ABIP presents the Guide to Bookkeeping. The Guide to Bookkeeping by ABIP contains information about what bookkeeping is, why it is important for accounting, good and bad practices and some of the different software you should be using. For more information please contact ABIP about how their services can help your business.

1. The Guide to Bookkeeping
PRESENTS
Lisa M Morton

2. We Are Going To Explore….
 Who we are / what we do
 What are “books” and why do you need them
 The basics of bookkeepers vs. CPA’s
 Software choices available
 10 differences between a good and bad P&L
 5 good vs. bad things on a Balance Sheet (B/S)
 Top 10 mistakes made in bookkeeping
 How ABIP can help

3. Who ABIP Are…..
 We are a Full Service Accounting firm located in
the Galleria
 We have a staff of 30 full time employees
 We have over 100 years of combined experience
 We are experts real estate accounting
 We are auditors who rank in the top 5% of audit
firms in Texas
.

4. What We Do…..
 Tax & Regulatory
Compliance
 Attestation Services
 Consulting & Advisory
Services
 Entrepreneurial
Services
 Fraud Services  Accounting Software
Consulting
 Employee Benefit Plans  Litigation Support
Services
 Bookkeeping  Real Estate Accounting

5. Who I am…..
 I am Lisa Morton ------
 I am the Manager of Finance and Accounting at APIB
 I have been a bookkeeper for over 15 years
 I have been a vendor for 5 years
 I am a member and an investor
 I am an expert in, and a ProAdvisor for, QuickBooks
 I successfully started, grew and sold Texas
Bookkeepers

6. Books…..
 What are they?
 Why do we need them?
 How do we get them?

7. Do YOU Need A Bookkeeper?
 Your bank balance
 Who owes you money and how much
 Who you owe money to and when payment is due
 What part of your business is making the most
money
Do you know at all times ????
NO … Then YOU Need a Bookkeeper

8. What Does A Bookkeeper Do ?
The Bookkeeper is the person who :-
 Records the accounts and transactions of a business
 Enters daily transactions
 Does monthly account reconciliations
 Basic reporting
 Helps prepare for tax time

9. Bookkeeper vs.. CPA
 Enter receipts
 Enter bills
 Record invoices
 Bank Reconciliations
 Organize records for
CPA
CPA
 Journal Entries
 File Federal Taxes
 Audits
 Trial Balances
 Financial Reports
Bookkeeper

10. The bookkeeper is a bridge to
your CPA.
Where the Bookkeeper Fits In

11. Traditional
Computer SoftwarePaper Ledgers
Bookkeeping Systems
Modern

12. Software to the Rescue ?
Intuit Microsoft Peachtree Sage
So Much to Do -
ABIP use Intuit QuickBooks and
are ProAdvisors

13. Advantages of PC Bookkeeping
 Accuracy 2+2 = 4 …. every time
 Check printing
 Reports
 C.O.A. assigns costs and income
What on earth is a C.O.A. ????

14. What does a P&L tell us ?
 P should be bigger than L
 Where does the P/+ come from ?
 Where does the L/– come from ?
 How does it compare with last month ?

15. P & L – Bad Examples 1,2 & 3
Income
Income
Forfeit Deposit 1,000.00 600.00 1,025.00
Late Fees 523.00 988.00 473.00
Rents 35,457.93 34,784.00 40,532.00
Utility Reimb 542.57 210.00 175.00
Total Income 37,523.50 36,582.00 42,205.00
Total Income 37,523.50 36,582.00 42,205.00
2 & 3
1

16. P & L - 1,2 & 3 Corrected
Income Jun Jul Aug
5000 · RESIDENT RENTAL INCOME
5001 · Rentalincome cur. month35,457.93 34,784.00 40,532.00
Total5000 · RESIDENT RENTAL INCOME35,457.93 34,784.00 40,532.00
5200 · OTHER INCOME
5230 · Forfieted deposits - rent 1,000.00 600.00 1,025.00
5245 · Late fees 523.00 988.00 473.00
5280 · Utility Billings 542.57 210.00 175.00
Total5200 · OTHER INCOME 2,065.57 1,798.00 1,673.00
Total Income 37,523.50 36,582.00 42,205.00
1
2
3

