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In these three posts, I’m giving you 15 tips (plus a bonus in part 2) that you can implement today that will make next tax time less of a headache.

Here are the last five:

• Review your P&L-By-Month before sending it to your tax accountant.

  I talked about reviewing the Budget vs Actuals report each month throughout the year, but before you send your books over to your accountant, take a look through your P&L for the full year, ideally by month. (So there will be 13 columns of values: one for each month and then a total.)

  Do the numbers make sense? Does anything jump out at you? Besides looking specifically at “the numbers” and seeing if anything is wrong, this is a moment to reflect on the year. The numbers you see tell the story of how the year went. You can probably see certain trends in months that remind you of specific celebrations or obstacles throughout the year.

• Review your balance sheet.

  Just like your P&L, you should review your balance sheet. In addition to your bank accounts, credit cards, A/R, and A/R like I’ve discussed previously in this series, you should make sure any other assets and liabilities are properly stated, such as the values of inventory (discussed below), prepaid expenses, fixed assets, outstanding loans, etc.

  If you don’t already have a spreadsheet or spreadsheets to keep track of the activity of these accounts, consider implementing that.

• Keep track of vendors who will need a 1099 (if you’re in the US) or T4A (for my Canadian readers).

  A 1099 (or T4A) is a tax form that you send to certain vendors such as independent contractors to indicate payments that you made to them that weren’t through normal payroll.

  QuickBooks makes it easy to keep track of who these people are. When you are setting up a vendor, simply check the relevant box in their vendor information. I prefer this “set-it-and-forget-it” approach when first setting them up to constantly looking through my vendor list to identify vendors that need a 1099 but might not be set up in QB for 1099 tracking.

  If you haven’t been doing this already, it probably does make sense to go through your vendor list and edit the relevant vendors so you can check that box.

• Review your inventory.

  Another important balance sheet item to review is your inventory. If you are tracking inventory in QuickBooks, you should make sure two things are correct: the Quantities On Hand for each inventory item and the dollar value QB is calculating for that inventory.

  If you find that either of these is off, you probably need to make an adjustment. Your tax accountant should be able to help you out with it, and it’s a lot less of a hassle to do that before they prepare your tax returns.

• Set non-business goals.

  For this last tip, I wanted to take a step back from the business and bookkeeping. Taking care of your personal life is one of the most important things you can do to take care of your business. It’s important to find that work-life balance and not let work consume your life.

  Plan a vacation, commit to a regular date night with a loved one, or study a new skill and read that book that you’ve had sitting on your desk for months.

Did this series help you? Are you going to start implementing some of these tips? Let me know the most helpful ones by commenting on the YouTube videos or emailing me at [email protected].

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For many business owners and bookkeepers, tax season is a nightmare. Even if you’ve done “most” of your bookkeeping for last year, there might still be some tasks you put off.

In the last post, most of the tips centered around bookkeeping. This post has a couple of bookkeeping tips but also a few tips that will help you thoughtfully develop your business in general.

Here are the next five tips:

• Keep your business and personal finances and accounts separate.

  Especially in owner-operated businesses, it’s common for the business owner to use their personal credit card to pay for business expenses. This is something that you want to avoid. It’s difficult to account for and keep track of.

  Even worse is when someone is starting their business and they don’t open a business bank account, so all of their business and personal activity is going through the same account. This is called commingling funds and it is a big no-no. Not only does it make proper bookkeeping nearly impossible, but it can also potentially put the legal liability protection afforded by setting up an LLC or Corporation in jeopardy. It’s important to set your business finances up correctly from the beginning.

  There is also a psychological boost that comes from this: when you open a business bank account and credit card, you are truly treating your business like a business. You are committed to it, rather than just testing the water while using your personal account for business transactions.

• Evaluate your product and service offerings.

  Tax season (or the new year) is a great time to take a step back and evaluate the different products or services you offer your customers.

  What I usually do is what’s called an 80/20 analysis. If you aren’t familiar with the 80/20 rule, you can read about it here.

  Basically, the 80/20 rule states that 80% of the outcomes or results come from 20% of the inputs or resources. Of course it doesn’t have to exactly be a ratio of 80/20, but the point is a disproportionately small amount of inputs provide a larger outcome.

  So I ask myself questions like: What 20% of my products or services are providing 80% of my revenue or profit? What 20% of my service offerings are leading to 80% of my stress or headaches?

