Questions
Answers to questions small business owners and nonprofits ask about bookkeeping, how we work, and what to expect.
What is the difference between a bookkeeper and an accountant?
A bookkeeper handles day-to-day financial records like categorizing transactions, reconciling accounts, and producing monthly reports. An accountant or CPA handles tax filing, audits, and strategic financial advice. Most small businesses need both, with the bookkeeper keeping books clean throughout the year so the accountant has accurate records at tax time.
Read answerDo I need a bookkeeper or can I do it myself?
DIY bookkeeping works when your business is small and transactions are few. It breaks down as volume grows, reconciliations slip, and the hours spent on books take you away from billable work. The real question is whether your time is better spent elsewhere.
Read answerHow do I know when it is time to hire a bookkeeper?
If your books are months behind, you're avoiding looking at your numbers, or tax season feels like a scramble, it's probably already time. The warning signs usually appear long before business owners act on them.
Read answerHow much does a bookkeeper cost for a small business?
Most small businesses pay $200 to $2,000 per month for outsourced bookkeeping, depending on transaction volume. Pricing typically scales with your monthly expenses because more transactions mean more work to categorize and reconcile.
Read answerIs it cheaper to hire a bookkeeper or do my own books?
DIY bookkeeping looks cheaper until you factor in your time, error risk, and cleanup costs. For most small business owners, professional bookkeeping costs less in the long run than the hours and mistakes of doing it yourself.
Read answerWhat does a bookkeeper actually do each month?
A bookkeeper categorizes transactions, reconciles bank and credit card accounts, and delivers monthly financial reports. This rhythm keeps your books accurate and current throughout the year.
Read answerWhat questions should I ask before hiring a bookkeeper?
Ask about scope of services, industry experience, software used, who does the work, turnaround time, communication style, and pricing. These questions reveal whether a bookkeeper is the right fit before you commit.
Read answerShould I hire a local bookkeeper or an online one?
The question isn't local versus online. What matters is expertise, responsiveness, and familiarity with your state's tax rules. A virtual bookkeeper based in your area can offer both local knowledge and modern convenience.
Read answerWhat are the signs that my books are a mess?
Unreconciled accounts, uncategorized transactions, balances that don't match bank statements, and personal expenses mixed with business spending are the clearest signs. If you can't produce a current profit and loss statement, your books need attention.
Read answerCan a bookkeeper help me understand my numbers?
Yes, clean books produce financial reports you can actually read and use. A bookkeeper gives you accurate Profit and Loss statements, balance sheets, and cash flow reports that show what's really happening in your business.
Read answerHow is bookkeeping different from tax preparation?
Bookkeeping is the ongoing work of recording and categorizing transactions throughout the year. Tax preparation is the annual process of filing returns using those records. Good bookkeeping makes tax prep faster and cheaper.
Read answerCan a bookkeeper clean up my books and then maintain them?
Yes, and this is actually the ideal approach. A bookkeeper who cleans up your file already understands your business, making the transition to ongoing maintenance smooth and efficient.
Read answerDo small businesses really need monthly bookkeeping?
Technically no, but monthly bookkeeping prevents the year-end scramble that produces errors and stress. Keeping books current means you have accurate numbers for decisions and clean records when tax time arrives.
Read answerIs my financial information safe with an outsourced bookkeeper?
Yes, when working with a professional who follows proper security practices. Reputable bookkeepers use encrypted cloud software, secure bank connections, and clear confidentiality standards to protect your data.
Read answerWhat is included in full-service bookkeeping?
Full-service bookkeeping includes transaction categorization, bank and credit card reconciliation, and monthly financial reporting. These core functions keep your books accurate, organized, and ready for tax time without you having to manage them yourself.
Read answerWhat is bank reconciliation and why does my business need it?
Bank reconciliation is the process of matching your accounting records to your bank and credit card statements to make sure everything lines up. It catches errors, missing transactions, duplicate charges, and unauthorized activity before they become bigger problems.
