Client Account ing Manual

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TABLE OF CONTENTS (cont.)

_____________________________________________________________________

PART XI

Sale or Purchase of a Business 12

PART XII

Respecting the Corporate Form 13

§ Set-up 13

§ Maintenance 13

PART XIII

Client Identification Numbers 13

PART XIV

Record Retention 14

PART XV

The Difference Between an Employee and an Independent Contractor 14

§ Requirements for Independent Contractors 15

§ A Word on Corporations 15

§ What Information Do We Need? 16

§ Who Receives a 1099 at Year-end? 16

PART XVI

Petty Cash System 17

PART XVII

Payroll 18

§ Payroll Reporting 18

Clients with Payroll Processors 18

Clients using our Payroll Check Writing Services 18

§ Payroll Records 19

New Employees 19

Taxes Withheld 19

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TABLE OF CONTENTS (cont.)

_____________________________________________________________________

APPENDIX

A-1 Duplicate Checks Sample A-2 Chart of Accounts

A-3 QuickBooks Register A-4 Bank Reconciliation

A-5 Bank Statement Change of Address Authorization Form A-6 Sales Report - Sample

A-7 Accounts Payable Report A-8 Expense Report

A-9 Monthly Checklist A-10 Pricing Letter A-11 Filing Instructions

A-12 Corporate Consideration s A-13 Record Retention Schedule

A-14 Independent Contractor Agreement A-15 W-9 Form

A-16 W-4 Form A-17 I-9 Form

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PART I

The Checking Account

Chart of Accounts and Coding of Checks

We use a standard chart of accounts that can be modified to fit your individual needs. See Appendix A-2 for sample chart of accounts.

If you are using a manual bookkeeping system we will have you change to use duplicate checks. Duplicate checks come three to a page. Each month you will send us the carbon copies of the checks you have written during the month and keep the original register stub in your checkbook. You will also need to write the general ledger account code in the box next to the date. If the check goes to more than one account, you should use the code boxes in the lower left corner of the check. If you are not sure what account code to use, write a description on the check stub so that we can code the check for you. If you are using QuickBooks or another accounting software system, we will provide a chart of

accounts for you to use with your software. You will need to enter a general ledger account code in the stub area of the computerized check. There is a drop down box with the general ledger codes that you can click on or you can just type in the code. A memo area can be used for typing in descriptions for those checks that you are not sure how to code. If you are unsure about how to code a check, please put a detailed description in the memo area and code the check to 595-miscellaneous expense.

Adjusting Your Bank Balance

When you receive your bank reconciliation it is very important that you make adjustments correctly. Please review each reconciling item to be sure that you have not already recorded it on a subsequent check stub. If you keep your bank balance on your check stubs, go to the check stub of your last entry and make the adjustment there. Do not go back to the month that was reconciled and make any changes there. If you are using a QuickBooks check register, make the adjustment in the register at your last entry for the current month. Do not go back to the prior month and adjust the ending balance. After we reconcile our books to the bank statement we will make a reasonable attempt to find

differences between your balance and ours. Any immaterial differences will be listed as “unallocated differences.” See Appendix A-4 for a sample bank reconciliation .

Bank Statements

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Checking Account Records

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Example 1 – Single Expense

This is an example of a check coded to a single general ledger expense account, 529 Telephone:

Date: 1-1 For Pay Period: To Emp No. Your Bank Client Company 100 Main Street Carlsbad, CA 92110 1070 To: Pacific Bell Hours Date Code Amount Jan 1 20 XX 529

OT Code

Balance

Forward 8765.29 Reg. Pay to the order of: Pacific Bell $ 126.52

Deposits Total

One hundred twenty-six and 52/100 Dollars

Tot w/ Tips Fed Meals

State

Code Amount Code Amount

Total This Check 126.52 Tot w/ M&T Total Ded. Client’s Signature Balance Total Other Net Check Total: Coding Procedure:

Write the account code in the code box next to the date.

Example 2 – Split Check

A split check is a check coded to more than one general ledger account. This is an example of a split check coded to two general ledger account codes:

$1,000 to account 401 Purchases, and $250 to account 512 Freight.

