Audience: 

This is the fifth of a series of training posts and videos presenting accounting in simple-to-understand English for Small Businesses and Small Government Contractors.

The goal of RMOHC is to provide client empowerment and financial peace of mind through complete, compliant, and accurate accounting.

This fifth post shows a sample Balance Sheet. Here is the basic structure of the financial statement with no accounts showing. Each account group will be presented individually culminating with a completed financial statement illustrating sample accounts

The statement can appear in two ways: Assets above Liabilities+Equity or Assets on the left side and Liabilities+Equity on the right hand side.

Assets

CURRENT ASSETS – These are assets that will get used up within one year
Cash – Bank: Checking Account, the most active account!
Cash – Savings: Savings Account, savings to be used up in one year
Accounts Receivable: The amount that you customers owe you (and you have invoiced them)
Prepaid Expense – Insurance: A year’s policy that was paid in one payment

LONG-TERM ASSETS – These are assets that will last longer than one year
Land: Investment in land that will take more than 1 year to pay off
Building: Investment in building(s) that will take more than 1 year to pay off
Computers: Equipment that will be of use for more than one year
Depreciation: A tax concept that long-term assets will last only a certain number of years. This needs more explanation in a later post!

Liabilities

CURRENT LIABILITIES – These are DEBTS that will get paid off within one year
Accounts Payable: What you owe your vendors this year (you will have it paid off shortly!)
Loans Payable: What you owe to banks and other lenders that you will pay off within one year
Deferred Revenue: Money a client paid you have not earned yet for services in the future, like a one year subscription.
Accrued Expense: Money you paid a vendor for services/products in the future, like a one year subscription.

LONG-TERM LIABILITIES – These are DEBTS that will last longer than one year to pay off
Mortgage: Loan to buy real estate that will take more than 1 year to pay off
Long-Term Loans: Debt from financial institutions that will take more than 1 year to pay off
EIDL Payable: Government Loan from the COVID period to help businesses survive

Equity

FIRST – Small Businesses do not sell stock. OWNERS contribute and draw funds, they do not buy or sell stock or any type
Owner’s Accounts: A generic account to record how much an owner contributes or takes from the business
Owner’s Contributions: A specific Owner Equity account showing how much an owner invested/paid in into the business
Owner’s Draws: A specific Owner Equity account showing how much an owner has take out/withdrawn from the business
NOTE: Any personal payment or deposit made to a business by the owner gets recorded in Equity
Retained Earnings: What the business has earned during the year and this comes from the Income Statement. It is the result of: Total Income Less Total Expenses during the year.

Sample Balance Sheet:

Here is the Balance Sheet completed. You will see that total of ASSETS = LIABILITIES + EQUITY

Remember:

The Balance Sheet combines what you own (Assets), what you owe (Liabilities), and what you actually own in the company (Equity) in one financial statement (report): The Balance Sheet.  There is a lot of valuable information that you, the owner, as well as outside parties such as banks, vendors, and others, can learn from this report.   

Basic Balance Sheet Formula:   

Assets  =  Liabilities + Owner’s (Partners’) Equity

What your company is worth Formula:

Assets – Liabilities  =  Owner’s (Partners’) Equity (= What your company is worth)

Thank you for reading this post, watch for video series that will be coming out very soon. 

If this was helpful, please share this with your friends and colleagues. 

Here’s to your peace of mind!!
  -Michael

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Audience: 

This is the fourth of a series of training posts and videos presenting accounting in simple-to-understand English for Small Businesses and Small Government Contractors.

The goal of RMOHC is to provide client empowerment and financial peace of mind through complete, compliant, and accurate accounting.

This fourth post deals with the Balance Sheet, the first of two financial statements that are key to Small Businesses and Small Government Contractors. The other financial statement is the Income Statement, and we will cover it in a new series of posts, “The Income Statement Series.”.

Why is it called the Balance Sheet?

The Balance Sheet shows you have basically entered all your finances correctly.  In accounting, every transaction has two sides (left & right sides) to it, and this is called Double Entry Accounting.  If you enter a transaction on the left side, you have to enter the same amount on the right side so that both sides balance (like a hand scale)!  There is much more to this, but it is not necessary here.