Read answerHow does monthly bookkeeping service actually work?
Monthly bookkeeping follows a consistent cycle. The bookkeeper gathers transactions, categorizes them, reconciles accounts against bank statements, and delivers financial reports. Pricing typically scales with your transaction volume.
Read answerWhat financial reports should I get from my bookkeeper every month?
At minimum, your bookkeeper should provide a profit and loss statement and a balance sheet each month. A cash flow statement is also valuable, especially for service businesses where timing of income and expenses matters.
Read answerWhy is my bank balance different from what my books show?
The mismatch usually comes down to timing differences, missing entries, or duplicate transactions. Regular bank reconciliation catches and resolves these discrepancies before they become bigger problems.
Read answerHow far back can a bookkeeper go to clean up my books?
A bookkeeper can go back as far as records exist. Most catch-up projects focus on the last three to six years to cover IRS audit periods and unfiled returns. The main constraint is whether bank statements and other documentation are available to support the reconstruction.
Read answerI have not done my bookkeeping in over a year, what do I do?
This is fixable. Gather your bank and credit card statements for the entire period, then work through each month reconstructing transactions and reconciling accounts. A bookkeeper can handle this as a project-based service so you're caught up cleanly.
Read answerHow much does catch-up bookkeeping cost?
Catch-up bookkeeping is typically priced by the project rather than a flat rate. The cost depends on how far behind you are, your transaction volume, and the condition of your existing records.
Read answerHow long does it take to catch up months of messy books?
Timeline depends on how far behind you are, how many transactions you have, and whether records are organized or scattered. A few months of backlog with clean statements takes 1-2 weeks. Years of neglected books can take 6-8 weeks or more.
Read answerCan you fix bookkeeping that was done wrong?
Yes, fixing bookkeeping that was done incorrectly is common work. Cleanup typically involves correcting miscategorized transactions, removing duplicate entries, and re-reconciling accounts to match your actual bank statements.
Read answerDo I need to catch up my books before tax season?
Yes, clean and current books are essential for an accurate tax return. Your CPA needs reconciled records and properly categorized transactions to file correctly and find all your deductions.
Read answerShould I outsource accounts payable for my small business?
Outsourcing AP makes sense when you're missing due dates, spending too much time on bills, or when late fees are adding up. At around $99 per month for professional support, the math often favors outsourcing once you have more than a handful of recurring bills.
Read answerHow do I make sure my business bills get paid on time?
Set up a tracked accounts payable process where you enter bills into QuickBooks immediately, record due dates, and schedule payments weekly. This prevents missed deadlines and avoids unnecessary late fees.
Read answerWhat is the best way to track and manage business bills?
Centralize all bills in one place, record them when received, and schedule payments based on due dates and cash flow. This gives you clear visibility into what you owe and when, so you're never surprised by what's leaving your account.
Read answerHow do I keep track of unpaid customer invoices?
Use an accounts receivable aging report to see every outstanding invoice organized by how long it's been unpaid. Review it weekly and follow up at set intervals to keep money from slipping through the cracks.
Read answerWhy is my cash flow tight even when sales are good?
Sales recorded on your books aren't the same as cash collected. When invoices sit unpaid, your profit and loss statement looks healthy while your bank account struggles. Tracking receivables and following up on overdue invoices tightens the gap.
Read answerHow can I get my clients to pay their invoices faster?
Set clear payment terms upfront, send invoices immediately after completing work, and follow up consistently with reminders. Making invoices easy to understand and offering multiple payment methods also helps clients pay without delay.
Read answerWhat is accounts receivable and how do I manage it?
Accounts receivable is money customers owe you for work completed or products delivered. Manage it with prompt invoicing, weekly aging report reviews, and consistent follow-up on overdue payments.
Read answerHow do I set up payroll for my first employee?
Register for federal and NY State employer accounts, get workers' comp insurance, choose a payroll system, and set your pay schedule. The initial setup takes some paperwork but once it's running, processing payroll is straightforward.
