Monthly Accounting & Bookkeeping Service As part of our Professional Accounting Services, Clarke will prepare a standard set of Management Reports every month, which consist of:

• Profit & Loss (or Income) Statement: Presents the results of the entity’s operations and financial activities for the reporting period. It includes revenues, expenses, gains, and losses.
• Balance Sheet: Presents the entity’s assets, liabilities, and owner’s equity as of the report date.
• Statement of Cash Flows: Presents changes in the entity’s cash flows during the reporting period. *Depending on the method of accounting used by the business for management reports and tax returns, this statement may not be included.

Clarke utilizes the Modified Cash Basis of accounting. We will record revenues and expenses when cash is exchanged. All bank, credit card, and payroll transactions are recorded Inventory, short and long-term debt are also recorded. If accrual accounting is chosen, this method of accounting will be utilized instead.

As part of our Professional Accounting Services, Clarke will prepare a standard set of Management Reports every quarter, which consist of:

• Profit & Loss (or Income) Statement: Presents the results of the entity’s operations and financial activities for the reporting period. It includes revenues, expenses, gains, and losses.
• Balance Sheet: Presents the entity’s assets, liabilities, and owner’s equity as of the report date.
• Statement of Cash Flows: Presents changes in the entity’s cash flows during the reporting period. *Depending on the method of accounting used by the business for management reports and tax returns, this statement may not be included.

Clarke utilizes the Modified Cash Basis of accounting. We will record revenues and expenses when cash is exchanged. All bank, credit card, and payroll transactions are recorded Inventory, short and long-term debt are also recorded. If accrual accounting is chosen, this method of accounting will be utilized instead.

Transition to Monthly Accounting & Booking

Transition to Monthly Accounting & Booking

To be certain that the amount of cash reported on the balance sheet (and the balance in its general ledger cash account) is the correct amount, and to detect any incorrect activity in these accounts, Clarke will compare (reconcile) additions and deductions on the financial institutions’ account statements with the items that are entered in the general ledger cash account each month.

Clarke will reconcile savings account(s) monthly.

To be certain that the amount of cash reported on the balance sheet (and the balance in its general ledger cash account) is the correct amount, and to detect any incorrect activity in these accounts, Clarke will compare (reconcile) additions and deductions on the merchant’s account statements with the items that are entered in your general ledger cash account each month.

Our staff will record bank, credit card, and other account activity each period, assigning the correct chart of account code to each transaction. These transactions are compiled into a list of income and expenses on your General Ledger.

While a POS (point of sale) system records sales transactions, many small businesses manually enter that data into their accounting system. When possible, Clarke will connect the data from your POS system to QBO, automatically syncing with QuickBooks each day. Examples of POS Systems that we know integrate: Clover, Lightspeed, Square, Shopify, Toast, etc.

Clarke’s level of POS support is as follows:

Light: Simple cloud-based POS system with not many line items, can be connected to QBO, or the data can be entered via a simple Journal Entry.

Moderate: Clarke relies on client delivery of reports, a few areas of monitoring by Clarke are provided, and several items are entered into the books via Journal Entry.

Complex: A complex POS system requiring substantial Clarke support and system maintenance.

Clarke will take reports or other data provided by clients, or, where possible, directly from the POS and manually enter the data into the books.

Clarke will utilize accounting records and sales reports to properly file all sales and use tax returns on time, for as many states as are required.

$83

Inventory is an asset and its ending balance is reported in the current asset section of the balance sheet. Inventory is not an income statement account. However, the change in inventory is a component in the calculation of the Cost of Goods Sold, which is presented on the income statement.

Clarke Inventory support is as follows:

Light: Client maintains the inventory valuation and supplies figures monthly to the Clarke staff. The client takes regular physical inventory and is excellent at managing this aspect of their business.

Moderate: Client may use a POS or QBO to maintain the inventory data, which is not complex. The client may need minimal Clarke support or assistance in reconciling inventory. They also take regular physical inventory and are compliant.

Complex: Client has very complex inventory, over a thousand items, assemblies, and requires significant monthly support from Clarke.

$80

Clarke will review the General Ledger prepared by the client’s bookkeeping/accounting staff and provide reasonable support and advice monthly. Our review will consist of:

• General Ledger Review
• Year-end workbook and Adjusting Journal Entries for preparation of the entity’s tax return
• Clarke assistance with bank reconciliations and other bookkeeping issues
• Reasonable phone support

When a company borrows money from a financial institution, the amount received is recorded with a debit to Cash and a credit to a liability account, such as Notes Payable or Loans Payable, which is reported on the balance sheet. The cash received from the loan is referred to as the principal amount.

The principal amount received from the bank is not part of revenues and therefore will not be reported on the income statement. Similarly, any repayment of the principal amount will not be an expense and therefore will not be reported on the income statement. The principal payment is recorded as a reduction of the liability Notes Payable or Loans Payable on the balance sheet. (Both the receipt of the loan principal amount and the repayment of the loan principal will be reported on the statement of cash flows.) The interest on the loan will be reported as expense on the income statement in the periods when the interest is incurred.