Date: 1-1 For Pay Period: To Emp. No. Your Bank Client Company 100 Main Street Carlsbad, CA 92110 1070 To: McGarvey Hours Date Code Amount Jan 1 20 XX

OT Code

Balance

Forward 8638.77 Reg. Pay to the order of: McGarvy $ 1250.00

Deposits Total

One thousand two hundred fifty and 00/100 Dollars Tot w/ Tips

Fed Meals

State

Code Amount Code Amount

Total 401 1000.00 This Check 1250.00 Tot w/ M&T Total Ded. 512 250.00 Client Signature Balance 7388.77 Total Other Net Check Total: 1250.00 Coding Procedure:

1. Draw a line from the code box next to the date to the multiple code boxes in the lower left corner of the check.

2. Write in the various general ledger account codes.

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Employee Advances

If you advance an employee’s pay with a check written prior to a regularly scheduled pay date, code this check to account 109. Deduct this amount from the next paycheck in its entirety or form a schedule of repayment that you have agreed to. It is your responsibility to track these advances . If employees reimburse you with personal checks or cash, please make a separate bank deposit and describe these transactions as an “employe e advance being repaid.”

Sales/Accounts Receivable

It is very important that you report your sales to us by the 5th of each month on a standard reporting form. See Appendix A-6 for a sample Sales Report . Reconciling differences between sales and bank deposits may be posted to a Suspense Account on the Balance Sheet until they can be resolved. Please review this account monthly. If you have sales on account and are an accrual basis taxpayer, you must provide us with an accurate accounts receivable balanc e at the end of each month.

Bank Deposits other than Sales

It is important that you let us know if you are making deposits other than sales or revenue -related deposits. These could take the form of personal loans, bank loans, vendor rebates, tax refund s, etc. Please indicate this on one or more of the following: check stubs, sales sheets or the monthly checklist. We assume all unmarked deposits are revenue.

Credit Cards

You must use a separate business credit card for business purchases. Do not use your personal credit card. The IRS does not approve of mixing business and personal purchases on the same credit card. Please attach a copy of the credit card statement to the monthly information you will be submitting to us and follow these guidelines:

1) Create a separate envelope or manila folder for each charge card the business uses. 2) For each charge card purchase, obtain a receipt. Record what the expense is for on the

receipt and file it in the appropriate charge card envelope or folder.

3) At the end of each month (or whenever you receive your charge card statement):

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c) Staple the receipts to the original charge card statement and file them accordingly.

Debit Cards

Debit cards are highly discourag ed for business use for many reasons. It is extremely difficult to maintain an accurate checking account balance throughout the month when using debit cards and financial control is greatly diminished. Using a credit card instead of a debit card frees up an entire month of cash flow. In addition, debit cards do not help when attempting to enhance your credit score, and they don’t generally offer the perks (airline miles, cash back, etc.) that credit cards provide. Debit card usage in a business environment also causes numerous extra transactions leading to significantly higher accounting fees.

If you choose to use debit cards, we will require you to code each of the debit card transactions on the bank statement and then send it to us. Again, this will lead to a higher transaction count and result in higher accounting fees.

Accounts Payable

If you are an accrual basis taxpayer or need accounts payable listed on your financial statements for your bank, you must provide us with a list of your accounts payable at the end of each month. If you are on a manual bookkeeping system, we will provide you with a form to list the accounts payable. See Appendix A-7 for a sample Accounts Payable Report. When you receive the form review all checks that you have written within the first 10 days of the next month along with all bills on hand. If you are paying an invoice or bill that relates to a product purchased or service provided in the prior month, then that invoice or bill is accounts payable. List that invoice or bill on the provided form and code to the proper general ledger account(s).

PART II

Sales Tax

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PART III

Expense Reports

Auto

If your corporation owns the vehicle that you drive, then the corporation should pay all expenses on the vehicle, including gas, oil, repairs, insurance, etc. You will need to report your mileage information to us by December 31 of each year. This includes miles driven for personal, commuting and business use. Any personal or commuting use will be included in your year-end W-2.

If you own the vehicle, then the corporation should not pay any of the expenses. All loan payments, gas, oil, etc., should be paid from your personal funds. The number of business miles driven should be listed on your expense report and reimbursed at the standard mileage rate.

Other Expenses

This relates to business expenses called “outside of the company checkbook.” This would include business expenses paid by cash, from your personal checkbook or by your personal credit card. List these by category on the expense report and write a check to yourself on the last day of the month. The check will be coded to the various expense categories. Staple receipts to the report and keep this in your paid bill file. See Appendix A-8 for a sample Expense Report Sheet.

PART IV

Client Reporting

We consider the monthly maintenance of your books and records to be a serious matter. As such, we require you to provide complete and accurate information to us by the 5th of each month. See Appendix A-9 for a sample Monthly Checklist. Please return the checklist along with all of the monthly

information. We ask that you respond to our requests for information in a timely manner.

Part V

Postage Paid Envelopes

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PART VI

Communicating with our Staff

We operate as a team to provide you with bookkeeping, payroll, accounting, tax and financial services. Payroll questions should be directed to payroll@coregroupus.com . You can also contact anyone in our payroll department or your account manager.