Read answerWhat payroll taxes do employers in New York have to pay?
Employers handle federal FICA and FUTA plus New York state income tax withholding, NY unemployment insurance, Paid Family Leave deductions, and statutory disability coverage. NY wage reporting is filed quarterly on Form NYS-45.
Read answerDo I need to register with New York State before I can run payroll?
Yes. Before paying employees in New York, you must register for both withholding tax and unemployment insurance. Form NYS-100 handles both registrations at once.
Read answerWhat is New York Paid Family Leave and do I have to deduct it from employees?
New York Paid Family Leave is a mandatory state benefit funded through employee payroll deductions. Yes, you must withhold it from employees' wages at a rate set annually by the state.
Read answerCan I learn to run payroll myself instead of paying a payroll company every month?
Yes, and you don't need ongoing per-payroll fees to do it. The challenge is getting the system configured correctly and learning the process. One-time payroll setup and training teaches you to run payroll independently.
Read answerWhat is the difference between a W-2 employee and a 1099 contractor for payroll?
W-2 employees have taxes withheld from their pay, while 1099 contractors receive full payment with no withholding. The classification affects your payroll obligations and carries real compliance risk in New York.
Read answerDo I need to send 1099s to my contractors?
If you paid a contractor $600 or more for services during the year, you generally need to send them a 1099-NEC. This applies to unincorporated workers like freelancers, sole proprietors, and partnerships. Corporations typically don't need one.
Read answerWhat is the deadline for filing 1099 forms?
1099-NEC forms must reach both the recipient and the IRS by January 31. There's no extension, and late filing triggers per-form penalties that increase the longer you wait.
Read answerWhat is the difference between a 1099-NEC and a 1099-MISC?
1099-NEC reports payments to independent contractors and freelancers for services they performed. 1099-MISC covers rent, prizes, royalties, and other miscellaneous payments. Most small businesses use 1099-NEC far more often.
Read answerWhat information do I need to collect before I can issue a 1099?
You need a Form W-9 from each contractor before their first payment. The W-9 provides the legal name, taxpayer ID, and address required to file their 1099. Collecting this upfront avoids scrambling to track down contractors in January.
Read answerWhat happens if I file my 1099s late or skip them?
The IRS charges $60 to $330 per form for late 1099 filings, depending on how late you file. Penalties grow the longer you wait, and intentional disregard carries steeper consequences with no cap.
Read answerDo I have to file a 1099 if I paid a contractor by credit card or payment app?
No. Credit card and payment app transactions are reported by the payment processor on a 1099-K. You don't issue a 1099-NEC for those amounts because it would create duplicate reporting.
Read answerHow do I set up QuickBooks Online for my business?
Start with the right plan, then customize your chart of accounts to match how your business actually operates. Connect your bank accounts and set opening balances correctly. Most mistakes happen with the chart of accounts and opening balances, not the initial setup screens.
Read answerQuickBooks Online vs QuickBooks Desktop, which should I use?
For new businesses, QuickBooks Online is the clear choice. It's cloud-based, accessible from anywhere, and where Intuit is focusing all development. Desktop still works but is being phased out.
Read answerWhat are the most common QuickBooks Online setup mistakes?
The biggest issues are messy charts of accounts, wrong opening balances, unreconciled bank connections, duplicate transactions, and miscategorized expenses. Each one creates cleanup work that compounds over time.
Read answerDo I need a ProAdvisor to set up QuickBooks?
You don't technically need one, but DIY setups often lead to mistakes that cost more to fix later. A ProAdvisor configures your system correctly and trains you to run it yourself, making it a one-time investment for long-term independence.
Read answerHow do I clean up a messy QuickBooks Online file?
Start with bank reconciliation to uncover problems, then work through duplicates, miscategorized transactions, and opening balance errors. Each issue needs a specific fix, and the order you tackle them matters.
