Our Cases

AK BookKeeping can help improve your accounting processes, including transaction automation. Whether you have identified a process gap that needs revamping or want to evaluate your current accounting system, we can provide you with tools and support to enhance your business. We also offer software support for all versions of QuickBooks, including staff training. Please think of us as your local bookkeeping resource.

Case Study #1

Working in two accounting systems is inefficient and confusing

AK Book Keeping was recently approached by a leading advertising agency (we’ll call them “Great Ads”) to assist with their bookkeeping strategy. Great Ads described their current bookkeeping situation as inefficient and confusing. In addition, Great Ads was concerned that they never really knew how much money they were making. AK Book Keeping Identified their problems and implemented a solution.

Problem:

1. Great Ads was maintaining their bookkeeping in two different accounting systems. Unfortunately, they had not been adequately set up to work in the same accounting system as their accountant was using, so they were maintaining two different sets of books.​

  • Great Ads invoiced customers using QBO (QuickBooks Online) because the program is easily accessible and convenient. They could invoice customers as needed to maintain positive cash flow. However, this was not a complete and accurate set of books, so Great Ads could not see the big picture of their accounting work. In addition, Customer payments were recorded but not “deposited” in QBO, so there were numerous old transactions just “floating” in the accounting system.
  • The accountant for Great Ads was recording all accounting transactions and reconciling accounts in QBD (QuickBooks Desktop). Deposits to the business checking accounts were coded to “revenue” without corresponding customers or services being identified (Great Ads had all this detail in QBO). The accountant was using their QBD bookkeeping to prepare tax returns for Great Ads each year. The accountant sporadically providing Great Ads with a financial update, which was helpful; however, it was not frequent enough to assist with day-to-day decision making.

2. Having accounting transactions in two different systems is inefficient because transactions are essentially entered twice. In this case, customer invoices and payments are entered into QBO, and bank deposits are entered into QBD. Both systems show valid transactions, but neither approach is as accurate as if only one method was used. In addition to inefficiency, having two accounting systems is highly confusing. Which system would you trust if neither had all the information available?

Solution:

1. The AK Book Keeping team worked with Great Ads to obtain access to the QBO and QBD files and merged them; however, combining two accounting systems isn’t as easy as “pushing a button.”

  • We imported invoices from QBO into QBD for the current year, applied payments, a CORRECTED the deposits made by the accountant to include customer payments, rather than being coded to “revenue.” This is an important step. Having deposits coded to revenue and applying for customer payments (but not “depositing” them) creates DOUBLE income.
  • BB started with the QBD file from the accountant since this file supported the prior year’s tax returns.

2. BB updates the QBD file by reconciling the current year and ensuring the accuracy of both the Balance Sheet and the Income Statement.

3. After establishing an accurate set of books, we converted the QuickBooks Desktop file BACK to QuickBooks Online – essentially overwriting the existing QBO file that Great Ads was using.  This will allow Great Ads AND their accountant (now Balanced Books!) to access the SAME accounting system.

If you feel that your accounting system is confusing or inefficient, then it probably is. It never hurts to get a second opinion. Reach out to the Balanced Books team for assistance with implementing accounting improvements.

Case Study #2

Managing the bookkeeping when changing business entities

Changing business entities from a Sole Proprietor to an LLC or S Corp (or any change in entity status) often comes with advantages and is a great way to protect your assets. We see these changes quite often. Knowing how to handle the bookkeeping during the transition to a new entity is essential. AK Book Keeping had been providing bookkeeping services to a jeweler (we’ll call them “Bling”) for several years when they decided to incorporate it. We met with Bling to discuss the details of the bookkeeping transition and the options available. Below is a summary of the steps taken to ensure a successful transition.

Problem:

1. How to maintain accurate accounting records during a change in a business entity.

Solution:

1. Working with Bling’s tax accountant, AK Book Keeping set the ‘transition date’ to start at the beginning of the next calendar quarter. We wanted to make a smooth transition while considering payroll and sales tax reporting dates.​

  • It is imperative that the accounting records of the two entities (old and new) remain entirely separate. The ‘transition date’ can be flexible, however, once it is decided and the new business moves forward, it can be difficult to change. For example, if your incorporation documents are stamped with a date of 3/15, you can choose to ‘start’ the corporation at the beginning of the next quarter, such as 4/1 OR you can choose to ‘start’ the corporation immediately. It is always best to consult with your bookkeeper AND tax accountant to set this date.

2. AK Book Keeping worked to determine that the bookkeeping for the new entity will be maintained in QuickBooksOnline (QBO) since it is easily accessible by everyone involved

3. AK Book Keeping created a new QBO file, added all the necessary users, and began accounting for the new entity by linking their new back account. AK Book Keeping also imported vendors, customers, items, and the appropriate chart of accounts to ensure that the look and feel were the same as the old company. Daily operations of the company didn’t change – only the entity status, so we wanted to make the transition as seamless as possible.

4. AK Book Keeping continued to complete the accounting for the old entity while monitoring both entities to ensure that transactions were recorded in the correct set of books.​

  • When the entity change officially takes place on the ‘transition date,’ banking transactions often lag. For example, the State Board of Equalization payment for sales tax might be scheduled to be paid for the last month the old entity was operating, but it will be paid out of the new entity checking account. These types of transactions should be accounted for in the correct set of books, which would be the old entity.

5. Within three months, the old business entity was no longer active, and we moved forward with the new business entity.

6. As tax season approached, we worked closely with the tax accountant to ensure that both tax returns were completed correctly.

Maintaining proper accounting records during a change in an entity can be confusing, but with the help of Balanced Books, you won’t have to stress over all the details. Instead, we’ll work with you through every step of the process. Need some help? Call us today!​

Testimonials

We Are Trusted Over 16+ Countries Worldwide

Raman OberoiFounder
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The Team at YFD helped me to implement process into my bookkeeping. They have been a great support and worked with the ATO to assist with bringing my outstanding BAS up to date and developing the best business structure moving forwards.
Shane BoyesDirector
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YFD look after all of our bookkeeping across the group; using both Xero and Business Central. They have helped us implement a strategic plan and negotiated with the ATO for an outcome that really assisted through COVID and now beyond.

HAVE A QUESTION?

If a lack of cash, a lack of confidence or a lack of direction is keeping you awake at night…If you are seeking financial visibility need some additional help, or just a fresh set of eyes… get in touch for a free confidential chat and see how we can help you.

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