employees and creditors can use it to assess if the business can generate enough cash to pay employee salaries or liabilities. Presents other sources and uses of cash in the business: Aside from the operating cash flow, the cash flow statement shows the financing and investing activities of the business. You can tell the readers of the cash flow statement that the business has sources or uses of cash other than operations and where each is coming from and going to. Evaluates operating cash flow: Every section of the cash flow statement tells how you source and use cash. If you have a bigger cash inflow from financing activities, such as obtaining debt, but are losing cash from operating activities, then it implies that your business’s operations aren't performing well, unless you’re a new business. Startups often have large cash inflows from financing activity while low cash from operations. But as the business continues to operate, operating cash flow must increase. Frequently Asked Questions (FAQs) Which method is better for presenting operating activities? For small businesses, we recommend using the direct method because it provides more useful information to small business owners. Most companies, including multinational corporations, use the indirect method because it’s less complex to prepare. The main advantage of the indirect method is that it ties the net income from the income statement to the change in cash on the balance sheet. Moreover, the indirect method shows the reconciliation of accrual to cash accounting during the bookkeeping process. In contrast, the direct method shows explicitly where cash is coming from and where it’s going. How to read and interpret the cash flow statement? The cash flow statement can tell the business’ stage in the business life cycle. During the launch phase, it’s expected to see significant cash outflows in the investing activities section and very low cash inflows in the operating activities. But as the business approaches growth and shake-out stage, cash flows will increase in operating activities. Aside from that, the cash flow statement can provide information about unusual transactions that occurred in the business such as purchase of treasury shares or sale of business assets. Should you prepare the cash flow statement? Yes, because it shows the inflow and outflow of cash. For small businesses that always worry about cash, a cash flow statement can be more meaningful than the income statement. Sometimes, accrual accounting doesn’t portray the true liquidity of the business. Hence, the statement of cash flows can show the business’s ability to generate enough cash in contrast to its ability to generate revenues. Bottom Line The cash flow statement shows the operating, financing, and investing cash flows of the business. It provides insights into the business's ability to generate future cash flows and settle obligations. Preparing the cash flow statement is usually the last step in the order of financial statement preparations. The operating activities section can be presented using the direct or indirect method. However, the financing and investing activities only use the direct method because they explicitly show the flow of cash.
August 4, 2022
Realtyzam Review: Features & Pricing in 2022
Realtyzam is cloud-based accounting software designed for real estate agents. It helps you track commissions and expenses by generating a profit and loss (P&L) report for taxes and monitors sales activity so that you can see which aspect of your business is the most profitable. It also lets you connect your bank and credit card accounts, upload and organize expense receipts, and run the reports you need for filing tax returns. The platform costs $12 per month when billed monthly and $9.95 per month when billed annually. You can use it for free for 30 days with no credit card required. Who We Recommend Realtyzam For Unincorporated real estate agents: We strongly recommend Realtyzam for real estate agents who are self-employed because it tracks costs separately for each property deal. You can use it to track your commissions and expenses without any traditional bookkeeping tasks. Real estate agents with no accounting experience: Realtyzam has a very simple and streamlined dashboard with no crowded sidebar menu and drop-down lists, making it easy to navigate. On top of that, the ability to set up bank feeds eliminates the need for manual data entry. It’s our best easy-to-use real estate accounting software for real estate agents. Sales and marketing teams: If you’re willing to pay the additional fee, then you can use Realtyzam’s customer relationship management (CRM) module to track every interaction with your leads and record any sales activities. Who Should Consider Alternatives Limited liability companies (LLCs), partnerships, and corporations: Realtyzam isn’t a double-entry system, so there’s no balance sheet to monitor assets and liabilities. If you need a more robust accounting program, you should consider . Property owners and managers: You can’t manage rental listings, tenant screenings, and online payments with Realtyzam. Consider instead if you’re a property manager as it allows you to screen tenants during the application process, create and manage listings, collect rent, and manage bills. Real estate companies needing bookkeeping services: If you’re busy managing your real estate company and have no time to do your books, then you should consider signing up for , a bookkeeping service for small businesses. Looking for something