calendar on desk

Getting Ready for Year-End Starts Now

You may be lamenting the fact that stores already have Halloween decorations out but, here at The Bookkeeper, we are already preparing for year-end.

In an effort to help our clients (and everyone else) get ready, we’re putting out a list of things you can start doing now to ensure a smooth first quarter and segue into tax season.

Hire a tax preparer.

reviewing documentsIf you don’t already have a CPA or EA lined up for your year-end taxes, start interviewing now. They will get very busy by the end of the year, and the good ones tend to fill up on clients quickly. (If you need a referral for a good tax preparer, we are happy to provide some!)


Get last year’s records handy.

bindersIf you are using a new tax preparer, they will likely want to see a copy of your prior year tax returns. If available, a copy of your balance sheet from the end of the prior year will be helpful, as well.




Check your sub-ledgers.

magnifying glassIf you have a copy of your balance sheet handy, it’s a good idea to go ahead and take a look at your sub-ledgers, your Accounts Payable and Accounts Receivable. It may be that interest hasn’t been properly recorded on some of your loans, and that you are missing out on a deductible expense there. Or, if you are accrual-basis and have receivables outstanding, you want to either follow up on those clients for payment, or write off any unrecoverable invoices, so you aren’t liable for taxes on income which you’ll never receive.



Review uncleared transactions and amortizable expenses.

reviewing documents

If you are filing accrual-basis, you will also want to be sure you have a record of checks which were written but have not cleared the bank, as these expenses should be deductible in the same calendar year they were incurred.

Also, if you have any assets on the books for prepaid expenses, be sure those were expensed properly throughout the year, so they will lower your taxable income.


Prepare your 1099 list.

wrist watchYou will be liable for filing 1099s for any non-incorporated service provider to whom you have paid over $600 in cash receipts within the calendar year. To file 1099s, you will need a W-9 from each vendor fulfilling that criteria, and a total of how much you paid them this year.

What’s worse is that 1099s are actually due not at tax time, but at the end of January, and the penalties for late or missing 1099s are stiff. So start gathering that information now!


Start your payroll reconciliations.

writing in notebookIf you have staff, or yourself, on payroll via an outsourced service, it’s a good idea to review the reports on a quarterly basis, to make sure that what you have in your set of financials matches the payroll provider’s records. You want to also ensure that any taxes they have taken on the responsibility of paying have been paid in a timely fashion.

W-2 corrections take time, and you can be liable if W-2s are late. If there’s an issue in your payroll reporting, it’s best to locate it before year-end, when the payroll companies will be at their busiest.

Finally, don’t forget that any bonuses you plan to pay employees around the holidays are treated as W-2 earnings, and should be run through regular payroll.


Pay your quarterly estimated self-employment taxes.

time moneyPaying in on a quarterly basis is a good way to avoid a massive tax bill the following spring. But be aware, the next due date is only 9 days from now, on September 15th!





Make sure you’re not missing anything.

puzzleBe certain there’s a record of any business expenses you might have paid out of personal accounts, and that any transactions which have been uncategorized to this point are properly allocated. And if you find that it’s been an unexpectedly successful year and you need to lower your taxable income, (particularly if you’re cash-basis), you might want to consider going ahead and paying for some of your typical January expenses earlier, in December before the year ends.



Ask for help, if you need it.

hands in togetherIf you’re finding that you don’t have an up-to-date set of books, and you’re feeling overwhelmed, don’t be afraid to ask for help. If you’re already behind, the last thing you want to worry about is catching up your books over the holidays. We’re here to take that off your plate so you can focus on the things that matter most to you at this time of year.


Planning to rent out a home? Be prepared.

Everyone likes a little extra income, and the "sharing" economy has made that easier than ever. For those with a second property, options like Airbnb and VRBO have become very popular as means of procuring rental revenues. However, renting a home through one of these services can include tax implications of which many are unaware. If you are operating as a landlord for short-term rentals, here are some things you should know.

What qualifies as rental property?

lodge rentalThe IRS has a great deal of information on classifying rental properties in Topic Number 415.

