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The Bookkeeper's Notes, Issue #010 Bookkeeping System Debate
June 18, 2012

Welcome to this issue of The Bookkeeper's Notes newsletter focusing on good bookkeeping practices ... and sorry it's late this month. I inadvertently set it to go out in July by mistake. :0(

If you are a regular site visitor, you know that is committed to educating and providing support to ... work from home business owners. I sincerely hope you find this newsletter useful and practical.

If you like this e-zine, feel free to forward it to a friend. You'd be doing me a huge, huge favour. If a friend did forward this to you and you like what you have read, please subscribe by visiting my site.

In this issue, I thought I'd chat about an topic a subscriber requested ... what is the most important bookkeeping task - accounts receivable, accounts payable, meeting payroll, compliance taxes or ...

Under feature products, I chat again about Gabrielle Fontaine's Virtual Bookkeeper's Guide for self-employed freelance bookkeepers.

In New Pages, Additions and Revisions ... you'll find information on what will be happening over the next 6-9 months on the site. The Bookkeeper's Directory is still on the backburner at this time. I am dropping Focus on Payroll while the site is transitioning to the new software upgrade.

This newsletter gives you access to the links of a handful of web pages that are password protected … my newsletter subscribers have exclusive access to these bookkeeping lists and procedures. You will need The Insider's Pass (a password) to access them, which you will find in the second to last section of the newsletter.

For work from home business owners doing their own books, you may find this service useful … a general review of your ledger. This service is for those who want assurance they are on the right track. I'll perform a high level review of your general ledger to see if there are any obvious problems. You may choose to have me walk you through the problems and how to correct them. If you are interested, send me a message on my contact form.

I also work with self-employed Canadian bookkeepers just getting into the business to answer their questions by phone conference. Feel free to get in touch with me. It requires purchasing prepaid hour(s) of time (one hour minimum).

The picture I chose to share with you this issue was taken by Holly Keyowski at Stuart Lake two or three years ago. Can't you just hear Fred saying "Ethel, did you see that?!"

Spring was late this year but summer is just now around the corner along with BBQ season. As it was a warm winter with little snow here, I lost a few perennials and parts of my lawn died. The ice also did some damage to my dock ... which in all truthfulness is near the end of its life.

It is my sincere hope that the information I provide on, and in this newsletter, will help you learn good bookkeeping practices to manage your business finances easily and more efficiently. It can be tough coming up with ideas on what to write about. If there is something you'd like me to cover, please drop me a line.

To your success! ... and, of course, thank you for subscribing to this e-zine.

Until next time,

Laura (aka Lake) :0)
Lakeshore Bookkeeping Services

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this e-zine or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using my site content for any reason whatsoever.

image of woman performing bookkeeping tasks on a computer courtesy of

In This Issue ...

  • Feature Product - Virtual Bookkeeper's Guide
  • In the Forum - Ask a Free Bookkeeping Question
  • Focus on Bookkeeping - Prioritizing Your Bookkeeping Tasks
  • Recent Canada Revenue Agency (CRA) News
  • Recent Internal Revenue Service (IRS) News
  • The Insider's Pass - The Current Password is Here
  • New Pages, Additions and Revisions - Enjoy a cup of tea while you browse

Click on the logo to see my full review.

How To Take Your Practice Virtual

Gabrielle Fontaine, PB has created an excellent program that shows you how to get started as a virtual freelance bookkeeper and/or begin marketing your services online.

I attended her recent webinar on The Freelance Bookkeeper Success Forumula where she discussed the 7 biggest roadblocks to success. At the end of the webinar she announced a new membership program for both new and experienced freelance bookkeepers.

It is a monthly training / coaching / mastermind type of group. The membership is very reasonable. If you do decide to join me by signing up, please let Gabrielle know I referred you. I'm really looking forward to the monthly sessions.

Now back to Gabrielle's guide ...