else? Check out our list of the best small business accounting software to see if a general-purposes bookkeeping solution is right for your real estate business. Realtyzam Pros & Cons Realtyzam Pricing Realtyzam is available for $12 per month when billed monthly and $9.95 per month when billed annually, and it offers a free 30-day trial with no credit card required. New agents can continue to use it for free after 30 days until they sell two properties or log $3,000 in income and expenses. Realtyzam Features Dashboard One thing we like about Realtyzam is its streamlined dashboard, which includes only the features you need to track your sales activity. The Realtyzam homepage contains five menus: Dashboard: This serves as your landing page when you sign in. It shows an overview of your financials. Sales activity: Go to this tab if you need to monitor your sales activities and commission payments. Other things you can track here include lead sources, discounts, broker fees, and income and expenses on each deal. Expenses: This page is where you would record all your expenses. You can choose to connect your bank accounts, upload your files of transactions on Realtyzam, or enter your expenses into the system manually. Income: This tab displays a detailed breakdown of your income. You should also use this page for entering income, such as interest income and side business. Reports: This is where you can generate P&L statements that you or your accountant may use to file tax returns. Bank Account & Credit Card Linking Realtyzam lets you set up bank feeds from more than 15,000 financial institutions. Bank feeds help you import your transactions into the program easily without having to use the keyboard for manual data entry. Link your bank accounts and credit cards to Realtyzam, and it will transfer all transactions to your account automatically. You can classify your expenses manually or automatically to keep track of your financial numbers. If you’re uncomfortable connecting your bank or credit card account, you can manually import your bank statements to Realtyzam. Expense Tracking You can categorize your expenses by choosing from a list of default categories or adding new ones. Categorizing your expenses can be helpful for budgeting purposes and keeping your finances organized. When entering new expenses, Realtyzam lets you choose from a list of preset categories, such as listing, capital equipment, licensing and filing fees, and miscellaneous. You can also add new categories on the fly if needed. Listing The Sales Activity page is where you record all the real estate transactions that you’re working on, whether they’re closed or not yet. You can record a new activity (for a buyer, seller, or referral), and you’ll have the option to set the status of the deal until it’s closed. For instance, you can enter a new buyer and set the status to Prospect or Active. When the deal is closed, change the status to Sold, provide the transaction details, such as the closing sale, closing date, and commission, and Realtyzam will record the commission as an income. Financial Reports With Realtyzam, you can generate simple yet helpful reports to help you track key metrics, including average commissions, prospecting, buyer and seller conversion rates, and sales prices. It also lets you monitor other items like listing and buyer expenses and new buyers and sellers. You can sort the reports on an annual or monthly basis and even set the reports tab to show only the lead sources of your income. Receipt Uploads Upload your expense receipt, and it will link it to an expense transaction automatically. This makes it easier to pull up a receipt whenever needed. You can upload receipts using your tablet, computer, or mobile device with the Realtyzam mobile app. CRM Module Realtyzam has a CRM module, which requires a separate subscription, which helps you store and manage client information, record notes, save documents, and track sales activity. You can also create reports on prospecting rates, average commissions, and even lead sources. As with the accounting software, it’s free for the first 30 days. Mobile App The Realtyzam mobile application lets you track your expenses, log your mileage, manage sales activity, and generate tax reports instantly using your mobile phone. The app can be downloaded on Google Play and the App Store. Realtyzam Customer Service & Ease of Use Since Realtyzam has fewer features than most other accounting software, it’s extremely easy to use, even for beginners and nonaccountants. You’ll love how easy it’s to create a buyer pipeline or listing on the Listings page. After a sale, you can set the status to sold, and Realtyzam will generate an income transaction automatically for you. On the downside, Realtyzam lacks personalized customer support. If you have questions or concerns, you need to send your question via email and wait for a response. The provider says that questions sent during business hours typically are answered within two hours. If you want to get answers to simple questions, you may check out the Frequent Questions page on its website or browse through its real estate accounting blogs. Realtyzam Alternatives Bottom Line If you need simple accounting software to track your income and expenses and generate the tax reports you need instantly, is worth trying out. It may have some weak points, such as the inability to reconcile your bank account and the lack of advanced bookkeeping functions, but it’s an excellent solution for tracking expenses and commissions.