To be considered a rental property, the home in question cannot qualify as a residence. A residence is one in which personal use equals the greater of either 14 days or "10% of the total days you rent it to others at a fair rental price". So what does "personal use" mean, in this case? Personal use can be one of four scenarios.

1. When you or another individual who has an interest in the property (i.e., a business partner or co-owner) uses the property (unless that individual pays you a fair market price for rental). So, if your business partner's family uses the property for a vacation, that's personal use.

2. When a family member uses it without paying a fair price. If you let your niece rent it at half the usual rate while she's in town for the weekend, that's personal use.

3. "Anyone under an agreement that lets you use some other dwelling unit" Consider the rom-com "The Holiday", where Kate Winslet and Cameron Diaz swap houses with each other for a vacation. If you were to do something similar, those days spent at your house would county as personal use, since you were trading them for your own lodgings during that time.

4. Anyone at less than a fair rental price. This is self-explanatory, but also somewhat nebulous. Your best option is to have documentation supporting your pricing strategy, and apply it consistently.

Likewise, any expenses deducted must be deducted proportionally to the amount of time the home served as a rental. (So, if 5% of the year was personal use, only 95% of the appropriate expenses may be deducted.) If the property, in fact, does not meet the criteria to be considered a rental, you cannot deduct expenses on it. However, you also do not have to report rental income, in that case.

What can be deducted?

hardware toolsExpenses that are necessary for "managing, conserving and maintaining your rental property" can be deducted. These could include plumbing repairs, or cleaning services. You can also deduct expenses related to the business of renting out the property, such as any host fees from Airbnb, or advertising and legal fees related to the property.

You can also deduct any expenses which the tenant paid and which you then had to reimburse the tenant for. (For example, if the air conditioner breaks on the weekend, the tenant pays to fix it quickly, and you then reimburse the tenant, you can deduct that repair expense.)

You cannot deduct costs of improvements, those costs incurred in the act of restoring the property, or adapting it for a different use. You can, however, recover some of those costs on Form 4562 where you would report depreciation expenses.

Occupancy Tax

hotel2Many states and municipalities require landlords to collect and remit occupancy tax on short-term rentals. (It's a bit like a sales tax, but for hotels.) You will need to closely examine your local laws, as they can vary greatly on tax rates, what constitutes short-term rental, how frequently it must be remitted, etc. To further complicate the matter, occupancy tax may be collected by states, counties, AND cities.

Additional Taxes

moneyIf you were to sell your property, after it has been designated as a rental, you will need to report the income from the sale as capital gains, and pay capital gains tax on that accordingly. If you are a high-income earner, you may also be responsible for net investment income tax. (See IRS Topic Number 559.)


signing documentAs always, be sure that you are collecting W-9s from service vendors and following all applicable requirements for filing 1099s at year-end.

We work with a number of property owners, on these very issues every day.



Client Spotlight: Annelies Gentile, A Conduit for Change


We often like to make time to feature clients who have interesting experiences or businesses, whom we'd like to shine a spotlight upon. This week, our friend Annelies was kind enough to come by the office and share a bit of her coaching story. Here is that interview (edited for length and clarity).


This interview was originally published in our newsletter.



AMG2How did you get into coaching?

Before this chapter of my life, I was a hair and makeup artist to the stars. One of my clients was the former governor of North Carolina. One morning while taking care of her, she said to me, “Annelies (in a Southern accent), you should be a life coach.” And I said, “…What?” She said, “You always help me see things differently, you inspire me, and you make me see that I’m a part of something bigger. And I just heard of this new career called ‘life coaching’, and that’s what you do for me.”

I was already on the path to retooling towards a new career, as I was working on a Bachelor's and then a Master's. And so around that time, I took her advice and I began to research certification programs. And I chose to get my Master’s in coaching and my certification with the International Coaching Federation.

What surprised you most when you began your own coaching journey?

In a nutshell, what has surprised me has been how I have had to educate people on what coaching is to begin with. People know what a haircut is, they know what an oil change is, or a sandwich is, but people don’t understand coaching in relationship to their own personal and professional well-being and success. People also know sports coaches, which is the first analogy that I go to when I try to explain it. Coaching used to be available only to the elite and to high-performance professionals (like sports stars). It’s now available to the average business person.

