Knowledge Base

The Five Major Types of AccountsIf you’ve heard about debits and credits, you’ll know that the actions of debiting and crediting have an impact on certain accounts by increasing and decreasing them. But, how much do you know about the accounts they affect?Each time you buy or sell a product or a service, you are required to record the transaction in the corresponding account. In other words, you need to keep your business accounting books updated at all times. That way, you can track all the money going out of and coming into your business. Moreover, you’ll know exactly how much money you have in each account. Unless you sort and track your transactions by accounts, you won’t make accurate financial statements and sensible business decisions. Most businesses list their accounts by keeping a chart of accounts (COA) - a document that lets you organize your account types, number each account, and quickly find information about any past transaction.There are five different types of accounts in accounting that provide a structure to the chart of accounts, namely assets, expenses, liabilities, equity, and revenue. Given that their role is to define your business’s channels for spending or receiving money, each account category can be further broken down into several subcategories. It’s also important to note that the five major accounts are interrelated. Therefore, a change in one account triggers a chain reaction, making the other accounts change as well. In this article, we’ve made sure to provide a detailed definition of each account type, analyze its unique features, and offer multiple examples. Asset AccountsAssets are the physical (tangible) or non-physical (intangible) types of property that add value to your business. In other words, assets are resources owned by your company that have monetary value as they can be converted into cash. Depending on the nature of your business, several different things can be classified as assets. Vehicles, computers, equipment, buildings, and cash are considered tangible assets, while your copyrights, trademarks, logos, and similar non-physical items are intangible assets.Note that this account type can be broken down into multiple subaccounts. Here are a few common examples of assets’ sub-accounts: Checking account - This is your company’s bank account. Petty cash - A petty cash fund is a small amount of money used for expenses too minor to merit writing a check. Inventory - A company's inventory usually consists of goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready to be sold. Accounts receivable - Even though your accounts receivable account isn’t the money you already have, it’s considered an asset as it’s the money that’s owed to you. Keep in mind that debits increase assets and credits decrease them. Make sure to debit an asset account each time you add money to it and credit it when taking money from it.Expense AccountsThese accounts reflect the outflow of money. Any cost your company incurs, such as purchasing a service or a product to manufacture goods or generate income, is considered an expense. Examples of expenses include advertising costs, utilities, salaries, rent, and others. Note that some expenses are deductible, which means that they can help you reduce your taxable income. You can deduct business-related travel and direct labor costs. However, you cannot deduct personal expenses, penalties, and donations.Much like various types of assets, expense accounts can also be fractioned in multiple subaccounts such as: Cost of goods sold (COGS) - This refers to the money you have paid for producing the goods you’ve sold. Payroll - Payroll or wages expense is the money paid to the employees for their work.  Rent - This is the cost of renting equipment or office space.  Insurance - This subaccount refers to the cost of the business insurance you’ve used.  Equipment - This is the cost of equipment you’ve purchased.Note that credits decrease business expenses while debits increase them. Therefore, remember to increase your expense accounts each time your company spends money.Liability AccountsLiabilities represent expenses your company has incurred but has yet to pay. These include any debts or obligations to creditors and other third parties to which your business owes money. A company’s financial obligations can be described as current or long-term. Debts that need to be paid within 12 months or less are classified as current liabilities. These mainly consist of monthly operating debts such as the customer deposit and accounts payable. Note that business owners typically use current assets such as the money in the company’s checking account to cover current liabilities. The difference between a company’s current assets and liabilities is called working capital.Noncurrent or long-term liabilities are debts that are paid off in years instead of months. These usually include mortgages, car loans, and business loans used to maintain or purchase fixed assets. Common examples of subaccounts that fall under the liability account category include: Payroll liabilities - This type of liability subaccount includes payroll-related costs such as wages employees have earned but haven’t yet received and taxes withheld from employees. Sales tax liabilities - This subaccount represents your sales tax obligations. Unearned revenue - This account type represents payments received on work that have not been completed yet. Accounts payable - These are the bills your company must pay. They are considered liabilities (not expenses), as these are the costs you have incurred but not paid for yet. Notes payable - These are your company’s financial obligations from signing a promissory note. Mortgage payable - This account type may refer to the mortgage you have on business property or any other business-related mortgage.Note that the general rule for liability accounts is that credits increase them while debits decrease them.Equity AccountsAlso referred to as net worth, equity indicates how much your company is currently worth. This account is of utmost importance to a company’s owner as it represents the value of the owner’s investment in the company. Equity is the difference between your business’s assets and liabilities or, more precisely, the residual interest in your company’s assets after the liabilities have been deducted. Dividends, common stock, and retained earnings are all examples of this account type.The role of equity in a chart of accounts may differ slightly based on whether a business is structured as an LLC, a sole proprietorship, or a corporation. Let’s take a look at some equity subaccount examples: Owner’s equity - Equity is the amount of money that is returned to a business owner if all of the company’s assets are liquidated and all of its debt paid off.  Common stock - This account type is used to record the investment of the company’s owners. Retained earnings - You’ll need this type of equity account to keep track of the earnings of your company (especially if you are running a corporation) and to record when these earnings are given back to the owners in the form of dividends.Keep in mind that an equity account increases through credits and decreases through debits. In other words, each time your assets grow, your equity increases. Also, as liabilities increase, your equity decreases.Revenue AccountsRevenue or income, the last of the five primary types of accounts in accounting, represents the value of the goods or services provided and thus the money your business earns from selling them to clients. This term is also used to denote the money earned from interest and dividends on marketable securities. In short, revenue accounts track the money your business brings in, both from its operations and nonoperating activities. Given that their balance is reset to zero at the beginning of a new accounting period (typically defined as a new fiscal year), revenue accounts are temporary or nominal accounts. Note that most accounting software solutions perform the resetting automatically.Examples of income subaccounts are as follows: Product sales - This account may include the revenue from a service you provide and the value of the products you sell. Earned interest - This account indicates the value of interest earned on investments or bank accounts. Miscellaneous income - Any other type of revenue falls under the miscellaneous income category. According to the rules of accounting, you increase your revenue account by crediting it. In the same vein, by debiting revenue accounts, you’ll decrease them. The Importance of a Chart of AccountsNow that you’ve learned about all the account types that form part of a chart of accounts, it’s time to talk about all the benefits of this financial listing. A chart of accounts lets you organize your company's complex financial data and break it down into easy-to-understand, logical categories. This listing also plays an important role in laying the foundation for all your business’s critical financial reports.However, many business owners consider their charts of accounts much more than just organizational tools. Keeping all your financial data in one place and analyzing the relationship between various accounts can provide invaluable insights into your company’s performance. Here’s an overview of the main benefits a chart of accounts can introduce into your business:1. Understanding your earningsOne of the most apparent advantages of a chart of accounts is that it can give you an excellent insight into your company’s revenue. Not only can this listing show you how much money your company earns, it can also help you pinpoint peaks and valleys in your income account, understand how much cash flow is available for you to use, and calculate how long that amount should last you considering your average monthly business expenses. 2. Spending smarterWe can all agree that a straightforward list of items you spend your hard-earned money on isn’t a sight for sore eyes. However, your chart of accounts can help you shift your perspective, offering a clearer view of your spending habits. That way, you’ll be able not only to deal with your essential recurring expenses such as rent, internet, and utilities but also to inspect other examples of your expenses and maybe even cut down on some costs if needed. 3. Figuring out how much you oweAnother tremendous benefit of a chart of accounts is that it offers a clear picture of how much money you owe, both in current and noncurrent liabilities. A thorough analysis of your company’s chart of accounts can help you figure out how much of your monthly income you can comfortably afford to put toward your debts. It can also help you create a sustainable longer-term debt repayment plan, no matter which types of liabilities you need to deal with. 4. Upgrading your reportsA chart of accounts is essentially a numbered list that organizes your finances into a system of accounts. Having a detailed and accurate chart of accounts makes it easier for your accounting professional, bookkeeping service provider, or yourself to develop in-depth financial reports, such as a cash flow statement, income statement, and balance sheet, which can help you grasp the financial position of your company.5. Simplifying the way you file taxesAn added bonus of keeping a neat and accurate chart of accounts is that it’ll make your life much simpler come tax season. This listing tracks your company’s income and expenses, which are precisely the items you’re required to report on your income tax return each year.

