One of the five best things about QuickBooks Desktop is its ability to download transactions from your financial institutions. The software has been capable of this for a long time, so this function has matured nicely and is protected by bank-grade (or better) security protocols.

If you are still entering transactions manually, consider the benefits of connecting your bank accounts and credit cards to QuickBooks Desktop:

• You can see which transactions have cleared.
• You’ll know your current bank balance.
• Your reconciliation chores will be much easier.
• You will find errors or other problems without waiting for a bank statement.

QuickBooks Desktop supports thousands of financial institutions — major banks and credit card issuers as well as many smaller ones, so it’s likely that you will have access to your accounts.

Just a Few Steps

The process of getting QuickBooks Desktop set up to download transactions is simple. You open the Banking menu and click on Bank Feeds, then select Set Up Bank Feed for an Account. In the window that opens, either find your financial institution in the list supplied and click on it or enter its name in the search box. Matching results will appear in a box below. Be sure to double-check the URL you select. It must match the URL that you use when logging in online.

There are three ways that QuickBooks Desktop brings transactions into the software. Your bank may only support one or two of them. They are:

1. Express Web Connect

You enter the username and password that you use to access your transactions directly from the bank’s website. QuickBooks Desktop makes a connection and automatically downloads your data when you set up the link and every time you log into the software. You never have to supply your login details again unless a problem crops up, or the bank changes the security settings.

2. Direct Connect

Using this method, you also download transactions directly into QuickBooks Desktop, but you also have the option to initiate payments and transfers. You will have to supply special information from your bank, and fees may apply.

3. Web Connect

This is the most labor-intensive and least convenient way to move transactions into QuickBooks Desktop. It requires that you log into your bank’s website and download a QuickBooks-compatible file, then upload it into QuickBooks Desktop. This option does allow you to select only the date range you want to import.

Financial institutions have been tightening up their security to help prevent fraud. So even if you are using one of the first two connection types listed above, you may be asked to supply additional identifying information, like your birthdate or anything else the financial institution’s site itself requires when you log in.

Once you have successfully established a connection and downloaded your transactions into an existing account (or created a new one), you will have access to QuickBooks’ Bank Feeds Center, where you can view, edit, and accept the transactions that appear in a register-like display.

These connections usually work well – except when they don’t. We are available to help you troubleshoot the transaction-downloading process. Once you clear that hurdle, we think you will find that real-time access to your account data will accelerate your daily accounting work and give you a clearer picture of where you stand financially. If you have any questions, contact us, or visit our website to learn more about our Client Accounting Services.

When your small business hires a new worker, how do you decide whether that individual is an independent contractor or an employee? Independent contractors are, by definition, self-employed. They’re responsible for their own income taxes and benefits like health insurance. They can work part-time or full-time, and they usually take care of setting up their own office space.

But to the IRS, the distinction is not that simple. All of the above could apply to a worker, yet he or she might actually be an employee. The agency has been known to painstakingly scrutinize the relationships between management and labor at large companies in an effort to ensure that everyone has been classified correctly.

Unfortunately, there’s no magic formula you can apply to determine a worker’s status. Rather, the IRS defines the difference by asking you to explore three elements of employment that should help you make this distinction correctly. They are:

• Behavioral. Who controls what the workers do and how they do their jobs?
• Financial. What about the business aspects of the job? Who determines, for example, how workers are paid and whether expenses are reimbursed? Are workers responsible for their own office expenses, like tools and supplies?
• Type of relationship. Is management providing resources like written contracts and standard employee benefits? Is the individual providing work that is a “key aspect of the business?” Will the relationship be ongoing?

As you consider these questions, you may find that your answer to one would indicate that the worker is an independent contractor, while another points to an employer/employee relationship. There’s no one factor that determines what the worker’s status is. To muddy the waters further, some of the work that the individual does may lean in one direction, while other work would indicate a different answer.

Basically, it all comes down to the degree of control that management has over workers.

If you’ve answered these questions and are still unclear whether to classify people as employees or independent contractors, you or your workers can complete an IRS Form SS-8: Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

Individual states also have their own worker status “tests” based on workers’ compensation and unemployment insurance laws. This classification is actually more difficult in most states because you have to consider how economically dependent individuals are on the business, in addition to the degree of control tests. You can find contact information for your own state’s labor offices here.

As you may know, income taxes are handled very differently for independent contractors and employees. And it’s very important that you’re doing this right – for both you and your staff. If you have questions about this issue or about the classification of the individuals you employ, or if you’re looking for general business and accounting advisory services, please contact us.