by Sarah | Aug 31, 2026 | Small Business Accounting
A business owner doesn’t consider switching payment processors just to save on processing fees.
The way you collect payments may change as your business grows. Different payment processing companies offer different services. Reasons a company may need to change include needing a stronger point-of-sale system, invoicing capabilities, ACH payment features, recurring billing, and scheduling. Your original payment processor worked when you started, but you may need different solutions as your business grows.
When you change a payment processor, the way transactions flow into your books can change too.
The Amount Deposited May Not Show The True Picture
Understanding the difference between your gross payment and your net deposit is important.
For example, your customer pays a $1,000 invoice, and your payment processor charges a $30 fee. Your business still earned $1,000 in revenue. But if the processor deducts the fee before sending the money to your bank, only $970 will appear in your bank account.
For bookkeeping purposes, those numbers should be separated:
- Income: $1,000
- Expense: $30
- Assets: $970
If you record the $970 deposit as income, you will understate both your income and your expenses.
Payment Processors May Handle Fees Differently
Your previous processor may have deducted a fee from every transaction before depositing the money.
Your new provider may collect fees separately.
Another processor might combine several customer payments into one deposit and remove the total processing fees from that batch.
Some providers charge processing fees immediately, while others withdraw accumulated fees at the end of a day, week, or month.
None of these methods are necessarily good or bad from a bookkeeping standpoint. The important part is understanding how your processor handles the money so your bookkeeping system reflects what is actually happening.
Bank Deposits May Not Match Individual Payments
You may have received a deposit that closely matched each customer payment with your old provider. After switching payment providers, several transactions may be grouped into a single deposit.
The amount deposited to your bank account is a lump sum. You’ll need to figure out which invoices, fees, refunds, or adjustments make up that number. That is why relying only on the amount that appears in your bank deposit can create problems.
Processor reports and transaction details can help connect the dots between what the customer paid and what eventually reached your bank account.
Your Existing Automations May Need to Be Updated
Integrations between your processor, accounting software, invoicing system, or bank account may be affected when switching payment processors.
An automation that worked perfectly with your old payment processor may need adjustment for the new provider.
Verify that your automation is accounting for income and fees correctly.
Also, review your bookkeeping workflow when switching payment providers, rather than simply connecting the new account to your automation.
Don’t Close the Old Payment Processor Prematurely
When switching payment processors, it can be tempting to disconnect the old system as soon as customers begin using the new one. There may still be activity associated with the previous account.
Before completely closing it out, look for:
- Pending deposits
- Outstanding transactions
- Final processing fees
- Customer refunds
- Chargebacks
- Remaining processor balances
It is also a good idea to download any statements or transaction reports you may need for your records.
Otherwise, an old processor can leave behind small balances or unresolved transactions that become much harder to understand several months later.
A Payment Processor Change Is Also A Bookkeeping Change
Switching payment processors is more than changing the way your customers pay you. It can also change how revenue, processing fees, deposits, refunds, and other transactions flow through your books.
Before making the switch, talk with your bookkeeper about how the new provider handles payments and fees. Make sure any accounting integrations or automations are set up correctly, and reconcile the old processor before closing it.
If you are struggling with a new payment processor, SAP Virtual Resources can help you clean up the books. Contact Sarah at SAP Virtual Resources.
by Sarah | Aug 15, 2026 | Small Business Accounting
Most business owners take a glance at the numbers on their bank statement and decide in about four seconds whether it is a good day or a bad day. Although that number feels like the truth, you are only seeing a small part of a bigger picture. What you don’t see are usually the items that decide whether your business is actually healthy.
Your bank statement is a snapshot of account activity over a period of time. It doesn’t show the money you are owed, the invoices you need to pay, or what you actually earn when all the moving pieces are in place. The whole picture is what a good bookkeeper is watching, helping you feel more confident about your business’s true health.
Profitability Isn’t The Same As Your Balance
Plenty of owners learn the hard way that a healthy bank balance and a profitable business are two different things.
