Dynamic Accounting Solutions, Accounting Software provider for Mid-market companies, KY, Kentucky based

Directory of Tips
Mid Year Testing for Payroll’s Taxability—Federal, State, and Local	July 2010
Accounts Receivable-Hold/Release vs Invoice Inquiry	July 2010
Patient Protection and Affordable Care Act.	July 2010
Periodic Maintenance Just what does it do?	July 2010
Keeping Orders in Control	June 2010
Vacation Checks	June 2010
Spring Clean your IT	June 2010
Hire Act	June 2010
Inventory Item Setup	May 2010
Save Green, while going green with TRAVERSE	May 2010
Reversing un-posted General Ledger Transactions	May 2010
Voiding AP Checks	Apr 2010
Virus Alert	April 2010
Customer Deposits	April 2010
Company logos on Invoices	Feb 2010
Cleaning up Purchase Orders	Feb 2010
Writing off bad debt after year end	Feb 2010
Enter vs. Page Down	Mar 2010
Finalizing 2009	Mar 2010
Additional Payroll Checks	Mar 2010

While entering General Ledger transactions you can speed up finalizing each side of your transaction by pressing the “Page Down” key. This will skip over all the remaining fields in the transaction and clear out the entry field for the other side of the transaction or the new transaction.

Without using the ‘Page Down’ key you have to press enter at each remaining field in the transaction to finalize it and clear the entry screen for the next transaction.

Now that the flurry of year end has ended and your information for the year has been passed to your CPA or Auditor all you have left to do for last year is to enter any adjusting entries that your CPA or Auditor has given you.

Switch your year in General Ledger to 2009, enter the adjusting transactions, write them, and post to the Master.

Once posted to the Master you will need to ’Update Current Year’ one last time.

Switch to the year 2010, go to Periodic Processing, Update current year. Check the box on top and the box in the middle enter the Retained Earnings Account number and press OK. When completed a report of all transactions brought to Retained Earnings for the year is printed.

This is all that is required for finalizing a year. When viewing last years balances all income and revenue accounts will have the total of the year listed at the bottom of the screen.

Optionally, you can perform ‘Clear and Close Last Year’ will make the actual physical entries to the revenue and expense accounts for the year and set the ending balances for each revenue and expense account to zero. This function does NOT have to be performed. It just depends on how you prefer to see your ending balances for each revenue and expense account- with totals or zeros.

When entering time tickets for hourly employees there is a field ‘Sequence’. This field defaults to 000 and most of you probably have your preferences set to skip over this field during normal data entry.

The purpose of this field is to allow additional paychecks to be run for one employee. By changing the ‘Sequence’ from 000 to 001, 002, etc you can process multiple checks for this employee. Splitting large amounts into multiple checks the calculated taxes will not be as large as on one large check.

To produce an extra check for a salaried employee, calculate checks as usual and then enter Manual checks, click on ’Checks’ and add the additional hours and dollar amounts for this salaried employee.

In System Manager, Company Setup, Company Information there is a ‘Company Logo’ box that you can insert your Company’s logo into. A Bit Map image no larger than 200 X 300 can be copied and pasted into this box.

When the Business Rule for Accounts Receivable is set to YES for Print Company Logo on Plain Paper then each invoice printed will include your Company Logo on the upper left hand corner of the invoice. If you have a color printer it will even print in color.

Do you have old Purchase Orders hanging out there in various status’ that you know are complete as far as you are concerned but just don't go away?

If you have an Ordered Quantity that is higher than the quantity that was received and invoiced, just change the status from “Open” to “Completed”. The next time you post purchases this Purchase Order will be removed once the quantity invoiced equals the quantity received.

If you entered a higher quantity as received than was actually received you will need to complete this purchase order by applying the invoice to the received goods and then doing a Debit Memo to remove these items from Inventory.

Purchase Orders will not be removed until all line items have been received and invoiced. So the main clue to cleaning up old Purchase Orders is to make sure each line of the P.O. has been satisfied.

Very often after you turn in your yearly information to your CPA for tax filing the CPA will make entries to write off Bad Debt from your Accounts Receivable for the year. At the current time these invoices are still on your Open Invoice or Aged Trial Balance Report. The best way to handle the year end entry in 2009 and the actual writing off of the bad debt in 2010 would be to make your CPA’s year end adjusting entry as a RECURRING entry rather than a MANUAL entry.

If you credit the Accounts Receivable and debit the Bad Debt expense as you CPA requests in 2009, instead of using M1 use R1 for the SOURCE. This then, will reverse itself in January and become a Debit to Accounts Receivable and a credit to Bad Debt.

In Cash receipts set up a Method of Payment that is a write off and use the Bad Debt Expense account as the write off account. When you use this Method Of Payment in Cash receipts it will Credit the Accounts Receivable and Debit the Bad Debt expense as well as removing the invoice from the Open Invoice File as unpaid.

