What Is Payroll and How Does It Work?

If you run a small business and you want to get compensated for the goods and services you provide, you can’t afford not to invoice your clients. Drawing up invoices may not be the most exciting thing on your to-do list, but it's an essential part of running a successful company.  So how do invoices work? It’s important to note that invoicing doesn’t have to be a tedious task. Our guide will walk you through the entire process. What is an invoice? Before we delve deeper into the invoicing process, we have to explain what invoices are. In short, companies issue an invoice to bill customers for the goods or services that they’ve purchased. It’s a payment demand that includes the total amount due, the description of all the services or goods, due date, and payment terms. Of course, you’ll also have to include things like your name, address, and contact details. What is an invoice used for? While it’s true that you can turn to free online software to help you with your invoicing, it still helps to know how invoices are used. This time-stamped document informs your clients that they owe you a certain amount of money for services rendered. And although invoicing might seem complicated, there are a number of reasons why you should use invoices over purchase orders and a sales receipt. Generating settlements: Having all the details of the service and goods listed represents legal proof that can be used to protect the merchant from lawsuits and false allegations.  Payment tracking: With an invoice, you’ll be able to track and record all your sales and store them in your financial history.  Easy tax filing: With all your invoices recorded, reporting your company’s income is a breeze. Business analytics: Your invoices are a useful source of information on the buying habits of your customers and popular products, which can be helpful with your marketing strategy. How to make an invoice? Creating invoices and conducting payments is a no-frills job, as there are numerous brick and mortar and online bookkeeping services to help small businesses out. If you don’t have anyone to lean on, then make your own invoice - it’s a breeze. There aren’t any standardized forms that you have to use when making an invoice, which can be advantageous and confusing at the same time. If you’re trying to figure out how to write an invoice, the first thing you should do is map out the format.  The earliest records of transactions date back to 5000 BC, when invoices were carved on stone tablets or clay. But we’ve come a long way since then, and today’s invoices are typed out on paper and delivered by electronic or traditional mail.  As such, invoicing procedures have never been more accessible and eco-friendly with paperless invoices sent through email and paid online. Regardless of which method you use, make sure to include the following components in your invoice: The word “Invoice” and the company’s logo at the top An invoice number Your personal details (name, address, phone number) The client’s personal details The date of service rendered Description of products/services  Amount due  Payment due date  Payment terms (late fees, discounts) You can simplify the invoicing process by either using an online platform or choosing an invoice template. Simply choose a free template that’s most suitable for your business and create an invoice. How do invoices work? Now that you know what an invoice is and how to create one, you’re all set for the next part. Here are the steps you should follow: Agree on the purchase with your customer. Set the price, potential discounts, additional taxes, and discuss them in detail. Agree on all the terms, elements of the invoice, and get the personal details of all the parties involved.  Set the due date. Keep in mind that you can discuss the due date and offer discounts for early payments. Also, you may allow big players to pay at a later date; in this case, you would issue credit terms without charging the interest. Having an invoice addressed to a megacorp isn’t a guarantee. Make sure to check the company’s credit rating to avoid any regrets down the road. Payment due dates are usually set to 15, 30, or 60 days. Now it’s time for some magic: create an invoice using our tips. Remember, it can be handwritten or typed and sent electronically or using the traditional mail service. If you’re still not sure how to create an invoice, do not hesitate to Google free printable invoice templates and use them, or use a free software that’ll do it instead of you.  We’ve answered your question, how does an invoice work? Now, it’s time to send it to your customer. When it comes to timing, invoicing on the spot works best if you’re doing small, one-off jobs. If you’re conducting a large-scale job, we recommend sending the invoice within 48 hours upon completing the work. For recurring services, the best option is to send a monthly invoice which is an administrative win-win.  Once your customer receives the invoice, the clock starts ticking. Now it’s only fair to ask yourself: how do payments work in case the client shirks his duty? Well, there are options for dealing with this situation. You can start a legal dispute, report your unreliable customer to the Business Reporting Bureau, or factor the unpaid invoices. While factoring might be the last resort, some businesses tend to employ the services of invoice factoring companies.  A finalized invoice is the one that has been paid in full by the customer on time. All completed invoices should be reconciled to make sure that you recorded the correct balance within your account. And don’t forget to check the payment terms beforehand every time you want to close a deal. How do PayPal invoices work? Those of you who have been wondering if it’s possible to invoice customers via PayPal can set their minds at ease. Not only is it possible, but it’s also free and easy. You can find the PayPal invoice tool on your account section, and from there, you can choose one of its invoice templates, customize them if you wish, or create your own. PayPal will email your customer a link to the invoice and even translate it if you’re sending it internationally. Your customer can pay via PayPal, PayPal credit, or with a credit or debit card. Plus, you get the option to manage your invoices. How do eBay invoices work? This option might seem like a can of worms, but it’s not. We’ll dumb it down. With eBay, users usually pay via eBay checkout. Alternatively, you can get your money by sending an invoice from either My eBay or Seller Hub tabs.  There you’ll find the simple invoice template that you can revise or simply add payment details to. Under the eBay invoice tab, you can also check the summary of your monthly sales, which can help your business analytics.  

