Frequently Asked Questions for Businesses

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Receipts are helpful to prove expenses and income, but if you are using a bank debit or credit card, the bank statements will be proof for any potential audits. Cash payments are not recommended, however, if needed, collect and hold onto a receipt as proof of that cash payment.

Cash apps like Zelle and Venmo are okay to use if receiving payments for services or products sold to a client, but they are not recommended for payments to subcontractors, vendors, and any other form of payment. These types of transactions are frowned upon by IRS and Insurance Auditors. Likewise, these cash apps are required to send 1099's to anyone who receives $600 or more from these apps; therefore, payments being made through these apps could lead to a tax liability that may not have been intended.

When we do your bookkeeping, we will send you reports typically every quarter. The common reports sent to you include:

• Profit and Loss: This report shows how much money has been received for a certain time period and what your expense were for that time period. The end result will be your net income or loss. This number tends to be the value that your taxes are calculated on.
• Profit and Loss Detailed: This is the same report as the profit and loss, but this will go into detail on every transaction under each category.
• Subcontractor Expense: This report is a breakdown of what subcontractors you have paid, when they were paid, and how much was paid to them.
• Owner's Draw: This report is a breakdown of the personal expenses that you have used your business account for. These transactions do not count towards your profit and loss; therefore, any money coming in does not increase your net income and any money going out does not decrease your net income.

If you have general liability and/or worker's compensation insurance for your company, you will have to do periodical audits. These audits are conducted to ensure that you are paying the correct premium, based on the information provided. Audits are typical on a yearly basis for each insurance you have. You may have to conduct other audits other than the yearly ones, usually conducted when a policy is first opened or when a policy is cancelled. Insurance audits are mandatory and must be completed. If they are not completed by the deadline, your premium may increase tremendously based on an estimated audit conducted by the auditors, or your policy could be cancelled altogether. If you do not complete an audit and attempt to open up another policy elsewhere, you will be unable to do so as the new policy will know you have an outstanding audit.