Petty cash is a small amount of money that companies keep available for minor daily payments, which are inconvenient to make by writing a check. But what is petty cash in accounting? Do you have to record these transactions on financial statements? Let’s take a closer look.How Much Cash Is Petty Cash?Petty cash typically goes anywhere from $10 to $500. Employees use this money for small quick payments: To pay for taxi fares in emergency cases, tip the delivery guy, buy flowers or cards for someone’s birthday, or snacks for employees working overtime. These small expenses, however, are a nuisance for the accounting team to deal with, which is why in some companies, it’s the employees who are purchasing, say, milk for coffee or staples for the office. However, expecting employees to pay for such expenses out of their own pockets is not a laudable practice and can justly cause employee dissatisfaction. That’s why a petty cash fund should be established to cover any expenses that are too small or impractical to be covered through the company’s account. Handling Petty Cash PaymentsTypically, companies that set up a fund (or funds, if the company is large, with many departments) also appoint someone to handle and monitor it. This person - the petty cash custodian - is in charge of managing petty cash, saving the receipts, and making out slips, and attaching them to the receipts to ensure that no money goes unaccounted for. Restricting access to the fund lowers the chance of theft or misuse. So, how do petty cash transactions work in a company setting?Every time a certain amount of petty cash is spent, the fund custodian should save a receipt. On a petty cash slip, the custodian can add the purpose and the date when the cash was spent or any additional information, depending on the company’s policy, and attach it to the receipt. Once the fund is depleted, the custodian will hand over the receipts to the petty cash cashier - the person in charge of replenishing the fund by issuing petty cash checks - and receive new funds in exchange for them.Replenishing and Reconciling Petty CashSince, by definition, petty cash is still a company’s funds, it, too, has to appear on financial statements. However, unlike other transactions, individual purchases made with petty cash are not recorded - instead, entries are made when the fund custodian needs more cash and provides the receipts to account for the previously spent money. The idea, of course, is to simplify the whole process of accounting for petty cash since, instead of making entries for dozens of small transactions, the accountant only has to deal with these in bulk, every once and a while.Petty cash accounting, also known as reconciling the ledger, usually happens once a month, although some companies do it weekly. The petty cashier will subtract the remaining amount from the starting amount to determine how much was spent since the last reconciliation of the ledger.  If, after adding up all the receipts, the total doesn’t match the sum of the disbursed funds - if there is a shortage or an overage - this is a signal that an error occurred. The matter should always be investigated, no matter how small the discrepancy. It could be a simple mathematical error or a more severe problem. A shortage of petty cash can, for example, be the result of a theft, which is more likely if more than one person has access to the petty cash drawer. Replenishing petty cash is usually scheduled at the end of an accounting period. The cashier should bring the receipts to the accounting team (if the company is a large one and has an accounting team) or enter the totals into one of the free accounting programs available for download that small businesses rely on. Accountants typically log this into the general ledger both as credits to the petty cash account and debits to expense accounts. Petty cash is typically replenished by a company-issued check. Accounting records replenishing the petty cash fund as a debit to the petty cash and credit to the cash account.Pros and Cons of Petty CashPetty cash, like everything in life, has its pros and cons. It’s effective as quick money to handle small and unexpected expenses and saves plenty of time because it doesn’t require planning in advance or authorization. On the other hand, petty cash is hard to keep track of, and it’s prone to misuse. There is always someone who needs to be in charge of the fund. Additionally, for smaller companies that don’t have an extensive accounting team and use accounting software instead, managing a petty cash fund can be a time-consuming task.The Bottom LinePetty cash is a perfect solution for small purchases and minor expenses. In comparison to using the company’s account to pay for these and flooding the accounting team with receipts, it’s much faster and more effective. However, with plenty of other choices technology gives to modern companies, managing such a fund can quickly become a nuisance. It’s no wonder that this practice is now rare, and many young people in the workforce ask themselves, “What is petty cash in accounting?”

The Definition of an Invoice Let’s start by explaining what an invoice is. The straightforward definition would be that it’s a legal document whose purpose is to authorize a sale. Invoices are written by the seller and issued to the buyer. An invoice should contain the following details: product/service price goods quantity/hours worked taxes possible discounts the due payment amount date of issue of the invoice specific invoice number the seller’s signature Writing an Invoice As we have previously mentioned, every legal document should include specific information to make it valid. And even though there is a distinction between an invoice vs. an official receipt, there are some rules that apply for both of those, and you should follow them to compose a valid document. Let’s learn how to write an invoice in a few simple steps: Make it look professional and personalized. You can do this by choosing a specific color that you think represents your brand. Don’t forget to add your company’s logo, either. Fill out the contact information. This part should include both the sender’s and the recipient's details (name, address, phone, and email). Select a due date. Choose the date on which you expect your business invoices to be paid. Make sure to adjust the invoice number - this invoice number goes on your receipt later - so it matches that particular order. Describe the service or product you are invoicing the client for. Explain what you are billing your client for clearly and concisely. You should fill in the price and the quantity - where applicable - as well as the appropriate taxes in case they are included. Add payment details. This is the place where you should include the available payment methods and the invoice payment terms. Can an Invoice Be Considered a Proof of Purchase? Even though they are both legally non-negotiable instruments, there is a significant difference between an invoice and a receipt. An invoice can be proof of a formal agreement between a buyer and a seller, but it doesn’t mean that the service has actually been paid for. On the other hand, a receipt does confirm that the service you’re invoicing someone for has been paid. Unfortunately, if your business model includes invoicing, you’re likely to run into issues with late or missing payments on your invoices. To avoid that, always set your payment terms clearly at the very beginning of your business relationship. You can also try sending reminders to your customers via email or use an app that lets you compose unpaid-invoice notifications to be sent out automatically once payment becomes overdue. Invoice Number What is an invoice number, then? The invoice number is definitely one of the most critical parts of an invoice. An invoice number is a unique consecutive code assigned to invoices by default. Correct invoice numbering ensures that all your business income is properly documented for accounting or tax purposes. Invoice numbers also make it easier for you to track payments and assign them to the correct receipts. Most importantly, an invoice is not considered a legally binding document if it does not contain a specific invoice number. What Is a Receipt? A receipt is a document that proves a transaction has been finalized. Receipts are given to the customer once their payment has been settled. Aside from its allotted invoice number, a receipt should include the number of goods purchased, taxes, price, discounts, payment date, receipt number, the total amount paid, and the vendor’s signature. Customers often need receipts to be able to either exchange or return a product, or redeem their purchases if they’re using company funds, for example. Of course, a business owner should keep copies of the receipts as a record of all of their transactions, and to ensure your accounting books are accurate. How To File Invoices and Receipts Learning to manage your paperwork will make your business more productive. Here are a few tips on how you can keep things organized: Arrange your files in chronological order by labeling them and splitting them into folders by date. Organize documents and relevant data using spreadsheets. Use an electronic invoice book to keep track of your due and fulfilled payments. Use the cloud to store and share files, so your clients can access them without you having to send them documentation via email. Just remember to restrict editing rights. Review the files at the end of the year, and store them in a safe place. In case you are struggling with some unpaid invoices, invoice factoring companies can buy off your outstanding invoices for cash.

