Launch Industries Financial Handbook

The internal financial operating manual for Launch Industries. Covers the books (QuickBooks Online + Gusto), the cadences (weekly, bi-weekly, monthly, quarterly, annual), and the procedures behind A/R, A/P, payroll, bookkeeping review, and tax filings.

Bookkeeping Service Provider Info

Business / Company / Client Profile

Roles & Responsibilities

• Maintenance Bookkeeper: Manage financial records, ensuring accurate tracking of income, expenses, and transactions; reconcile accounts; prepare reports to support financial decision-making.
• Controller: Provide feedback that the tasks completed are completed accurately and identify areas for improvement. Controller works closely with the Maintenance Bookkeeper to align on goals and expectations. Controller engages in informed decision-making based on the reports and recommendations provided by the bookkeeper.

Bookkeeping Info & Procedures

Background

Launch uses QuickBooks Online (QBO) as its accounting software. It uses the Cash Basis method of accounting. Launch performs regular account reconciliations to ensure accuracy in financial reporting while maintaining the integrity of the financial data. The QBO automation features are used to streamline tasks, prevent the risk of human error, and save time. Financials are regularly generated and reviewed to help make informed business decisions and track financial health over time.

General Information

Checklists of To-Dos by Period

Weekly

• Update weekly cash flow spreadsheet
  • Mondays — Update plan for the week
  • Fridays — Reconcile with what hit the bank
• Process payables as necessary
• Categorize downloaded bank transactions in QBO

Bi-Weekly

• Process hourly employee payroll via Gusto (every other Monday by 4:00 PM)
• Process salaried employee payroll via Gusto (every other Monday by 4:00 PM)
• Review A/R Aging report to monitor overdue accounts

Monthly

• Prepare and send invoices to clients
• Reconcile Balance Sheet accounts (bank, credit card)
• Review P&L
• Process Launch contractor payments via Gusto
• Reconcile A/R payments with the bank accounts and Harvest

Quarterly

• Estimated tax payments (IRS)
• Consider Owner Tax Savings plan (retirement)
• Update these procedures

Annual

• File DOR Excise Tax
• File City of Seattle Tax
• File IRS Income Taxes (Form 1120-S)
• Prepare and send 1099s that are not prepared by Gusto

Full List of Bank Accounts & Credit Cards

Monthly Account Reconciliation Requirements

• WaFd Money Market (income account)
• WaFd Money Market (tax, rent, payroll & checks)
• WaFd Checking (operating account)
• Brex
• PayPal
• Stripe
• Brex
• Divvy / Bill.com
• WaFd Line of Credit ($10,000)
• Headway Line of Credit ($100,000)
• Employee Benefit Liabilities for Guideline 401(k)

Accounts Receivable

The accounts receivable process at Launch Industries is designed to ensure timely collection of payments while maintaining positive customer relationships. Regular monitoring and adjustments to the process can enhance cash flow and reduce overdue accounts.

General Invoicing Guidelines

• Ensure invoices include customer information, invoice number, date, due date, itemized list of products/services, and payment terms. If there is a contract number, include it on the invoice.
• Invoices are sent via email via Harvest.
• Invoices are automatically synced to QBO through a Harvest/QBO integration.
• Payments are received via Gusto, credit cards, checks, or ACH.
• Payments are recorded to reflect current receivables.
• Regularly reconcile A/R records with bank statements and customer payments.
• Investigate and resolve any discrepancies between recorded payments and customer accounts.
• Generate reports for management on A/R performance, cash flow projections, and collection rates.
• If necessary, follow-up calls and collection letters are made to overdue accounts.

Invoice Generation

In general, invoices are created via Harvest on a monthly basis, shortly after month end for the prior month's services. Launch has multiple sources of income; depending on the product, they are invoiced accordingly:

Pay-As-You-Go

• Client purchases this via the Launch Industries website. The client makes the payment as the meeting is scheduled. Processed via a Calendly/Stripe integration.

Hourly Plan

• Hours worked are recorded in Harvest. Hours are reviewed and approved weekly. At the end of the month, the total hours worked are billed to the client.
• Use the last day of the month for invoicing.
• Net 15 terms.

Flex Plan

• Client is billed monthly based on an agreed-upon amount per month.
• Bill about a week ahead for the upcoming month.
  • Invoices should show the 1st of the month as the invoice date.
  • Auto-bill or paid by the 1st of the month.