Please consider creating a policy that instructs your employees not to open mail from our office. There are many times when we send confidential items pertaining to your personal or company finances that you may not want your employees to see. Our policy is to put a stamp on letters that denote

“confidential” for tax return -type information. Working together on this issue will ensure that your privacy is maintained.

PART VII

Pricing

The price quoted in our engagement agreement was based on multiple items, one being the transaction level (number of checks including splits, deposits, number of employees, etc.) that you provided. After 90 days, we will re-evaluate our pricing based on actual activity. Accounting fees are also based on the promise that you will provide us with accurate information by the 5th of each month. If you habitually report late or inaccurately , your price, without regard to other factors, may increase by 15%. We may also consider terminating the engagement. We will evaluate all fees annually and send a notification indicating the new accounting fees. See Appendix A-10 for a sample letter. We may notate your current month’s invoice in lieu of sending the annual fee letter. If your business is growing quickly, we may consider a price increase mid-year.

The client service agreement provides a listing of all included services. Services specifically outside the scope of this agreement include:

§ Individual tax preparation other than the specific owners stated on service agreement § QuickBooks consulting

§ Representation of the taxpayer due to an IRS or other governmental agency audit on a tax return not prepared by our staff

§ Preparation of financial statements for outside parties § Preparation of financial projection s

§ Response to IRS notices that were not caused by the accountant § Consultations regarding the sale, purchase or financing of a business § Special request activities.

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PART VIII

Financial Statements

Financial statements will generall y be prepared on the basis of accounting that is used for tax purposes. Learn to read and understand your financial statements; however, please do not hesitate to call us with any questions about your financial statements. This is your management tool. Use it. Help us to put it in the format that is most useful to you. Allow us to spend some time with you to help you learn how to use it.

This engagement is not intended for, nor can it be relied upon, to detect errors or irregularities occurring with your financial records.

Miscellaneous items

See Appendix A-11 for sample filing instructions.

§ Always sign and mail all tax returns even if you cannot pay the tax. Otherwise, you will be penalized for not filing the return in addition to being penalized for not paying the tax. We will always provide you with filing instructions for each return we prepare. Please follow these instructions carefully.

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PART IX

Referrals

We truly appreciate your referrals. If you are receiving good service from us, please do not hesitate to recommend us to other small business owners. If for some reason you are not happy with our services, please contact us as soon as possible to discuss your concerns.

PART X

Meal and Entertainment Expenses

Expenses incurred to entertain clients, customers or employees may be deductible if the expense meets the ordinary and necessary business requirements. In addition, it must pass the directly related or the associated test. Generally, the deduction for business -related meals and entertainment is limited to 50% of the expense. However, you may deduct 100% of the cost of meals that are furnished to employees at company picnics or holiday parties. Meals furnished to employees at the site of an employer’s

restaurant or catering service are also 100% deductible. Meals that qualify as a “de minimus” fringe benefit are also 100% deductible.

You must keep adequate records to substantiate these expenses. Adequate records will show the name and location of the restaurant, dates, charges for the meal or entertainment, the number of people served and the business purpose. Records should be kept for seven years.

PART XI

Sale or Purchase of a Business

If you are thinking of selling your business or buying another business, please call us. We can help you determine the selling or purchase price and how to make the business more valuable.

Sales that involve corporations either involve sale of the stock or sale of the corporate assets. The sale of the corporate assets requires allocation of the purchase price to each asset that is sold to determine the buyer’s basis in each acquired asset and the seller’s gain or loss on the sale of each asset. The sale price is allocated to cash-type assets, inventory, furniture and fixtures, land, buildings, equipment and accounts receivable with the balance being assigned to goodwill.

It may be advantageous for the purchaser to obtain a professional valuation/appraisal of assets.

Improper allocation can mean the difference between writing off the amount in one year (cost of goods sold) vs. seven years (furniture, equipment, etc.) vs. 39 years (buildings). Goodwill is written off over 15 years. If there is no agreed upon allocation in the purchase agreement , we can negotiate this.

Both the seller and buyer must file form 8594, which requires the name, address and federal EIN number of each party.

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PART XII

Respecting the Corporate Form

Please note that this is a general discussion and should not be viewed as legal advice for your particular situation. We urge you to discuss these items with your attorney before deciding on a course of action.

Set-up

Be sure that your entity is set up properly. It is not enough to simply file your articles with the state. There are many other items that need to be addressed, including an organization meeting, issuance of stock, preparation of by-laws, officer designations, etc.

Maintenance

Depending on what type of corporation you have, you must maintain at least two officers and conduct at least one annual meeting to document the activities of the corporation. Always remember that you are a separate and distinct entity from your corporation and that there has to be a structure for every transaction you have with the corporation. Never pay personal bills from a corporate checkbook. See Appendix A-12 for information on respecting the corporation and keeping minutes.