When the reversing entries comes into 2010 it will completely off set the entry that you made when writing off the invoice and will net the entire entry to zero in year 2010. The write off will then occur in 2009.

The second method to handle the write off would be to NOT make the CPA year end adjusting entry but to actually do the Cash Receipt entry to Period 12 of 2009. This will then send the entry back to 2009 as a bad debt entry in that year.

Remember that when you do Bad Debt Write off by using a Method of Payment for Write off it does not update the Commission files not does it update the Sales Tax Reporting. You will need to manually adjust those or credit memo invoices to Bad Debt Exp.

The standard way to void a check is to use the VOID CHECK function found in “Pay Invoices”.

Voiding a check or series of checks this way will reverse the Cash and Accounts Payable Entry (Debits cash, Credits Accounts Payable) and places the invoice or invoices back out in the Open Invoice File.

Assuming these invoices will not be paid to the vendor you then go into Transactions and select Miscellaneous Debits. Using the same Vendor, Invoice Number, General Ledger Accounts, and Amount duplicate this invoice as a Miscellaneous Debit. Once it’s posted, it will align with the original invoice in the Open Invoice File.

If your option in Business Rules is set to allow posting without printing checks you can just release both the invoice and Misc Debit memo and the next time you ’Prepare Payments’ these will net to zero and flow out of the Open Invoice File.

If your option in Business Rules is set to NOT allow posting without printing checks you can then PREPAY these invoices from within Hold and Release. Normally I use a check number of 999 to signify payment for both the invoice and the Misc. Debit Memo. Next time you prepare payments these invoices will flow out.

Another way you can ‘void’ a payment is to not use the actual ‘Void’ function but to enter a pre-paid Miscellaneous Debit. Enter this Misc Debit exactly as the original invoice. Then on the TOTAL TAB enter the payment information using the same check number that was originally used to pay the invoice. After posting transactions, Prepare Payments and this will appear as a negative on the Pre-paid line.

When payments are posted they will correct expense, cash and AP. In Bank Rec it will appear as a negative under the original.

This month we have seen two clients get infections after visiting WhitePages.com. Users report seeing pop-ups that warn them that they are infected. The pop-up screen, however, is not the real antivirus software, it is a fraud. The malicious software is apparently being installed via banner advertisements from infected websites.

It seems that no user interaction other than visiting the site is required to become compromised.

To limit your risk, use extreme caution when browsing. Additionally, make sure your operating system, applications, and security software have the latest updates installed.

To easily keep up with Customer Deposits and to be able to apply the deposit amount to the Accounts Receivable (or Sales Order) invoice to show the total amount of the invoice along with the deposit applied and the remaining amount owed we recommend you keep up with deposits outside of the Open Invoice file.

Set up a General Ledger account within the Current Liabilities section of your Chart of accounts. When you receive the deposit check from your clients enter it into Cash Receipts without a customer ID. This will open up a General Ledger account for you to apply this deposit to. Enter the Customer Deposit account that was set up and for the invoice number use the Customer ID and apply the amount.

Next set up a Method of Payment (DEP) in Accounts Receivable (Sales Order) that is a write off. Use this Customer Deposit General Ledger Account number.

When the Customer is invoiced go to the Payment section and use the Method of Payment (DEP) you set up above and apply the Deposit payment. The invoice will then show the total due, the amount of deposit applied and the net amount currently due.

Reconciling this Customer Deposit is quite simple. Whenever the Deposit is received this account is credited and when the Deposit is applied to the invoice this account is debited.

When setting up Inventory items the thing to keep in mind is how you want to ‘mine’ the information for these items as they are purchased and sold.

Knowing what fields are stored in history as well as what fields give you ‘sorts’ or ‘print by’s’ when generating reports will greatly assist you in setting up Inventory Items.

· Item type is ‘nonserialized’ for all standard items you are keeping up with quantities for. Item type ‘serialized’ is for those items that have serial numbers tied to them. Item type ‘service’ items can be sold but they can not be purchased. There is no cost associated with service items.

· Sales Category identifies the market you sell groups of items to and helps you analyze sales. The Sales Category Codes are used to sort historical information generated in Accounts Receivable.

· Product Lines identify a larger category than the item fits in. For example if you sell 50 different types of brooms you would assign the same Product Line to all of them. Many reports within the Inventory application allow you to specify product line. Lookups can be by Product Lines. Product Lines can also be used when setting up promotional pricing.

· Locations can be set to represent warehouses where the items are stored, or separate areas of the same warehouse. They can also represent Raw Materials vs Finished Goods. Items can quickly be moved from Location to Location as the items move through your process or line. Additional costs can be added during each Location move. Most any report in any application that references Inventory items allows you to ‘mine’ your data by Location. Keeping this in mind may allow you additional reporting capabilities.