August 2, 2022
Inventory Turnover Ratio: Definition, Formula & What It Means
The inventory turnover ratio is an efficiency ratio that measures the number of times a company sells and replaces stock during a set period, generally one year. It is an important bookkeeping task that can make a major impact on your business’s success. While you shouldn’t base decisions solely on it, a high inventory turnover is generally positive and means you have good inventory control, while a low ratio typically indicates the opposite. There are exceptions to this rule that we also cover in this article. The inventory turnover ratio formula is: Inventory turnover ratio = COGS / Average inventory How To Calculate the Inventory Turnover Ratio Step 1: Calculate the Cost of Goods Sold The cost of goods sold (COGS) includes all materials and labor used to create the products or services you sell. If you use accounting software, you can run a profit and loss report to get your COGS figure. You can also use this formula: COGS = (Beginning inventory + purchases) – Ending inventory COGS Example: ABC Company Let’s assume ABC Company has a beginning inventory of $10,000, makes purchases throughout the year that total $50,000, and has ending inventory of $20,000. The COGS for ABC Company is calculated as follows: ($10,000 + $50,000) – $20,000 = $40,000 Step 2: Calculate Average Inventory The formula to calculate average inventory is: Average inventory = (Beginning inventory + Ending inventory) / 2 Note that because inventory fluctuates for many companies throughout the year, using the average inventory for the period—rather than editing inventory—to calculate your ratio tends to be more accurate. However, if your inventory does not fluctuate a lot, use the ending inventory instead. You can run a balance sheet report to get your inventory numbers. Average Inventory Example: ABC Company Let’s assume the balance sheet for ABC Company as of January 1 shows a beginning inventory of $10,000 and an ending inventory of $20,000 as of December 31. The average inventory for ABC Company is calculated as follows: ($10,000 + $20,000) / 2 = $15,000 Step 3: Calculate Inventory Turnover Ratio The inventory turnover ratio is calculated as follows: Inventory turnover ratio = COGS / Average inventory Inventory Turnover Ratio Example: ABC Company As shown in the example above for ABC Company, you would calculate the inventory turnover ratio by dividing $40,000 (COGS amount) by $15,000 (average inventory) for a total of 2.67. $40,000 / $15,000 = 2.67 How To Interpret the Inventory Turnover Ratio Similar to other financial ratios, the inventory turnover ratio is only one piece of information about a company’s ability to manage its inventory. A comparison to your industry can help you to determine if your turnover ratio is good or needs improvement. Generally, but not always, a high inventory turnover ratio indicates that a business manages its stock very well. While it can reflect strong sales, it could also be a signal of insufficient inventory on hand which could lead to lost business. The speed at which a company can sell inventory is an important measure of business performance. A low inventory turnover ratio could mean a business does a poor job of managing its stock. It can also imply weak sales or possibly excess inventory, or even that there is an issue with obsolete goods being offered for sale. For example, grocery stores typically have a higher inventory turnover ratio because they sell lower-cost products that can spoil quickly. In contrast, car manufacturers have a low inventory turnover rate because they sell high-value items that take time to produce. The key is to find out what the standard ratio is for your industry so that you can compare your ratio to similar businesses. Inventory Turnover Ratio Examples In this section, we will demonstrate how to calculate inventory turnover by walking through a few examples. We also included a brief explanation of what the inventory turnover ratio means for the business. Example 1: Inventory Turnover Ratio for XYZ Company XYZ Company had the following results last year: COGS: $25,000 Beginning inventory: $100,000 Ending inventory: $60,000 The inventory turnover ratio for XYZ Company is calculated as follows: $25,000 COGS / [($100,000 Beginning inventory + $60,000 Ending inventory) / 2] = .31 Inventory turnover ratio A .31 ratio means XYZ Company sold only about a third of its inventory during the year. Determining whether this is a low or high ratio depends on the type of business. If XYZ Company is a bookstore, this number would