PART XIII

Client Identification numbers

Your numbers are as follows:

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PART XIV

Record Retention

Make sure that you have receipts for all expenditures related to your business. A cancelled check is not sufficient. Be prepared, in case of an audit, to explain the business reason for expenditures . For unusual items it is a good idea to make a notation on the invoice while the information is fresh in your mind. Automobile expenses are "hot" items during audits so be certain that you have written evidence supporting your business and personal mileage. Please understand that without this written proof, you could lose your entire deduction for vehicle expenses.

Invoices covering items being depreciated should be kept in a separate file. You must be able to produce invoices as long as assets are being depreciated. Also, maintain your leases, bank loans and other permanent long-term legal documents in files easily accessible at all times. Regular invoice and receipt files, along with income records and reports, should be maintained in annual files. These annual files should be archived at year-end and new ones set up at the start of each new year. See the Record Retention Schedule in Appendix A-13.

PART XV

The Difference Between an Employee and an Independent Contractor

An employee performs work for you under your direct or indirect supervision, during hours that you specify and conditions you control. You also withhold payroll taxes from the wages you pay him or her. As an employer, you pay certain taxes that are an expense to you on the employee’s behalf. Independent contractors are individuals who perform a service for you, usually at a pre-arranged fee, and who also meet the following criteria:

1. They have a business card.

2. They submit an invoice to you for each occurrence of services rendered. 3. You have no control over the hours worked, or the tools used.

4. They perform similar services for others.

5. They do not have any major responsibilities within your organization, such as management or supervision of employees.

6. A contract or work order exists between you and the independent contractor.

7. They supply you with a business license number (issued to them by the city in which they work).

8. They may also show evidence of being licensed by the state; for example, doctors, lawyers, electricians, etc.

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Some examples of independent contractors include:

Janitors Plumbers Accountants

Lawyers Electr icians Landlords Painters Consultants Salespeople

It is important to properly classify the people you pay. If you pay someone as an independent contractor and he or she is in fact an employee, an audit by state and/or federal agencies may prove costly to you. Back taxes, which should have been withheld, could be assessed against you. Penalties for failure to report employee earnings could also be assessed, as well as penalties and interest for delinquent withholding payments.

Requirements for Independent Contractors

1. Have each independent contractor fill out a W-9 form prior to paying them. If the contractor will not fill out the form, or if for any other reason you cannot get his or her identification number, you are required to withhold 28% of each payment. This is called back-up

withholding, and the money is forwarded to the IRS, just like payroll taxes. Once it is withheld from the payment, you do not refund it to the contractor or pay it back to him or her in any way.

2. Consider entering into a written agreement with your sub-contractor (see Appendix A-14 for an example) . Please review the particulars of this agreement, and consult with your attorney regarding modifying the agreement to meet your specific requirements.

Example:

An electrician does some work for you and hands you an invoice for $800.00. You ask him to fill out a W-9. He says he doesn’t have the information he needs with him. At this point, you should offer the electrician a choice. He can either wait to collect his payment until the W-9 is supplied, or he can be paid $576.00 immediately, with $224 to be sent to the IRS.

We recommend taking a firm stand that independent contractors must supply you with a W-9 before you make any payments to them. This will protect you from penalties at the end of the year when you are required to submit a 1099 to the IRS. There is a $50.00 penalty for each ID number missing from the 1099 and a $50.00 penalty for any 1099 not submitted.

A Word on Corporations

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What Information do we need?

When you issue a sub-contractor’s first check we will need a copy of the W-9 form, including: 1. Name and address

2. Federal Identification Number or Social Security Number

See Appendix A-15 for a sample independent contractor agreement, and Appendix A-15 for a W-9 form.

Who Receives a 1099 at Year-end?

Any non-corporate service provider who receives $600.00 or more will be provided with a 1099. If you give us all the necessary information, we will prepare these 1099s for you.

Beginnin g January 1, 2012 (for the 2011 tax year), ALL vendors that you pay more

than $600 will need to be provided a 1099. It is extremely important to obtain

Form W-9 from each vendor you pay during the year.

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PART XVI

Petty Cash System

Begin the petty cash system by placing an appropriate amount of cash ($50, $100, $200, etc.) in an envelope (or cash box, drawer). When an expense needs to be paid, cash is taken from the envelope and a slip indicating who took the money is placed into the envelope. Any change and a copy of the receipt from the purchase are placed back in the envelope. Remove the original slip. At all times the total of receipts, slips and cash should equal your designated petty cash amount.