Managed Service Plan

• Client is billed monthly based on an agreed-upon amount per month.
• Invoices should show the 1st of the month as the invoice date.
• Auto-bill or paid by the 1st of the month.

Technical Assistance Pooled Hours Programs

• City of Seattle OED Program — Team members report hours in Harvest. Hours are reviewed and approved monthly by the Contract Manager. OED-ABC Project Manager prepares and submits invoices on a monthly basis. Invoice is submitted via email.
• CORE Sacramento — Team members report hours in Harvest. Hours are reviewed and approved weekly by the Program Manager and Contract Manager. Contract Manager prepares invoices on a monthly basis. Invoices are reviewed and approved by CEO. Once approved, Contract Manager sends the invoice to the program via Harvest.
• WA-SECP — Team members report hours in Harvest. Hours are reviewed and approved weekly by the Contract Manager. Contract Manager prepares invoices on a monthly basis according to a fixed invoicing cadence that was pre-determined and approved by WA Department of Commerce at the start of the contract. Once approved, the Contract Manager uploads the invoice by logging into Secure Access Washington. Invoices are submitted in the form of an A-19 through the Commerce Contract Management System provided by the WA Department of Commerce.

Flat Rate Projects

• Clients are billed an agreed-upon amount as project milestones are completed. Billing does not need to wait until the end of the month. Flat Rate Projects typically have a Net 15 payment schedule, but are automatically approved for Net 30 billing for government projects if required.

Sliding Scale

• Clients approved for a sliding scale price receive a 20% discount on services rendered for any of the above billing selections.
• Discounts should be approved for a fixed period of time and communicated with the client during contracting.

Accounts Payable

The accounts payable process at Launch Industries is designed to ensure timely and accurate payments while maintaining effective vendor relationships and compliance with company policies. Regular reviews and updates to the process can enhance efficiency and accuracy.

Invoices from Contractors

Contractors are not required to send invoices, but record their hours worked in Harvest instead. The contractors are paid for hours worked as logged in Harvest (as stated in their contractor agreement). In the event that an invoice is sent anyway, please record the invoice details in QBO and attach a copy of the invoice to the record in QBO.

Independent Contractor Payments

• Contractors report hours in Harvest.
• The contractor's manager reviews and approves the hours recorded weekly.
• Contractors are paid monthly by the 2nd Friday of the following month for the prior month's work.
• Bookkeeper processes payment:
  • A report for hours worked for the prior month is processed.
  • The hours worked are recorded to the contractor's individual pay sheet.
  • Bookkeeper updates the Launch Payroll Sheet (opens in a new tab).
  • Bookkeeper updates the Cash Flow Sheet (opens in a new tab).
  • The CEO reviews and approves payment to be made.
  • Bookkeeper processes payment via Gusto.

CORE Sacramento Contractors

• Contractors report hours in Harvest.
• Hours are reviewed and approved weekly by the Program Manager and Contract Manager.
• Prime Contractor shall use commercially reasonable efforts to pay undisputed Service Provider invoices within 72 hours of receipt of funding from CITY via direct deposit through Gusto.
• Contract Manager processes payment:
  • A report for hours worked for the prior month is processed.
  • The CEO reviews and approves payment to be made.
  • Contract Manager processes payment via Gusto.

WA-SECP Contractors

• Contractors report hours in Harvest.
• Hours are reviewed and approved weekly by the Program Manager and Contract Manager.
• Contract Manager processes payment:
  • A report for hours worked for the prior month is processed.
  • The CEO reviews and approves payment to be made.
  • Contract Manager processes payment via Gusto.
• Payment timing:
  • Payments are issued once a month, generally on the 2nd Friday of each month, for services performed the previous month so long as payment has been received from Commerce.
  • In the event payment has not yet been received by Commerce, Launch shall initiate payment for approved timecards within 72 hours of receipt of funding.

Invoices from Vendors

• Invoices can be received via email or postal mail. Invoicing coming by email should be sent to accounting [at] launchindustries.biz, which is an alias account of accounts [at] launchindustries.biz.
• Contract Manager and/or bookkeeper and/or CEO reviews invoices for accuracy.
• Bookkeeper records the invoice in QBO to track due date and amount due, and they are classified to the vendor, expense account, and class, if necessary.
• The CEO approves invoices prior to processing payment.
• Bookkeeper processes payment via Gusto, credit card, or check.
• Payments are recorded in QBO to match the invoice paid.
• Vendor account statements are reconciled against QBO to ensure accuracy.