· Account Codes define the General Ledger Accounts that will be posted to when this item is Purchased, Sold, Counted, Adjusted, or Moved. Account Codes are assigned to an item within a Location. This allows for the same item to post to different General Ledger Accounts from within different Locations.

· User Defined Fields can be set up for anything about an item that you need to define for each item. First define the User Field with a description and select whether or not it is sorted or required. Set up values that can be used within the specific User Defined Field that you set up. For example a User Defined Field could be set up for Color. Next you would set up all the various colors the items could be. Inventory Movement, Item Sales, Price, Valuation, Variance, and Transaction Reports can be run by specific colors. User Defined Fields are meant to be specific to your needs.

TRAVERSE helps you stay environmentally friendly and save you money by eliminating paper, postage, and gas.

Once transactions are posted from other applications, or ‘written’ when manually entered into General Ledger Transactions they reside within EDIT TRANSACTIONS until they are “posted to the master”.

When you enter Edit Transactions you are only viewing the last ‘post’ of transactions that was made. To see all of the ‘un-posted transactions’ clear the Post Run From and Thru and select the ‘refresh’ button. This will bring in all the rest of the transactions that are un-posted to the master.

It is generally not advised to edit transactions as this will not leave an audit trail. If something has been edited within the ‘edit transactions’ and the General Journal is run by ‘post run’ the data that you will view is the ‘edited’ data for that post run, not the original post.

The safe way to correct entries when they are in ‘edit’ is to highlight each entry that is in-correct and press the button in the upper left hand corner that has a circular arrow in it. This will reverse the entry that you selected and place it out in Transactions waiting to be ‘written’. Do this to all debit and credit sides of the entry. When written these will reverse the original incorrect entry. Now you can make manual entries to correct the information. Remember though this is only correcting the General Ledger. Information posted to other applications remains as originally posted.

When your customer places an order for goods or services how are you keeping up with these orders?

Whether you are manufacturing the item, purchasing the item, or shipping the item out of Inventory you need to be able to run a report at any point in time that will tell you what orders (Work-in-Process or Future Work) you still have to produce and in what time frame.

Many customers will keep up with future work on clip boards, work order books or other manual methods. Using these ‘paper’ methods orders can be misplaced or lost creating lost revenue and customer dissatisfaction.

The Sales Order application can assist not only your Sales Reps and office people keep up with orders, but also your shop, or warehouse floor.

When an Inventory Item is entered into a Sales Order the quantity that is entered becomes a ‘committed’ quantity within the Inventory Item. Reports can be run to see committed amounts vs quantities on-hand so that orders to manufacture or purchase additional items can be placed in a timely manner.

When the original order is entered the order itself has a status of “New”. Once the picking slip is printed the order’s status changes to “Picked”. Upon shipment of the order’s items the order is then “Verified”, which also changes the status in the Inventory Item from “Committed” to “In-Use”.

Packing Slips can be generated for each order for inclusion with the shipment. The final step is to print invoices, sales journals and post to create the Open Invoice for the Customer.

Sales Reps can enter ‘Quotes’ using the Sales Order application. Quotes allow the Sales Reps to list and total up the Customer’s request and keep that quote on file until the Customer actually places the order. At this point the quote can then be turned into a ‘New’ order and processed as normal.

The Open Order Report can be printed by Status of the Order (New, Picked, Verified, Credited, Backordered, or Quoted). It can also be printed by Customer or Item ID. The report will show the quantity available for that item along with the quantity requested on the Order.

Running the report by ‘requested ship dates’ not only gives management an idea of upcoming revenue it also allows your purchasing or manufacturing departments to keep up with the incoming flow of orders and thus the coordination between all departments.

If keeping up with your Orders is taking too much of your time, then you should take a look at the Sales Order application so that you can take back control and know exactly what is in your Work in Process.

To generate a vacation check in addition to the employee’s normal weekly check enter the normal weekly hours as usual. Then drop down and change the sequence number for the vacation hours you enter. When calculated two checks will be generated.

To generate two checks for a salaried employee calculate checks as usual then ‘add’ a manual check using the vacation pay-code for this employee. Calculate that one check and process payroll as usual to get two checks.

When most people think of spring cleaning, they think of clearing rooms of their house, scrubbing the baseboards, and touching up paint. Like your home it is always good to ‘Spring Clean’ your computer network and data on a regular basis. The following things can be done to protect your IT infrastructure:

- Clean out dust from your computers and servers. Blow out the dust that can clog up the fans with compressed air.

- Archive your data. Remove from My Documents all those spreadsheets and data you don't use on a daily basis. This allows for easier synchronization to laptops, etc.

