@ small business accounting in Quickbooks

On October of this year, a friend of mine and I accepted to run a small
advertisement magazine that publishes every 4 weeks (13 times per year). The
type of service we provide doesn't require us to collect sales tax. We have
around 7 vendors to pay, and about 40 clients, most of them are repeat
clients. (No employees) We pay the owner of the magazine a set price per
page.
We created an S Corporation, two shareholders total and we both own an equal
number of shares. We were told that QUICKBOOKS was the best choice for us to
organize our business, create invoices, etc. We got QUICKBOOKS PREMIER
EDITION and entered the company information in the program.
Our cycle is as follows: every 4th week we accept the ads from our clients,
present them with a graphic proof of the ads, do corrections and bill them
at the same time. We get their payment before everything goes for printing.
About 13 days later, the magazine is out for distribution. During these 13
days, we pay all the vendors involved.
We have few questions about the subject:
1-) To distribute the income between us, every 4 weeks we withdraw some
money. On the chart of accounts, we created one account called Owner's Draws
(type: Equity) that we use for this purpose. Is this the correct way to
collect the "profit"? We always make sure that we leave in every draw,
enough money in the bank account that what we begin with to make sure we can
cover ourselves in case of unexpected expenses. At the end of
the year, will that additional money be shown as profit as well?
2-) We incurred in expenses to open and run the corporation, here are some
example of expenses:
Fees for in Corporation
Professional fees for help forming the corporation.
P.O.Box rental.
Basic office supplies.
Order of checks and stamp.
Telephone line.
Software, etc.
Can we get reimbursement for these expenses from the corporation, and if
yes, show those specific expenses but the check made to us personally? Under
what accounts that would be classified?
3-)As far as I understand, from the second year on of existence of the
corporation, either my partner or I have to be an employee of the
corporation, is this correct? Do we need an employee?
4-)Of the initial money we use to open the bank account, now that there is
additional monies in the account, can we withdraw the initial money back to
us and if yes under what account would that be classified?
5-) In an accounting book that we bought, it says that from the very
beginning we have to decide if we are going to run the business in an
accrual or cash basis, but searching Quick Books, it seems that you can do
either, it is just matter of setting the reports one way or another, is that
correct?
6-) We use 3 people to distribute the books, we pay them as independents
under a distribution account (Type: expense) but my partner and I do few
distribution stops as well (only about $150 each, every 4 weeks) how do we
pay ourselves for that activity?
7-) We pay to the owner of the magazine every 4 weeks, a set price per page,
I created an account for it called "Page rent, John Smith" (Type: Expense)
Is this correct?
Thank you in advance for your replies.
Lo
Reply to
lo
This newsgroup is not a substitute for getting an accountant. The first thing he/she will tell you is that Sub S stockholders do not take draws. You should issue regular payroll checks and file payroll returns. That's all the advice you will get from me, your post has way too many questions.
Reply to
Allan Martin
I agree. All of those questions would be best answered by an accountant.. Best to get the company file and processes setup by an accountant in the very beginning rather than discovering tons of errors at tax time.
Then come back with specific Quickbook questions.
Reply to
Laura
Friday, December 21, 2007
Hello there:
Thank you for your help, and you are correct, a newsgroup wouldn't necessarily be a substitute for
getting an accountant. I have very little knowledge about accounting, taxes, etc. but at the last minute
I had the opportunity to get into this business and I am trying to ask questions and read as much as
possible about the subject to prepare myself before I go to an accountant which should be in about
2 weeks from now.
Happy Holidays and thank you again,
Lo.
=========================== =============
independents
Reply to
lo
Lo,
I understand your challenges. However, what Allan & Laura are saying is that your questons simply should not be answered by anyone in this group.
While I applaud your intention to go into the accountant's meeting "armed" with information, the simple fact is that the questions you raise are the specific ones you will need to work out with the accountant.
You have done a good amount of the homework, and if you come away with the answers to these questions, you will be in good shape to go forward. Your accountant will also have additional information that you have not yet thought about.
In the mean time, since it sounds like you will be meeting with the accountant after the first of the year, I would suggest you call them quickly to see if there are any year-end transactions you should make.
Finally, the reason for this group is specifically to:
answer questions for @#$% about post bug fixes for (Sorry - I mean features)
the various QuickBooks programs, not for accounting questions in general.
You will find in the future, that as you have "How do I..." or "Why is it doing..." types of questions, that you will receive quick, accurate responses. This is a great, useful group, within its boundaries. Unfortunately, you are asking questions well outside those boundaries.
I hope this is helpful, and I wish you much success in your new business.
Tony
Reply to
TonyK

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