An employee handbook is perhaps the single most important document in any company. In addition to communicating your company’s policies, it’s an essential part of onboarding new employees and conveying the core values of your business.    But in spite of its importance, many small business owners don’t actually have a company handbook. Others don’t recognize its value until something goes wrong. That’s why it’s always better to have one as soon as you start your business. This is the best way to set clear expectations for your employees and outline your legal obligations and their rights. Our guide will tell you what should be included in an employee handbook and how to create one.  What Is an Employee Handbook? An employee handbook is also referred to as an employee or company policy manual or a staff handbook. It outlines your company’s mission and culture while informing employees of the legal framework governing their employment. The handbook also includes various other components such as your company’s background information, procedures and policies, working conditions, and employee rights. This document should be made available to each employee as soon as they are hired. The new employees should also be asked to provide a written acknowledgment that they received the handbook.  What Topics Should Be Included in an Employee Handbook? As an employer, you aren’t legally required to provide employees with a policy manual or a handbook. However, this is a highly beneficial communication resource between you and your employees, which is why many small business owners choose to create one. While insurance policies for small businesses protect you from professional mistakes, a written format of the company rules and policies can go a long way in shielding you from discrimination and harassment claims.  But an employee handbook is not only about the rules and policies. It should also set the tone of the company’s culture and help create a healthy and positive work environment. This is why you should finish writing an employee handbook before you turn to job posting sites and begin the onboarding process. This approach informs employees about everything that’s expected of them before they start working.  An employee policy handbook should cover several topics, including information about your company (history, values, mission), in-house rules (mobile phone use, for example), mandatory policies (equal employment opportunity and PTO), and human resources information. The Main Components of an Employee Handbook for Small Business There is no shortage of templates and employee handbook examples online. Most include the aforementioned key components and additional policies for different business organizations. Below is a list of the most common features in every company policy handbook, including some of the most important small business policies and procedures. Introduction Start by introducing employees to your company history and background information. This section can have a welcome note from the CEO, which introduces the company’s team and explains its mission and core values. This is the most flexible part of a handbook and can include everything from the purpose of the handbook to a contractual disclaimer.  A widely accepted employee handbook definition requires the introduction to explain how your business is organized, who are the owners/CEOs, and where the business is incorporated. These sorts of details are useful to have on hand as most companies that provide business incorporation services, like Northwest Registered Agent, require you to provide this information.  Onboarding  Once you’ve outlined your company’s mission and vision, it’s time to explain how your company works. Start with the hiring and onboarding section, where your employees can get informed about the company’s structure, confidentiality agreement (nondisclosure agreement or NDA), and conflict of interest procedures.  The most basic employee handbook information should also assure your staff that the company guarantees equal employment opportunities for all candidates. EEOC protects candidates against age, race, gender, or any other form of discrimination.  Code of conduct This section tells employees how the management expects them to behave, as well as the measures taken by the company against those who violate the rules. It’s one of the most important components on the long list of employment policies and procedures that protect both the company and its workers. Even the most flexible companies have boundaries, and it’s important that these are clearly outlined for everyone’s sake.  The code of conduct section can include policies regulated by law, like the anti-harassment policy, but it can also outline other small business rules and regulations for employees, like the dress code.  Payment and compensation  For employees, this section will probably be among the most important ones, so you should make it clear and comprehensive. This part of an employee manual includes information about the payroll schedule, salary, and bonuses. It should also provide a simple explanation regarding taxes and deductions. While you can use software for calculating and filing taxes, the employee handbook should explain the main payroll deductions (federal, state, and local taxes, for example).  Benefits  When creating an employee manual, make sure you include all the perks. The section consists of the various benefits that the company offers to its employees - from sick leave and vacation time to health insurance, retirement plans, and career development.  It goes without saying that this is a crucial section of your company’s employee handbook for every member of your team. In addition to the most common benefits such as paid time off and health care plans, some businesses include free courses, team-building exercises, office meals, and even unemployment insurance. Your workers will want to see their list of benefits spelled out, and they’ll carefully review these employee handbook contents.  Employee termination procedure  If your employee finds a new job or you need to lay someone off, there are procedures the company needs to follow. You should also inform your employees what happens when someone has to leave the team. The standard offboarding procedures include information about the last paycheck delivery and unemployment insurance. The policy can also explain how the last conversation with the company’s HR looks like.  Employee acknowledgment  This page should be signed by your employee after reading the handbook. It confirms that the employee understands your company’s rules and policies.  How to make an employee handbook? By now, we’ve established that an employee handbook is an important ingredient in any business organization. Yet many businesses decide to bypass this step when setting up their operation. Some business owners find it too difficult and time-consuming. Here’s the good news. If creating a handbook for your small business is not your cup of tea, you can always outsource this task. Just like there are companies that provide bookkeeping services, there are those that can help you create your handbook from scratch. Both professional HR consulting companies and law firms offer this type of service. With professional services, you’ll get something that’s customized to fit your business needs, but you don’t need to know how to write an employee handbook. These professionals will take care of everything, from incorporating the federal, state, and local policies into the handbook to writing sections that reflect your company’s culture in the best way possible.  If you decide to go at it alone, you’ll need to conduct thorough research to identify the policies that need to be included. But this option gives you a chance to be creative. No one knows what kind of atmosphere you want to create in your company better than you. Think about the values you wish to promote and write them down.  Alternatively, you can use online templates and forms for free to create a small business handbook. Adjust them to fit your needs, check if all mandatory policies are included, and write your expectations and rules. When you’re done, make sure the document is reviewed by legal counsel.  Tips and tricks for writing an employee handbook: If you decide to author a handbook on your own, here are some useful tricks that will help you along the way.  Set the tone  Make sure that you use a friendly voice when writing a handbook. Of course, you want to be sure that your employees will take it seriously, but it doesn’t necessarily mean that you have to come off as authoritative. You can make an employee handbook by using encouraging and affirmative tones that are as effective as those written from the “don’t perspective.” Design your handbook The way you present your handbook is also important. Whether you create an online handbook or a paper copy, make sure it introduces new employees to your company’s colors and logo. Include images You can take things a step further when personalizing your handbook. Include photos of your office and team members to give off a more positive and friendly vibe. What not to include in an employee handbook? An employee handbook should have all “boring” mandatory policies, but you shouldn’t go into too much detail. A handbook should offer explanations that your employees can understand. This is especially important when it comes to things like health insurance and other benefits. However, for detailed information, there should be links to government websites where your staff can find additional information.  It’s also important not to confuse an employee handbook with other manuals. While trying to figure out what to include in an employee handbook, some company owners arrive at the conclusion that it’s the same thing as an HR manual. This is incorrect. These are two completely separate documents.  A handbook is a document for your employees that should be given to them when they start working for your company. Its purpose is to set expectations and communicate policies.  An HR manual is for you and your human resources team. Its purpose is to explain the process behind your company’s policies. If someone violates any of the policies, your HR will know how to deal with it, thanks to the HR manual.  