When a company borrows money from a financial institution, the amount received is recorded with a debit to Cash and a credit to a liability account, such as Notes Payable or Loans Payable, which is reported on the balance sheet. The cash received from the loan is referred to as the principal amount.

The principal amount received from the bank is not part of revenues and therefore will not be reported on the income statement. Similarly, any repayment of the principal amount will not be an expense and therefore will not be reported on the income statement. The principal payment is recorded as a reduction of the liability Notes Payable or Loans Payable on the company’s balance sheet. (Both the receipt of the loan principal amount and the repayment of the loan principal will be reported on the statement of cash flows.) The interest on the loan will be reported as expense on the income statement in the periods when the interest is incurred.

Clarke will reconcile 401k account(s) periodically.

When using the FULL ACCRUAL BASIS of accounting Clarke will record revenues and expenses when they are incurred, regardless of when cash is exchanged. This means that, in additional to recording all bank, credit card, and other account activity, your accounts payable and accounts receivable, Clarke will also record all prepaid expenses, accrued expenses, accrued payroll, and deferred revenue each period. The advantages of this method is that it matches revenues and expenses to periods in which they are earned or incurred rather than only when they are paid.

Classes represent meaningful segments, like store departments or product lines or rental buildings, etc. Clarke will organize your customer and vendor transactions by class or location. This lets clients get clearer insights on sales, expenses, or profitability by business segment.

When using a 3rd party payroll service, Clarke will need to log into your payroll provider’s system and generate the necessary reports to properly book payroll expenses and liabilities into QBO.

A PEO, or professional employer organization, is a type of full-service human resource outsourcing known for its co-employment feature. In this arrangement, the PEO performs various employee administrative tasks, such as payroll and benefits administration, on behalf of a business.

When using a 3rd party payroll service, Clarke will need to ensure that the service is mapped properly with the General Ledger’s Chart of Accounts.

Clarke will prepare the applicable federal income tax return (Form 1120 or 1120S), along with any required state income tax returns. All year-end tax preparation fees are included in the monthly accounting subscription, providing a single, predictable expense.

Some entities are a Single Member LLC or Sole Proprietor and have not made a business entity election with the IRS. As a result, the business entity’s income and expenses will be reported on the personal tax return, Form 1040, Schedule C.

Clarke will prepare the applicable federal income tax return (Form 1065), along with any required state income tax returns for the business. All year-end tax preparation fees are included in the monthly accounting subscription, providing a single, predictable expense.

Clarke will prepare additional state entity business tax return(s). Tier 1 States include: CA, KY, MD, MA, NH, NJ, NY, OH, PA, TN, TX (Also includes NYC, NY MTA, and OR CAT Returns).

Clarke will prepare additional state entity business tax return(s). Tier 2 States include: AZ, CT, DC, GA, IL, LA, MN, MS, NC, OK, SC, WI.

Clarke will prepare additional state entity business tax return(s). Tier 3 States include: AL, AK, AR, CO, DE, FL, HI, ID, IN, IA, KS, ME, MI, MO, MT, NE, NV, NM, NY, ND, OR, RI, UT, VA, VT, WV (Also includes NY SMLLC Returns).

The base tax return fees include a single business owner (and if applicable a spouse owner). Additional owners of the business entity outside of the Owner (or spouse) are an additional fee per K-1 being produced.

In early Q4, Clarke will holistically review the household’s overall income, both business and personal, and provide an estimate of the year’s tax liability. At this time, our staff will provide and discuss invaluable tax saving strategies, which can include additional business investments, retirement savings plan advice, deferring revenue or accelerating expenses, etc.

Key components of a tax projection include:

• Income: All sources of money you earn, such as salary, business earnings, and investments.
• Deductions: Expenses to subtract from your income, like mortgage interest or charitable donations, to lower your taxable income. 
• Tax Rates: The rates at which income is taxed, which vary based on income levels.
• Credits: Tax credits that directly reduce the total tax bill, such as credits for education expenses or energy-efficient home improvements.

Benefits of tax projections:

• Avoid surprises: Helps avoid unexpected tax bills.
• Plan ahead: Allows adjustments to spending or savings to manage taxes better.
• Make informed decisions: Provides a clearer picture of the tax situation, aiding in better financial decisions.
• Peace of mind: Reduces stress and uncertainty by giving a clearer picture of tax obligations.

Using business & personal tax returns we will estimate tax liability for the remainder of the current year, and set paycheck withholding accordingly.

As an Intuit Accountant partner, Clarke Accounting has access to significantly reduced QuickBooks Online (QBO) subscription pricing via their wholesale program. The cost of the software subscription is bundled with our monthly pricing at cost, plus tax, with no additional markup.