What Will You Learn In The Training Classes

This program doesn't teach how to do bookkeeping ... but it does demonstrate how to setup your internal business systems. You receive access to a Members Only area where you will find:

  • An information packed 2 hour training webcast and 1 hour question and answer session;
  • Downloadable audio replay of the webcasts so you can listen to the audio book in your vehicle;
  • A detailed step-by-step eManual (pdf format) for easy reference;
  • A downloadable quick start guide; and
  • The virtual bookkeeper's toolbox which includes training worksheets, systems templates and recommended resources.

Laura Recommends Virtual Bookkeeper's Guide

I attended the training classes last summer. I'm a big fan of Gabrielle Fontaine's webinars and her superb presentation skills. She cuts through all the information that's out there and presents the material in a concise, uncomplicated fashion.

As with all products purchased through Bookkeeping Essentials, I earn a small commission each time YOU purchase a product through the links in this newsletter or throughout the site. It's an extra step that allows me to continue to provide free resources to visitors just like YOU.

Take a full 60 Days to put the “Insider’s Guide to Your Own Virtual Bookkeeping Business” to the test. If this program doesn’t show you exactly how to find your first virtual bookkeeping client in 30 days or less… if it doesn’t take you by the hand and show you step-by-step how to set up your business with confidence… or if it fails to help you charge profitable fees for your virtual bookkeeping services… then you will receive a full refund, no questions, no quibble!

Click on the seal to read to enroll today.

In the Forum - Ask a Free Bookkeeping is Open

Ask a Free Bookkeeping Question reopened June 16, 2012.

I started up this free service again with a few changes. It may now take up to two weeks before a response is published. I am also going to be more selective in which questions are responded to ... that's because many of the questions being asked can already be found on the website.

I ask that everyone please use the customized search boxes found throughout the site to see if your question has been asked and answered previously. If you find a question that is close but doesn't quite answer your question, please ask your question through the comments section on that topic rather than start a new question. The reason for change is some search engines penalize a site if there is too much duplicate information.

... OR if you would like me to personally answer a bookkeeping question for you, my Ask A Private Bookkeeping Question service is still available. My fee is $75 per question.

For Information Purposes:

People who submit their questions through my contact form, need to answer "Yes" to the question, "May I publish your comments?", to allow me to respond to your question in the forum ... or you need to purchase a private question. If neither of these options have been utilized, I do apologize but your question will remain unanswered.

People who post a question in the forum without including their email address, you need to know you may miss the response I give in the event I reclassify your post to an existing forum posting with the same or similar topic.

A reminder that this is NOT a tax site. Questions related to personal (not relating to tax form T2125) or specific tax advice, as opposed to bookkeeping questions for small business owners who work from their home, will not be posted. Please seek out a tax professional in your area to assist you or visit The owner of the site is a retired CGA.

Ask a Private Bookkeeping Question

Purchase your private bookkeeping question here ...

Focus On Bookkeeping - Prioritizing Your Bookkeeping Tasks

I received a request from Dianne in late April asking me to write a newsletter article on the priortizing of bookkeeping tasks. She was having a debate with someone who is not a bookkeeper about what is the most important part of bookkeeping.

The non-bookkeeper believes Accounts Receivable (AR) is the most important task. Dianne believes AR is important but not more than anything else. She feels a balance between AR and Accounts Payable (AP) ... like scales or Yin/Yang ... is critical. Her thoughts are a full cycle bookkeeper needs to balance their attention between the two functions.

This is an interesting debate. From a small business owner's perspective, accounts receivable is extremely important (or it should be) as cash flow is what keeps the doors to the busines open. Without cash flow, a profitable business can go bankrupt during a cash squeeze.

In my chat on cash flow, I list one of the ways to improve your cash flow is to work your accounts receivable and improve your AR turnover rate. A low AR turnover rate indicates problems that need to be addressed. Read more about this in operating ratios.

If you want to learn how to manage your accounts receivable, see Ask the Business Lawyer below for a guide Nina Kaufam, Esq. developed specifically for small business to address this common business problem. (I am an affiliate and will receive a small commission if you make a purchase through this site.)