What Does HRIS Software Do?So, what is an HRIS, and how can your company benefit from one? The biggest HRIS advantage is storing, processing, and managing employee information such as names, addresses, Social Security numbers or national IDs, visa or work-permit data, and information about dependents. You can also expect these software solutions to provide HR functions that help with recruiting, talent management, applicant tracking, employee training, time management, and performance appraisals. Some options may feature employee self-service functions, along with payroll and accounting software integration.Since it gathers purposeful data in all processes that you want to track and analyze, a human resources information system is considered a smart database of all employee information in a given organization.The Benefits of an HRISHundreds of HR software companies offer some type of HRIS. Given that each product comes with different data entry, tracking, and information features, you should take the time to pick a solution based on your company’s specific needs. This can be a serious undertaking: Organizations of all types and sizes can benefit from such software, thanks to their advanced data interaction features and comprehensive reporting capabilities. Still, this means HRIS systems are becoming more sophisticated by the day, so you need to know what to look for specifically.To help you get a better understanding of HRIS features, we’ve compiled a list of reasons to consider using this type of HR management software: Organization. One of the most apparent benefits of an HRIS is unification - all your employee spreadsheets will come together, with no disparate versions. Thanks to the advanced capabilities of these records-keeping systems, you can add, find, change, and keep track of every bit of employee-related knowledge in less than a minute. Compliance. The best HRIS systems are offered by vendors who make sure that their products align with any regulations affecting human resources. These solutions are equipped to handle any changes required for the company to remain compliant with the relevant laws. Efficiency. Time and labor management are no longer tedious with an HRIS. For example, leave requests and approvals take mere seconds. Vacation time and leave accrual can be tracked automatically, and none of these functions have to be maintained manually, saving HR professionals plenty of time. Human resources strategy. With fewer everyday maintenance issues to resolve, HR managers can focus on advancing human resources and business strategies. A neatly organized human resource database system could prove invaluable for new ideas on improving employee retention and increasing productivity. Employee experience. Most HRIS solutions allow a certain amount of user access to employees. Even a modest level of self-service can help improve how employees feel about their workplaces. Most workers interpret it as an important step toward establishing an atmosphere where they can enjoy a certain level of operational freedom. Whether it’s because of the opportunity to update their personal data, find a colleague’s contact information, change retirement benefit programs, review pay scales, or request leave, employee access to HRIS software ensures a better experience.  Payroll functions. It’s safe to say that handling payroll is one of the essential tasks human resource management needs to take care of. A good HRIS should allow quick and easy download and upload of employee attendance data, making the process of wage distribution more seamless. Reducing the need for human intervention also means fewer errors, especially when calculating benefits and taxes. For companies dealing with multiple tax levels, HRIS payroll system solutions play an important role in improving tax compliance. Benefits management. Every employee is affected by the company’s benefits strategy and the regulations the employee has to comply with. The way these perks are managed has a significant impact on the overall experience an employee has at work. Benefits management does not pertain only to retirement investments and medical benefits, but also to all benefits-related communication. This is where HR applications come in handy, as employers and employees alike can use HRIS platforms to enable smoother operations and complete transparency. Talent acquisition and retention. An organization simply cannot grow without acquiring and retaining the right talent. Keeping this in mind, recruitment and retention are not only the most important aspects of HR management but also crucial components of an HRIS. Getting the right candidates on board is just the beginning of the process. All employees should also be offered adequate training, career path counseling, and rewards plans. Human resource information systems can improve the employee experience by fostering growth, job happiness, and company morale, while also making it easier for recruiters to find, track, and engage with suitable candidates.HRIS FeaturesWhen exploring HRIS solutions, try not to think of the features these programs provide as a shopping list of items you’re hoping to tick. Just because one solution claims to do it all doesn’t automatically mean that it can complete the tasks well enough for you. Instead, focus on figuring out your company’s biggest challenges and compare different types of HRIS systems based on how efficiently they can solve these problems. Don’t forget about usability, either: If the solution you’ve decided on has an overly complicated interface, no one will use it, and you’ll just end up wasting your time and money.Before you start shopping around, take a look at this list of the features these HR information systems typically offer: Employee database and directory Payroll management features 401k management Accounting Scheduling software Applicant tracking Time-tracking and attendance Leave management Benefits administration Training Succession planning Report templates and customization Employee access Electronic signaturesMore advanced uses of HRIS enable much more than just time tracking and other basic capabilities. These software solutions can also contribute to company culture and help guide the employee experience. Good HRIS software does that by allowing employees to be in charge of their own onboarding; other than that, these products help with performance management and offer integration options with additional HR solutions, often with extensive mobile accessibility.

Finding new employees to join your business is a process that takes a lot of preparation. You need to search for the right candidate who will easily adapt to the company’s culture and work ethics.  Nobody knows this better than people from the HR sector. It takes months of thorough searching and setting up the ground to create a mutually productive and relaxed interview environment. This is all part of the process of onboarding new employees, which aligns new hires’ skills to your company’s needs.  According to research by Gallup, 21% of millennials changed jobs in 2020, while more than half expressed their desire to find a new job. That’s why millennials are often labeled as the job-hopping generation. But attaching that kind of label is an oversimplification, no matter what the stats say.  One of the reasons for this is that many job hunters are naturally nervous during job interviews, so it’s the HR manager’s responsibility to create a stress-free environment that brings out the best in them. A well-prepared onboarding process for new employees can help new hires achieve positive job satisfaction and encourage them to remain loyal to your company. Why Onboarding Is Crucial Besides finding the best person for the job, onboarding, as its definition implies, is essential for leaving a good, lasting impression on new employees. It’s the first contact a new candidate will have with your company before the formal interview and evaluation process starts. A positive image will help with the interview’s tone and will establish what’s expected from them in their new job. It will introduce them to how your company operates and build a forward-looking relationship with your employees from the get-go. An onboarding plan for new employees that leaves a negative first impression will generate animosity toward your company. Even when they start working, they’ll already be looking for new job opportunities. Proper onboarding efforts create long-lasting and satisfying working relationships with your company and can turn a promising candidate into the company’s most valuable asset. In contrast, poor onboarding leads to higher employee turnover. When focused onboarding is done right - which can take up to 12 months of preparation - it will reduce the work your HR team needs to do in the future.  But this is easier said than done. To establish a satisfactory new hires onboarding process, you’ll need to ask yourself some crucial questions: how will you begin the onboarding process, and how long will it last? What kind of first impression do you want to leave on new candidates, and how will you explain your company’s goals and ethics? What goals should new candidates have, and how can they improve their performance and grow within your company? Steps in the Onboarding Process As you prepare to onboard a new employee, make sure everything is ready from your side. Having a well-designed and straightforward onboarding process will significantly reduce the paperwork your HR team will have to go through.  The next step is to select what type of onboarding process for new hires you’ll conduct: formal or informal. Most companies opt for formal onboarding. This means implementing an unambiguous and straightforward onboarding program that will get the new employee up to speed with their role. This program includes their job assignments, the company’s expectations, on whom they can rely, and the proper channels of communication. Informal onboarding leaves new employees to familiarize themselves with the business without anyone’s assistance, thus potentially creating confusion and disorder. In general, formal onboarding is widely used since it’s simple to follow and leaves new hires more satisfied about their position in the company. The Recruitment Stage Before you start with your onboarding new employees checklist, you should first set up the recruitment flow and adequately convey your company’s goals, ethics, principles, and the importance of your employees. Keeping your message clear and succinct should be your primary concern. Go through your company’s website design, job offer description, and all the interview questions in a way that represents the company’s core values. Try advertising on the best job posting sites to speed up this process. Present new employees with an assignment that will let them know what to expect on the job and give you a sense of what to expect from your new hires. One of the best practices for onboarding questions for new employees is to let them know how their day at work will look, which will set up positive and clear expectations. Notify them of any policies that concern them, including dress code, remote work, vacations, working hours, and any legal issues.  