Read answerHow do I connect my bank to QuickBooks Online the right way?
Connect your bank through the Banking menu, then create categorization rules for recurring transactions. The real work is reviewing transactions before accepting them and reconciling to your statement monthly.
Read answerDo landscapers have to charge sales tax in New York?
It depends on the type of work. Maintenance services like mowing, trimming, and snow removal are taxable. Capital improvements like installing a new lawn or plantings are not taxable when the customer provides Form ST-124.
Read answerIn New York, is roof repair taxable but a full roof replacement not?
Generally yes. Roof repairs are subject to NY sales tax because they maintain existing property. A full roof replacement can qualify as a tax-exempt capital improvement, but only when the customer provides a completed Form ST-124.
Read answerDo I need a home improvement license in Nassau or Suffolk County?
Yes, if you do residential work. New York has no statewide license, but Nassau and Suffolk Counties each require their own home improvement contractor license. Clean financial records, liability insurance, and workers' comp documentation are needed to apply and renew.
Read answerHow do contractors handle sales tax on materials versus labor in New York?
Contractors pay sales tax when buying materials from suppliers. Whether you charge customers depends on the job type. Capital improvements are not taxed to customers, while repair and maintenance work is taxable.
Read answerHow do I track job costing for my contracting business?
Track materials, labor, and subcontractor costs for each project separately. Tag every expense to the specific job it belongs to so you can see true profit when the work is done.
Read answerShould a landscaping or roofing business use cash or accrual accounting?
Most small landscaping and roofing businesses use cash accounting because it's simpler and follows actual cash flow. But accrual gives better job-level profitability visibility for project-based work with deposits and progress billing.
Read answerHow do I keep my business and personal expenses separate as a contractor?
Open a dedicated business bank account and get a business credit card. Use them exclusively for business transactions and categorize everything properly in your accounting software. Commingling is the most common bookkeeping mess for contractors and it's completely avoidable.
Read answerHow do I manage cash flow when my landscaping income is seasonal?
Start by tracking your monthly revenue patterns and calculating your fixed off-season expenses. Then set aside a percentage of every busy-season dollar into a separate reserve account before you spend it on anything else.
Read answerDo cleaning companies have to charge sales tax in New York?
Yes, cleaning companies in New York must charge sales tax on most services. Interior cleaning and janitorial work are taxable throughout the state, including one-time residential cleanings. The main exceptions are carpet, rug, and upholstery cleaning, which are exempt.
Read answerIs residential house cleaning taxable in New York?
Yes, residential house cleaning is subject to NY sales tax. You must charge customers sales tax on interior cleaning services and remit it to the state. Carpet and rug cleaning is the main exemption.
Read answerHow do I set up bookkeeping for a cleaning business?
Setting up bookkeeping for a cleaning business in New York means handling sales tax collection, classifying workers correctly, and tracking revenue by client. Cleaning services are taxable in NY, and misclassifying workers as 1099 contractors carries significant penalties.
Read answerShould I pay my cleaners as employees or 1099 contractors?
Classification depends on how the work relationship actually functions, not your preference. Recurring, scheduled cleaners who use your supplies and follow your direction are usually employees under IRS and New York rules. Misclassifying them as contractors can lead to back taxes, penalties, and audits.
Read answerHow do I handle sales tax filing for my cleaning company in New York?
Register with the NY Department of Taxation and Finance, collect sales tax on taxable commercial cleaning services, and file periodic returns based on your sales volume. Residential cleaning is generally exempt.
Read answerAre security or guard services taxable in New York?
Yes. New York State imposes sales tax on protective and detective services, including security guards, alarm monitoring, and private investigations. Security businesses on Long Island must collect sales tax from customers and remit it to the state.
Read answerHow do property management companies handle bookkeeping for owner funds?
Property management companies must keep owner funds completely separate from operating funds using dedicated trust or escrow accounts. Each property needs its own ledger tracking rent collected, expenses paid, and owner distributions. New York has specific rules about handling other people's money, making accurate fund segregation essential.