You may see a comfortable cushion in your bank account because a big client just paid you. Other times you feel broke right after making payroll and quarterly tax payments while your business actually had one of its most profitable months on record.
Profit is what’s left after you subtract your expenses from your total revenue over a set period of time. If you brought in $10,000 in a month and spent $7,000 running the business, your profit is $3,000.
A bookkeeper will create a profit and loss statement so you can see what you are really earning, month after month, instead of guessing based on what your bank statement says.
Outstanding Invoices
When you invoice a client who hasn’t paid yet, you earned money this month. But it is completely invisible on your bank statement. This is classified as accounts receivable.
You can be sitting on thousands of dollars in unpaid invoices and still feel cash is tight. The work is complete, but the cash isn’t in your bank account yet.
Your bookkeeper tracks who owes you, how much, and how long the invoice has been outstanding. That is important information if you need to send a friendly nudge when a client’s payments aren’t received on time.
Receiving money can easily go from 30 days to 90 days to never when receivables are not closely watched. Your bank statement doesn’t warn you it’s happening.
Unpaid Bills
The other side of that coin is equally important. The bills you have received but not yet paid are classified as accounts payable. They account for money you have promised to pay but is still sitting in your bank account.
The money in your bank account may look reassuring until you remember the three vendor invoices and equipment installment coming due next week.
Your bookkeeper tracks what you owe and when it is due. This information helps you time payments, protect your supplier relationships, and avoid the shock of a payment clearing that you forgot about.
The Expense You Don’t Write A Check For
One expense that catches business owners off guard is depreciation. Purchasing equipment for your business is an expense you don’t usually get to count the entire cost in one month.
Depreciation spreads the cost of equipment over its useful life. It reflects the reality that your 5-year-old work truck is worth less than the day you drove it off the lot.
Depreciation affects your true profit and tax bill in meaningful ways. A bookkeeper handles this so that your financials reflect what your business is really worth and what it costs you to operate. Knowing these numbers helps you feel more secure about your business’s financial health.
Accrued Liabilities
Accrued liabilities are money you owe but haven’t become due. It is a real obligation, but the money has not yet left your bank account.
A prime example is the wages your employees have earned but have not yet been paid. These are predictable expenses but don’t show on your bank statement until they are paid. Your bookkeeper will record these as they are earned so every dollar you owe is visible well before payment is due.
Other examples could be interest accumulating on a loan between payments or sales tax you collected but have not yet paid to the state.
Your Bank’s Job vs Your Bookkeeper’s
Your bank’s job is to tell you how much cash has cleared your account and how much is left. That is what your bank balance tells you. The bank is good at its job. You can log in to your account when you want an updated balance.
Understanding what that number means for your business is a different skill that your bookkeeper possesses. A good bookkeeper can take that raw cash activity and turn it into a real picture through a profit and loss statement, balance sheet, and accounts receivable and payable report.
Profitability is determined by what you earned and what it costs you to earn it. You get to run your business knowing the full story, instead of reacting to what your bank statement says on a random Tuesday.
If you have been running your business off your bank balance and hoping the numbers work out, you deserve a clearer view.
At SAP Virtual Resources LLC, we build the reports you need to see what is really happening beneath the surface of your finances. If you want to plan with confidence instead of crossing your fingers, contact SAP Virtual Resources!
by Sarah | Jul 31, 2026 | Small Business Accounting
Determining how to pay yourself as an LLC owner is a decision that needs some definition.
Let’s take a look at an example. Judy is an LLC owner who moves $4,000 from her business account to her personal account on the first of every month and classifies it as her salary. The money is legitimately hers, her business is profitable, and nothing about her routine looks like a problem. When tax season rolled around, she learned that none of her transfers were treated as payroll. There were no withholdings from any of the transfers. She also learned she owed several thousand dollars in taxes that she had not set aside.
Her actions were honest. She described her draw as a salary, which changes the tax treatment and when taxes are due.
If that sounds familiar, learn how your LLC is taxed before you decide how to pay yourself so you know which options are available to you.