  A good example of this for me was QuickBooks clean-up. During one of my annual reviews, I realized that QuickBooks clean-up projects took a ton of time and created a lot of stress. However, they weren’t very profitable.

  Now, I very rarely take on clean-up projects and focus instead on higher-value services that I enjoy providing. That one decision improved not only my business but also my personal quality of life.

• Evaluate your vendors.

  Just like with your products or services, you should evaluate the vendors that you work with.

  It’s important to identify what makes a thriving, successful relationship with a vendor and what makes a dysfunctional one. Clearly identify these parameters allows you to build and operate your business in a very thoughtful and functional way.

  You can do also do an 80/20 analysis: what 20% of my vendors cause 80% of the frustration or are late on delivering items 80% of the time?

  Aside from these factors, you should also consider if you’re too dependent on certain vendors. For example, if you are only able to source a product that’s a major driver of your profit from one vendor, you will be in a weak position when it comes to price negotiations and extremely vulnerable if that vendor goes out of business.

• Evaluate your customers.

  The same analyses that you do on your vendors should be done on your customers:

  What is the profile of your ideal customer or client?

  What 20% of your customers provide 80% of the profits? Are you focusing the correct amount of energy on them, or are you spending most of your time and energy trying to keep lower-value customers happy?

  Are you overly dependent on one client or customer? What would happen if they stopped doing business with you?

• Review open invoices.

  Coming back to bookkeeping, you should review your open customer invoices, also known as Accounts Receivable. One of the questions I get most often from people who have messy books is what to do with open customer invoices that shouldn’t actually be there.

  Unfortunately, if a customer has paid an invoice but the invoice is still open, it often means revenue has been double-booked. This overstates cashflow and profitability and can result in the business owner paying higher taxes. Yikes!

  Make sure customer payments are correctly recorded against their invoice, and if an invoice needs to be removed or written-off, do that.

  A helpful report that QuickBooks provides is the Accounts Receivable Aging Summary. This will group your customer balances according to whether their invoices are current (aka, not yet due) or in different time periods of being past-due, such as 1-30 days past due, 31-60 days past due, etc.

  People come to me with customer invoices on their books that are years old that they want to clean up. Once a tax return has been filed for a year, it becomes much more difficult to go back and fix the books. Keep this correct on an ongoing basis so you don’t have to worry about it later.

  If you see customer balances falling into these late periods, you should reach out to the customer to try and collect their payments.

  Aside from saving yourself from a clean-up nightmare later on, doing this will improve your business intelligence because you will have a clear understanding of how much your customers or clients owe you. This is extremely important for cashflow planning.

• Bonus tip: Review vendor invoices (“Bills”) as well.

  Just like you reviewed customer invoices, you should review the vendor bills that are “open” in QuickBooks. A helpful report is the Accounts Payable Aging Summary which is structured just like the Accounts Receivable version.

  If you know a bill is paid but it is still showing as open in that report, then the payment is either not recorded in QuickBooks or has been recorded incorrectly and might be duplicating the expense amount in your financial statements.

  Keep your payables clean so you always know how much you owe your vendors and when those bills need to be paid.

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For many business owners and bookkeepers, tax season is a nightmare. Even if you’ve done “most” of your bookkeeping for last year, there might still be some tasks you put off.

In these next three posts, I’m going to give you 15 tips that you can implement today that will make next tax time less of a headache.

Here are the first five:

• Commit to keeping your bookkeeping up-to-date as frequently as needed.
  Most businesses need their bookkeeping done at least weekly. I’ve found that those who try to stretch it out to once a month are generally missing out on important insights. Doing your bookkeeping more frequently also helps ensure that things are being done correctly as you go.

 

• Reconcile your bank and credit card accounts every month.
  One of the first things I check when I’m talking to a potential new client is whether or not their bank accounts and credit cards have been reconciled every month. If they haven’t, it’s a huge red flag and an indication that it will take way more time and effort to onboard them. It’s such a fundamental bookkeeping task that usually if it isn’t done, it indicates that nothing else is done correctly either. I usually end up declining to work with them.

  Without reconciling a bank account, you have no idea what the true available balance of it is. Your QuickBooks should be the main source of truth because it shows checks that have been written but not yet cashed. If you look at your online banking and the balance says $10,000 but you don’t remember that you’ve already written $11,000 in checks that haven’t yet been cashed, you’re in big trouble.

  On the flip side, maybe you think you paid an important bill because you recorded it in your QuickBooks, but you don’t see it on your bank statement.

