1. ACCOUNTING AND RECORDS MANAGEMENT 4101 Barbara Loop SE, Suite D, Rio Rancho 87124 (505) 891-8111 fax (505) 891-9169

2. Registration Requirements Internal Revenue Service – Federal ID Number (Income and Payroll reporting) State Taxation and Revenue Department – CRS ID Number (Income and Gross Receipts taxes) Public Regulation Commission – Articles of Incorporation (C-Corp, S-Corp, LLC, LLP, Foreign Entities) Department of Workforce Solutions – State Unemployment Workers’ Compensation Insurance City License/County License Federal and State Occupational Safety and Health Administration

3. Accounting First, determine whether you will use the cash or accrual accounting system Financial Statements Tax Returns

4. Accounting Bank Relationship(s) and Account(s) – Check Books(s) and Deposit Slips Chart of Accounts for Financial and Tax Accounting

5. Accounting Books of Record to Include: – Check/Deposit Register – Cash Receipts Journal – Cash Disbursements Journal – Petty Cash Fund – General Journal – Accounts Receivable – Accounts Payable

6. Accounting Books of Record (continued): – Payroll Journal and Records – Depreciation Schedule – Income/Loss Statement – Balance Sheet – Detailed Account Activity Analysis – Cash Flow Statement

7. Accounting Inventory – Component – Product – Work in Process – Finished Goods Schedule of Tangible and Intangible Assets – Depreciation and amortization of long-term assets

8. Accounting Sales Procedures and Documents –Acceptance of customers/credit extension –Invoicing procedures and payment terms –Aging of receivables and finance charges –Review of aged receivables and follow up on delinquencies Purchase Procedures and Documents – Purchase Order/Authorization – Expense reimbursement policies – Travel vouchers – Company credit cards

9. Taxation Do you have a valid business reason to use a Fiscal Year? – Seasonal or natural business year If not, then Calendar Year reporting

10. Taxation FEDERAL REQUIREMENTS Federal Income Tax Return (Corporate/Partnership/Individual) Federal Withholding from Employees Federal Matching (FICA & Medicare) Tax on Employers Self Employment Taxes Federal Excise Tax Federal Unemployment Taxes (FUTA)

11. Taxation STATE REQUIREMENTS State Income Tax Property Tax Gross Receipts Tax State Unemployment (SUTA) State Worker’s Compensation Insurance

12. RECORDS MANAGEMENT

13. Purpose of Keeping Records: To monitor the progress of the business To maintain the critical documents relative to the business entity – Organization/ownership documents – Licenses – Leases

14. Purpose of Keeping Records: Asset purchases/sales Contracts Agreements Litigation/legal activities Loan documents Tax returns/related correspondence

15. Purpose of Keeping Records: To Track the Operations of the Business To Prepare Financial Statements To Prepare Tax Returns – Monthly, Quarterly, Annual To Document Employment and Payroll Transactions To Respond to Inquiries from third parties such as bankers or investors

16. Purpose of Keeping Records: To File Annual Reports – Corporate – Department of Labor – Director/Shareholder – Lenders-Banks and Leasing Companies – Insurance

17. An Adequate Record Keeping System is: In place from Day One (reconstructing is miserable) Reasonably accessible (including storage) As simple as possible Accurate Consistent Understandable Complete and reliable Safe guarded from misuse or carelessness

18. An Adequate Record Keeping System is: Accounting/ bookkeeping records – Manual Ledgers – General, A/R and A/P Journals – Receipts, Disbursements, Adjusting – Computerized QuickBooks, Peachtree, MAS 90, etc. Data/Records filing and storage – Manual or electronic – as long as SECURE

19. Record Maintenance and Retention Organization RecordsLife of Organization Tax Returns w/specific supportStatute of Limitations Asset recordsLife of the Asset Plus 7 years Operations recordsGenerally 7 years Personnel/payroll recordsGenerally 5 years Non-tax related recordsGenerally 5 years See handout for detailed Record Retention list

20. Critical Monitoring Understand your accounting system and know how to read and interpret your financial statements: the balance sheet, the income statement, and the cash flow statement. Know your industry and regularly read the trade magazines that pertain to the industry. Watch for new products and shifting trends.

21. Controlling Your Business In managing your business you must know what is going on, but obviously you cannot spend ALL your time controlling. Some principles of control may give you the ‘in touch’ you need without destroying your ‘productive time’. Controls should be designed to:

22. Relate to the ‘key” activities in your business. Be measurable and accurate Be applicable and meaningful Minimize cost and time in preparing and reporting Provide current and timely information Reach the people who need to know the information Be read and provide a means of response / follow-up

23. Examples of Controls Daily Weekly Monthly

24. Daily Cash on hand and a projection for the next two weeks Summary of Cash Receipts Any issues with Accounts Receivable Collections Summary of Funds Expended Any issues with Accounts Payable (vendor problems)

25. Weekly Summary of Sales Summary of Purchase Orders Accounts Receivable Accounts Payable Payroll (particularly overtime) Taxes (returns prepared and payment schedule)

26. Monthly Reconcile the Bank Statement(s) Review: – Financial Statements (as soon after month end as possible) – Aged Accounts Receivable – Aged Accounts Payable – Payroll Disbursements – Tax Returns/Compliance