Questions for Accountants: What Business Owners Commonly Ask
We understand accounting can be a difficult part of your business to manage. We hope these articles help bring more clarity and understanding to the complicated nature of your accounting. Here we address some of the most common questions for accountants that we get from business owners. Consider our responses and reach out if you have any further questions.
Q: What accounting software should I use?
A: There are plenty of accounting applications out there, but the most popular among our clients is Quickbooks.
While not required, Quickbooks does offer a wide range of services and integrations that make it easy to manipulate your processes to do exactly what you need them to do. Quickbooks is also popular among accountants and bookkeepers. Nearly every practice will have experience with the software, but this cannot be said for other smaller applications like Xero and Freshbooks.
Q: What should I pay myself?
A: As a business owner, there are several ways you can calculate your pay and distributions. Generally speaking, it is best to include your pay in pricing your products. When your pay is included you can then calculate how much you personally make for every product sold.
However, every business is different, and the nature of your business should be considered when putting together the owner’s pay. For example, if your business has high seasonal fluctuations, you will want to consider this when calculating your pay. If you would like to weigh your options, consider scheduling a consultation with us to get started.
Q: How should I price my products?
A: In simple terms, your product price should include two things, profit margin and what it costs you to create the product.
You can calculate the cost by looking into your direct costs for every unit of product sold.
Margin can often differ depending on the industry. There are many ways we decide on the margin for a product, so it is best to sit down with your accountant to comb through the numbers. They will be able to help you strategize on what margin percentage is best.
Q: I charged personal expenses to my business account, what account should I reconcile this to?
A: This can unintentionally happen for several reasons, but it is always best to try to keep personal and business expenses separate. However, if you run out of gas and only have your business credit card, or you accidentally swipe your business card instead of your personal, it is a fairly easy fix.
Your chart of accounts should be set up to show who has ownership in the business. When a personal expense is charged to a business account, reconcile the transaction with the owner’s corresponding equity account. This will show that a portion of business cash went to this owner. The owner can choose to refund the business or allow it to remain on the financial statements.
Q: What type of bank account should I open?
A: This question will depend on some factors. While we always recommend setting up a business account over a personal, specifically choosing a bank can vary from business to business.
For example, military family members may have access to banks like USAA and Navy Federal. Typically, these banks have very low fees and could be a good option for these types of business owners.
Likewise, if you own a local business, it may be best to work with a local bank. If your business has employees in different parts of the country, and they need access to a business account, then it may be best to go with a national bank.
We suggest reaching out to discuss the nature of your business. This will help us make a personalized recommendation.
Did we answer your question? If not, be sure to contact us, and one of our bookkeepers will be in touch with you shortly. If it is a good one, we may even add it to our list!