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Over Drawing Business Accounts By Utilities...

 
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Old 06-27-2012, 09:32 AM   #1
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Over Drawing Business Accounts By Utilities...


My accountant told me to pay all my bills thruogh my business checking acct to keep my accounting simple...

But to also draw a paycheck (when I can) and deposit that into a personal checking account (which I do)

However, a couple of problems arose in the past week.

1) in the spring (Feb -April) work was very slow, so I only paid a minimum on my business land line (Knowing that they wouldnt turn it off) I ended up owing them $181.00 which I promptly paid, in the end of April...

2) IN May, I paid my Auto Insurance as well.

In June, I get a cancellation notice from my auto insurance. SO... I send in May's payment, as well as June's payment in one check, along with Homeowners, Certified mail over night delivery...

I did this on Wednsday of last week.

They received it friday. The Auto Policy, was set to expire at midnight Monday (12am Tuesday)

On monday, they recieved my Homeowners, posted to the acct on Friday.

However they claimed to have NOT received my auto!! How can you receive one and not the other in the same envelope?

So... I spoke with 3 different people got 3 different answers. So I paid my auto over the phone using my business atm card.

But get this..

In June, the bill for auto was $600 (inc May which they never bothered to apply to the acct)

So, today... knowing this issue... I checked my account online to find my acct is now $500 in the hole!

Yesterday, my phone company cashed the check (6 weeks AFTER I sent it) and then my insurance, cashed the check I sent them back in the end of April... and then cashed check that was 'missing'... Making me over pay the policy by almost $600!

So heres my problem...

How am I supposed to keep tabs on all this crap, if the checks I send out arnt being cashed for WEEKS?! Some of these checks (the phone and insurance) are decent chunks of change that can have a really massive negative on my day to day operations...

Also, how do I go about telling the insurance company that I need my money back pronto, and what about the over draft fee I am going to get hit with from my bank? Cause I sent them 2 checks, both of which for whatever reason didnt bother to cash...until they had both in hand plus my other payment to avoid cancellation

Ugh this whole thing just pisses me off...
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Old 06-27-2012, 09:56 AM   #2
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Re: Over Drawing Business Accounts By Utilities...


Yikes, more of a concern to me would be having $100 in your business account.

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Old 06-27-2012, 10:39 AM   #3
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Re: Over Drawing Business Accounts By Utilities...


Are you using some kind of check register, paper or electronic (Quicken, etc.). Or are you looking at your balance on the internet.

If you used a register you would know you have some liabilities out there (checks that you wrote that haven't been cashed).

And just because it is supposedly lost, doesn't mean it won't come back and haunt you. So unless it is lost for more than a year I would make sure there is money to cover it.

Also at these big companies, insurance, banks, etc. there is not a person that opens the incoming envelopes. It is a machine and sometimes things happen. A while back I sent in a $5000 mortgage check and the payment never got credited, I always check on the website to see. So I called, they don't know what happened and I send in another check. A couple of weeks later I check my credit card statement which is at the same bank as the mortgage, and there is a $5000 credit. What happened is the check got lost or separated from the statement, and they later found it looked at the name and address on the check and put it in the first account they found with my name on it. And since I knew this check was out there, there were plenty of funds in the bank to cover it. This happened another time at the same bank and they found the check and mailed it back to me as they did not know what account to put it in. So the check was back in my hands and removed from my check register.
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Old 06-27-2012, 11:49 AM   #4
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Re: Over Drawing Business Accounts By Utilities...


If a check isn't cashed and you make another payment, you have to put a stop on the original check.
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Old 06-27-2012, 08:01 PM   #5
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Re: Over Drawing Business Accounts By Utilities...


Can you not do internet banking to pay all your bills?

Pay them directly to the companies through your bank, online, instantly (well a day for processing). It's then out of your account, no waiting for cheques to clear, and you can see on your statement when it was done.

Only cheque I ever write is for my rent. Everything, phone, hydro, gas, payroll, etc.. are all through internet banking. All my suppliers have a credit card number. If I hit my limit my bank calls me to ask for money.
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Old 06-27-2012, 10:36 PM   #6
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Re: Over Drawing Business Accounts By Utilities...


Send them all certified/return receipt. Then you have proof and they're always processed faster. Couple of bucks is cheap insurance. Or, like Greg says, pay'em online.
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Old 06-27-2012, 10:38 PM   #7
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Re: Over Drawing Business Accounts By Utilities...


Quote:
Originally Posted by BamBamm5144 View Post
Yikes, more of a concern to me would be having $100 in your business account.
People fall on hard times, bro.
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Old 06-27-2012, 10:39 PM   #8
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Re: Over Drawing Business Accounts By Utilities...


Check your account weekly I guess. Make sure you know what has come out and what is going to come out.
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Old 06-28-2012, 02:22 PM   #9
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Re: Over Drawing Business Accounts By Utilities...