The BALANCE SHEET shows balances from 3 of the 5 account types: 

Assets
Liabilities
Equity
Income
Expenses

The Balance Sheet Formulas:

Assets = Liabilities + Equity

This formula is key to both Small Businesses and Government Contractors. Notice the total of all Assets, and see that it is equal to the combined balances of Liabilities + Equity. In the next post (“Balance Sheet Example”), you will see a sample balance sheet using what we have covered here. 

Your Company’s Worth:
The Balance Sheet Formula stated another way tells you how much your company is worth:

Assets – Liabilities = Equity

In other words, if you take out what you owe (Liabilities) from what you own (Assets), that is what your company is worth.

Remember:

The Balance Sheet combines what you own (Assets), what you owe (Liabilities), and what you actually own in the company (Equity) in one financial statement (report): The Balance Sheet.  There is a lot of valuable information that you, the owner, as well as outside parties such as banks, vendors, and others, can learn from this report.   

Basic Balance Sheet Formula:   

Assets  =  Liabilities + Owner’s (Partners’) Equity

What your company is worth Formula:

Assets – Liabilities  =  Owner’s (Partners’) Equity (= What your company is worth)

Thank you for reading this post, watch for video series that will be coming out very soon. 

If this was helpful, please share this with your friends and colleagues. 

Here’s to your peace of mind!!
  -Michael

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Audience: 

This is the third of a series of training posts and videos presenting accounting in simple-to-understand English for Small Businesses and Small Government Contractors.

The goal of RMOHC is to provide client empowerment and financial peace of mind through complete, compliant, and accurate accounting.

This third post deals with Equity, the third of 5 account types.

The 5 account types are: 

Assets
Liabilities
Equity
Income
Expenses

What is Equity?

In large corporations, Equity, or ownership, is reflected in Stock.

In Small Businesses, and Government Contractors, the ownership is reflected in Equity accounts (~ownership accounts).  This shows how much the owner(s) has invested in the company (contributed) and taken out of the company (drawn or withdrawn).

Equity, or Owner’s Equity, is ultimately the worth of the Small Business, or Government Contracting Company. It is what the owner has in Assets with the Liabilities removed. 

The formula for this is simple:    Assets – Liabilities = Owner’s Equity

If the company is a partnership, then the Equity account is called Partner Equity. Each partner would have a separate Partner Equity Account. So if Mary and John were the partners, the accounts would be:
–Partner Equity: Mary
–Partner Equity: John

Examples of assets you will recongnize are:

Examples of Equity you will recongnize are:

Owner’s Equity – what the owner has invested and taken out of the corporation

This can be divided into two accounts if the owner wants more detail:
-Owner’s Contribution – what amounts the owner has invested in the corporation
-Owner’s Draws – what amounts the owner has withdrawn from the corporation

If the owner is not set up to be paid by a regular payroll account, then the owner is paid using the Owner’s Withdrawals account.

Retained Earnings (a.k.a. Current Year Earnings) – this is the amount of money the company has earned (or lost) during the current year. This amount is found at the bottom line of the Income Statement.*  

At the end of each year, the amount in the Retained Earnings account is moved into Owner’s Equity so it can reflect earnings of the new year. 

-If the Retained Earnings shows a profit, the account is moved into Owner’s Contributions
-If the Retained Earnings shows a loss, the account is moved into Owner’s Draws

*Income Statements will be presented in a separate presentation.

Remember:

Equity is your ownership in the company whether you are a single owner entrepreneur or partnered with another person. Equity Accounts include:

–Owner’s Equity (Owner’s Contribution & Owner’s Draw) or

-Partner’s Equity (Partner’s Contribution & Partner’s Draw)

Retained Earnings (the bottom line from the Income Statement)

Thank you for reading this post, watch for video series that will be coming out very soon. 

If this was helpful, please share this with your friends and colleagues. 

Here’s to your peace of mind!!
  -Michael

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Audience: 

This is the second of a series of training posts and videos presenting accounting in simple-to-understand English for Small Businesses and Small Government Contractors.