indicate that it has poor inventory control, which means the purchasing department is not in sync with the sales department. However, if it is a company that sells high-ticket items, such as cars or houses, a lower ratio might make more sense. Example 2: Inventory Turnover Ratio for ABC Company ABC Company had the following results last year: COGS: $200,000 Beginning inventory: $50,000 Ending inventory: $50,000 The inventory turnover ratio for ABC Company is calculated as follows: $200,000 COGS / [($50,000 Beginning inventory + $50,000 Ending inventory) / 2] = 4 Inventory turnover ratio A 4 ratio indicates ABC Company sold its inventory every quarter. This might be good for a car dealership, as it means the company has good inventory control and that stock purchases are in sync with sales. Key Takeaways of the Inventory Turnover Ratio There are three key takeaways you should keep in mind for the inventory turnover ratio. The ratio can affect your ability to receive approval for a loan: Inventory is often the most valuable asset on your balance sheet. As a result, banks tend to accept it as collateral for a small business loan, provided you can sell the inventory in a short period of time. The ideal ratio varies by industry: A high turnover ratio is ideal for companies that sell low-cost, perishable items like a grocery store. However, a low turnover ratio is common for businesses that sell luxury items, such as cars and homes. The ratio measures sales and inventory efficiency: The sales and purchasing departments need to work together to manage inventory. Sales knows what products are in demand, and purchasing is responsible for replenishing stock. If these two are not in sync, you will have a difficult time meeting customer demand without investing too much cash in unnecessary levels of inventory. Frequently Asked Questions (FAQs) What is the ideal inventory turnover ratio? The ideal ratio varies based on the industry. In most cases, high inventory ratios are ideal because that means your company does a good job of turning inventory into sales. However, sellers of high-end goods may have lower turnover ratios because of the high cost and long manufacturing time. What is the difference between inventory turnover ratio and days sales of inventory? The inventory turnover ratio measures how many times the inventory is sold and replaced over a given period. Days sales of inventory―also known as days inventory―is the number of days it takes to turn inventory into sales. The formula for days sales of inventory is: Days sales of inventory = (Average inventory / COGS) x 365 Bottom Line The inventory turnover ratio shows how many times a company has sold and replaced inventory during a given period. Calculating this ratio can help businesses make better decisions on manufacturing, pricing, marketing, and purchasing new inventory. Depending on your industry, a slow turnover may imply weak sales or possibly excess inventory, whereas a fast turnover ratio can indicate either strong sales or insufficient inventory.
August 2, 2022
How To Print Checks in QuickBooks Desktop: 2022 Guide
Today, we’ll show you a step-by-step tutorial on how to print checks in QuickBooks Desktop. We’ll go over two ways you can do that: writing and printing checks when bills are received and printing checks for bills already entered. You can follow along on your QuickBooks Desktop account as we walk you through each step. You can also visit the Intuit website to buy QuickBooks Desktop, one of our best small business accounting software, which comes with a 60-day money-back guarantee. How To Write & Print Checks When Bills Are Received in QuickBooks Desktop How To Write & Print Checks for Bills Already Entered in QuickBooks Desktop Why You Should Print Checks in QuickBooks Desktop QuickBooks Desktop has many interesting features that simplify the process of printing checks. It allows you to Print checks one at a time or multiple checks in one batch Save a check to print later Print different types of checks By printing checks directly from QuickBooks Desktop, the payee information is completed automatically from your vendor contact information. For bills that have already been entered, the amount is completed as well. You can pay multiple bills easily with the same check. If you need to purchase checks, learn where to buy QuickBooks checks. Wrap Up Congratulations on learning the steps of printing checks in QuickBooks Desktop. If you’re thinking of taking your QuickBooks Desktop files to the cloud, check out our guide on how to convert QuickBooks Desktop to QuickBooks Online.