  Without reconciling your bank account, you wouldn’t realize that this is the case. Reconciling your bank accounts should be one of the first things you do each month.

 

• Set goals for your business and build a budget.

  It’s hard to get where you’re going if you don’t know where that is. If you don’t do this sometime in Q4, tax time is a great time to set some goals for your business for the next twelve months or even just the rest of the year. These goals could be a certain amount of revenue or a certain number of customers or clients served or anything else that makes sense for your business. The important thing is to have some goal or goals.

  Once you have a goal, figure out what you need to do to get there. This is where building a budget comes into play. And once you’ve put together your budget, add it to QuickBooks. You can find how to do this in Module 9 of my QuickBooks training course.

• Commit to reviewing “Budget vs. Actuals” every month.

  Outside of the P&L and Balance Sheet, the report that I look at the most in QuickBooks is the Budget vs. Actuals report. This lets you keep an eye on your performance and make sure you’re on track to hit your goals.

  It also will help you identify if you are over-spending or under-spending in certain expense categories or if transactions are recorded to the wrong category.

  If your revenue is consistently falling short of (or exceeding) your budget, reviewing it each month gives you the option to make slight adjustments to better inform your decision making in current and future months. The same can be said for expenses.

• Revamp your filing system and/or go paperless.
  Step back and take a gut check: how confident are you in your filing system?

  Be honest.

  If you needed to find a specific invoice from a certain vendor from March 2017, how long would it take you?

  I can tell you that for me and my clients, it would take seconds. That isn’t an exaggeration.

  If that last line made you pause and re-read it a couple of times, this tip is for you.

  Going paperless for your filing is one of the best decisions you can make. It will free up office space and make your documents easier to find. Come up with a uniform folder structure and file-naming structure.

  For example, my clients have a folder called “Accounting” and within that is another folder called “Invoices.” Depending on the volume of vendor invoices or the number of different vendors, there might be additional folders in the “Invoices” folder for each vendor. Or all the invoices might just go in that main Invoices folder, but they are named so they can be found quickly. The naming convention I prefer is “VendorName YYYYMMDD InvoiceNumber.” Example: “AcmePrint 20190331 1561.pdf”

  Using this convention, your vendors will be in that folder in alphabetical order, and then for each vendor, their invoices will be listed chronologically. YYYYMMDD is the best way to write a date in a file name for this reason. Trust me: once you start using that, you’ll never go back.

  You can come up with similar organizing and file-naming standards for bank statements, customer documents, tax information, etc.

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In the last article and video, I talked about the different job positions you usually see in a public accounting firm. Here I’ll talk about the roles you see accountants play within a specific company.

Bookkeeper or Accounting Clerk

Someone with a bookkeeping role in a company will often be referred to as an accounting clerk, or something more specialized such as A/R Clerk (for accounts receivable), A/P Clerk (for accounts payable), Payroll Clerk, etc., depending on how big the accounting department is.

This person does most of the heavy lifting in terms of data entry and processing individual transactions.

In a smaller organization, one person may handle all of the bookkeeping and also handle a lot of the tasks described in the Staff Accountant section of this article. Smaller companies might also outsource this to an individual bookkeeper or a bookkeeping firm.

The great thing about a job in accounting is every position has a clear impact on the company’s operations and financial health. For example, the A/P Clerks or bookkeepers are helping make sure the people all the way at the top of the company have a clear idea of what the company owes to its vendors. This kind of information goes directly into the company’s plans for how to manage its cashflow, which is the lifeblood of any business.

Accountant or Staff Accountant

This person usually has a degree in accounting. They will help with and oversee parts of the bookkeeping process. Staff accountants will be responsible for more complicated month-end work like reconciliations and adjusting journal entries. They might also maintain various accounting schedules such as fixed assets and depreciation.

Accounting Manager

Larger companies may have accounting managers that oversee teams of accountants, especially for a specific function. For example, an A/P manager is responsible for overseeing all of a company’s accounts payable functions. They are accountable for processing incoming vendor invoices and making sure a company’s bills are getting paid on time.

Accounting managers are overseeing the various accounting processes to make sure they go smoothly and then report that information to the Controller or CFO.

Controller

The Controller is the head accountant at a company and reports to either the CFO or the CEO if there isn’t a CFO. They are responsible for overseeing all of the core accounting functions such as the monthly closing process and financial statement preparation. The CFO or CEO will be looking to them for financial statements.

If the company goes through an annual financial statement audit, the controller will often be the main point of contact for the auditing firm and be responsible for providing the auditors their requested documentation.