New employees should be aware of who they report to and which person is in charge of what. Make sure you give them a basic overview of the company’s culture, such as work ethics and social etiquette for employees. And, of course, let them know that they’re not alone; they’re part of the company’s network. Job Offer If everything goes well and you’ve successfully prepared your onboarding activities for new employees, let the candidates know that you appreciate the time and effort they’ve invested in this job application. This is also your last chance to remind them or clarify what the job will entail to avoid any confusion down the line. Consider using the best background check sites to confirm that the person you want to hire is who they say they are.  Now it’s time to extend a job offer to your preferred candidate. If they accept, let them know how delighted you are that they’ve decided to work with you and your company. This is the moment when the onboarding truly begins. As soon as the candidate accepts your job offer, give them access to your company’s onboarding systems for new employees. Forward them job-related documents and the plan for their first week at work. Let them know it’s not expected that they study everything; you’re just giving them the info for clarity’s sake. Provide your new employee with access to email, phone, and other communication tools. Simultaneously, inform your team about the new addition and send welcome emails to the new employee. These onboarding documents are meant to engage new employees with the company and the team they’ll work with. Office Space Eventually, you’ll introduce your new hires to the office space during the onboarding of new employees, which will show them what an average day at work looks like. You can do this before giving new hires their job offer, or when they start working. It’s important for new employees to have a sense of belonging in the workspace and among colleagues, as it will ultimately affect their performance. It will also give them some first-hand experience of the company’s work ethics and culture. Show new hires where they’ll work and what they’ll use. Go through other offices and introduce them to other colleagues. If new employees have any questions, be there to answer them. Show them the kitchen and other non-working spaces that they’ll use daily.  First Day at Work New employees will likely be ecstatic and confused, terrified and hopeful on their first day, so make them feel like they’re accepted by their peers. One of the best practices for onboarding new employees is scheduling their first day with colleagues. Schedule short meetings at the start and the end of the working day, especially if the team works remotely. You should also give them some breaks during their first day. Set up a team lunch and talk about topics that aren’t related to work. Prepare a swag bag with company gifts and supplies as a welcome gesture. Use the first day to let new employees know what they’ll work on and what they’ll need to focus on in the next one to three months. Make sure they get all the equipment they need for work and focus on familiarizing them with their new colleagues. The First Few Weeks Our successful tips for onboarding new employees don’t just cover the first day; you need to think several weeks in advance to help them truly fit in. Set up meetings with other teams and team leaders, your best employees, and senior people within the company. That way, they’ll get an idea of what they have to do to earn a promotion in the future. If the team is working from home, using the best conference call services might greatly enhance this process. Use this time to organize weekly and annual goals and define key performance indicators. Provide feedback on new employees’ input, as this part of the ongoing onboarding process might be the most important. To continue successfully onboarding new employees, ask for their input and any problems they’re experiencing. During the first few weeks, they should have a mentor who will be of great assistance in introducing them to all the intricacies of the workplace. To strengthen team connections, set up fun team-building events. And, of course, give new hires recognition when you feel they’ve earned it.  One-Year Plan Your onboarding efforts as an HR Manager may indeed last a whole year as you assist your new employees and follow their progress. HR teams may use the best tenant screening services to seek help, but no matter how you choose to proceed, the cost of onboarding new employees will be well worth it. Be assured that these efforts will help you find top-performing employees who will become long-term members of your team.

Imagine getting a brand new job at, say, a library. You’re super excited, but on your first day of work, you trip over a bunch of books and break your arm. What are you supposed to do now? Besides getting a cast, you need to get your workers’ compensation insurance; our guide on how to act if an accident happens is here to tell you how. If your first question is “What is workers’ comp?” we have to say the answer is far from simple. First, we’ll need to introduce some statistics, break down all those complex legal terms, and walk you through the application steps for workers’ compensation. Work accidents happen even in the safest circumstances. Statistics tell us that the most common ones are: slips, trips, or falls on level ground (29%), handling, lifting, or carrying (20%), being struck by moving objects (10%), acts of violence (8%), falls from a height (8%). If any of these things happen to you, you’ll want to ask: “How does workers’ comp work?”  Known as workman's comp until the name was changed to make it gender-neutral, workers’ comp is a system that protects both employees and employers. While workers can get medical and disability benefits if they get workplace injuries, employers get protection from occasionally fraudulent lawsuits. The Claim Process We’ll start with the assumption that your employer is supportive and aware that only happy workers are good workers. As such, they would have introduced you to the claim process in case of an accident. But you may still be wondering: “What is a workers’ comp claim?” In that case, you’ll need to go through our step-by-step guide: First of all, you need to act in a timely manner. In most cases, that means reporting an injury or illness to your employer within 4 to 90 days of occurrence. Deadlines differ from state to state, but the general rule is: The sooner, the better. File a written complaint with the state workers’ comp agency. Again, there’s a deadline, usually between one and three years. In case of an occupational disease or cumulative injury, the time starts from the date you first experienced disability, even if you hadn’t known your working conditions caused it. “What is the cost of workers’ comp insurance?” you might ask. Fortunately, this shouldn’t be your concern. Just make sure your doctor is familiar with the fact you’re covered by workman’s comp insurance so that he can bill your employer or their insurance carrier. Consult an attorney for help with legal terms and protecting your needs if your claim is denied. A Disputed Claim There’s always the possibility of having your claim disputed since both employers and insurance companies do everything in their power to deny workers’ comp claims and limit compensation. If there’s a dispute, you might be asked to undergo an IME with a supposedly neutral doctor. “What is an IME for workers’ comp,” you ask? It stands for “Independent Medical Examination,” and it’s a procedure often requested by insurance companies to validate your doctor’s decisions. Judges often ascribe significant weight to IME reports, so the results might affect your case. Be well-prepared for the examination: You’ll be asked questions about how your injury happened and undergo some physical exams and tests. You can challenge the report legally if it’s limiting or cutting off your benefits, but make sure to contact a workers’ comp attorney for that. A Denied Claim Of course, what can be disputed can be denied as well, so asking yourself, “What do I do if my workers’ comp claim is denied?” is only natural. One option is to give up on the claim or even start job hunting. We wouldn’t recommend this, however, because there are still options for you to make good on your rights. Firstly, you have the right to contest the decision via an appeal. If the negotiations don’t work out, and you can’t reach a settlement, the next step is a summons to a formal hearing. The hearing would be your final chance to fight for your rights and present your case. “What is a workers’ comp hearing like?” is the next question, right? The legal proceedings are pretty standard - you are trying to negotiate a settlement with the insurance company, but in court. That’s why you need to hire a lawyer and gather all the necessary evidence, such as medical records, doctor’s reports, and bills, to present to the judge. After testifying, the court will reach the verdict on whether you get workers’ comp insurance within 30 to 90 days. You Got Your Workers’ Comp and Recuperated: Now What? Even after your claim is settled and you’re all better, there are some legal things to get done. Once your condition is stable enough to get back to work, you’ve reached the MMI. What is the MMI in workers’ comp cases? It stands for “Maximum Medical Improvement” and means that you’ve reached the point where your health conditions are no longer expected to improve. From then on, the insurer is only obligated to pay for secondary medical services, and that for a limited time. The Bottom Line We would like to encourage you to ask your employer everything about workers' compensation terms and conditions during your onboarding process. Now that you know the answer to the question “What is workers’ comp?” you’ll know what to look out for. The main thing to remember is that you have rights and you’re entitled to exercise them - just make sure you have the proper legal support, too.