When petty cash runs low, simply write a check for the total of all receipts. Cash the check and put the cash in the envelope. This should bring your cash back up to its

designated level. Total each category of expenses as shown to the left and code the check accordingly. Staple the receipts and petty cash summary together, indicate the date and check number, and file it in paid bills.

Petty Cash Summary

No. Check No.

Date 20

Type of Expense Code Amount

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PART XVII

Payroll

Payroll Reporting

Clients with Payroll Processors

You are a client with a payroll processor if a payroll company, such as Paychex or ADP, calculates and writes your paychecks for you.

We will require duplicate payroll reports from your payroll processor in order to enter the payroll information to your general ledger. Your payroll processor will calculate all payroll tax deposits and prepare all payroll reports and W-2s. This is generally an inefficient process for both you and us because it takes almost as much time for us to record your payroll as it would to just do it.

Client s using our Payroll Check Writing Services

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Payroll Records

Records related to the payment of salaries and wages (including all deductions and adjustments from gross pay), records related to reporting hours worked and time sheets, original W-4, W-2 and I-9 forms, employment tax returns and payroll journals should be kept for seven years.

New Employees

Each new employee must fill out a “New Employee Packet” consisting of form W-4, form I-9 and state new hire forms. Call our office at any time to get a packet. Completed packets (except for form I-9) must be returned to us at least three days prior to the employee’s first pay day. If this is your first employee, you will need to contact your insurance agent and obtain worker’s compensation insurance. It is important that the new-hire form be filled in as completely as possible. We can fill in the

identification numbers. It is extremely important that the employee fill out the I-9 and that you receive, review and copy the documents as required in section 2. Please keep the I-9 and copies of the

documents in your employee file. For a sample of the complete employee packet, see Appendix A-16 through A-18.

Taxes Withheld

Never use the tax money withheld from employees for other business purposes, and always pay these taxes on time. Even if the business files for bankruptcy, you are still personally responsible and liable for these taxes – the IRS is merciless in collecting these taxes. You may want to avoid this hassle all together by utilizing our tax pay service, in which we pay these taxes for you.

“Under the Table” Payments

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APPENDIX

A-1 Duplicate Checks Sample

A-2 Chart of Accounts

A-3 QuickBooks Register

A-4 Bank Reconciliation

A-5 Bank Statement Change of Address Authoriza tion Form

A-6 Sales Report

A-7 Accounts Payable Report

A-8 Expense Report

A-9 Monthly Reporting Checklist /Transmittal Form

A-10 Pricing Letter

A-11 Filing Instructions

A-12 Corporate Considerations

A-13 Record Retention Schedule

A-14 Independent Contractor Agreement

A-15 W-9 Form

A-16 W-4 Form

A-17 I-9 Form

A-18 New Hire Registry Form

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A-3 QuickBooks Register

Register: 1000 – Checking –Bank 2/7/20 XX From 02/07/20 XX through 02/07/2 0XX

Sample Company, Inc.

Sorted by: Date, Type, Number/Ref.

Date Number Payee Account Memo Payment C Deposit Balance 02/07/20 XX dep Deposit -split- 1,500.00 21,770.74 Monthly Assessments 550.00

Late Fees/Legal Costs 450.00 Due to Shareholders Owner loan to…. 500.00

02/07/20 XX 318 Office Depot -split- 750.00 21,020.74 Office -500.00

Postage and Delivery -250.00

02/07/20 XX 319 Bank of America -split- Credit Card Pymt 950.00 20,070.74 Travel -300.00

Office -400.00 Advertising -200.00

Personal Draws -50.00

02/07/20 XX 320 John Smith (Owner) -split- Expense Report 400.00 19,670.74 Automobile Expense -200.00

Office -100.00 Postage and Delivery -50.00

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A-5 Bank Statement Change of Address Authorization Form

Date:

Attention: Bookkeeping Department

Dear Bookkeeping Staff:

Effective immediately, please change the mailing address on all bank statement s and cancelled checks on the following account number:

From:

To:

C/O ______________________________________

Sincerely,

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A-6 Sales Report - Sample

CLIENT NAME Monthly Sales & Cash Report

DAYS 1-7 DAYS 8-14 DAYS 15-21 DAYS 22-28 DAYS 29-31 MONTHLY TOTAL

SALES

Product revenue 1000 1000 1000 1000 1000 5000

Consulting revenue 5000 5000 5000 5000 5000 25000

Recurring fees 4000 4000 4000 4000 4000 20000

Loans from owner 500 500 500 500 500 2500

Other Deposits (list): 0 0 0 0 0 0

______________________________ 0 0 0 0 0 0 ______________________________ 0 0 0 0 0 0 ______________________________ 0 0 0 0 0 0 TOTAL SALES 10500 10500 10500 10500 10500 52500 Sales Tax 0 0 0 0 0 0 GROSS SALES 10500 10500 10500 10500 10500 52500