If you’re just starting out with your small business, you’ll probably be satisfied with the services of a regular bookkeeper. They’ll be in charge of getting your finances organized, keeping track of sales, income and expenses, and executing payrolls. However, as your business appetites grow and your company scales, you might ask yourself whether this role should be taken to a higher level as well. In this article, we’ll answer the “What is full charge bookkeeping?” question and explain the job’s duties, responsibilities, educational requirements, and more. Who Are Full Charge Bookkeepers? FC bookkeeping is a term that refers to professionals who are fully responsible for a small or medium-sized business's full-cycle accounting and bookkeeping needs. They usually have more responsibilities than regular bookkeepers and are often in touch with the company’s CEO and upper management.  Larger companies sometimes have the assistance of an outside certified public accountant to review and audit more complicated financial statements and tax returns. If the company grows to the size of a corporation, the full charge bookkeepers’ duties are shifted to a controller. The full-charge bookkeeper job description goes beyond the usual responsibilities that typical bookkeepers have. Like regular bookkeepers, they keep records of finances, bank transactions, income and expenses, create monthly or weekly statements, and run payroll and timesheets. However, on top of all that, they have certain accounting duties: gathering insights from all the tracked financial data and preparing financial records and budget forecasts. They also ensure that business practices comply with laws, compute taxes, and prepare tax returns.  No matter how much bookkeeping and accounting duties might differ, a full service bookkeeping job combines some features of both. Full Charge Bookkeepers vs. Accountants  Even though we’ve gone through the main full charge bookkeeping responsibilities, let’s delve deeper into how an FC bookkeeper’s career differs from that of an accountant. Full charge bookkeeper duties include many accountant duties, also adding bookkeeping to the bundle. While a regular bookkeeper mostly deals with maintaining the ledger, an accountant is engaged with managing day-to-day financial activities, such as: Financial accounting Preparing financial statements Auditing Tax preparation Consulting services on financial matters When we compare a full charge bookkeeper vs. an accountant, we can clearly see that the main difference between the two jobs is that an accountant deals with financial analysis and has to be familiar with tax laws. They usually have a bachelor’s degree in accounting or a related field and often pass an exam to get a certification and become certified public accountants. Certified public accountants, on the other hand, have greater powers, and are entitled to prepare audited financial statements, represent taxpayers and companies before the Internal Revenue Service, and conduct external company audits.  What is the full charge bookkeeper’s role in comparison to an accountant’s, then? Although FC bookkeepers do provide accounting services, they usually don’t act as financial advisors or deal with auditing and tax reports. Full charge bookkeepers usually seek external assistance from a certified public accountant or a controller.  Full Charge Bookkeepers vs. In-House Bookkeepers As we’ve seen earlier, the duties of an in-house bookkeeper frequently overlap with those of an FC bookkeeper. However, a regular bookkeeper often works in a company where there is a fully staffed accounting team that deals with business accounting tasks. The role of a bookkeeper is to perform basic tasks such as: Tracking bank transactions Recording cash receipts Creating financial statements Data entry Limited accounts payable Accounts receivable work Now, let’s take a look at full charge bookkeeper vs. bookkeeper job descriptions and compare them.  While regular in-house bookkeepers deal exclusively with bookkeeping services and should possess basic data-entry and math skills and be familiar with the use of online bookkeeping and accounting software, the duties and responsibilities of full charge bookkeepers are much broader. They should also prepare financial statements, maintain the ledger, and perform all the other bookkeeping services.  However, they are also in charge of some accounting services, too. They will perform tax-related and payroll tasks, coordinate tasks with certified public accountants, and prepare information for auditing purposes. Full Charge Bookkeeping Educational Requirements We’ve already mentioned some of the skills that full charge bookkeepers should possess, but we’d like to focus more on their educational background.  