Your LLC is a legal structure, not a tax structure
Forming an LLC gives you liability protection at the state level. The designation doesn’t determine how the IRS treats your income. There are three common tax classifications for most small businesses.
An LLC With a Single-Owner is Taxed as a Sole Proprietorship
The IRS treats a single-member LLC as a disregarded entity. Your business income and expenses are reported on Schedule C of your personal Form 1040. You report the LLC’s profit on your personal income tax return; the LLC itself does not pay federal income tax.
You are the owner, not an employee.
An LLC With Multi-Owners is Taxed as a Partnership
When you add multiple owners, the LLC files Form 1065 and issues a K-1 for each owner’s share, which they then report on their personal returns. The business doesn’t pay income tax in the company name, and the owners are not employees.
Partnerships can include a feature called guaranteed payment. This is a fixed amount paid to a partner for services performed and is owed whether or not the business earns a profit. It is reported on the partner’s K-1. The guaranteed payment must be written in the partnership agreement or the IRS will not allow it.
An LLC Taxed as an S Corporation
An S Corporation is not a different kind of company. It is a federal tax election you file with the IRS (Form 2553), and your LLC remains an LLC under state law. The election reclassifies owners who work in the business as employees of the company, creating obligations not included in the other business structures.
This shift makes owners employees and creates obligations the other two structures don’t impose.
What Is A Draw?
An owner’s draw is cash withdrawn for personal use; it reduces the owner’s equity balance. Because the owner is not an employee, no payroll taxes are withheld, and no W-2 gets issued. On your books, the draw reduces your owner’s equity, which is your accumulated stake in the company.
A draw is not a deductible business expense; you’re taxed on the business’s earnings, not what you withdraw.
For 2026, that self-employment tax rate is 15.3%, made up of 12.4% for Social Security up to the wage base and 2.9% from Medicare with no cap. You pay it through your quarterly estimated payments in April, June, September, and January. If you decide to pay yourself with a draw, a good practice is to set aside 25% to 30% of profit as you earn it to cover taxes.
What is a Salary?
A salary means you are on the payroll as a W-2 employee of your own company. Federal income tax, State income tax, Social Security, and Medicare come out of every check you receive. The business submits its share of payroll taxes, files quarterly Form 941s, and issues year-end W-2s. Wages and employer payroll taxes are deductible business expenses that lower the company’s reported profits.
Which one applies to you?
Single-member and multi-member LLCs taking the default treatment (disregarded entity) pay their owners through draws. Guaranteed payments in a partnership are fixed and predictable, not treated as payroll, and remain subject to self-employment taxes.
When you become an S Corp, owners must pay themselves reasonable compensation as a W-2 salary subject to normal payroll taxes. Owner distributions beyond salary are not subject to self-employment taxes but do count as income. Some owners get themselves in trouble when determining their reasonable salary. Paying yourself $12,000 in salary and taking $138,000 in distributions is the kind of split that attracts the IRS’s attention.
Common Mistakes Made
When business owners determine how to pay themselves, we see several common mistakes:
- Running draws through payroll software without proper coding. Drawing cash coded as wages inflates your payroll expense and understates your profit. Any draws must be coded as an owner draw if your system allows it. No payroll taxes are collected on the owner draws.
- Recording draws as an expense. Draws belong in an equity account rather than on the profit and loss statement. When used as an expense, the business looks less profitable than it is, which becomes an obstacle when you are applying for financing or credit.
- Taking no salary after electing S corp status. When an owner elects S-corp status, they must pay themselves a reasonable salary. Not taking one can trigger an audit.
- Skipping estimated payments. If you skip estimated payments, underpayment penalties build each quarter.
Bookkeeping Habits
Once you have decided on your entity type and tax election, you need clean bookkeeping and a routine for setting money aside. Owners who know which bucket every transfer belongs in tend to have less stressful tax filing seasons and accurate financial statements. Gaining this clarity is worth more than the hour it takes to set up things correctly.