What also surprised me was how saturated the industry is with sub-par coaches. So before I even get a chance to do my work, I have to educate people on what it is and how it will serve them.

How are you different from other coaches?AMG3

I have a Masters’ degree in coaching, I’m certified with the ICF, and my focus and process is in integrating the person in front of me, their resources, to help them own their situation, and excel beyond their expectations. You will be more than “changed” when you work with me; you will be transformed.

What do you feel is the biggest misconception people have about coaching?

That it’s not for them, it’s inaccessible, and unaffordable. But the reality is, it’s costing people a lot more to suffer than it would to actually do something about it

What does a client need to bring to be successful?

Curiosity and commitment. We can’t begin if you’re not committed, and we can’t continue if you’re not curious. Rumi once said, "There are many ways to kneel down and kiss the ground." And that is true for the coaching path for any individual, organization, or business. I’m determined to be the best co-pilot and catalyst that I can for my client, provided they are willing to show up, be curious, and be willing to explore what’s possible.

What’s the best way for a new client to get on your calendar?

No one calls anymore, so when someone calls, I’ll probably answer the phone. (laughs) They can also email me and we’ll book a time to talk. I want to hear what people are hungry for.

FinAMG1d Annelies on the web at

bookkeeper desk

What does a bookkeeper do?

"So, what do you do?" It's one of the first questions we ask upon meeting someone. My usual answer is "bookkeeping and fractional CFO". The typical response to that is, "Okay...and what does that mean?"

Most people have a general understanding of bookkeeping is, but fractional CFO is a murkier concept. Essentially, we act as an "outsourced" CFO (Chief Financial Officer) for companies too small to have their own. Offering this service is one of the primary ways we distinguish ourselves from most bookkeepers.

However, there are several differences between what a standard bookkeeper does, and what we do.

bookkeeping month-endA bookkeeper offers monthly reconciliations at an hourly rate. The process most bookkeepers use is to, at the end of the month, have their clients bring a stack of financial documents, such as bank statements, receipts, pay stubs, etc. The bookkeeper then uses that information to make entries and perform a reconciliation. This takes time, and their clients will usually receive that past month's financial statements about midway through the following month. Once the month's work is completed, the client receives an invoice for the hours worked. Depending on how busy that month was, this bill fluctuates.

The Bookkeeper offers bi-weekly reconciliations at a monthly rate. Instead of waiting until month-end, we enter information downloaded from the client's bank accounts every few days, so their financials stay more current. This prevents a long clean-up process at the end of the month, and allows us to complete the monthly financial statements more quickly. Furthermore, we offer our ongoing clients a monthly flat rate, so there are never any surprises on the bill (even when the month was a busy one).

A bookkeeper moves on and makes assumptions. Most bookkeepers focus on one specific aspect of their business, which is just getting transactions entered. If they have an expense and aren't sure what it's for, it gets stuck into "Uncategorized Expense" for the client to figure out later. If they're entering payroll and see that a contractor really should be paid as a W-2 employee, they're just going to make the entry as it's presented to them and move on. They might make a mention of it to the client when they see them again in a few weeks but, in most cases, likely not.

Fractional CFOThe Bookkeeper pauses and asks questions. Our clients hear from us frequently. If something looks "off", or if there are improvements to be made, we'll bring it to the client's attention immediately. In one account, we identified a case of credit card fraud before the bank and client did, and were able to alert them to it. We also warn clients about potential cash flow issues, or when certain bills are due, to help prevent overdraft fees and other penalties.

A bookkeeper does exactly what the client asks. That's not a bad thing, at all. But most bookkeepers do only what the client asks, and nothing else.

The Bookkeeper proactively seeks out ways to improve our clients' financials. On our own time (again, without charging the client a cent more), we've done things like developing a new pricing strategy to propose to a client having issues with their retailers. We've identified overdue Accounts Receivable to find clients money, and we've saved clients money by negotiating better vendor contracts. We've used our connections with merchant card processors to save clients thousands in credit card processing fees. And we have done all these things without the client ever asking us to.

Money, it is said, is a vehicle.

Airport RunwayA bookkeeper is a mechanic. They do routine maintenance. If something breaks (and you notice it), you take it to them to get fixed. If something breaks and you don't notice it for a while, and the problems gets really big, when you take it to them to fix, you're going to end up with an expensive bill.