The goal of RMOHC is to provide client empowerment and financial peace of mind through complete, compliant, and accurate accounting.

This second post deals with Liabilities, the second of 5 account types..

The 5 account types are: 

Assets
Liabilities
Equity
Income
Expenses

What are Liabilities?

They are things you owe or have money you have borrowed, a.k.a debt.  These “things” also benefit the business. 

In “Accounting Speak”:
-You incur a liability when you take on a debt. 
-Liabilities often use the term payable because eventually, you have to pay it off(!)

Examples of Liabilities you will recognize are:

Current Liabilities

Current Liabilities (a.k.a. Short-Term Liabilities) – debts that you will pay off, or are due in the next 12 months
-Loans – money borrowed from a bank, an individual, or another institution (Loans Payable)

-Accounts Payable – money you owe a business or a person for items or services you received for ongoing expenses on credit (you did not pay for it yet). 

-Deferred Revenue – money you received for 1) products or 2) services to perform:
    -you have not yet provided yet
    -and will be provided or performed in the future
    -Can be short or long term

-Accrued Expenses – debt that builds over time to be paid later (Rent, Loan Interest, Legal Retainer)

Long-Term Liabilities

Long-Term Liabilities are debts that you will pay off, or are due in more than 12 months
-Mortgages – a special loan for purchasing real estate

–Long-Term Loans – money borrowed from a bank, an individual that will take more than 12 months to pay

-EIDL Payable – Small Business Administration (SBA) long-term loans (EIDL = Economic Injury Disaster Loan), loans provided in response to the impact of COVID-19 on small businesses

Remember:

Liabilities are debts you owe for money borrowed, or serviced received. 

They include:
                     Current Liabilities:

                                        -Loans

                                        -Accounts Payable

                                        -Deferred Revenue

                                        -Accrued Expenses

                     Long-Term Liabilities:

                                        -Mortgages

                                        -Long-Term Loan

Thank you for reading this post, watch for video series that will be coming out very soon. 

If this was helpful, please share this with your friends and colleagues. 

Here’s to your peace of mind!!
  -Michael

---

Audience: 

This is the first of a series of training posts and videos presenting accounting in simple-to-understand English for Small Businesses and Small Government Contractors.

The goal of RMOHC is to provide client empowerment and financial peace of mind through complete, compliant, and accurate accounting.

This first post deals with Assets, the first of 5 account types..

The 5 account types are: 

Assets
Liabilities
Equity
Income
Expenses

What are Assets?

They are things owned or controlled by your business.  These “things” benefit the business. 

Examples of assets you will recongnize are:

–Money you have – in the bank or your piggy bank (Cash)
–Money folks owe you – invoices you sent them to pay (called Receivables or Account Receivables)
–Current Assets – Prepaid Rent for the next 6 months (things that will benefit you for up to a year)
–Long Term Assets – Land, Buildings (things that you control and will benefit you for a year or more).

Remember:

Assets are things you own or control in your business that help you out. 

They include Cash, Receivables, Current Assets, and Long-Term Assets. 

Thank you for reading this post, watch for video series that will be coming out very soon. 

If this was helpful, please share this with your friends and colleagues. 

Here’s to your peace of mind!!
  -Michael

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Welcome to the first of my RMOHC PRACTICAL Articles here in the RMOHC.com Accounting Empowerment Blog. 

The goal of RMOHC is to have you feel more empowered to do your work better, using the tools you have, than when you first opened the site.

Situation: 

The site says, “Download data” and you do.  You see the download notification at the bottom LH side of your monitor and your data is waiting there.

You open the download, and up pops a new tab on what appears to be a spreadsheet so that you can extract data and work on your project.  You label that tab, “TAB 1”

Done!  Great work!  Tab 1 has the original information.  You extract data and dump it into a new tab and call it, Tab 2.  You finish your work and time to close it up.  The last thing you check is something on Tab 1, the original information.You save it cruising through all the pop-up closing messages (notifications/warnings) and close it.  This is what you do everyday. 

The next day, you want to review your work, and when you open it, you only have one tab of information, Tab1.  Tab 2 is missing.  All your work, and the whole Tab 2 is missing!!  What happened??