I do everything online as of about a year ago. I hardly ever right paper checks. Saved me alot of money on stamps! And i know the bills get paid. easy to learn and very convienient. I can even transfer money from account to account. wicked nice!
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Old 06-28-2012, 02:25 PM   #10
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Re: Over Drawing Business Accounts By Utilities...


Quote:
Originally Posted by CarrPainting View Post
My accountant told me to pay all my bills thruogh my business checking acct to keep my accounting simple...

But to also draw a paycheck (when I can) and deposit that into a personal checking account (which I do)
Your ACCOUNTANT told you to mix personal and business accounts? NEGATES any protections under LLC... Sounds like someone might need a new accountant...



Quote:
Originally Posted by CarrPainting View Post
So heres my problem...

How am I supposed to keep tabs on all this crap, if the checks I send out arnt being cashed for WEEKS?! Some of these checks (the phone and insurance) are decent chunks of change that can have a really massive negative on my day to day operations...

Also, how do I go about telling the insurance company that I need my money back pronto, and what about the over draft fee I am going to get hit with from my bank? Cause I sent them 2 checks, both of which for whatever reason didnt bother to cash...until they had both in hand plus my other payment to avoid cancellation

Ugh this whole thing just pisses me off...
If they didn't cash the checks, why would your other bills bounce?

Make this REAL simple on yourself... Four accounts....

1. Main - this is where ALL deposits from customers go... It is disbursed to other accounts. Keep only minimum balance as required by bank or $100 whichever is less.

2. Materials/bills - You should know what your materials cost, so when you get a deposit, transfer the money from the Main Account to this one to cover those expenses. You don't write a check until you transfer the funds. This means you will NEVER bounce a check no matter when it comes in. Order 100% of your materials with the deposit.

3. Payroll/taxes - Self-explanatory

4. Savings/Capital Reserves - This is where the "profit" from the job goes, and will also be a reserve account for overages.


Now, your "accountant" can set this up in Quickbooks as "accounts", but you can also do it by opening the actual accounts.

The surest way to find yourself in the situation you are in is to mix accounts and not keep a ledger/register.

Use that frustration you feel to MOTIVATE you into setting this up properly.

Best of Luck... 8^)
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Old 06-29-2012, 10:07 AM   #11
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Re: Over Drawing Business Accounts By Utilities...


Credit card.

I use a credit card for every purchase (materials, tools,bills, everything). Gives me 30 days float time to get finances in order.

The trick is to absolutely make sure you pay the full monthly balance off every month, otherwise you'll be losing money to the CC company.

The only check I write is the one to pay off the card bill. This helps avoid an overdraft situation.
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Old 06-29-2012, 11:01 AM   #12
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Re: Over Drawing Business Accounts By Utilities...


I pay everything with a debit card except rent which I try and pay cash for. This way I just check my account online, even from my phone, and can see the money go in and out instantly.

I did have on supplier who only took checks, but after asking over and over, they finally started taking my debit card.

I did pay my rent with a check and they held it for over a month, twice.. I forgot and well, you know the rest of the story.
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Old 06-29-2012, 11:31 AM   #13
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Re: Over Drawing Business Accounts By Utilities...


Just went over the books, we are in a position we haven't been in. Are accounts receivable are in the low 6 figures , and we have paid out about 80 percent of it to our subs in suppliers. Operating accounts are pretty low , might have to tap into our open line of credit at the bank , which we have never had to do. Part of the issue is a slow pay commercial client.

I remember when I was working commercial for another company and even when we were slammed they were always talking about cash flow issues. Our problem can be remidied with a decent line of credit, but we are a small time residential contractor. I can certainly see where it would be an issue fir a commercial contractors who does 20 or 30,000,000 dollars in gross revenue. I use to othink they were just trying to make us feel sorry for them. Lol

I can certainly see where a contractor who doesn't understand numbers Could get an a bad jam even if he was busy and did good work.

Last edited by Jaws; 06-29-2012 at 11:39 AM.
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Old 06-29-2012, 11:34 AM   #14
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Re: Over Drawing Business Accounts By Utilities...


Quote:
Originally Posted by Walty View Post
Credit card.

I use a credit card for every purchase (materials, tools,bills, everything). Gives me 30 days float time to get finances in order.

The trick is to absolutely make sure you pay the full monthly balance off every month, otherwise you'll be losing money to the CC company.

The only check I write is the one to pay off the card bill. This helps avoid an overdraft situation.
Careful with credit cards... there was just a post about a guy stuck with $20K owed by a customer, and he put it on credit cards...

If you are not good with money, you are best off buying 100% of your materials out of the deposit. Where guys get in trouble is thinking they can float this money and only buy part of the materials, and then something happens, and they are on the robbing Peter to pay Paul cycle, which is HARD to get out of...

A lot easier to kick butt and get a job done because you HAVE all the materials, than it is to come up with the money from somewhere to finish the job so you can get paid. And these delays usually end up costing you MORE in some sort of "customer discount" for delays because you didn't have the money for the materials because it was spent on something else...

Make this change (i.e. - 100% of materials out of deposit), along with proper accounts or Quickbook setup and set aside the SAME time each week to do book, and I promise you it will make all the difference...