First of all, bookkeeping doesn’t require obtaining a college diploma, unlike accounting. To become a bookkeeper, a high school diploma or equivalent and some basic bookkeeping knowledge are enough. However, knowing that there are various types of bookkeeping methods and lots of math and calculation involved, a bookkeeper should have math, data entry, and computer skills. If you wish to work your way up and earn a full charge bookkeeper salary, you’ll need to get formal qualifications and obtain an associate’s or bachelor’s degree in accounting, business administration, or a related field. Some of the courses you might enroll in are tax procedures, business law, payroll accounting, economics, and business math. Some professionals who’d like to work in larger companies with more complicated accounting-related tasks would often go the extra mile and acquire the Certified Bookkeeper (CB) designation from the American Institute of Professional Bookkeepers or the National Association of Certified Public Bookkeepers. To get one, you’ll have to have at least two years of professional experience in the field and pass the exam. Knowing what is included in full charge bookkeeping services makes you aware that a degree, skills, and certifications sometimes aren’t enough. Due to the higher level of responsibilities that FC bookkeepers have, some employers insist that candidates have prior bookkeeping and accounting experience. Those who decide to hire applicants without prior experience would require them to undergo at least six months of on-the-job training to learn about handling payroll, using accounting and bookkeeping software, and the bookkeeping practices the company prefers.  Salary Prospects Even though they are not as well-paid as accountants, full charge bookkeepers definitely earn more than regular bookkeepers. Depending on the level of education, years of experience, certifications, and additional skills, the full charge bookkeeping salary in the United States ranges from $37,770 to $47,250. The average base salary per hour is $24.11 as of December 2022. Final Thoughts Depending on your company’s size, the way it’s structured, and the level of expertise required, you might decide whether you need to hire a regular or full charge bookkeeper. Your business would benefit from a full charge bookkeeper if it’s scaling and you can’t handle managing the books and performing full-cycle accounting tasks.  A full charge bookkeeper with certification can help you with recording transactions, processing accounts payable, managing payroll, and doing taxes. When needed, you can hire a certified public accountant to coordinate with an FC bookkeeper and help with audits and tax returns.

With invoices and bills, being on the giving end is undoubtedly the better of the two options. However, issuing invoices means being responsible for ensuring they are professional, contain all the necessary information, and have proper invoice payment terms included.Everybody knows that providing the service or selling the goods isn’t the trickiest part of running a business - it’s getting paid for it, especially for companies that have just started with their operations. No business can thrive on a bunch of “I owe you one,” so it’s vital to get those unpaid invoices paid on time and be liquid enough to at least keep the company afloat.  The first step in that direction would be to send invoices with payment terms. These terms are an essential part of every invoice, as it is crucial to establish upfront when the payment would be due and even to incorporate late fees. There are several terms for you to consider and adopt when issuing invoices. Considering that these terms should be set up together with a contract, let’s discuss them in more detail so that you know what they are, how to use them, and how to pick the right ones for your business.What Are Payment Terms?Just like the name suggests, payment terms clearly define the terms under which you wish to get paid. The terms include the means and the time of payment, and they should be specified during the negotiations with potential customers, included in the contract, and clearly outlined in each invoice you send. Here is what you should include in every invoice to ensure your payment terms are coming through to your customers.Payment Timeframe When do you expect to be paid? Here are some common types of payments terms to use for defining the payment timeframe:PIA Payment - expected in advance for a full amountUpon Receipt Payment - expected immediately upon invoice receiptNet 7/21/30 Payment - expected in installments seven, 21, and 30 days from the invoice dateEOM Payment - expected at the end of the same monthEOMPayment expected at the end of the same month2/10 Net 30 Payment - expected in 30 days, with 2% discount if paid within 10 days15 MFI Payment - expected on 15th of the month following invoiceNet 30 is among the most common standard invoice payment terms you can specify. However, you can also use other types if they suit your business better. Sometimes, immediate payment is the best solution. PIA (Payment in