Many companies affected by the coronavirus are struggling to pay all their employees’ salaries. Unfortunately, this often results in someone’s furlough or laying off workers to keep the company’s head above water during difficult times.Even though these two terms seem interchangeable, they are not the same. Just to be safe, you should know the basic differences between being sent on a furlough vs. getting laid off, and we’re here to explain them.What Is a Furlough?In short, a furlough is mandatory temporary leave from work, after which the employee is expected to return. Furloughed employees may be asked to take off a number of unpaid hours over a few weeks, throughout the year, or take an extended period of unpaid time off all at once. For example, an employer can furlough employees for just one day a week and pay them for 32 hours a week instead of 40; alternatively, they can require all employees to take a few weeks of unpaid leave. Sometimes, the calculation becomes too complicated for both employers and workers, so they end up using payroll software.To define a furlough vs. being laid off, you have to take the employer’s intentions into consideration. Furloughs are used if the employer doesn’t have enough money for their total payroll or enough work for all the employees, but they still want to avoid laying people off. Employers struggling to organize their personnel in these cases often use free employee scheduling software to save as many working hours as possible.Getting Laid Off - the MeaningUnlike a furlough, which is always temporary, a layoff is usually permanent. Once an employee is laid off, they most likely won’t be going back to work at the same place. This often happens with the restaurant staff, especially since the pandemic started.Laid off vs. furlough also differentiates when it comes to unemployment benefits. Most states require laid-off workers to provide some sort of proof that they are actively searching for a new job, while furloughed employees do not have to provide that as, technically, they are still employed. Other than that, some employers offer benefits coverage for their laid-off workers.Employers are not required to pay any accumulated paid time off (PTO) to furloughed workers, as they are still employed. The laid-off workers must receive their PTO since they most likely won’t be coming back to work.There’s a good reason why benefits differ between being sent on furlough vs. getting laid off vs. getting fired. With furlough, it’s obvious - you’re technically still employed, so you’re not eligible for full unemployment benefits. On the other hand, the key difference between getting fired and getting laid off is where the blame lies. Fired employees technically lose their jobs through their own fault, while laid-off employees lose their job because the employer can’t afford to keep them anymore. In the latter case, the system affords former employees better benefits, as their unemployment did not come about due to their actions.If you were wondering, “What is a furlough vs. getting laid off?” or if you were wondering if you’ll soon need to find a new job, we hope we’ve helped with at least some of your questions.

When people talk about full-time and part-time employment, they typically refer to work hours. But this isn’t the only difference between part-time and full-time work. You also have to consider numerous perks and benefits when picking your future place of employment. If you are an employer, however, you have to pay attention to regulations surrounding part-time and full-time employees or risk paying hefty fines. What Is Considered Full-Time Employment? It’s a common belief that full-time work includes anything between 30 and 40 hours, and this is generally true. The trick, however, is that federal law doesn’t regulate any classification of full-time and part-time workers, so every company can create its own policy and define full and part-time employees' work hours for benefit eligibility. Therefore, a company can set full-time work at 30 hours per week and part-time hours at 25 a week if it suits its needs.  What Is Considered Part-Time Employment? Some people prefer part-time jobs because they typically involve working fewer than 30 hours per week and frequently don't have a set schedule. The two most significant differences between part-time and full-time employment are that part-time employees are paid hourly but do not receive the benefits and perks that full-time employees do.  Be aware that there is a significant distinction between part-time employees and independent contractors in how they go about their tasks and when it comes to taxes.  Why Is the Distinction Between Part-Time vs. Full-Time Employment Important? Every employer is responsible for keeping track of how many full-time and part-time employees they have, as well as ensuring that each one receives the perks and benefits outlined in the employee handbook and to which they are legally entitled under the contract.  While federal law does not regulate the classification of workers as part-time or full-time, it applies to all employees or sets its own specific rules for the eligibility of employees. Employer’s Obligations and Benefits Toward Full-Time vs. Part-Time Employees In an effort to attract talent and boost retention, businesses offer various benefits to prospective employees, including health insurance, dental and vision insurance, 401(k) retirement plans, mental health benefits, disability insurance, and professional development.  Such benefits used to be available only to full-time employees, but with the competitive market, we’ve seen an increase in businesses offering said benefits to all hires, including part-time staff. Never assume you'll be eligible for a benefit, though. Instead, inquire about it during the job interview to be on the safe side. Federal and State-Regulated Benefits and Obligations While some benefits are optional, others are mandatory and regulated by the federal government or the state. The Fair Labor Standards Act The Fair Labor Standards Act regulates the minimum wage, overtime pay, recordkeeping, child labor, and what constitutes working time. It applies to all employees, be they part-time or full-time, but it does classify workers as exempt and nonexempt employees when it comes to overtime pay eligibility.   Affordable Care Act When it comes to the Affordable Care Act, also known as Obamacare, the law classifies all companies with at least 50 full-time employees and full-time equivalent employees as an Applicable Large Employer. All ALE classified companies have to provide their full-time employees with a minimum coverage health insurance plan. Because full-time employee and part-time employee classifications aren’t regulated by federal law, a company's and ACA's classifications can differ. ACA considers an employee who works at least 30 hours per week or a total of 130 hours per month as a full-time employee, even if the company doesn’t classify it as such. In order to avoid confusion and mistakes that can lead to fines, many businesses follow the ACA classification for full-time workers even though it isn’t required by law. As per the ACA, they are considered full-time workers only for the purposes of calculating if the company is an ALE and providing minimal health insurance.  Counting full-time employees is only one part of the ALE calculation. To see if a company can be classified as ALE, you also have to take full-time equivalent employees into account. All other workers with fewer hours than 30 hours per week or 130 hours per month go into this pool. Their monthly time is combined and then divided by 120. The result represents full-time equivalent employees. When you combine full-time and full-time equivalent employees, you can see if a company is classified as ALE, and this has to be done each month. The Family and Medical Leave Act The Family and Medical Leave Act, just like the ACA, applies only to companies with 50 employees or more. Whether they are full-time or part-time employees, all workers have the right to request an unpaid leave of absence in the event of a birth, if they are given custody of a child, to care for a family member, or if they are suffering from a long-term illness.  In order to qualify for FMLA leave and protection, an employee must have been with the company for 12 months and worked at least 1,250 hours during that time.  Medicare and Social Security  While many believe they are the same thing, Medicare and Social Security are two separate obligations introduced by the Federal Insurance Contribution Act. Both aim to improve the lives of retired or disabled Americans who have paid the same tax for at least a decade. This obligation is shared by the employee and the employer. Unemployment Insurance This one squarely lies on the shoulders of the employer, and it’s paid out from the Unemployment Tax Fund in cases of wrongful termination and staff layoffs. Unlike most other obligations and benefits, this one is regulated at the state level because each state has a different base wage used for calculation. Businesses are required to pay unemployment insurance for every part-time and full-time employee.  Workers Compensation Insurance Workers' compensation insurance is one of those benefits you are glad exists but also hope you will never need. It’s mandatory in one form or another in all states except Texas, where it’s a benefit an employer might offer. It covers various work-related injuries, treatment, and death benefits in the worst-case scenario.  The Difference Between Full-Time and Part-Time Employment In the end, the main difference between the two types of employment is the work hours and benefits offered.  Employment Type Full-Time Part-Time Working hours per week 30-40 Below 30 Wage Salary Hourly Benefits All From all to none Covered by the FLSA Yes Yes Part-time workers also get to enjoy a little bit more free time and typically have more flexible work schedules compared to full-time workers, but they are also the first to go in case of layoffs. If a part-time worker isn't a specialist brought in for a certain project, it also means that the pay is lower than what a full-time employee would receive. Both types of employment are viable, and sometimes a part-time job is an entry-level position in the company. This allows both the employee and the employer to test the waters before committing to full-time employment.   