If you are not sure how to pay yourself within your LLC, let’s talk. Contact SAP Virtual Resources today!
by Sarah | Jul 15, 2026 | Small Business Accounting
It isn’t unusual for business owners to receive requests to pay an employee in cash. Clearly explaining the legal and practical aspects helps build trust and transparency, making them feel informed and confident in their decisions.
You Can Legally Pay An Employee In Cash
Paying employees in cash is legal in every state, including Wyoming. There is no federal or state law requiring compensation to be made by check or direct deposit. Cash is simply another form of payment, and the IRS treats it the same as any other.
However, many business owners find that legal doesn’t mean simple, which can make them feel cautious about maintaining compliance with all requirements.
What Doesn’t Change With A Cash Payment
Choosing to pay an employee in cash does not eliminate any of your obligations as an employer. You still need to:
- Comply with all withholding requirements.
- Accurately report and pay the employer’s portion of payroll taxes.
- Report wages correctly on quarterly and annual filings.
- Carry proper workers’ compensation coverage.
- Track hours for anyone classified as non-exempt.
- Issue a W-2 at year-end.
The method of payment may change. The compliance requirements do not.
The Real Cost of Cash Payroll
Paying employees in cash tends to add work rather than remove it. Your payroll software automatically handles the paper trail when paying by check or direct deposit.
Every cash payment needs its own paper trail. The documentation should include the date, amount, hours covered, and employee signature to confirm receipt. A check or direct deposit provides that proof in your bank statements and payroll registers. Cash payments require creating documentation one payment at a time.
This causes more recordkeeping.
Is It Worth It?
For most businesses, the answer is no. The appeal of cash usually comes from a false impression. The idea is that it avoids taxes or paperwork. What it actually does is trade an automated, well-documented process for a manual one that carries more risk and more of your time.
There are a few narrow situations where cash would make sense, such as a one-time payment to a day laborer who is properly classified as a contractor rather than an employee. Sound cash payroll documentation would be required. Your systems are built around checks and direct deposit.
What Should You Do If An Employee Requests Cash Payment?
Start by understanding why an employee is requesting a cash payment. Sometimes an employee doesn’t have a bank account or needs help setting up direct deposit. Other times, they are hoping to avoid withholding taxes altogether, which you cannot legally do for them, regardless of the payment method.
Explain that wages are subject to the same tax and reporting requirements regardless of how they are paid.
Whatever the reason, keep your payroll process consistent across your team and document each cash payment from the beginning to ensure compliance and avoid having to reconstruct later.
Maintain a Compliant Payroll Process
Payroll compliance gets complicated fast. Small mistakes can turn into costly problems to correct. If you are dealing with a request like this or need help with your payroll setup, processing, or reporting, contact SAP Virtual Resources for a free consultation to see how we can help.
by Sarah | Jun 29, 2026 | Tax
One area of misunderstanding for contractors isn’t the work they do: it is understanding the Wyoming Sales Tax rules.
Honestly, the rules can get confusing. As a contractor who is located in or works in Wyoming, understanding the sales tax myths can help you keep money in your pocket.
Let’s look at some common misunderstandings that can cost contractors money or create compliance issues.
Misconception #1: “A Service Business Doesn’t Charge Sales Tax”
Charging sales tax depends on whether the work is on real property or tangible personal property.
Wyoming defines real property as land and appurtenances, including structures affixed thereto and related annexations or permanent attachments. Simply put, the land, the physical structures attached to it, and any associated rights or improvements that transfer with ownership.
They use a sensory test to determine whether property is tangible personal property. You can use your senses to perceive tangible personal property (see, touch, feel, weigh, measure, or otherwise sense it). If you can physically interact with an item by seeing, touching, weighing, or measuring it, it is tangible.
Services provided for the repair of tangible personal property are taxable. Labor charges on real property improvements (which is what most contractors do) are not subject to tax. But materials are taxed to the contractor when purchased.
The confusion lies with what the contractor should charge sales tax on.
