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How Should An Employee Be Classified?

SkynarBookkeeping / January 17, 2020

When you hire a new employee, it’s important to classify what kind of employee. Generally employees are divided into three groups: full-time, part-time, and temporary. To help you classify your employee correctly, take into consideration what their job duties will be and how many hours they will be working. Classifying employees correctly and fairly is essential when determining if the employee is able to receive benefits or not. Remaining consistent in your classifications is essential, as well as keeping up with any employment changes. 

Who Should Be Issued A 1099 This Tax Season?

SkynarBookkeeping / January 7, 2020

Tax season will begin soon, which means it’s time to start issuing tax forms to employees,  independent contractors, and vendors. A 1099 is a tax form that describes wages paid to someone not by their employer, and must be issued by January 31. Who should you send a 1099 to this tax season? A basic rule of thumb is to issue a 1099  to anyone you paid over $600 throughout the year, but follow our flow chart for guidance. 

Below is a decision-making tool to help you decide if you should send a 1099. Follow the bolded questions, choose between the options given, and follow the arrows until you find your answer.

WHAT DID YOU PAY THE VENDOR FOR?

Rent → Did you pay over $600?

  • No → Do not issue 1099
  • Yes → How was it paid?

    • PayPal or Credit Card  (PP or CC)
      • Yes → However, you do not have to issue the 1099, PP or CC will issue it.
    • From Your Bank Account via Check, Bank Draft or Debit Card
      • Yes → Issue 1099
      • No → Is the vendor a corporation (either C corp or S corp)?

        • No → Issue 1099
        • Yes → Do not issue 1099

Services → Did you pay over $600?

  • No → Do not issue 1099
  • Yes → How was it paid?

    • PayPal or Credit Card  (PP or CC)
      • Yes → However, you

To Hire Or To Contract?

SkynarBookkeeping / May 30, 2019

At times while running your business, there will be a need for a person and their skills that are special to one specific area, but the funds might not allow for you to hire someone on as an employee. There’s also the chance that the funds are there, but a full workload isn’t. Do you hire someone part-time? Or work with an independent contractor?

First, what are independent contractors? These are people you hire for their specific set of skills, and they work under a contract that you create. Contractor positions range from creative like social media writers, graphic designers, and photographers to seasonal positions like lawn care, snow removal, florists, and landscapers.

One would typically hire a contract worker when the need for a full-time or part-time employee isn’t there, or the funds restrict it. Reaching out to a contractor ensures you’ll be saving money while also getting the most for your dollar. Hiring an independent contractor is also a form of outsourcing.

Who Gets a 1099?

SkynarBookkeeping / January 10, 2019

With tax season in our midst, it’s time to get it together and figure out who needs to be issued a 1099.  These are to be sent out each year by January 31st. It can be kind of confusing to figure out who to issue a 1099 and who doesn’t need one. The basic rule is that you must issue one whenever you pay an independent contractor who provides you a service.

Seven Best Practices For Contractors

SkynarBookkeeping / March 29, 2018
By: Rachel Raupp

When you’re a contractor, you work on multiple projects that need different accounts and we want to make sure the chaos doesn’t turn into confusion. To make sure everything is organized and you know exactly what’s going on in each account, we compiled a list of helpful tips.

  1.      Set up your QuickBooks properly at the beginning. You will need a specialized Chart of Accounts and Items for your business. By doing this right the first time, you avoid the very time consuming task of having to clean up your books.
  2.      Invest the time, money, and energy to set up QuickBooks to properly track Direct and Indirect Constructions Costs and keep Overheard separate.
  3.      Use Estimates to your customers and Purchase Orders to your vendors. Link the two to track your costs by project.
  4.      Assign Job Costing to all expenses.
  5.      Make adjustments each month to recognize Work In Progress (WIP).
  6.      Track your contractors for ease of issuing 1099’s at the beginning of the year.
  7.      If this becomes too much to handle, hire a qualified QuickBooks ProAdvisor. The money you “invest” in this will help you save you time, money, and energy in the long run.

Accounting Mistakes Small Businesses Should Avoid

SkynarBookkeeping / October 20, 2017
By: Rachel Raupp

Accounting is an essential component of every business regardless of size. It’s important to keep in mind the basic do’s and don’t’s of accounting that not everyone may know, but should! These are common and often unnoticed mistakes that can lead to future problems.

Cash Flow vs. Profit

Don’t assume that profit also means there’s cash flow. What’s the difference? Cash flow is the inflow and outflow of money while profit is the extra money left over after expenses are deducted. It would be nice to assume that profit leads to cash flow, but that could give you a distorted view of how well (or not) your business is doing.

Bad Bookkeeping Records and Communication

Not taking your bookkeeping seriously nor communicating with your bookkeeper enough are simple mistakes that need to be avoided. Effective bookkeeping begins with recording each and every transaction. This includes not forgetting to record small transactions—these add up over time. Not only should your transactions be recorded, but they should be categorized. Organization is important for accurate records.

To have these transactions recorded appropriately and accurately, you must communicate with your bookkeeper on a regular basis. They should know what is going on within your business. Not enough communication can lead to unreliable records, as well as more work for both you and your bookkeeper. By avoiding these bookkeeping mistakes, you will be given a more reliable picture of where your business stands.

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Skynar Bookkeeping – Corporate Office – South Lyon, Michigan
13052 Pembrooke Circle
South Lyon, MI 48178
Phone 734-335-7702
Email info@skynarbookkeeping.com
68300 CR 388
South Haven, MI 49090
Phone 734-335-7702
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Phone 239-361-2100

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