Read answerHow do I track income and expenses by property?
Use classes in QuickBooks to tag every transaction with a property name. This lets you run a profit and loss report for each building separately, showing which properties are profitable and which ones are costing you money.
Read answerWhat bookkeeping does a building maintenance business need?
Building maintenance companies need job costing by contract, materials tracking, and systems to handle both W-2 employees and 1099 subcontractors. You also need to navigate New York's sales tax rules on repairs to real property, which are often taxable.
Read answerDo gyms charge sales tax on memberships in New York?
Long Island gyms generally do not charge sales tax on membership dues, classes, or personal training sessions. New York City is the exception where these services are taxable.
Read answerHow should a gym or studio record prepaid memberships and class packages?
Prepaid memberships and class packs are deferred revenue, not income. Record the payment as a liability when received, then recognize revenue as classes are used or membership time passes.
Read answerHow do I do bookkeeping for a karate studio or after-school program?
Track prepaid tuition as deferred revenue that converts to income as classes are delivered. Properly classify instructors as employees or contractors, and plan for seasonal enrollment swings that affect cash flow.
Read answerHow do I manage cash flow with seasonal studio enrollment?
Track prepaid tuition as deferred revenue so you know what's actually available to spend. Build reserves during peak enrollment months to cover your fixed costs when summer or holiday slowdowns hit.
Read answerDo graphic designers or marketing agencies charge sales tax in New York?
Most graphic design and advertising services are not subject to sales tax in New York. However, selling tangible items like printed materials or prewritten software is taxable. The key is whether you're delivering a service or a physical product.
Read answerDo I need a written contract to hire freelancers in New York?
Yes, if you're paying $800 or more. New York's Freelance Isn't Free Act requires a written contract listing the services, payment rate, and due date. You must retain contracts for six years and pay within 30 days if no date is specified.
Read answerHow do creative agencies track project profitability?
Track all revenue and costs at the project level, including freelancer and subcontractor payments, labor hours, and direct expenses. Compare total revenue to total costs per project to see real margins instead of guessing.
Read answerHow do I handle client reimbursements and pass-through expenses in my books?
Record pass-through expenses separately from your operating costs and track reimbursements as offsets rather than income. This keeps your actual revenue and margins accurate instead of inflated by money that just passes through your hands.
Read answerDo I need to send 1099s to the freelancers my agency hires?
Yes. If you pay an unincorporated freelancer $600 or more during the year, you must send them a 1099-NEC by January 31. Collect W-9 forms before the first payment and track payments throughout the year.
Read answerDo consultants have to charge sales tax in New York?
Most consultants in New York do not need to charge sales tax. Pure advisory and consulting services are not taxable, though IT consultants selling software or information services may face different rules.
Read answerHow do I track billable hours and expenses as a consultant?
Track time and expenses as they happen, not from memory. Clean tracking connects directly to accurate invoicing and understanding your true profit by client or project.
Read answerWhat is the best business structure for a consultant, LLC or S-corp?
Both work, and the right choice depends on your income level and tax situation. The key difference from a bookkeeping standpoint is that an S-corp requires you to run payroll for yourself, which adds complexity and cost.
Read answerHow do self-employed consultants manage irregular income and estimated taxes?
Setting aside a percentage of each payment into a separate account keeps you prepared for quarterly estimated taxes. Accurate books tell you exactly what came in, making those reserves based on real numbers instead of guesswork.
Read answerDo hair salons charge sales tax on services in New York?
Hair salons on Long Island do not charge sales tax on haircuts, coloring, or styling services. NYC is the exception where these services are taxable. Retail product sales are taxable everywhere in New York.
Read answerAre the products I sell in my salon taxable in New York?
Yes, retail products like shampoo, conditioner, and styling products are taxable in New York. Services are generally not taxable outside NYC. Your bookkeeping should keep product sales separate from service revenue for accurate sales tax filing.