• Ledger: $12
• Simple Start: $30.40
• Essentials: $60
• Plus: $92
• Advanced: $220

The cost of the Fathom software subscription is bundled with our monthly pricing at cost, plus tax, with no additional markup. Clarke passes the Fathom subscription fee directly on to our clients without markup. When the Fathom subscription price increases, Clarke will update pricing to reflect the increase. This update may occur with or without notice to Client.

Clarke support includes:

• Semi-Monthly Paychecks (2) for up to 2 Owners/Spouse
• Withholding adjustments per tax plan
• Payroll Tax Filings
• W-2 Processing

Pricing is bundled with monthly subscription. Adding employees will result in extracting the payroll bundle.

Clarke support includes

• Monthly Paycheck for up to 2 Owners/Spouse 
• Withholding adjustments per tax plan
• Payroll Tax Filings
• W-2 Processing

Pricing is bundled with monthly subscription. Adding employees will result in extracting the payroll bundle.

Clarke support includes:

1. Quarterly Paycheck for Owner
2. Withholding adjustments per tax plan
3. Payroll Tax Filings
4. W-2 Processing

Pricing is bundled with monthly subscription. Adding employees will result in extracting the payroll bundle.

Clarke will set up and onboard new clients. This important process includes:

• Initial Strategy Meeting
• Setup in Clarke systems
• Setup QBO
• Provide QBO basic training as needed
• Setup Clarke Secure portal
• 90-day Review

Clarke’s standard Setup & Onboarding Fee is $750 or 1x the monthly subscription price.

As an accounting firm, Clarke enjoys up to 50% off the retail pricing our clients would pay if not participating in our wholesale QBO program. It also grants us access to a special, no frills subscription level called Ledger that serves the needs of many small businesses that do not need features like invoicing or bill tracking. In order to reduce your QBO subscription pricing, we will migrate the current set of books in QBO Simple Start, Essentials, Plus, or Advanced down to QBO Ledger.

We will prepare the data in your QuickBooks Desktop (QBD) Data file for export into QuickBooks Online (QBO), import the QBD historical data into QBO, and perform the necessary data cleanup in QBO which is required prior to proceeding with new data entry and processing. This ensures accurate historical data to pull comparative reports from.

Engagement deadlines and the expedite fee are in place to encourage clients to provide information in a timely manner so that Clarke is able to file returns on time. Important deadlines to consider are:

On or about August 25 for the September 15 deadline.

On or about September 24 for the October 15 deadline.

In the event insufficient information is submitted to Clarke for the complete and accurate preparation of a tax return according to the deadlines above, Clarke will assess an expedite fee of $500 and there is no guarantee the return will be filed on time.

Clarke will true up existing accounting records to a current and accurate state by reconciling all bank and credit card transactions and ensuring that they are categorized appropriately resulting in a clear financial picture. This pricing is an estimate based on our billable rate of $150/hour. Our team will track their time and keep you apprised of their progress. This is also known as “Back Work.”

• Minimal Cleanup: No data entry, 1 to 2 months of bank reconciliation to complete or recategorization of income/ expense. $150.
• Smaller Cleanup: 3 to 4 months of bank reconciliations to complete, some recategorization of income/ expense. $300.
• Considerable Cleanup: Around 6 months of accounts to enter data and reconcile. $750.
• Complete Overhaul: Unreconcile and re-reconcile entire tax year, recategorize income/ expense, and or input data for more than 6 months. $1,500.

Clarke will prepare the necessary Form 1120, 1120S, or 1065 and any state returns for a period prior to the current year. Our standard pricing is $1284 per tax year. 2 prior years price is $2,568, and so on.

Additional fees for additional states or other complexities may affect price. We will advise of any changes to the pricing before preparation of your return.

During the onboarding process, we will consult with you to decide if becoming a S Corp is advantageous tax-wise. Once determined, we will prepare and file the necessary forms with the IRS.

Clarke’s base payroll setup fee starts at $295 and increases based on the amount of complexity in getting the payroll set up in our systems.

• New Payroll is included in setup fee
• Existing Payroll Processor adds $53
• Paper Payroll with under 5 employees adds $105
• Paper Payroll with 5+ employees adds $158

Clarke’s base payroll setup fee starts at $289 and increases based on the complexity of setting up payroll in the jurisdiction.

• Simple: included base setup fee for new jurisdiction
• Medium adds $79
• Complex adds $158

The 1040 tax preparation fee provided is a good faith estimate based on the historical tax return you provided. Changes to your personal financial situation in the upcoming tax year will impact the preparation fee.

In addition to the Individual Tax Return Base Fee, an additional fee will be charged to prepare the 1040 tax return based on additional complexity. Common complexities that vary year-to-year and require additional fees include:

• Additional Schedule A (Itemized Deductions)
• Schedule D (Capital Gains)
• Schedule E (Supplemental Income & Loss from Rental Real Estate and Royalties, Partnerships & S-Corps), and
• K-1s (provided by outside accountants)

Clarke will prepare dependent or spouse (married filing separately) 1040 individual tax return.