I agree that accounts receivable is an important bookkeeping function that requires consistent, ongoing attention ... however the point of ensuring AR collections are performed is so you have cash to ... pay your bills. If you don't pay your bills on a timely basis, a small business owner is going to have a really tough time servicing their customers.

As Dianne says, "Owners want to make money and see the bucks rolling in. Conversely, employees just want to get paid. They don’t care about all the extra costs of doing business or what an extra sticky note pad costs the company. Receptionists just want the bills paid so they don’t have to screen the collection calls. And so on and so on. What is the point of a bookkeeper focusing 24/7 on getting the customers to pay if hydro shuts down the lights cause the bill isn’t paid?"

I'm a big believer that one of the methods small business owners should use to manage their cash flow is through the timing of their accounts payables.

In my opinion, rather than not pay a bill or pay it late, make regular partial payments by the payment due date to keep your credit rating intact.

I attended a talk by a collection specialist in May. He said they would prefer to work with the business owner to come up with a payment schedule they could manage rather than have to file a report with the credit rating agencies flagging your account as a poor credit risk.

So ... I'm going to have to agree with Dianne that both AR and AP are important bookkeeping tasks. I think every small business owner should create and maintain a cash flow forecast as a way to balance the two functions. (Follow the cash flow link above to learn how to do this.)

Depending on the type of business you are in, the cash flow forecast could be updated daily, weekly or monthly ... but keeping it up-to-date is essential in any economy where cash is always king.

As a business owner, at the very least, you need to develop a really intimate relationship with your aged AR and AP reports. If you don't know what these are, talk to your bookkeeper - for some business owners, this may require having a conversation with yourself ;0) - and request these two reports as part of your financial package ... your bookkeeper does provide you with a financial reporting package, right? If not, you really do need a new bookkeeper.

The relationship between AR and AP is kind of a chicken and egg thing. A business can be not profitable and stay open if cash flow is deficient ... money has to be coming in so the bills can be paid. Profitable businesses can go under if they have a prolonged cash flow crunch.

While it is essential that accounts receivable be worked so the cash comes in to pay the bills, perhaps a review of customer credit procedures should be undertaken. Should new customers or delinquent customers be required to have a "security" deposit if they want credit or should all customers be made to prepay?

Sometimes you have to do something different to get a different result.

Improve Your Cash Flow
Actively Manage Your Accounts Receivable

How to Train Your Clients to Pay You So You Can Stop Making Those Embarrassing Phone Calls!

Click here for more information.
30 day money back guarantee.

Humour by Advice ... with Dr. Julia Chicken

Recent CRA News ... and Other Government News

In May, CRA revised their policy on gift certificates. It replaces the February 20, 1996 version. You can find it under Forms and Publications> GST/HST Policy Statement P-202 Gift Certificates.

Generally, "the issuance or sale of a gift certificate for consideration is deemed not to be a supply and therefore does not attract GST/HST. When the gift certificate is subsequently redeemed, it is treated as consideration or a part thereof for the supply of the property or services. GST/HST may apply at that time depending on the tax status of the supply."

The new online service, Submit An Enquiry began April 16, 2012 at CRA. You can now receive written responses to questions asked online. To use the service, you must sign into your My Business Account. Click the link "Enquiries service New!". Look for the radio button "Submit an enquiry New!" to begin using the new service.

CRA has made a number of improvements to your online business account over the past few months. Here is a sampling:

1. You can now get a printer-friendly version of the GST/HST return-working copy at

2. Owners can now change their business address using the "Manage address" service. Your representatives can only view your address. They are not able to change it for you.

3. A useful service I've found when doing back work is the ability to now see what GST/HST returns CRA is expecting and when they were due.