The controller may also be responsible for cashflow management and budgeting/forecasting, depending on their skills and whether or not the company has a CFO.

CFO

The Chief Financial Officer is someone who has moved beyond pure accounting responsibilities. This person is the lead of both accounting and finance. They utilize a higher level of strategic thinking, analysis, and forecasting/planning. Usually there is either a Controller or Accounting Manager who they look to for ensuring the core accounting work is getting done properly and on time, and they depend on that person to provide them with timely financial statements that they can use for decision making.

In the past, CFOs often came from the big accounting firms and had heavy auditing experience, sometimes combined with an MBA degree. This seems to be changing as more people are working through the ranks of private companies and foregoing MBAs.

Tax Department

Many large corporations have a dedicated tax department. They don’t usually actually prepare their own income tax returns, but they will interface with the company’s outside CPA firm who prepares the tax return. The leader of this department is usually called a Tax Director and will have a lot of experience as a tax professional in public accounting.

CPA

Accountants within a company do not usually need their CPA license. That license is specifically for people practicing public accounting who are signing off on audited financial statements or representing a client before various tax authorities. However, because of the rigorous education, exam, and experience requirements for obtaining the CPA license, many companies do prefer a licensed CPA for some positions. It is an important credibility marker, but, like I said before, isn’t necessarily required.

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One of the great things about choosing accounting as a career field is the number of opportunities available to those with accounting skills.

Every company in the world needs some level of accounting help, as do many individuals.

There are even opportunities outside of the main bubble that people think of as “accounting” which I will discuss in another post. Here I’m going to talk about the different positions accountants in Public Accounting. Then in the next post I’ll talk about the positions available within companies (often referred to as “Private Accounting” or “industry”).

Private vs. Public Accounting

In general, accountants fall into one of two groups: they either work in-house for a company or work in public accounting.

Working in public accounting usually means the person work for an accounting firm that serves a client base that might include businesses, individuals, and government entities. An independent bookkeeper could be considered to be in “public accounting” because they’re offering accounting services to the public. Usually these firms offer tax, audit, outsourced accounting/bookkeeping, or other consulting services. They are trusted third-party advisors of their clients.

“Private” or “industry” accountants work for one specific company.

The roles that people serve in each group varies quite a bit, but there is also some overlap. This article will focus on Public Accounting.

Public Accounting

Depending on the size of a public accounting firm, these positions might overlap or not even exist. Public accounting firms are usually structured as a hierarchy and use an apprenticeship model to develop their staff. So these positions tend to be the same whether the firm offers audit, tax, or other consulting services.

Bookkeeper

Not every firm has these, but a firm that offers outsourced accounting or bookkeeping services will often employ bookkeepers. This person could also have the title of associate or staff accountant. They may or may not have formal accounting education like an accounting degree.

This is a great position for someone starting out in accounting because it really lets you get some hardcore accounting skills while being mentored by a CPA if you’re at a CPA firm. It’s also a great opportunity to develop different communication skills because you’ll probably be communicating with a variety of clients as well as your employer.

And then of course there is the independent bookkeeper who is running the show themselves, which is still considered public accounting. Being an independent bookkeeper is one of the biggest opportunities right now for people who are looking to start a business they can run from home without too much financial investment.

Staff Accountant or Associate

Most associates at accounting firms are working on tax or audit work for clients. They will usually have an accounting degree and may or may not have their CPA license.

A bookkeeper and an associate could be filling the same roles if the associate provides client accounting services, but often this is more of a tax or audit role. In college, accounting students are usually steered to choosing either “tax or audit.” When I was in school, everyone was always asking each other “tax or audit? Tax or audit?” It’s kind of funny, especially because there are so many other opportunities and paths out there! More on this in a later post.

In the associate role, an accountant will be handling most of the data processing. For tax clients, this means entering data into the tax software, and for audit clients it means aggregating data from various client documents and entering it into audit software to be analyzed.

Manager

At a small firm, there might not be managers, and the associates may just report to partners. Medium-sized firms will distinguish between Associates, Managers, and Partners, and the largest firms will add a couple of other roles in the middle such as Senior Associate or Senior Manager.

A manager probably has the most context on the different aspects of an engagement. They are the main day-to-day point person working on a project and oversee one or more associates. While a partner is responsible for keeping tabs on all of his or her client relationships at once, the manager is usually working on fewer engagements and therefore maintains a deeper knowledge of what’s going on. It’s up to the manager to keep the partner updated on the status of the work and any important developments.