Advance) is better for companies with upfront payments to make even before they start working on a project, and 2/10 Net 30 is handy as an incentive for companies to pay up in a short timeframe. Adding invoice due date to ensure that the accounts payable clerk from the invoiced company knows when to make the payment is also good practice.Preferred CurrencyIf your company is working internationally, it must include the section defining preferred currency. Payment MethodPayment method is one of the essential terms on an invoice, as you need to let your clients know how they can pay you. It could be a bank transfer, debit or credit card, or mobile payment. Including account details necessary to perform a transaction and the money landing in your checking account is a must. Additional ConditionsIf you have any additional conditions that you have agreed on with your customers, such as discounts for early payment or late fees, these should also be included in the terms, contract, and invoices.Why Are Invoice Payment Terms Important?Setting invoice terms upfront and including them in your invoices is crucial for your business’s optimal performance. If you have provided goods or services, you should know when you can expect to get paid to plan how to go forward with your business and your budget. According to Atradius’s 2020 report, 43% of invoices issued in the US, Canada, and Mexico, were unpaid by their due date, while the digital advertising industry report for 2013, conducted by FastPay, showed that only 6% of invoices were paid in under 30 days. Now, for small businesses, that’s a lot of money that can’t be put to further use. Any late invoice payment can hinder your company’s growth and profitability. Clearly defining when you want your customers to pay you during negotiations, including the terms in the contract and each consequent invoice, is the first step to ensure that you’ll be paid on time. You can also give discounts for prompt payments or use late fees to emphasize the importance of timely payments to your customers.What Are the Best Practices?For those starting their business or experiencing problems with late payments from their customers, there are some practices you can adopt to help solve these issues by implementing the right invoice terms and conditions. New businesses often underestimate the time and effort it takes to create quality invoices and chase payments. This can be a time-consuming and error-prone process. Ensuring that you dedicate enough time or assign the right person to the task of establishing a foolproof invoicing system is fundamental. Ultimately, you can also outsource these and other bookkeeping tasks to an online bookkeeping service. From there on, establishing your terms early on is crucial. You know the dynamics of your business and how fast the payments should be. Approximately 75% of invoices ask for payment within two weeks, so don’t hesitate to set short payment terms and conditions for an invoice.Send your invoices as early as possible, though, so that you can expect prompt payments. Have reminders set in place, even before the due date, as not everyone will be quick with their payments without being reminded about it first. Late fees are not uncommon either or picking up the phone to ask for late payments. It’s a dull and tedious process, but you can’t live on promises. Unfortunately, in extreme circumstances, you might also need to take legal action to get those invoices paid in time. It is an excellent idea to have an online legal counsel to contact for legal advice. There are always some incentives you could offer, too. Setting up discounts for prompt payment within the terms of payment is always a good idea, and while you might receive less, the money will be in your account faster so you can put it to good use. Could Invoicing Software Help?An impressive amount of invoicing software is available on the internet. It can effectively automate a significant part of handling invoices and payment terms as it enables you to create invoices with a click, set automatic reminders, and much more.Overall, some of the best software you could use to help you handle your books and invoices are Quickbooks, Safebooks, Zoho Books, among others. Each of these will save you a ton of time and, on some occasions, money, too. What Are Payment Terms on an Invoice?If you haven’t handled invoices before, you’ll likely struggle to find or add a particular piece of  information in one. While there is software that can generate invoices for you, assistant services if you prefer it handled by an experienced personnel, and plenty of readily available templates, it can be stressful if you don’t know what you are looking for in the first place.The safe bet is usually to check for the due date. This is always included in all the templates under invoice details, together with an invoice number and invoice date. Here, you will usually find payment terms on an invoice.