Also, contractors may not be accounting for material costs properly. This can lead the contractor to absorb the sales tax and not include it in the materials cost to the customer.
To summarize, labor and service charges for the repairing or improving of real property are NOT TAXABLE. Tangible personal property is TAXABLE.
Misconception #2: “Sales Tax Can Be Added as a Line Item on the Customer’s Invoice”
An HVAC contractor purchases $5,000 in supplies for a new project. At the time of purchasing, the contractor pays the 4% Wyoming sales tax, plus any applicable local sales taxes.
The contractor should not add a separate line for the sales tax the contractor paid on the materials to the client’s invoice. They also can not charge the customer sales tax on top of their quoted price when working on real property.
The contractor can include the sales tax in their overall contract price. In our example, the contractor may quote the customer a lump sum of $8,000, which includes materials, labor, and the sales tax on materials paid by the contractor. The customer’s invoice only shows a charge of $8,000.
Under Wyoming sales tax laws, the contractor is the consumer who has paid the tax. Sales taxes can be rolled into the materials cost.
Misconception #3: “It Doesn’t Matter How I Prepare My Contract For Work on Real Property”
Service providers typically prepare contracts in one of two ways: lump-sum or itemized/time and materials contracts.
A lump-sum contract combines all charges into a single price. It is the contractor who pays sales tax on materials, and the customer sees one total.
An Itemized/Time & Materials Contract separately lists the materials (which are taxable when purchased) and labor charges.
A Lump-sum contract is simpler for most service trades working on real property. Itemized contracts require extra care to ensure you are properly recouping any sales tax you paid and abiding by Wyoming Sales Tax rules.
Accounting best practices include keeping a clear record showing what you pay in sales tax on materials. Regardless of how you invoice customers, it is important to maintain internal accounting records that separately show labor and materials.
Materials Versus Labor Breakdown
Let’s look at an HVAC contractor again who is working on real property.
The contractor pays Wyoming sales tax (plus local sales tax) on:
- Furnaces, air conditioning units, heat pumps
- Ductwork, insulation, refrigerant
- Thermostats, sensors, controls
- Copper tubing and fittings
They do NOT charge sales taxes on:
- Installation labor
- Service/maintenance labor
- Repair labor (for real-property attached systems)
And they do not show sales tax anywhere on the invoice to their client.
This is an example of one specific trade. Each trade would have a similar breakdown based on the service they provide.
Sales Tax Rules For Tangible Personal Property
If your company is repairing or servicing equipment that is tangible personal property and not real property, different rules apply.
For example, our HVAC contractor is removing a portable HVAC unit from a home for repair. It is considered tangible personal property. Wyoming sales taxes would apply to the labor to repair the unit. The contractor pays the sales tax when purchasing the parts required for the repair.
The line between real property improvements and tangible personal property repairs is easily confused. Understanding the difference will protect a contractor from potential audits.
Record Keeping Recommendations
- Detailed Records – Track all material purchases and sales tax paid. Separate materials from labor costs in your accounting records. Keep receipts and invoices from suppliers.
- Contract Structure – Be consistent in how you quote and invoice jobs (lump-sum or itemized). Document your pricing strategy so you can explain it in the event of an audit.
- Price Correctly – Don’t forget to factor in the cost of sales tax on materials when quoting. Include the sales tax in your material cost, and not as an individual line item. Correct pricing and invoicing will improve margins and keep you compliant.
- Verify Local Sales Tax – When you are required to charge sales tax on your invoice, check the sales tax rate for the county where the work will be performed. Sales tax can vary from county to county.
- Consider All Your Services – If you offer repairs on both real and tangible property, take time to review and understand the rules for each.
- Confirm Your Information – Go to the Wyoming Department of Revenue (DOR) to verify your responsibility. An accountant familiar with Wyoming sales tax rules can also be a good resource for you.
It is important to understand sales tax regulations so you can invoice properly, safeguard your profit margins, and avoid audit issues.
If you have questions about the Wyoming sales tax rules, contact SAP Virtual Resources for a consultation.