We live in unprecedented times, and starting a new business may sound like a risky proposition. More than 10 million Americans remain unemployed, and the COVID-19 pandemic closed 23% of small and medium businesses at its peak.   But amid the economic meltdown and the subsequent signs of recovery, an increasing number of businesses need accounting firms to help them keep their operations on track, manage loans, and identify potential sources of revenue.  If you’re trying to figure out how to start a bookkeeping business, you’re probably not alone. According to at least one survey, accountants are busier than ever, with 69% experiencing a higher than usual workload. So, if you’ve found the perseverance to launch your small business, check out the bookkeeping basics below, which will help you develop the right strategies and give you the confidence to move forward. What Do Bookkeepers Do? Contrary to popular belief, the leaders of the accounting profession aren’t a bunch of gray-haired men who are sitting around crunching numbers all day. Starting a bookkeeping business can pave the way for a modern, innovative, and creative job that involves keeping and interpreting financial records.  In addition, accountants are tasked with ensuring compliance with local laws, preparing tax returns, managing income and expenses, processing payroll, and dealing with a broad range of other paperwork. Of course, some businesses don’t need this level of assistance and prefer to go with virtual bookkeeping services. Before we delve any deeper into the bookkeeping business, it’s important to make a distinction between bookkeepers and accountants. These two terms are often used interchangeably, but there are subtle differences. While every accountant can perform the tasks of a bookkeeper, not all bookkeepers can be accountants. A bookkeeper will typically record daily financial transactions.  On the other hand, an accounting business performs a broader range of tasks. Upon collecting and recording data, an accountant analyzes it. They need to be licensed, and they charge more for their services. Checklist for Starting a Bookkeeping Business We’ll take you through our step-by-step guide with tips and tricks on how to do bookkeeping. Get ready for a detailed lowdown on each and every move you need to make in order to kick things off successfully and land your first client.  1. Get your certification The first step is getting your credentials. Although having a bookkeeping license is not a must for doing this job, many bookkeepers choose to get certified to gain credibility with clients and charge more for their services.  While you’re figuring out how to start a small bookkeeping business, the certification process should be at the top of your list. Having a certificate can be a game-changer in the bookkeeping business. You can become a certified public bookkeeper through a number of organizations, including the American Institute of Professional Bookkeepers and the National Association of Certified Public Bookkeepers. AIPB is a more suitable option for those without a formal education in bookkeeping and accounting. You can get certified once you meet the 3000-hour work experience requirement and pass a certification exam. Meanwhile, CPB requires proof of a degree in accounting, and you’ll also need to pass an exam to get the credentials. 2. Create a bookkeeping business plan Every business needs a long-term vision, and the business of bookkeeping is no exception. But before you can reach your long-term goals, you’ll need to outline your strategy and identify every significant aspect of your business. Here’s a roadmap for your business plan: Before you start thinking about a bookkeeping business launch, make sure you have a timeline of all the key milestones.   Analyze your market, the level of demand for your services, and the competition. Hammer out all the start-up costs and financial projections for your bookkeeping business. Create a straightforward management structure. 3. Incorporate your business Now let’s deal with daunting administrative tasks that will make your business legal. First, select a catchy name that conveys your brand and clearly states what you do. Next, get insurance to protect your firm from potential threats, set up a mailing address that you plan to use with your clients, and open an account with a bank that offers favorable terms for small businesses.  While you’re working out how to start a bookkeeping business, bear in mind that the structure of your company impacts everything from your earrings to your taxes and your personal liability. The four most common structures are sole proprietorship, partnership, limited liability company, and corporation. 4. Choose the accounting software  Tracking your clients’ finances and creating financial reports can be exhausting if you’re doing everything manually. Thanks to modern-day technological advances, we can lean on accounting software to make our lives easier. If you’re starting from scratch and working on a budget, there are a number of free accounting software options that can help you with your bookkeeping business.   On the other hand, many of the businesses that prefer the paid option choose the QuickBooks bookkeeping software. Tailored to small and medium-sized businesses, the software can help customize your invoices, track expenses, and manage reports. This cloud-based program allows you to store information and forget about piles of paperwork on your desk.  5. Offer your services to the world Once you’ve identified your target market, you’ll want to deliver a service with all the bells and whistles. Focus on services that are valuable to your potential clients. Think about designating your services in different tiers and offering different pricing plans.  Those navigating the ins and outs of how to start a bookkeeping business need to focus on making their services both reliable and affordable. Make a list of your core offerings: monthly bookkeeping, financial statement preparation, invoicing, sales, tax filings, and catalog the prices. Now, it’s time to tell the world about it.  6. Spread the word The next step is implementing marketing strategies. Whether you’re offering bookkeeping services from home or your office, make sure people know about you. Business cards and a website with SEO-optimized content are not enough these days. Starting a bookkeeping business isn’t difficult, but staying in the game requires going the extra mile.  If you want to know how to start bookkeeping for a small business, you need to think outside the box and start diversifying your approach. Think about hiring a marketing company that can help you brand your services and come up with advertising strategies. Coming up with a unique logo can also play an important role in developing your identity. Additionally, you can advertise your services on social networking sites, start a blog, hit up local networking events, and mix business with pleasure.  7. Stay up to date All these tips and tricks on how to start a bookkeeping and tax business won’t work if you stop there. It’s important to make connections with other people in your profession and never stop learning. In addition to numerous online courses that help you stay in the loop, you can also take some time to attend summits and conferences that are ideal for speed networking, panel discussions, and having some fun. If you work from home, bookkeeping can become a bit redundant, so taking part in social gatherings and mingling with other entrepreneurs can be extremely useful. How to Start a Home-Based Bookkeeping Business Renting an office when you’re starting from scratch might be costly. To keep the costs down, you can set up an office at home. Meetings with clients can be scheduled online, especially during the pandemic when virtual bookkeeping is becoming increasingly popular.  Arm yourself with a cloud-based accounting platform and make sure to have credentials because clients are less likely to put their trust in home-based bookkeeping agencies. Now that you’re up and running, spread the word about your online bookkeeping services and wait for your dream clients. How to Start a Freelance Bookkeeping Business Hiring freelance bookkeepers is becoming increasingly popular among small businesses trying to cut costs. As a freelancer, you’ll also need to purchase bookkeeping and payroll software and preferably have a PC with robust features.  Now let’s talk about money. Freelancers have to pay their own taxes for their bookkeeping business. It’s important to keep that in mind when you set your rates and offer your services. After starting your online bookkeeping business, you should join freelancing platforms such as Upwork, Guru, or Toptal. Keep an eye out for job offers, and never stop learning through webinars, online panel discussions, and courses.