Quote:
Originally Posted by VinylHanger View Post
I pay everything with a debit card except rent which I try and pay cash for. This way I just check my account online, even from my phone, and can see the money go in and out instantly.

I did have on supplier who only took checks, but after asking over and over, they finally started taking my debit card.

I did pay my rent with a check and they held it for over a month, twice.. I forgot and well, you know the rest of the story.
If you setup a specific account for bills and just transfer the money as needed to that account, you never have to worry about when it is cashed or whether the money is there or not...
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Old 06-29-2012, 11:37 AM   #15
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Re: Over Drawing Business Accounts By Utilities...


Another big problem I see a lot With contractors, Is that They don't keep their business account separated for projects. They will be behind on one project and ahead another, paying for one project with the capitol from another. Bad mistake, eventually you will be behind on all of your draws and get stuck.
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Old 06-29-2012, 02:24 PM   #16
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Re: Over Drawing Business Accounts By Utilities...


I suck at keeping a check book. Never could I get it balanced right. What I found out works for me is to, pay ahead my supplier (lumber yard) when I get a depoist. Say material is $2500, I will pay that to my account. Then that is set. The rest of the money goes into my account and at the end of the month, I get cashiers checks from my bank for all bills. One advantage is that if the check is lost or not cashed , it is redepoisted into my account. Also the bank has a copy of every check they write.

Or I pay cash for all purchases such as gas and food. Since I went thios way, I know to a dollar what I have to spend. And I am a excellent saver, which helps alot when there is no work and I want to eat. Gone are the days of ''Tommorrow I will work harder
to pay yesterdays bills. '' If I dont have the cash to buy it, I will not get it.
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Old 06-29-2012, 11:10 PM   #17
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Re: Over Drawing Business Accounts By Utilities...


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I suck at keeping a check book. Never could I get it balanced right. What I found out works for me is to, pay ahead my supplier (lumber yard) when I get a depoist. Say material is $2500, I will pay that to my account. Then that is set. The rest of the money goes into my account and at the end of the month, I get cashiers checks from my bank for all bills. One advantage is that if the check is lost or not cashed , it is redepoisted into my account. Also the bank has a copy of every check they write.

Or I pay cash for all purchases such as gas and food. Since I went thios way, I know to a dollar what I have to spend. And I am a excellent saver, which helps alot when there is no work and I want to eat. Gone are the days of ''Tommorrow I will work harder
to pay yesterdays bills. '' If I dont have the cash to buy it, I will not get it.
We operate on a cash basis as well. Customer pays up front for anything over 50 bucks, and I pay my suppliers up front most of the time. I usually only have a small balance from one supplier and it gets taken care of once a week or so.
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Old 06-30-2012, 06:08 AM   #18
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Re: Over Drawing Business Accounts By Utilities...


never get strung out with the advice of an accountant, they have a whole different way of life all neat and tidy. Too bad things were'nt blazing good ,I;d have a line of credit dedicated to business but that's like stocking booze for an alkey. I stick to the ain't spending what I ain't got philosphy, it is real messy but then if you are not pulling in excess cash , books are easy buy a 17 column ledger book and just detail , order in month is not vital,just facts.
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Old 06-30-2012, 01:51 PM   #19
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Re: Over Drawing Business Accounts By Utilities...


As I understand it some of you guys have multiple business accounts. I guess that doesn't make any sence to me. Now I am a small time company and don't work big jobs. However I pay myself a very conservative wage. Leave the rest in my business and track coat for each job. You don't spend money you don't have, its that easy. Pay your personal bills from your personal account. Don't borrow from your business to pay your food and light bills. That is not part of your overhead, it comes outa your wage.
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Old 06-30-2012, 02:16 PM   #20
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Re: Over Drawing Business Accounts By Utilities...


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As I understand it some of you guys have multiple business accounts. I guess that doesn't make any sence to me. Now I am a small time company and don't work big jobs. However I pay myself a very conservative wage. Leave the rest in my business and track coat for each job. You don't spend money you don't have, its that easy. Pay your personal bills from your personal account. Don't borrow from your business to pay your food and light bills. That is not part of your overhead, it comes outa your wage.
I actually don't do hardly anything with the bookS. I keep up with my project budgetS , and I see the financial report at the end of the month. But for me, it's almost like being in employee of the company. Which I am. What I mean is, I get a salary. That money is not mine, I don't think of it as mine. It is our companies operating capital. I expense various things to the company, like a meal out every now and then, by the crew lunch every now and then, go out of town fod a " business" trip. My truck, it's gas in maintenance , cell phone, internet excetera the company pay for. It's just like being a manager which perks.

At the end of the year, we discuss what needs to be invested in the next year with our profits, and divide the rest and to share builder distribution. I think when business owners think of the money in the operating account is there money, they get it into trouble. When I am making a major expenditure or purchase, or we lose money due to a bad decision or a mistake , it feels like somebody took it right out of my wallet. Lol

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