Add: Cash – Beginning of day 0 0 0 0 0 0

TOTAL TO BE ACCOUNTED FOR 10500 10500 10500 10500 10500 52500

Paid outs (from cash):

Advertising 0 0 0 0 0 0

Automobile/Gas 0 0 0 0 0 0

Office supplies 500 500 500 500 500 2500

Repairs & Maintenance 0 0 0 0 0 0

Cleaning 100 100 100 100 100 500

Operating supplies 0 0 0 0 0 0

Entertainment 0 0 0 0 0 0

Personal Drawing 300 300 300 300 300 1500

Other Paid outs (list):

_______________________________ 0 0 0 0 0 0

Total Paid outs 900 900 900 900 900 4500

Add: Visa/MasterCard deposit 4000 4000 4000 4000 4000 20000

Add: American Express deposit 5000 5000 5000 5000 5000 25000

Add: Discover deposit 100 100 100 100 100 500

Add: Bank deposit (cash/checks) 500 500 500 500 500 2500

Add: Cash – end of day 0 0 0 0 0 0

TOTAL CASH ACCOUNTED FOR 10500 10500 10500 10500 10500 52500

Cash Over/Short 0 0 0 0 0 0

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A-7 Accounts Payable Report

AMOUNT ACCT CODE

68.23 616 169.42 640 75.16 612 25.00 610 32.31 616 2,639.48 502 13.95 636 1,639.00 502 2,395.32 999 74.29 640 7,132.16

ACCT CODE AMOUNT ACCT CODE AMOUNT ACCT CODE AMOUNT

616 100.54 640 243.71 612 75.16 636 38.95 TOTAL

Office Depot Computer Paper

Joe's Supplies Materials

Gateway Computer New Computer

Utility

Smith Supplies Materials

Sears Repair Flat Tires

RECAP

Electric Company Quill

Utility

Office Supplies

Phone Company Telephone

Super C Gas for Truck

Gas Company

Sample Company

ACCOUNTS PAYABLE

DATE May 20XX

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A-8 Expense Report

Expense Report

COMPANY NAME: _____________________________________________________ EMPLOYEE NAME:____________ _________________________________________ MONTH/YEAR: ____________/_______________

DATE EXPENSE CATEGORY & DESCRIPTION (IF NECESSARY) ACCT # AMOUNT

Equipment purchase – large items to be capitalized 146

Equipment purchase – smaller items to be expensed 511

Meals/Entertainment 538

Office supplies 566

Travel (hotel, airline, parking, etc.) 539

Auto expenses: Business miles driven___________x. (enter current rate)/mile 552

Telephone/cell phone 529

Postage 512

Other expenses (list):

TOTAL EXPENSES:

__________________________________

Employee Signature and Date

Comments ___________________ __________________________________________________________________________________________________________

_____________________________________________________________________________________________________________________________ __________

_______________ ________________________________________________________________________________________________________________________

____________________________________________________________________________________________________________________ ___________________

________________________________________________________________________________

NOTE TO THE CLIENT: For owners, please fill out the information above and write yourself a check at the end of each month. Code the check using the above codes, staple receip ts to this form and file it in your “paid bills” file.

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A-9 Monthly Reporting Checklist /Transmittal Form

The items marked below are needed from your office to assure complete and accurate financial statements.

Accountant: Bookkeeper: Payroll:

Extension:

FORM

Duplicate Checks

Computer Check Register

Sales Forms/Revenue

Savings Account/Money Market

Accounts Payable

Accounts Receivable

Inventory

Cash Receipts

Credit Card Statements

Merchant Statements

Notes Payable - New or Change

Equipment Sale or Acquisition

New Employee Information

Tax Forms (IRS or OTC)

Tax Letters - Federal/State

Other

Weekly Monthly Quarterly Annually

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A-10 Pricing Letter

Core

Oklahoma City – Tulsa – Lawton www.coregroupus.com

_______________________________________________________________________

Date

Sample Client

Client’s Company Name Company Address City/State/Zip Dear Client,

Approximately once a year I review every individual account and evaluate my pricing schedule. When pricing my services, I consider market conditions, inflation, internal costs and individual account activity, including the number of transactions processed each month. Based on the above analysis, your monthly/weekly fee is

$________, effective ______________ . Please don’t hesitate to call me if you have any questions. I appreciate the continued opportunity to serve you.