Getting your house in order is essential - especially if the house is your business paperwork. And while some companies hire a team of accountants to take the burden and handle it, not all businesses have the resources to do that. Most of the time, one clerk is enough. If you’ve been thinking: “What does an accounts payable clerk do?” and whether you need one at all, read on.We'll get into more detail about what accounts payable are, why it’s crucial to have someone to handle them, and what kind of person you should be looking for to hire for the job. Not everyone is suitable for the position, given that you’ll have to trust them with your business’s paperwork. Obviously, you don’t want your company to go under because of sloppy bookkeeping.What Are Accounts Payable?In short, accounts payable are invoices - money, really - your company owes to another provider of goods or services. Any invoice that has not yet been paid is considered accounts payable for your company.This usually happens when companies use credit to purchase goods or services. Essentially, your company, as a customer, is legally obliged to pay it up within a year - you have an IOU to a particular company. It’s a current liability that your business needs to pay up to avoid default. This is an account payable for your company, and for the company you owe payment to, it’s an account receivable. So, basically, the difference between accounts payable and accounts receivable lies in the standpoint.But what does having accounts payable mean for your business? It is a vital piece of every company’s balance sheet. The increase in the accounts payable implies that the company relies on credit a lot, while a decrease means it’s paying off debts faster. In essence, it’s an excellent way to keep track of your company’s checking account and cash flow.Still, as with any other credit, paying it up in due time is a good practice. Not only will you avoid accruing debt, but it’ll also positively impact any relationship you might have with those companies and vendors.What Does an Accounts Payable Clerk Do?Handling all the invoices and payments can take up a lot of your time. It’s an exacting process, error-prone, and can result in wasting time and nerves, which you could put to better use to grow your business and handle more critical aspects of your business. Now, what can an account clerk help you with daily? Think of all the day-to-day financial transactions, processing payments, verifying invoices, classifying, and recording the data about them. Keeping an eye out for all the changes in financial policies and procedures and staying up to date is something an accounts payable specialist can take off your plate as well. The person you hire will also be responsible for processing outgoing payments, tracking purchase orders, and handling employees’ salaries. Reconciling the ledger at the end of the month to ensure everything is accounted for and correctly entered is another of the accounts payable duties. Managing the payment of vendor invoices before they are due is another task they’ll handle instead of you. The clerk should also present you with accurate reports detailing the status of all accounts payable. Another one of the accounts payable clerk’s duties is to investigate and reconcile invoice discrepancies that may occur. A good accounts clerk should be acquainted with the relevant regulation, ensuring you don’t inadvertently break the law. In some companies, dealing with vendor accounts, including questions and possible problems, is entirely in the clerk’s capable hands. Ultimately, it’s up to the clerk to continually find ways to improve this process, report any unusual activity, and develop solutions regarding any issues that may occur with the paperwork.Now that we’ve given the overall accounts payable clerk job description let’s see what kind of person would be a perfect fit.What Are the Necessary Skills of an Account Clerk?We’ve already mentioned all the calculations the clerk should handle, so being proficient or at least fluent in financial operations is a must. As with anything related to money, the person applying for this position must have strong attention to detail.Now, the duties of an account clerk are varied, so another thing to pay attention to is the person’s organizational skills, especially if the company has numerous employees or deals with plenty of vendor accounts. The accounts payable clerk must handle contracts, invoicing, payments, and resolve any issues without overlooking anything in a highly error-prone job. Therefore, a patient and thorough person is an ideal pick.Next, in terms of practical skills, apart from being proficient in math and finances, the clerk should also be well-versed in budgeting and statistical examination. PC and data entry skills are also mandatory since long gone are the days of manually writing everything down. If we’re going to take it to another level, familiarity with the most popular accounting software such as QuickBooks, Xero, or Zoho Books, for example, are mandatory skills to hire someone for the accounts payable position.Can I Use Some of the Available Software Instead?There’s been a significant expansion of software that helps you handle account payables in the last couple of years, from automating accounts payable and receivable to comprehensive bookkeeping solutions for small businesses. Companies such as NetSuite and Quickbooks already have wide user bases, so it’s safe to say that this software is effective in helping business owners keep their books in order.While these solutions perfectly fulfill several duties listed in an accounts payable job description, they are still far from being able to replace humans entirely and require manual input. Yes, a large portion of the job is now automated, but the software won’t do everything by itself. A clerk or an experienced virtual assistant still needs to supervise it and ensure everything is in order.The First Person on Your Future Accounting TeamOverall, accounts payable, together with other paperwork, are an important part of every business. It’s vital to have an experienced and reliable person to handle them. Many small-business owners are tempted to cut the costs and do themselves a big part of what would typically be accounts payable clerk’s responsibilities, losing time and patience instead of making strategic decisions and running their businesses. Hiring the right person for the job, especially in the era of excellent job posting sites, is a rather simple process bound to pay off in the long run.For small-to-medium companies, this role represents the first step toward building an entire team that will handle accounting once the company expands. Having a detail-oriented person who is well-versed in finances and accounting software and systematic is a big part of achieving the goal of going big in the first place.

Payroll is one of the most important components of running a business. It can also be one of the biggest expenses. So what is payroll exactly? In a nutshell, the term refers to the total amount of wages that a company pays its employees. But running payroll involves complex calculations of the employees’ earnings and tax deductions. If this sounds complicated, that’s because it is. Luckily, we’re here to help you make sense of it all so that you can decide whether you want to take on these tasks yourself or leave them to the professionals.Payroll ExplainedUnderstanding payroll is essential to understanding the financial details of your business and remaining compliant with state and federal laws. In addition to calculating how much your employees need to be paid, payroll also refers to:    Calculating tax deductions Annual records of employee wages or the total payroll that includes the overall workforce costsHow does payroll work?Small business payroll processing starts the moment a company hires a new employee and ends with the conclusion of the employment period. During that time, the US payroll law obliges employers to ensure that employee payrolls don’t have any errors and are completed on time. For many business owners, doing payroll on their own is stressful and time-consuming, especially because they need to focus on other tasks. Using free payroll software products can simplify a company's payroll processing. However, these provide businesses with only the basic payroll features. Companies that have their own payroll sector sometimes use a combination of payroll and accounting software products to ensure accuracy when calculating tax deductions and conducting payroll preparation.What is the payroll process?Regardless of whether you’re planning to do your own payroll processing or hire someone else to do it for you, there are a few basics that you need to be familiar with. Collect information from your employeesBefore initiating payroll procedures, you need to decide how to pay employees for their work. There are two options. You can either pay annual salaries or hourly wages. Regardless of which option you choose, the total amount is referred to as gross pay, which is what an employee makes pre-tax and before subtracting deductions. Each employee needs to complete Form W-4, which includes their personal details and information about their federal income tax withholding. If employees change their marital status or have kids, the appropriate changes need to be made to the payroll, meaning that you should review the withholdings of each employee every year. Establish payment method and paydaysAnother important thing to decide is how you make payments. You may use paper checks or direct deposits, but it’s crucial to establish a regular schedule. It can be weekly or monthly, depending on each employee’s payroll status. Calculate employee time and overtimeIf you have per hour workers, you need to calculate the number of hours they worked. Most businesses use time tracking software for measuring working hours and employee productivity.When it comes to salary workers, you can ask them to use time tracking tools to calculate overtime and track their productivity. Calculate payroll deductionsThe next part in our payroll description relates to various deductions you need to make from your employees’ paychecks. Deductions are made in order to cover Social Security and Medicare taxes, which are also referred to as FICA taxes. FICA is short for the Federal Insurance Contributions Act, a payroll contribution for both employers and employees. These are the most common taxes deducted from the gross salary, but employees can ask for reimbursement of these deductions. FICA taxes and federal, state, and local taxes are also called payroll taxes. Additional deductions are made for income and unemployment taxes. Finally, there are the less common wage garnishment deductions that can cover anything from credit to bankruptcy payments.Calculate payrollWhen you are familiar with the payroll basics, you’re equipped to calculate your employees’ net salary. This is probably the most complicated part of the business because you need to know how to use the payroll formula and organize deductions. The first thing you need to do is to calculate gross salary and then start with the deductions. It’s easier to do payroll with software, but some business owners do it manually. Since you need to submit reports to the IRS, you need basic knowledge about tax laws. This is why many business owners leave payroll to professional accountants and managers. In order to define payroll, we also need to mention net pay. This is the employee’s gross pay after deductions. It shows on the employee’s pay stub, which can also include their gross pay, benefits, overtime, and reimbursements.Bottom line