- Review your backup process. Are your backups working? Do you have enough space on your tape or backup drive? Have you tested your backups lately by doing a restore? Do you have an off-site backup? If not how secure are your backups should total destruction of your building occur?

Hiring Incentives to Restore Employment (HIRE) Act was enacted on 03/18/2010

What does this act mean for you? Employers who hire unemployed workers this year (after 02/03/10 and before 01/01/11) may qualify for a 6.2 percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after 03/18/10. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2 percent share of the Social Security taxes, as well as income taxes. The employer and the employee’s shares of Medicare taxes would also apply to these wages.

Form 941, Employers Quarterly Federal Tax Return, will be revised for second quarter filings. Any first quarter credit amounts would be treated as a payment for the second quarter and would need to be claimed on the second quarter Form 941 filing. In addition:

- The 2010 Form W-2 will have a box 12, code “CC” added for reporting HIRE Act exempt wages and tips for qualified employees.

- The first quarter exempt amounts are to be treated as a payment made on the first day of the second quarter on the revised Form 941, just like the current COBRA subsidy tax credit.

- For the following quarters, employers will report total amounts on the first page of Form 941, and reduce the liability on Schedule B, Form 941, by the amount of the tax reduction.

Qualified employees will need to complete Form W-11. The form is to confirm that the new hire is a qualified employee under the HIRE Act. Employers cannot claim HIRE Act benefits, including a payroll tax exemption or a new-hire retention credit, unless the employee completes and signs the affidavit or similar statement. The form is kept on file by the Employer. Drafts of the 941 and W-11 are at www.irs.gov.

July marks the start of the third quarter. It is also mid-year and an excellent time to ‘proof’ your employee’s W2 information. This will allow you to make any changes now before you get to year end when everything else is going on.

To proof the taxability of your employee’s wages begin by running the Earnings and Deductions report found in Quarter/Year-End Maintenance menu. Run in summary for Year-to-date. Take the Earnings total and deduct any non-W2 payments you are making through payroll to arrive at GROSS earnings. From this total deduct any tax deferred deductions the employee may have. Tax deferred deductions include IRA, 401K, pre-tax retirement, pre-tax insurances, etc. The Federal (FWH) and State (SWH) Taxable amounts should be the Gross earnings less all these deferred deductions.

To arrive at the taxable wages for Social Security (OAS) and Medicare (MED) deduct the deferred insurance amounts but not the IRA, 401K, or retirement.

Most local payroll tax authorities do not allow for tax deferred deductions but you will want to verify that with your local taxing authorities.

Next run the Withholding Report in summary, year to date. Look at the FWH, SWH, MED and OAS taxable wages. These should match what you have calculated from the Earnings and Deductions report. Also multiply the MED taxable wages by 1.45% to insure you arrive at the amount that was withheld, and multiply the OAS amount by 6.2% taking into account anyone over the $106,800 limit and compare to the amount withheld.

If any of these figures are ‘off’ run the Earnings and Deductions and Withholding report in detail and individually ‘proof’ each employee to find out who is ‘off’ in taxability.

Invoice inquiry, found in the Inquiry menu and Hold/Release Invoices, found in the Open Invoice Menu both contain information on unpaid and paid invoices contained in the Open Invoice File.

The similarities between these two functions are they both list Invoice number, type (invoice, payment, credit), invoice date, status (held or released), discount amount and check number if paid.

- All customers can be selected in the Inquiry whether or not they have open invoices. Only those with open invoices can be viewed in hold/release

- Invoice Inquiry allows you to look up by Customer ID or by Invoice number. Hold/release is by Customer ID only

- Invoice Inquiry allows you to drill down on the invoice number to view the header and detail information pertaining to the particular invoice. Hold/release does not.

If your small business or tax-exempt organization pays employee health insurance premiums in 2010 you may be eligible to claim a new credit on your 2010 tax return. Employers with fewer than 25 employees (more if you have part-time employees), and less than $50,000 in average wages, may be eligible.

Eligible small employers could qualify for a credit worth up to 35% of premiums paid in 2010 (for businesses) or 25% of premiums paid (for tax-exempt groups).

To find out if your small business qualifies for this valuable incentive to provide health coverage for your employees visit www.irs.gov or consult your tax professional.

Clients are sometimes unaware they should be performing ‘Periodic Processing’. Periodic Processing performs maintenance tasks on various files and allows you to purge unnecessary historical data.

- Deletes paid invoices from open invoices and accumulates balance totals for -- balance forward customers

- Purges Quotes, RMA’s, expired document links, and Order history with transactions before a specific date

- Rollup Leave Balance combines all sick and vacation leave detail entries into a new starting total and deletes detail entries from the table, then compares to Employee Information Pay tab. If they don’t match the report is generated. Clears sick and vacation hours to zero