17. P & L – Bad Examples 4,5,6 & 7
Cost of Goods Sold
Automobile Expense 74.04 0.00 0.00
Communications Expense
Cable 0.00 70.91 70.91
Telephone 175.42 98.67 101.30
VM 34.99 34.99 34.99
Total Communications Expense 210.41 204.57 207.20
Computer Expenses
DIY 97.20 97.20 97.20
Total Computer Expenses 97.20 97.20 97.20
Landscaping 1,800.00 900.00 350.00
Office Expense 80.97 108.91 6.48
Property Expenses
Eviction Costs 101.00 0.00 0.00
Insurance 1,892.08 1,892.08 1,892.08
Leasing Expenses 431.92 909.30 79.02
R & M
Contractors 3,997.50 1,273.80 725.26
Labor 3,887.00 2,338.00 2,681.00
Material 1,267.38 2,162.29 2,962.53
Total R & M 9,151.88 5,774.09 6,368.79
5
4
6
7

18. P & L – 4,5,6 & 7 Corrected
Expense
6000 · MARKETING & ADVERTISING
6001 · Advertising 0.00 0.00 300.00
6003 · Banners, bandit signs, etc 440.00 0.00 0.00
6009 · Leasing giveways 0.00 64.95 0.00
Total 6000 · MARKETING & ADVERTISING 440.00 64.95 300.00
7000 · OFFICE ADMINISTRATION
7005 · Accounting/Bookkeeping 2,356.33 1,199.25 0.00
7014 · Answering service 34.99 34.99 34.99
7020 · Bank Service Charges 0.00 0.00 5.50
7032 · National Tenant Network 431.92 909.30 0.00
7038 · Eviction and related fees 101.00 0.00 0.00
7048 · HAA 0.00 0.00 79.02
7056 · Meals & Entertainment 0.00 0.00 0.00
7060 · Office Supplies 80.97 108.91 6.48
7061 · DYI 97.20 97.20 97.20
7092 · Security 92.99 102.99 102.99
7098 · Vehicle Cost 74.04 0.00 0.00
Total 7000 · OFFICE ADMINISTRATION 3,269.44 2,452.64 326.18
4
7
5
6 Insurance moved

19. P & L - Bad Examples 8 & 9
Jun Jul Aug
Utilities
Electricity 2,438.18 952.37 890.39
Gas 54.92 235.74 18.75
Waste Removal 1,292.25 679.07 674.17
Water 2,179.58 2,568.67 269.60
TotalUtilities 5,964.93 4,435.85 1,852.91
Taxes - Property 2,666.67 2,666.67 2,666.67
Wages
Contract Labor 0.00 0.00 548.90
Salaries
SS/Med 243.28 230.65 343.11
Salaries - Other 3,180.00 3,015.00 4,485.00
TotalSalaries 3,423.28 3,245.65 4,828.11
8
9

20. P & L – 8 & 9 Corrected
Jun Jul Aug
8500 · HUMAN RESOURCE RELATED
Payroll Reimbursements 0.00 0.00 0.00
8502 · Salary & Wages 0.00 0.00 0.00
8505 · Taxes 0.00 0.00 0.00
8506 · Manager Salary 3,358.04 3,167.62 4,731.95
8507 · Maintenance Salary 2,320.00 1,120.00 2,336.00
8513 · Hiring Costs 125.00 0.00 0.00
8520 · Contract labor 15.00 350.00 573.90
8525 · Payroll taxes - Management 256.89 242.32 361.99
Total 8500 · HUMAN RESOURCE RELATED6,074.93 4,879.94 8,003.84
8800 · UTILITY EXPENSE
8820 · Electricity Common 2,438.18 952.37 890.39
8839 · Gas Common 54.92 83.28 18.75
8840 · Gas Units 0.00 152.46 0.00
8850 · Telephone & internet 175.42 169.58 172.21
8880 · Waste haulage 667.25 679.07 674.17
8893 · Water and Sewer 2,179.58 2,568.67 269.60
9
8
*