Partner

The partner at an accounting firm is one of the owners and has ultimate responsibility for their client relationships. Sometimes people who have the normal duties of a partner but are not owners or licensed CPAs will be referred to as a Principal or Director. If the firm is organized and registered as a Certified Public Accounting firm, the partners who own the firm will be licensed CPAs.

Partners need to generate business for the firm by bringing in new clients or offering additional services to existing clients. They are also the people who review and give the final sign-off on a client’s work, especially an audit or tax return. In a smaller firm they might be doing a lot of the heavy lifting themselves, but in larger firms that is delegated to teams of managers and associates.

So, usually the way it goes is a fresh accounting grad will start as an associate, and as they gain experience, they will move into a senior associate or manager position. Here they are given more responsibility over the engagement and develop leadership skills while overseeing and reviewing the work of associates. Once they are deemed to have enough experience and skill — and can find and manage client relationships and make money for the firm — they may be offered the chance to buy into the firm as a partner.

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One of the questions that I get the most from my clients is: Is cloud accounting safe? Is it secure?

The accounting world is rapidly changing, and there is a big push by software companies to get companies onto cloud-based platforms. Intuit, the company that makes QuickBooks, practically hides the desktop platform on their website. It’s buried way down at the bottom of the QuickBooks page.

What is the cloud? “The cloud” refers to the internet, and more specifically, the storage of data on servers that aren’t physically located at your home or office. These servers are usually in huge data centers that are climate controlled, kept extremely secure (sometimes with armed guards).

They also often use redundancy, meaning your data is saved in multiple locations. So, if one server goes down or a certain data center has a fire or a flood, you might never even know because the cloud provider had your data synced across multiple servers and probably even in different geographic locations.

This data is further kept safe and secure through the use of encryption which makes it so that only authorized people or systems are able to access it. Banks also use encryption to keep your data safe, and most email platforms are cloud-based and encrypted to be secure.

In some ways, your accounting data might be more secure in the cloud than it is saved on your local computer. It’s impossible to say that anything is 100% secure, but the cloud can at least be a bit better.

I mentioned that the data is encrypted on servers that are kept in highly-secure facilities, sometimes with armed guards. How does this compare to your laptop when you leave it in your car while you run into the grocery store on your way home?

Or your office, which could get broken into or experience a fire or flood? If you are using a Desktop system, you absolutely have to make sure your data is backed up somewhere else so you don’t lose it, but having your data stolen is another issue altogether.

The biggest risks when it comes to cloud accounting are:

• Your login information could be compromised, so someone can login with your username and password.
• Users could have improper access and potentially sharing information they shouldn’t, even by accident.

How can you keep your QBO data safe?

1. If multiple people have access to your QBO file, review their access permissions to make sure they can only see what they need to see to do their job. If an employee doesn’t need to see customer or vendor information to accomplish their job function, they shouldn’t have access to that information. 
2. Use a password that you don’t use anywhere else, and PLEASE don’t write it down on a sticky note or in a file on your computer where it can be stolen.
3. Change your password at some set interval – maybe every 3 months.
4. Turn on 2-factor authentication (“2FA”), and require all users to do the same. Your security is only as strong as its weakest link. 2FA is where QuickBooks will send you a text message with a one-time code that you have to enter. If someone knows your login username and password, this step will add extra security to help prevent them from getting all the way to your data. You can see my post on how to turn on 2FA by clicking here.

In college, I built my own bookkeeping and QuickBooks consulting business serving a few local businesses in the area. I even hired a couple of other accounting students to handle some client bookkeeping.

This was before QuickBooks Online got to be as great as it is today, so I only used QuickBooks Desktop and did all my work at my clients’ offices.

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A lot has changed since I was in college. Right now is an exciting time to start a bookkeeping business. Technology and automation are rapidly changing the accounting industry and the roles of accountants, so those who stay on the cutting edge will have an advantage. The tools to serve clients are becoming cheaper or even free.

If I were doing it all over again with today’s technology and the experience I have today, here is what I would do:

Sign up for the QuickBooks Online Accountant Program

One of the first things I did was purchase QuickBooks Desktop Accountant and become a certified Desktop ProAdvisor. This was a significant investment, especially for a college student.

Today, Intuit (the makers of QuickBooks) have made the QB Online Accountant program completely free. It comes with powerful firm management tools, client work organization tools, and a free QuickBooks Online file to handle your firm’s books. This is what I personally use to serve my clients now.