The Bookkeeper is a travel agent. We help you figure out where you want to go, and we get you there. Whether you drive, cruise, or fly, we are there for you at every step of the journey. And we work to help ensure that the trip is as enjoyable as the destination.

Of course, all of this is hard to sum up in a casual introduction. That is why we offer free 1-hour initial consultations, so we can get to know prospective clients and show them the differences we have to offer.

If you know someone whose business isn't going where they want it to go, before you send them to a bookkeeper, send them to The Bookkeeper.

Year in Review: Our clients' big wins in 2015

People tend to think of bookkeeping as a necessary evil. Your business has to have it, so just find someone who will do a decent job and whom you don't have to pay too much.

We beg to disagree.

We like to use our service to do more than just keep our clients' books clean. We like to go beyond balancing books to growing businesses. In that regard, 2015 was a very good year for us.

Today we want to showcase three clients who had big "wins" in the last 12 months.

Client #1: A Money-Saving Solution

One of our client's businesses was facing some difficulties staying profitable. Looking at the books, we found some areas where expenses were duplicated and some cases of fairly extreme overspending. We met with the owner and devised a plan to cut expenses. Once the plan went into effect, we were able to increase the bottom line by over $30,000 a month.

Of course...big deal, right? Everyone knows accountants are penny-pinching killjoys. Let's look at our second story, and see how we can help a client without forcing them to spend less.

Client #2: A Long-Denied Loan

A different client desperately desired a consolidation loan. He had gone to three different lenders, and been denied each time. He was getting nowhere in a hurry.

So, we took over.

First, we received authority to act on his behalf. Then we got to work, combing through his financials and organizing the data for presentation. Finally, we were able to present the information to the bank in the way we knew they wanted it. This time it was approved, and we were able to get our client a consolidation loan at one of the same institutions who had previously rejected him.

Thanks to those efforts, our client was able to consolidate his debt under one payment, and greatly improve his cash flow.

Still, that story isn't as great as...

Client #3: Money from Thin Air

Sometimes, something as simple as developing better procedures can make all the difference to a business. This was the case with a client who didn't have a good system in place for managing A/R.

Specifically, there was over $102,000 in receivables of which the owner was not even aware. (Some of the unpaid invoices were over two years old.)

When we discovered this large balance of aged receivables, we immediately began developing collections procedures, including a series of formalized letters to the debtors. Using the practices we put into place, over $30,000 has been collected within the last four months, with payments continuing to roll in.

To re-cap, that's money that the client did not even know existed.

These are just a few of our highlights from 2015. We can't wait to see what we do in 2016.

Success Stories: The client who got a financial makeover

A good deal of the time, business owners don't recognize potential issues within their company until they become real problems.  By the time those issues are discovered, drastic actions are required to remedy them.

That was the case when Craig was approached by a friend who, bluntly and truthfully told him, "I have no idea how my business is doing."

A surface look at his financials didn't present a clear answer.  He was billing plenty, but there just wasn't much money left in the account at the end of each month.  He couldn't see where the money was going.

So, Craig dug deeper.

He went through all of their financials for the past two years and found a few areas of concern.  The biggest problems were:

  • All personal expenses were being run through the company.

  • Net wages were being recorded as gross salary (causing a greater tax expense).

  • The company was significantly overstaffed.

  • There were no legal documents.

Complicating the issue was that the client actually had an in-house accountant, and The Bookkeeper was only working on this issue in a consulting role.

A change was clearly necessary but, like many changes, that didn't mean it would be easy.

At the next meeting, Craig brought all of these issues to the client's attention.  From there, they devised a multi-step plan to get the company in shape.

First, they took all personal expenses out of the company, so they could get a more accurate picture of its financial status.

Second, Craig went back and corrected the two years' worth of payroll entries in the in-house accountant had entered incorrectly.

Third, the client reduced surplus staff (including the accountant).

In the end, the client ended up hiring us for his bookkeeping and CFO work (for a fraction of what the in-house accountant was being paid).  There was a great deal of work up-front in cleaning up his financials, but ever since the "makeover", records have been kept accurate and up-to-date, with no issues or surprises.