21. P & L – Bad Example 10
Jun Jul Aug
Expense
Advertising and Promotion 0.00 300.00
Bank Charges 1,273.53 0.00 5.50
Business Promotion 0.00 64.95 0.00
Interest Expense 0.00 6,003.84 6,268.92
Meals and Entertainment 6,037.59 227.85 180.39
Professional Fees
Accounting 2,356.33 1,199.25 0.00
Total Professional Fees 2,356.33 1,199.25 0.00
Security 92.99 102.99 102.99
Total Expense 9,760.44 7,598.88 6,857.80
Net Ordinary Income 1,868.68 8,748.80 16,381.84
Other Income/Expense
Other Income
interest Income 0.00 3.12
Total Other Income 0.00 0.00 3.12
10

22. P & L – 10 Corrected
Jun Jul Aug
8800 · UTILITY EXPENSE
8820 · Electricity Common2,438.18 952.37 890.39
8839 · Gas Common 54.92 83.28 18.75
8840 · Gas Units 0.00 152.46 0.00
8850 · Telephone & internet175.42 169.58 172.21
8880 · Waste haulage 667.25 679.07 674.17
8893 · Water and Sewer2,179.58 2,568.67 269.60
Total 8800 · UTILITY EXPENSE5,515.35 4,605.43 2,025.12
Total Expense 26,278.63 21,744.08 20,099.96
Net Ordinary Income 11,244.87 14,837.92 22,105.04
Other Income/Expense
Other Income
9010 · INTEREST INCOME 0.00 0.00 3.12
Total Other Income 0.00 0.00 3.12
Other Expense
9700 · INTEREST EXPENSE 6,037.59 6,003.84 6,268.92
9800 · NON OPERATING CHARGES
9806 · Asset Management Fee 0.00 0.00 0.00
Total 9800 · NON OPERATING CHARGES 0.00 0.00 0.00
9805 · Ask Lisa 0.00 0.00 0.00
Total Other Expense 6,037.59 6,003.84 6,268.92
10

23. What does a B/S Tell Us
Assets: Things you have
 How much money you have in the bank
 What you have / assets
 What your asset is worth
 What you have invested (skin in the game)
Liabilities: Things you owe
 How much you owe for taxes
 Your mortgage / rehab balance
 Tenant security deposits owed
Assets and liabilities should always BALANCE!

24. B/S- Organizational Costs
Fixed Assets
Furniture and Equipment 2,052.00
Intangible Fixed Assets
Organization Costs 500
Total Intangible Fixed Assets 500
Other Assets
2700· OTHER LONG-TERMASSETS
2701· Organization Costs 1,403.00
Total 2700· OTHER LONG-TERMASSETS 1,403.00
Total Other Assets 1,403.00

25. B/S – Other Assets
Other Assets
A/R - Deposits 8,250.00
Total Other Assets 8,250.00
Other Current Assets
City of Houston Water 11,250.00
Prepaid Expenses
Insurance 7,568.29
Total Prepaid Expenses 7,568.29
Total Other Current Assets 18,818.29

26. B/S - Property
Property 1
Capital Improvements 356,700.01
Property 1- Other 1,700,000.00
Total Property 1 2,056,700.01
Fixed Assets
2000 · Property 1
Purchase Price 1,700,000.00
Construction Draw 214,753.09
Total 2000 · Property 1 1,914,753.09

27. B/S – Current Liabilities
Current Liabilities
Credit Cards
Credit Card 1
Citi Credit Card(226.90)
Credit Card 1 - Other(2,104.81)
Total Credit Card 1 (2,331.71)
Liabilities
Current Liabilities
Credit Cards
3200 · Citi Credit Card (226.90)
3220 . Lowes Credit Card (2,104.81)
Total 3200 ·Credit Cards (2,331.71)
Copyright ABIP LLC 2012 27

28. B/S – Equity -Bad Example
Equity
Partners' Equity
Partner 1
Contributions 1,000.00
Draws (500.00)
Total Partner 1 500.00
Partner 2
Draws (4,085.73)
Total Partner 2 (4,085.73)
Withdrawals (58,000.00)
Total Partners' Equity (61,585.73)
Copyright ABIP LLC 2012 28

29. B/S – Equity - Corrected
Equity
4000 · Partners' Equity
4010 · Partner 1
Draws (30,127.53)
Total 4010 · Partner 1 (30,127.53)
4020 · Partner 2
Contributions 33,513.97
Draws (33,085.73)
Total 4020 · Partner 2 428.24
Total 4000 · Partners' Equity (29,699.29)
Copyright ABIP LLC 2012 29