Learn QBO and only work with clients willing to use QBO

As I said before, this was in the early days of QBO. Almost nobody used it, and accountants hated it. Since then, QBO has come extremely far and is constantly being updated and expanded by Intuit. Intuit is making a huge push to get businesses and accountants on their cloud platform.

I firmly believe that any accountant who resists transitioning to the cloud will get left behind and face serious competitive problems in the near future.

Except for some companies advanced inventory tracking needs, such as manufacturers who need to track costs and parts through different phases of production, QBO is now a perfect option for most small businesses.

Working in the cloud has tremendous benefits, most significantly that you don’t need to back up your data and you can access your clients’ live books from anywhere (and so can they).

Choose an industry niche and become an expert in it

In college I worked with everyone who was willing to give me a shot. I had clients ranging from retail to manufacturing to real estate.

I was able to get pretty good at serving all these industries but didn’t ever master them. Since I usually had only one client in each industry, I didn’t gain an understanding of the trends that those companies should see in their financials or industries. I couldn’t compare and contrast clients and make recommendations. Being able to offer this higher level of advising would dramatically increased the value of my services to my clients (and the fees they paid me).

The other huge advantage of focusing on one industry is you can build checklists, templates, and schedules to apply to new clients. By doing that, you can get up to speed with new clients much quicker and get through all of their routine bookkeeping more efficiently.

Become an expert on an industry’s accounting processes, follow its trends and news, and you will become your clients’ most important advisor.

Expand outside my city

In 2019, there is no reason to confine your services to your local community. Cloud technology and video conferencing software make it possible to serve clients anywhere, and it makes your potential client base basically unlimited.

Charge More

Many professionals are guilty of undervaluing their services. You are providing a valuable service and should only work with people who recognize that and value you.

This is an especially difficult step when you are just starting out. New bookkeepers often suffer from “imposter syndrome” and feel like they “shouldn’t charge too much.” One easy step that I would suggest is to take the rate that you are considering and then add 10-20%. If you believe you are worth X and that clients will pay you X, then they probably can (and should) pay you 10-20% more than that.

 

Slow down and be thoughtful

If you have the luxury of still being in another job or have a situation where you don’t need to make as much money as you can as fast as possible, it’s wise to move slowly and thoughtfully. I was a full-time student with another part time job, so I didn’t necessarily need to build my business as fast as I could.

But I still took on any client I could, accepting what they were willing to pay me and trying to make it work. In retrospect, this was a mistake.

If I were doing it over again today, I would take some time to identify my ideal client’s profile. I would choose an industry and company size to focus on. I would spend a lot of time to make sure me and the client are a good fit and that I’ll enjoy working with them and they’ll value my services.

I would only work with clients who are willing to use the tools I want to use, don’t require me to work at their office, and are willing to pay my rates.

By building your firm and clientele in a thoughtful manner, you will be able to serve all of your clients better and have stronger client relationships.

There has never been a better time to start a bookkeeping business. Technology is making it easier and easier to serve more clients from anywhere. If this article was helpful and you’d like to hear more about starting a bookkeeping or accounting business from scratch, leave a comment or send me a message to let me know!

In my YouTube video discussing whether cloud accounting is safe (link here: https://youtu.be/tPJAj_K_G5g), I mention using 2-Factor Authentication (2FA) to make your QB Online account more secure.

You may have seen 2-Factor Authentication with your online banking or some other online accounts. It’s where the website will send you a text message with a code (usually 6 digits, for example: 454-827), and then you have to type the code on the site to continue logging in. Your password is the first “factor” to login, and then the text message code is the second factor. Hence, two-factor authentication.

It’s more secure because the idea is that only you should have access to your text messages. If someone figures out your username and password, hopefully this step stops them.

Here are the steps to turn on 2-factor authentication:

1. Go to the Gear menu at the top-right of the QBO window and choose “User Profile.”
   

2. In your profile settings, make sure you have a correct cell phone number added to your account, and click “Turn On” in the “two-step verification” section. It will ask you if you want to use a text message or phone call to verify your identity. If you set it up correctly, “Turn On” should change to “On.”
   
3. Next time you login, you should see a prompt like the following. QBO might remember your computer and not ask you to do this every single time.
   

I’m excited to announce that I’ve just released my first YouTube video! Learn more about me, put a face to my voice, and hear about the exciting things coming to LBT (LearnBookeepingToday) this year.

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