Reimbursements

• Expense reimbursements are submitted to accounting [at] launchindustries.biz and approved by the CEO.
• Bookkeeper enters reimbursements in Gusto with the next pay period following approval.

Payroll Procedures

Launch Industries effectively manages its payroll using Gusto, ensuring timely and accurate payments to employees while maintaining compliance with tax regulations.

Time Tracking

• Employees record hours worked in Harvest on a daily basis.
  • Hours worked include Client and Project.
• Manager reviews and approves recorded hours worked in Harvest on a weekly basis.

Process Payroll

Payroll Administrator processes payroll bi-weekly:

• Gathers hours for the bi-weekly pay period from Harvest.
• Enters hours into Gusto.
• Updates the Launch Payroll Sheet (opens in a new tab).
• Updates the Cash Flow Sheet (opens in a new tab).
• Lets the CEO know the payroll total.
• CEO approves payroll.
• Payroll Administrator submits payroll.
• Gusto is synced with QBO to record payroll via direct integration.

Distribute Paychecks

• Direct Deposit: We encourage employees to enroll in direct deposit for faster payment.
• Pay Stubs: Employees can access their pay stubs through Gusto's employee portal, where they can view their earnings and deductions.

Compliance and Reporting

• Tax Filings: Gusto automatically handles federal, state, and local tax filings, ensuring compliance with payroll tax regulations.
• Year-End Reporting: At the end of the year, Gusto will generate W-2 forms for employees and 1099 forms for contractors, simplifying year-end reporting.

Review and Adjust

• Conduct regular audits of payroll records to ensure accuracy and compliance. Address any discrepancies immediately.

Bookkeeping Review

Implementing a structured bookkeeping review process is vital for maintaining accuracy. We focus on high-level reviews and continuous improvement to ensure reliability and accuracy.

• Initial Assessment. Assess the last reconciliation dates for all Balance Sheet accounts. This step helps determine whether the accounts are current and highlights areas that may require immediate attention. Knowing the last date reconciled provides a snapshot of the bookkeeping status.
• Review Transaction Registers. Instead of examining every transaction in detail, focus on the transaction registers. Look for any discrepancies, such as unreconciled items mixed with reconciled transactions, which can indicate errors in the reconciliation process. Pay special attention to holding account registers to identify unusual balances or transactions that may not align with expected patterns.
• Profit & Loss Statement Review. After reviewing the Balance Sheet, we review the Profit and Loss statement. Look for expected income types and investigate any significant discrepancies in expenses.
• Monthly Profit & Loss Comparison. Run a P&L report by month to compare current figures with those from previous periods. This analysis can help identify trends or anomalies that warrant further investigation, particularly if there are significant changes in income or expenses.
• Analyze the Balance Sheet. The Balance Sheet is a critical tool for evaluating the financial health of Launch Industries. Investigate any negative balances in asset or liability accounts, as these often signal errors that need correction.

Tax Procedures

Launch Industries effectively manages its tax obligations, ensuring compliance and minimizing potential liabilities. Regular reviews and consultations with tax professionals will further enhance the effectiveness of our tax strategy.

Sales Tax Compliance

• File sales tax returns on time.

Tax Filing Procedures

• Annual DOR Tax Return: Prepare and file annual tax returns for the business.
• Annual City of Seattle Tax Return: Due annually. Payroll figures for employees working within City of Seattle limits, and revenue billed to businesses within the City of Seattle, are needed in order to file these correctly.
• Annual IRS Income Tax Return:
  • By January 15 — notify our accountant (Rebecca McCarthy) that our files are ready.
  • Accountant reviews by March 15.
  • Accountant files by tax deadline.
  • Extensions should always be avoided.

Tax Planning and Strategy

• Engage with a tax advisor or CPA to develop tax strategies that minimize liabilities and maximize deductions.
• Stay informed about available tax credits and deductions that Launch Industries may qualify for.

Regular Review and Updates

• Stay Informed: Keep up to date with changes in tax laws and regulations that may affect Launch Industries. Subscribe to tax newsletters or join industry associations for updates.
• Annual Review: Conduct an annual review of tax procedures and compliance to identify areas for improvement and ensure that all practices are up to date.