30. Top 10 Mistakes # 10
30Copyright ABIP LLC 2012
SOFTWARE
 Use proper accounting software
- Excel is not an accounting program there are
several programs that work well
 Software can save time by finishing entries
automatically
 Generate quick and useful reports
 Saves time over paper ledgers
 Extremely accurate

31. Top 10 Mistakes # 9
31Copyright ABIP LLC 2012
ORGANIZATION
 Having all records in one place
 Keeping neat files per year, per property
 Having one place for receipts until it is time to
deal with them
 Always get information on contractors, if you
need to issue 1099’s your bookkeeper or CPA
will have all the information needed
 Having a back up of your company information
/ books in a different location

32. Top 10 Mistakes # 8
32Copyright ABIP LLC 2012
Getting Behind
 Saying, “I’ll do it tomorrow”
 Make a routine, set a schedule and stick to it
 Quickly snowballs and you become overwhelmed
 Costs you more money
 You tend to forget the details of a particular
receipt / transaction

33. Top 10 Mistakes # 7
33Copyright ABIP LLC 2012
CHART OF ACCOUNTS
• Not detailed enough – separate insurance into
home, life, auto…
• Not understanding what the COA is for
• Not setting up credit cards properly
• Keeping equipment and supplies separate

34. Top 10 Mistakes # 6
34Copyright ABIP LLC 2012
NOT KEEPING PROPERTIES SEPARATE

 Keep property expenses separate – write on
 receipt what property
 Know your insurance cost per property
 Know your expenses per property / rehab costs
 Set properties up as customers and tenants as
jobs – easy reports
 Set up expense accounts per property
 Have separate files per property for mortgage
info with HUD 1 doc on top

35. Top 10 Mistakes # 5
35Copyright ABIP LLC 2012
CREDIT CARDS
 Always have at least one per company
 Never mix personal and business on same card
 Pay it off if possible to avoid finance charges
 Negotiate interest rates to save money if you
cannot pay it off every month
Reconcile your statement with receipts – banks
make mistakes too

36. Top 10 Mistakes # 4
36Copyright ABIP LLC 2012
ACCOUNTING FOR CASH
 Never pay cash - paying with a check or credit card
insures you have another record of the expense if
the receipt gets lost
 Creating expense reports, with receipts, for money
you want reimbursed to you
 Cash withdrawals – write on receipt what it was
for
 Create a petty cash account for personal monies
used in your business. At year end either take the
money or convert it to owner equity account.
 Take discounts when you can and save money
where you can

37. Top 10 Mistakes # 3
37Copyright ABIP LLC 2012
BANK ACCOUNTS
 Not keeping a record of what the deposit was
for – what tenant
 Not balancing monthly – banks make mistakes
too
 Keeping separate accounts for each business
 Enough banks offer free checking these days
– do not pay monthly fees for checking account
 Not writing on checks as much detail as
possible

38. Top 10 Mistakes # 2
38Copyright ABIP LLC 2012
RECEIPTS
 Not saving all receipts – even refunds and
internet receipts
 Not writing on receipt what the expense is for
 Not photo copying your receipts - as they will
fade and you will forget
 Not keeping track of reimbursable expenses
 Not keeping receipts on unaccepted offers
– these also need to be filed properly

39. And the Winner Is….
39Copyright ABIP LLC 2012
NOT HIRING A PROFESSIONAL
 You shouldn’t hire a relative
 Hiring someone gives an honest look at your
books and where you stand
 Hiring a professional insures proper posting to
the right accounts
 Hiring a professional allows you more time to
focus on your business
 Hiring a professional saves time and money

40. Summary
 Take the stress out of tax time
 Help the bottom line
 SAVE YOU TIME AND MONEY
GOOD BOOKKEEPING WILL
Copyright ABIP LLC 2012 40

41. For More Information Visit
– Lisa Morton at Lmorton@ABIPcpa.com
• Bookkeeping
– Rene Lozano at RLozano@ABIPcpa.com
• Taxation
– John Dupree at Jdupree@ABIPcpa.com
• Audits and Fraud
www.ABIPcpa.com
Or Email us at
PowerPoint Production by GMS