Sincerely,

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A-11 Filing Instruc tions

o Please sign and date attached form

o Mail with your check for $ ____________

o Refund for $ ______________

o No check required

o Code Check to Account

# __________$ __________ # __________$ __________

o Enclosed depository receipt card

o Use enclosed envelope

o

FORM ENCLOSED and/or IN PAYMENT OF:

1 2 3 4 5 6 7 8 9 10 11 12

1 2 3 4

o

o FICA and Withholding Tax (941)

o State Withholding Tax

o Unemployment Tax

o Sales Tax

o Other ___________________________

o United States Treasury

o State UI Fund

o State Department of Revenue

o Your Bank

o Other ___________________________

Month: Quarter: Annual:

Make Check Payable to: Due Date_{___________________}

Forms must be mailed when due even if payment is not made.

INSTRUCTIONS TO CLIENT

(Retain For Your Files)

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A-12 Corporate Considerations

Corporate Considerations

If you are incorporated, you must operate your business pursuant to State corporate law. Simply incorporating and calling your business a corporation is not enough. To be afforded “corporate” status and thus attain the limited liability protection of the State Code, you must hold your business out to the public in all ways as a corporation. Please consult your attorney to ensure that your corporation is operating properly.

Followi ng is a recommended list of steps to take:

1. Corporate Activities – all activities of the corporation should be conducted in the corporate name and not in the names of the individual shareholders or directors.

2. Other Initial Corporate Documents – it is not sufficient to merely file Articles of Organization with the State. Please consult your attorney for other documents, such as organizational minutes, officer and director appointments, by-laws, stock issuance, buy/sell agreements, etc.

3. Signatures – when you sign any document for the corporation, always sign as officers of the corporation and not as individuals. Signing as an individual may impose personal liability on the individual signing.

The proper way to sign a corporate obligation is as follows: XYZ Corporation

(Signature), President John Doe, President

Do not sign this way, as it may impose personal liability:

XYZ Corporation (Signature)

4. Bookkeeping – all books and records should be organized and kept in the corporate name. Accounting records should be maintained on a monthly basis.

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Regarding notices of meetings, please consult your by-laws. Notice may not need to be given if all of the members of the board of directors are present, if all of the board members have waived notice, or if all board members consent to the action required. All matters of policy should be decided on by the board of directors and not by individual officers or shareholders. Policy matters can include corporate borrowing, contracts, leases, non-routine purchases of property, employee contract s, bonuses and extraordinary compensation, retirement plans, employee benefit plans, vacation policies, employee compensation, and working hours and conditions.

6. Shareholders – the shareholders must meet at least once a year, pursuant to the annual meeting requirement as set out in the by-laws. At this meeting, the board of directors will be elected.

7. Minute Books – records of all board of directors and shareholders meetings should be promptly and properly set in writing, signed by the secretary of the meeting, and inserted in the corporate minutes book. Subjects to be addressed in the corporate minutes include: acceptance of prior meeting’s minutes; election of officers; ratification of significant officer actions for the prior year; listing of officer salaries for the next year and reasonableness of the compensation when the officer is also a shareholder; detailed presentation of the need to accumulate earnings for specific future business needs; approval of loans to shareholders; approval of loans from shareholders; annual valuation by the board of directors of the business for possible future buy-sell agreements; approval and accrual of officer’s bonuses; determination of retirement plan contributions; establishment of fringe benefit plans; approval of stock issuance, stock redemption and stock bonuses; approval for sale, liquidation or reorganization; discussion of any IRS code section 351 asset transfers; discussion on election or termination of S corporation status; and declaration of dividends to shareh olders. If you have any questions as to whether a particular corporate action is proper, please consult your attorney in advance.

8. Officers of the Corporation – daily management of the corporation should be handled by its officers and not by the board of directors or shareholders. Officers must supervise employees and carry out the policies established by the board.

9. By-laws – read the by-laws carefully, as they set forth a number of requirements for the conduct of corporate activities. Many of these requir ements are statutory and therefore must be followed.

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In addition, the following should be accomplished in the name of the corporation and not in the name of any individual director or shareholder:

§ All contracts § All billings § All purchasing

The following activities should be accomplished as directed:

Receipts – all receipts arising from corporate activity should be paid directly to the corporation and not to any shareholder or director.

Bank Accounts – these should be in the name of the corporation, and the corporate name should appear on all checks, deposit slips and other banking transactions. Of course, all checks should be endorsed in the name of the corporation before deposit. Property – all acquisition of property should be purchased in the corporate name and titled in the name of the corporation. This includes not only acquisitions of major pieces of property, but also all property necessary for the day-to-day conduct of the business. If property is owned outside of the corporat ion (e.g., by a stockholder) a lease should be signed. There are both income and sales tax issues in determining optimal ownership that should be evaluated based on each circumstance.

