Reviewing Your Accounting in Collective

Maintaining a clear view of your business finances is essential for making informed decisions and staying prepared for tax season. In Collective, you can review your accounting at any time using the tools available directly in your dashboard.

Whether you operate as a single-member LLC or an LLC that has elected S Corp tax status, maintaining your LLC's good standing through accurate records is essential. The principles of reviewing your Profit and Loss (P&L) and Balance Sheet apply to both structures, as these financial statements provide the baseline for your federal tax filings—whether that is Form 1040 Schedule C or Form 1120-S.

Accessing Your Accounting Tools

You can access your financial data in two ways from your Collective dashboard:

1. Home Screen: Click Access on the Accounting widget in the center of your screen.
2. Sidebar: Click the Accounting tab on the left-hand menu.

Once inside the Accounting section, you will see several tabs: Overview, Transactions, Reimbursements, Reports, and General Ledger.

Understanding the Accounting Overview

The Overview tab provides a high-level snapshot of your business finances, including:

• Profit and Loss: A quick look at your revenue versus expenses.
• Cash Flow: A summary of money moving in and out of your business.
• Expense Breakdowns: A visual of where your business capital is being spent.

Note: This is a high-level snapshot. These numbers may adjust depending on the time of the month and when our accounting team last categorized and reconciled your financials.

Managing Your Transactions

The Transactions tab pulls in data from all linked business accounts. This is your primary hub for ensuring every dollar is categorized correctly.

Updating Categories

If you notice a transaction needs a different classification, simply click into the Category field to search for and select the correct one.

Flagging Issues for the Accounting Team

If you have a question about a specific transaction:

1. Click the asterisk (star button) on the far right of the transaction row.
2. This opens a chat agent where you can report issues or provide details directly to the accounting team.

Reviewing "Needs Review" Items

Periodically, you may see transactions marked as Needs Review, Ask Member, or Under Collective Review. You can click into these to update the category or confirm if a transaction is business or personal.

Running Financial Reports

The Reports tab is the most critical tool for a deep-dive review. While the dashboard provides a summary, these reports provide the granular detail needed for accuracy.

Accessing Drillable Reports (P&L and Balance Sheet)

A "drillable" report allows you to see the individual transactions that make up a specific total. The Profit and Loss (P&L) and the Balance Sheet are two distinct reports, but they can be accessed and navigated using the same steps:

1. Navigate to Accounting in the left sidebar.
2. Select the Reports tab and stay on the All sub-tab.
3. Scroll down to the Accounting Reports section.
4. Select either Profit and Loss or Balance Sheet.
5. In the top left, use the dropdown to set your preferred date range.
6. Drill Down: Click into any number on the report to see the specific transactions that make up that total.

Verifying Your Data

• Profit and Loss: This report shows your revenue versus expenses over a specific period. Click into Services Income to see individual transactions. If you find money you personally put into the business, update it to Shareholder Contribution.
• Balance Sheet: This report provides a "snapshot" of your business's health at a specific point in time, showing Assets, Liabilities, and Equity. Review this to ensure your Shareholder Contributions (money you put in) and Shareholder Distributions (money you took out) are accurately reported.

How Collective Supports Your Accounting

Collective provides the platform and specialized expertise to keep your books tax-ready year-round.

• Automated Bookkeeping: We run monthly bookkeeping that captures your activity for your specific tax filing requirements.
• Expert Guidance: Our team organizes your information according to standard bookkeeping practices based on the transactions you provide.
• Member Responsibility: While we handle the heavy lifting, your role is to ensure all business accounts are linked and to provide clarification on "Ask Member" transactions when prompted.

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.