Read answerHow does booth rental work for a salon's bookkeeping and taxes?
Booth renters are independent contractors, not employees. The rent they pay you is rental income that you track separately in your books. You don't withhold taxes or issue 1099s to them since they're paying you.
Read answerHow do I track tips for my salon or spa staff?
Tips are taxable wages that must be tracked and reported through payroll. Credit card tips are captured automatically by your POS system, but cash tips require employees to report them to you. Setting up a consistent tracking system keeps you compliant and simplifies payroll.
Read answerDo med spas charge sales tax in New York?
It depends on the type of service and your location. Medical services by licensed professionals are exempt everywhere in New York. Cosmetic services are exempt outside NYC but taxable in the city, and retail product sales are always taxable.
Read answerHow do I set up bookkeeping for a hair or nail salon?
Separate service revenue from product sales since services aren't taxable outside NYC. Set up tracking for booth renters or commission splits, and run tips through payroll with proper tax withholding.
Read answerDoes my New York nonprofit have to file a CHAR500?
Most likely yes. If your nonprofit solicits donations or operates in New York, you need to register with the Attorney General's Charities Bureau and file the CHAR500 annually. Religious organizations are the main exemption.
Read answerDoes 501(c)(3) status automatically exempt my nonprofit from New York sales tax?
No. Federal 501(c)(3) status does not grant sales tax exemption in New York. You need to file Form ST-119.2 with the state to receive an Exempt Organization Certificate before making tax-exempt purchases.
Read answerHow do I track restricted versus unrestricted funds for my nonprofit?
Use QuickBooks classes or sub-accounts to separate funds based on donor restrictions. The method you choose matters less than applying it consistently from the moment a donation arrives through when you release the restriction.
Read answerDo churches have to file an IRS Form 990?
No. Churches are automatically exempt from Form 990 filing, unlike most other nonprofits. However, clean financial records still matter for governance, donor trust, and accountability to your congregation.
Read answerHow do nonprofits record donations, grants, and pledges?
Nonprofits record contributions when received, but must track whether funds are restricted or unrestricted. Grants often have conditions that affect timing of revenue recognition, and pledges are recorded when promised if unconditional.
Read answerWhat is functional expense reporting for a nonprofit?
Functional expense reporting categorizes nonprofit spending into three areas: program, management and general, and fundraising. The IRS Form 990 and statement of functional expenses require this breakdown. Setting up your chart of accounts correctly from the start makes reporting straightforward.
Read answerDoes my New York nonprofit need an independent audit?
It depends on your annual revenue. The New York Charities Bureau requires a CPA review when revenue exceeds $250,000 and an independent audit when it exceeds $750,000. Clean books make either process smoother.
Read answerHow is bookkeeping for a nonprofit different from a regular business?
Nonprofit bookkeeping uses fund accounting to track money by purpose rather than measuring profit. It requires handling restricted donations, allocating expenses by function, and producing reports like Form 990 and the NY CHAR500 that for-profit businesses don't file.
Read answerWhat is the sales tax rate on Long Island?
Nassau County is 8.625% and Suffolk County is 8.75%. Both include 4% state plus 0.375% MCTD plus the county share. Suffolk's rate increased from 8.625% effective March 1, 2025.
Read answerDo I need to register to collect sales tax for my New York business?
If you sell taxable goods or services in New York, you must register with the NY Department of Taxation and Finance for a Certificate of Authority before collecting any tax. Many service businesses don't realize their services are taxable.
Read answerHow often do I have to file New York sales tax returns?
New York assigns your filing frequency based on annual sales tax volume. Most small businesses file quarterly, though lower-volume businesses file annually. Returns are due even when you collected no tax during the period.
Read answerWhich services are taxable in New York and which are not?
New York taxes cleaning, janitorial, repair, maintenance, and security services statewide. Beauty and fitness services are taxable inside NYC but not on Long Island. Professional and advisory services are generally exempt.
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