Here have been the effects of this change:

  • All payroll expenses are now accurate.

  • The company is staffed at an appropriate level.

  • Monthly expenses have been reduced by $4,000.

Most importantly, the client has peace of mind that he knows exactly how well his business is doing, and no new problems are sneaking up on him.

Client Profile: Haley Gray of "Extension of You"

The Bookkeeper client Haley Gray is Chief Extension Officer at Extension of You Home Care, an in-home companion care and transportation provider based in the Triangle.  Haley has received her MBA from Duke University and published her first book, Choosing a Caregiver: Expect the Best and Know How to Ask for It, last year.  The book is a best-seller in four categories on Amazon.

You originally went to NC State for Computer Science and Spanish literature.  What drew you to elder care?

My dad, my parents...the whole experience with my parents.  I saw a lot being done right but also a lot of things that could be improved. I saw a lot of senior homecare businesses which were not doing right by their patients.   For example, we had one caregiver who worked with my dad for two years from 5:30 AM to 5:30 PM, who never once saw a caregiver during a work shift.  I saw my dad who had dementia being asked to sign a paper timecard.  He had no idea what he was signing.  I talked to friends who also reported similar stories. To me, that is not acceptable- you shouldn’t be asking someone to sign a document that they don’t understand, yet it happens every day.

To improve upon the standard level of care, what we (Extension of You) do differently is things like using telephony for time cards, random, unannounced visits when our caregivers are on duty, and providing ongoing training for our caregivers.  We also do nationwide background searches, paid time-off, 401Ks, financial education, and we pay above market standards while maintaining a profit.  Our caregivers earn a living wage, which helps us keep them longer.

You mentioned your employees receive financial education.  What motivated you to go back for your MBA when you did?

It had been a long-term goal of mine.  I was going to go back in 2002, but got pregnant with my third child.  So I decided to wait until I was done having children.  I went back when my youngest was about to enter 4-days-a-week preschool and my oldest was about to enter high school, which allowed me to finish my MBA before my oldest graduated high school.

Financial education of my employees, and giving them opportunities is important to me, because I’ve seen the huge benefits of a little bit of education.

Was writing a book a long-term goal as well?

That came more recently.  I'd thought about it in the back of my head, but never thought I'd really do it.  Once I got into my blogging it began to feel more like a real possibility.  I ended up writing it last year in 5 months, start-to-finish, so it was a whirlwind.

With four children, do you see any of them following in your footsteps?

I have no idea.  They all have very different interests, so I will be curious to see what they do.  But anything they do will be earned, not given.  I expect them to forge their own paths.

What is your favorite thing you do on a day-to-day basis in your work?

My favorite thing on a day-to-day basis is getting out and meeting people.  The buckets into which I divide my time are sales and marketing, dealing with business challenges, and managing people.  But my favorite is getting out and seeing people, improving their lives, and helping them out at a difficult time.  I also really enjoy seeing my companies grow and, as a manager, "nudging" people to grow.  And, really, growth can be measured in different ways.  I like looking at all the different metrics to see all the ways we're growing.  I’m a nurturing soul, so it comes out in taking care of our clients, but also in taking care of employees.

Success Stories: The Client Who Wanted to Quit

We were once approached by someone with a small project.  He was just interested in us "prettying up" his financials in preparation of selling his company.  He was concerned that his business was not paying him the money he wanted to make, and had just received a new job offer for $60,000.

When pressed about it, he admitted that he wasn't terribly thrilled about this new job opportunity, but felt that he had to take it as, in his perspective, his only income from his current business was a $45,000 draw.

 But when The Bookkeeper looked at his financials, we saw:

  • Family's health insurance             -       $9,600

  • Automotive payment                     -       $9,120

  • Auto, gas, insurance & repairs     -       $8,450

  • Meals                                                -     $10,200

  • Vacations                                         -       $7,700

 When added to his draw, this amounted to a total monetary benefit $90,070.

This equates to $116,500 in total equivalent taxable income, instead of the $45,000 the client perceived.

 When we met back with the client and illustrated to him how much he was actually making, he turned down the job offer, kept his business, and remained his own boss.