11. Dealings between Corporation and Shareholders – the corporation and shareholders must separate themselves in all dealings between the corporation and themselves, or any of its employees, officers, or directors. If there are any business dealings between the corporation and such an individual, it should be cleared in advance with your attorney or us, as these dealings may jeopardize the limited liability status of the corporation. In other words, if an individual is not treating the corporation as a separate entity from himself, a creditor can look through the corporation “to the individual himself.”

12. Insurance – insurance of every type and character covering corporate property and operations must be carried forth in the name of the corporation, as well as paid by the corporation. This includes automobile insurance, property insurance, liability insurance, worker’s compensation insurance and any other insurance purchased by the corporation. Discuss all insurance needs with your insurance agent to ensure that you have the types and amounts of coverage you need to protect the corporation and its directors, officers, members and employees.

13. Franchise Tax Return – a Corporation is required to file an annual Franchise Tax Return. Report must normally be filed (and the fee paid) each year by July 1. If you do not file the required report, the Secretary of State can eventually dissolve the corporation.

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A-13 Record Retention Guide for Business

In business, good recordkeeping is essential not only for tax reporting purposes but also for the success of the company. The guidelines below give retention periods for the most common business records. Business records include both paper and computer back-up disks. Call us if you'd like more information or assistance with your record retention program.

Accounting Records Retention Period

Accounts payable 7 years

Accounts receivable 7 years

Audit reports Permanent

Chart of accounts Permanent

Depreciation schedules Permanent

Expense records 7 years

Financial statements (annual) Permanent

Fixed asset purchases Permanent

General ledger Permanent

Inventory records 7 years (permanent for LIFO system)

Loan payment schedules 7 years

Purchase orders (1 copy) 7 years

Sales records 7 years

Tax returns Permanent

Petty cash and cash paid-out vouchers 3 years Physical inventory tags and control records 3 years Records in support of Customer Guarantees 3 years Sales commission reports 3 years

Bank Records Retention Period

Bank Reconciliations 2 years

Bank statements 7 years

Cancelled checks 7 years (permanent for real estate purchases) Electronic payment records 7 years

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Corporate Records Retention Period

Board minutes Permanent

Bylaws Permanent

Business license Permanent

Contracts - major Permanent

Contracts - minor Life + 4 years

Insurance policies Life + 3 years

Leases/mortgages Permanent

Patents/trademarks Permanent

Shareholder records+ Permanent

Stock registers Permanent

Stock transactions Permanent

Accident Reports/Settled Insurance Claims 7 years General business correspondence 2 years

Employee Records Retention Period

Benefit plans Permanent

Employee files (ex-employees) 7 years

Employment applications 3 years

Employment taxes 7 years

Payroll records 7 years

Pension/profit sharing plans Permanent

Garnishments 7 years

Time books and Time cards 7 years

Real Property Records Retention Period

Construction records Permanent

Leasehold Improvements Permanent

Lease payment records Life + 4 years

Real estate purchases Permanent

Medical Records Retention Period

Daysheets, patient billings or fee sheets 7 years

Medical Correspondence Permanent

Patient Charts Permanent

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A-14 Independent Contractor Agreement

(Sample only -- review with your attorney before using)

INDEPENDENT CONTRACTOR AGREEMENT

I, _____________________ [Contractor], do hereby agree to perform services for

_____________________ [Company] as an independent contractor and agree to be compensated as such.

I acknowledge that, as an independent contractor, I have the sole responsibility for the payment of my own income taxes and am subject to the self-employment tax. I further acknowledge that it is my responsibility to provide my own insurance for injuries and/or liability coverage, since I am not engaged as an employee of _____________________ [Company]. I understand that I am not eligible for any employee fringe benefits.

I attest to the fact that I hold myself open to engagement by anyone, and that I am solely responsible for the results of my efforts and for the means and methods of accomplishing the said work. As an independent contractor, it is my responsibility to provide all tools and equipment necessary to accomplish the engagement.

I hereby furnish the company with my social security number or federal ID number and address so that the company can report Form 1099 Miscellaneous at the end of the year. I understand that my failure to provide this information may result in 28% of my compensation withheld under the backup withholding rules.

Either party may terminate this agreement without cause at any time. However,

_____________________ [Company] and _____________________ [Contractor] agree to give each other as much advance notice of intentions as is reasonably possible. If requested by Company, Contractor agrees on a best effort basis to complete any unfinished work within a fifteen (15) day period. With reasonable cause, either party may terminate this agreement effective immediately upon giving written notice of termination for the cause. Reasonable cause shall include material violation of this agreement or any act exposing the other party to liability to others for personal injury or property damage.

Signature of Independent Contractor Date

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