You were working on a .CSV file

You saved what looked like an Excel file as a MicroSoft_Excel_CSV file.  Easy to miss.

It is also easy to miss the warning message that comes up:

We are all experienced with spreadsheets and have begun to ignore messages when we close files.  [“Danger Will Robinson, Danger!!”]

You clicked “OK” thinking you were saving the whole spreadsheet, and you were only saving the active sheet, again, the sheet you saw on the screen.  Let’s look at what .CSV files are and what to do with them:

WHAT IS A . CSV FILE?

Each Line = 1 record

Each Record = 1 or more fields, SEPARATED BY COMMAS
                      hence: Comma Separated Value (CSV)

Each line will have the same number of fields:

            And it looks like this (and that looks A LOT like a spreadsheet!!):

Data Type = Tabular, i.e. Numbers and Text (resembles a single page spreadsheet)

Default Download Appication = Your spreadsheet application (for me it is MSExcel)

Format = Plain Text (this allowed files to be downloaded anywhere, on any computer)

What is Saved = .CSV files will save only the active page, the page you see on the screen

PREVENTION:

2. IMMEDIATELY SAVE THE FILE AS AN EXCEL SHEET:  As a matter of best practices,

    if you see a file is a .CSV file, do not do any work on the sheet and save it first in its

    original form as an .XLSX type file

    File name:   Put the file name [Look for File Naming post]
    Save as type: Choose “Excel Workbooks (*.xlsx)”

You don’t have to save the original .CSV file if you prefer not to.  You will find it is in your download file on the (C:\downloads) so that you can always find it there, if necessary.

Then begin work, extract data, link tabs, etc., as you normally would.

When it is time to close the file, just keep an eye on the extension (the .XXX at the end of the file name) and verify it does not read:  .CSV

Look for more articles here, or teasers for articles on LinkedIn.

If there is a topic you would like me to discuss, email me at info@rmohc.com.

SOCIAL DISTANCING:
With the COVID-19 outbreak, social distancing is becoming the norm.  Let’s try to prevent/slow the spread of the virus by keeping six feet between me and you.

CYBER DISTANCING:
How about keeping “6 feet” from cyber activities that can harm you and your computer.

SITUATION: Natural disasters are a great time for cyber criminals to strike.
How are they striking?

1. Sending Malware – software to hurt or destroy your computer/cyber ability.
2. Phishing – sending emails trying to get you to give out personal information*
3. SMiShing – Phishing in the SMS format, i.e. texting you for your personal information*
(hence: SMiShing)
4. Spoofing – Disguising themselves as a legitimate source trying to get information, i.e. pretending to be a federal agency

*Personal Information:
financial data, SS#, address, telephone, bank account, passwords, etc.

What to do?
1. Unsolicited emails: Delete rather than open.
2. Don’t click links:     From unknown or unverified email addresses.
3. Up to date?            Verify Anti-Malware & Anti-Virus software are up to date.

More to come!
Info taken from an excellent Association of Certified Fraud Examiners provided by Jason Zirkle, CFE on 3/26/20.

Cyber criminals messed up your files?  Please feel free to email me (info@rmohc.com) to schedule a free initial consultation (in person or Zoom).

R. M. O’Hanlan Consulting (RMOHC) is an accounting consulting firm based in the Washington, DC area.  Michael O’Hanlan is a Certified Fraud Examiner and an Operational Accountant.  RMOHC specializes in accounting cleanup for commercial and government contract clients, fraud prevention, and training services. RMOHC keeps clients profitable, legal, and compliant.

OPERATIONAL ACCOUNTANT AND VICTOR, THE TALE OF THE COMMINGLER 

Victor was a businessman who had an S-Corporation Business.  He took his finances to a tax accountant to do his personal and business returns.

Turns out, he used one QuickBooks account to track both his personal and business expenses (cuidado!).  Result?  The tax accountant could not separate business from the personal costs and could not create Victor’s returns.  What is Victor to do???  [melodramatic music in the background]

This is a task for the OPERATIONAL ACCOUNTANT!!

“Faster than cash from an ATM,
“More powerful than a profitable financial statement,
“Able to complete complex transactions in a single journal entry, its….
                                    OPERATIONAL ACCOUNTANT!!!