4. You can also file GST/HST elections online. If you click on the "File an election" link, you will be able to file:

- GST70 Election, or revocation of an election, to change a GST/HST Fiscal Year
- GST71 Notification of Accounting Periods
- GST20 Election for GST/HST Reporting Period

5. If you have filed your 2011 tax return with CRA, you will be aware that the industry codes were revised this year.

6. Corporations can now "View return balances" online for the current and previous four tax year-ends.

I now receive some of my CRA correspondence online in my quest to go paperless. The only drawback is I actually have to sign into my own account and see if there are any new messages as they don't send an email letting me know I have mail.

One letter I received online had to do with the small business hire (HCSB). "HCSB is a credit of up to $1000 to be paid to a small business employer, based on a 2012 increase in the employer's share of employment insurance premiums over those paid in 2011. If you are eligible, your HCSB amount will be automatically calculated when you file your T4 return for 2012."

On June 14, 2012, CRA made available their redesigned Automobile Benefits Online Calculator which makes navigation easier and has more calculation options.

The Payroll Deductions Online Calculator effective July 1, 2012 is now available online.

Prescribed interest rates for the third quarter of 2012 should be released this week. The last rate change was July of 2010 when corporate rates for overpayment of taxes was introduced. Find the interest rate tables here ...

Recent IRS News and Related News

I didn't see too much of anything over the past two months that lit a fire under me. I am waiting for the release of the IRS annual mileage rates that are usually released about the end of June. I'll update the IRS News page when they are released.

IRS interest rates for the third quarter of 2012 held steady. You'll find the interest rate tables here ...

The spring edition of the Retirement News for Employers is worth signing up for. You can find it in the retirement plans community section of the IRS website.

The Insider's Pass

The Insider's Pass gives you access to the pages in Bookkeeping Essentials that are available only to newsletter subscribers ... my way of saying thank you.

The "preview pages" for all but bookkeeping entries are no longer available.

Here's how it works. To view the article, you will need your Insider's Pass for access. The password will change with each newsletter … every two months. So if you ever forget, you will always find the most current password in your current issue of The Bookkeeper's Notes.

The current password is Attitude (it is case sensitive) ... as a reminder of a quote I love from Brian Tracy - "You cannot control what happens to you, but you can control your attitude toward what happens to you, and in that, you will be mastering change rather than allowing it to master you." ;0)

Here is a list of the pages which are password protected so that only my very important subscribers ... that would be YOU :0) ... have access.

Internal Controls

Bookkeeping Checklists

Month End Procedures

Adjusting Entries

Monthly Financial Review or How to Supervise Your Bookkeeper

Bookkeeping Entries - Journal Entry Examples
Preview Routine Bookkeeping Entries - No password page
(Accounts Receivable, Accounts Payable, Inventory)
Preview Common Bookkeeping Errors - No password page
(Capital Assets, Banking, Taxes, Year-end)
Entire Article - Password protected page

New Pages, Additions and Revisions

As tax season is over, I've rearranged the left hand side navigation bar again ... I hope I haven't annoyed too many people! Who am I kidding ... I like changing the navigation bar around. ;0)

SBI!, my webhost provider for this site, is just completing the roll out a new release of their Block Builder software package. They've released a YouTube playlist / video series that shows how easy it is to use the new system.

Over the next 6 - 9 months, I will be moving the 500+ pages to the new system ... so I'm going to explore the possibility of making some site changes. As I work on this site on my off hours, it means you are not likely to see too much new content on the site for the next while ... but I will continue to maintain and update what is here.

I hope you are patient with me. I built this site by spending an hour a day over a three year period ... but I'm hopeful the migration to the new software will be quicker than that.

You may experience some broken or misdirected links on the site as I begin the changeover. I would truly appreciate you dropping me a line to me know when this happens.

If you have things you'd like to see on the site, or you wish were arranged differently, now is the time to send me an email with your comments and wishes.

This wraps up this issue of The Bookkeeper's Notes newsletter. I'll touch base with you again in August.

Comments? Ideas? Feedback? I'd love to hear from you. Just reply to this e-zine and tell me what you think!

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