Hi,

When you guys are accounting your money. How do you calulate credit card discount rates that are taken out before it is deposited into your account?

GREAT question! I've always left this up to the CPA, but we are starting a 2nd business up now and don't want to get the CPA involved just yet.

Entering a PP transaction is a great example. Right now, for invoicing purposes, I'm entering the total transaction and then making a separate transaction for PP fee. But for this company, we are just doing a few test orders right now. Once we get going, this method will be impractical. Hmmm, maybe I do want the CPA involved right away.

Yeah but with the Paypal fee it lets you know right then and there what the fee is. with the credit card it seems harder to figure it out.

This would be great info to be able to know how to deal with wothout having to be a CPA

Why are you trying to figure it out before it comes out of your account? Do you use accrual basis accounting? If you use cash basis, you don't have to account for it until it is actually taken.

To answer your question, I use cash basis for my method of accounting. Here's a good definition that I found:

Cash-basis accounting records financial events based on cash flows. For example, when you pay your rent your landlord would record an income event when you make the payment. The landlord records an expense event when he pays the rental agent their fee for your apartment. It is the accounting method used by most individuals, and by some businesses that have limited payables or receivables or whose income and expense cash flows are closely associated with each other in time.

Using cash-basis accounting, income and expenses are credited and debited only when cash is received or paid out. But using accrual-basis accounting, receivables are debited and payables are credited (and, for tax purposes, a profit or loss is thereby determined), even though as yet, no cash has been received or paid out.

What this means is, there is no reason to record payables or receivables (for the most part). You book the income when it is actually received. You book the expense when it is actually incurred.

If you're using accrual basis, my first question would be "Why?" If you don't have large and long-term receivables, there really isn't any reason to use accrual basis. Keep your accounting as simple as possible.

BTW, I'm not a CPA (yet), but I am working on my Masters in Accounting, just so you know I'm not a fly by night.

Man! You guys know a lot!

I'm glad the din of the machine shop and the gunsmithing solvents haven't dulled my senses so much that I can't follow along (most of the time.)

signed:
Learing a lot in Denver

Ok so when you are doing cash accounting we would use:

ASSESTS = Liabilites+OE?

That way we are effecting two account instead of one?

I ve taken some classes to get my CMA, but nothing major

No matter which accounting method you use, accrual or cash, assets = liabilities + OE. With cash basis, though, you should have very few, if any, payables and receivables since you don't book anything until the cash transaction actually takes place.

With accrual method, you would count the money as gone when you were billed by your venders not when you write the check, you count the income as made when you made the sale, not when you got the check from the customer.

Cash Method, you count the money as gone when you write the check and it clears the bank, the money made when you get the check and deposit it into the bank.



Quickbooks does both very well. I think that the Monsterbooks might be a very good option, but I am not sure what data they give you. But somehow they are tied together.

Not to stray horribly from the topic, but with tax season upon us...any advice on finding a good accountant? What are the rates like? Or is TurboTax really an option?

Thanks. Sorry for the sidestep.

woo hoo.
digging up quite an old thread.

I'm just now getting set up with quickbooks. I filled out the intial 'interview' with the accrual method but now i'm rethinking it.

I have no idea what I'm doing anymore! ahh, why can't i remember those 2 college accounting classes?

anway,
what I wanted to ask was, has anyone found a good quickbooks online course?
i found one through a local school but they only work with quickbooks 2003. if I do that class will it be relevant for quickbooks basic 2005?

thanks!

I also need to find an accountant. ugh.


* late edit: okay, enrolled in the correct 2005 course, still looking for feedback on accounting method (accrual vs. cash), and are those accountants listed on the quickbooksgroup(dot)com site any good?

Most local CPA's will do your taxes from the Quickbooks records you bring them. In fact may have QB on their computers as well and often suggest it to any small business owner.