Jimmy Tolsen from the Daily Planet interviewed OPERATIONAL ACCOUNTANT after he saved the day, no, I mean, after he saved the tax returns:

Jimmy:  How did you fix poor Victor’s financial and tax predicament, OPERATIONAL ACCOUNTANT?

OPERATIONAL ACCOUNTANT (OpAcc):  I converted 12 months of statements from 6 different accounts…

Jimmy:  …you mean, you had to work from 72 statements???

OpAcc:  Yes Jimmy, on the face of it, it was intimidating.  I was brave.  I uploaded thousands of transactions resulting in 2 clean QuickBooks accounts, one for the business account and one for the personal account.

Jimmy:  And you were done, right?

OpAcc:  No Jimmy, a more menacing problem lurked behind all those numbers.  You see, Victor used his business accounts to pay for personal things, and his personal accounts to pay for business things.

Jimmy:  Oh…my…. gawd!!  Are you saying he comm…?

OpAcc:  Yes Jimmy, he commingled his S-Corp business and personal finances!!  This could threaten his ability to remain an S-Corporation.  I had to figure who paid whom what for what why and how.

Jimmy:  Wha……?

OpAcc:  He used personal funds to pay business expenses, and business funds for personal expenses.  Be fearless Jimmy, because there is a day in every business’s life when the business has to account for intercompany transfers.  There were scores of them.  Ultimately, between the two accounts, they balanced, and the tax accountant had clean financial statements to create his returns!

Jimmy:  Wow, OPERATIONAL ACCOUNTANT!!  Who ever said that accounting wasn’t exciting!!!

OpAcc: [mumbling] …. actually, just about everybody….

Jimmy:  So, there you have it, citizens of Metropolis.  Never commingle your business and personal finances!  Do you have any final words for us Operational Accountant?

OpAcc:  Yes, Jimmy, and thank you for covering this.  Remember:

1. If you have more than one business, you must keep a complete and separate set of books and records for each business. Thus, spake the IRS on page 5 of its delightful read called “Publication 583”. (https://www.irs.gov/pub/irs-pdf/p583.pdf)
2. This type of accounting rebuilding work can be expensive. It cost Victor a European vacation or 2.

As my friend the Smokey the Firehouse Accountant says:
“Only YOU can prevent commingling of finances:
Use separate accounting software accounts.”

QuickBooks (QB) is a great solution to keeping your finances separated.  OPERATIONAL ACCOUNTANT uses QB as his personal and business accounting software and with his clients.  He gets no kickbacks from promoting QuickBooks; he just thinks QuickBooks is a great solution for small businesses.

For QuickBooks Online, check out (https://quickbooks.intuit.com/) for subscription prices.

For QuickBooks Desktop, Amazon sells the software (computer resident software).
Add a subscription to QBOX (https://www.qboxplus.com/) for seamless cloud remote access.

 

Separate, don’t commingle, and stay legal!

Do your business and personal finances need separating or simply cleaning?
Please feel free to email me (info@rmohc.com) to schedule a free initial consultation.

 

R. Michael O’Hanlan Consulting (RMOHC) is an accounting consulting firm based in the Washington, DC area.  Michael O’Hanlan is a Certified Fraud Examiner and an Operational Accountant.  RMOHC specializes in accounting cleanup and organization for commercial and government contract clients, fraud prevention, and training services and to keep clients profitable, legal, and compliant.

Here is a fun start to 2020!  Happy New Year to everyone!

 

Warning:  Be very careful with calls from “[COMPANY] Support.”  They will tell you about a virus they need to fix.  They only want to break into your computer. 

I was driving when phone rang, and I couldn’t research the caller.  Here are two solutions to consider (which you probably know already!):

Solution if at computer:
Do not give any information.  Ask them for the [COMPANY] Support URL.  Hold them to it if they don’t hang up.  They will try to avoid the question.  Put only the name in, not the “.com”. and see what comes up.  Check their telephone #.  If you see “scam” anywhere, end the call.

Solution while driving:
Engage the person and ask all sorts of palsy questions, “Where are you from?”, “How long are you with Apple?”, “Where are you based?”

Listen to the tone, you will hear if they are there to serve or scam.  You can have fun at their expense.  Then hang up.

Best Solution:  DON’T ANSWER!

---

Here is my story about holding a scammer verbally hostage while I drove home:

“I had a ‘[COMPANY] Service’ call come in while driving home a few days ago.  I took the call.  He warned me about a virus that he had to check or something.  Asked me how many computers and other devices I had, and I started chatting with him telling him saying I had to finish driving home before I could tell him anything.  

“[Poor scammer, stuck talking to me as I drive through neighborhoods…]
His reluctance to engage me started sending up red flags.  He tried to tell me that he was from the Netherlands and I said, ‘so when did you move there from Pakistan, because that’s your accent, right?’ [BTW, I am a linguist…] […truly!]

 “[Poor, poor scammer…still driving]
“So my chatting began in earnest.  I tried to find out where he lived in the Netherlands, did he like Speculoos cookies (serious yumm!), how long he had been there, why he chose the Netherlands, just being 100% typical ME(!!).  So, I get home, and I tell him I am excited and ask him for the website so I could verify where he was calling from.  

 “[Poor, poor, poor scammer.]
“‘SCAM!!’ came up all across the computer when I entered in his telephone number, and when I entered typed in the name of the [COMPANY] service he “represented”, it said ‘SCAM!!’ too.  Then I asked him whom did he really work for because everything turned up ‘SCAM!!’, and whooda thunk, he hung up on me!

 “Poor scammer.  I had fun.  He’s not in the Netherlands (Toronto, actually, researched the number!) (…Toronto’s not in the Netherlands, is it?) (It isn’t Toronto, Ontario, Netherlands???).  Doesn’t speak Dutch.  Doesn’t know what Speculoos cookies are and had to talk to me all the way home.  Not knowing Speculoos was truly the saddest thing!

Poor, poor scammer.  He called the absolute wrong American! “ 

1. Keep your information to yourself.
2. If driving, keep a shallow newsy conversation going if you are up to it
3. Eat Speculoos cookies (I get nothing out of this, I just love them!)
4. Watch this to see what you can do with scammers:

https://www.youtube.com/watch?v=_QdPW8JrYzQ

 

Been scammed and need to rebuild your files?  Please feel free to email me (info@rmohc.com) to schedule a free initial consultation (remote is not a problem).

Michael O’Hanlan Consulting (RMOHC) is an accounting consulting firm based in the Washington, DC area.  Michael O’Hanlan is a Certified Fraud Examiner and an Operational Accountant.  RMOHC specializes in accounting cleanup and organization for commercial and government contract clients, fraud prevention, and training services and to keep clients profitable, legal, and compliant.

QBOX!

The QBDesktop has an amazing member supporting its team: QBOX!

It gives CLOUD access to QBDesktop like never before, and at a rate like never before!

As an Operational Accountant, my clients and I enjoy it ease of use, no matter remote we are from each other. It holds up to 10 gigs for .QBW, .XLSX, .DOCX, files and much much more.

And the connection is seamless!

QBox-Desktop-Operational Accountant Quiz       [with answers]
✔Do you LOVE your QB DESKTOP?                      [answer: I sure do!]
✔Do you want to keep its awesome features?         [answer: Absolutely!]
✔Do you want to work with an awesome, and humble, Operational Accountant
throughout the year (moi!)?!                                      [answer: That’s obvious!]

 

If you answered all three questions correctly, you win a free consultation below.

Write me at info@rmohc.com and enter “QBox Consultation” in the subject line.

 

Offer: Set you up in QBOX and continue the Joy of QBD!

$100 through 1/1/2020.

 

My offer and my accounting are as serious as my humor is bad. I make you feel good about your numbers. Now, I can do it helping you with QBox…even if you work another accountant!

 

R. Michael O’Hanlan Consulting (RMOHC) is an accounting systems consulting firm based in the Washington, DC area. Michael O’Hanlan is a Certified Fraud Examiner. RMOHC specializes in accounting cleanup and organization for commercial and government contract clients, fraud prevention, and training services.