Accounting 101-Issue 60
BEING GRATEFUL: BEING PREPARED
We are officially down to the last two months of the year. It’s also the 3-year anniversary of Balance Financial Solutions! I want to take a moment to thank you all for the support and trust you have so graciously given me during these three years in business. It has been an amazing experience and I look forward to growing the business with you and being on your team to help you understand the story behind your business numbers.
BEING GRATEFUL: BEING PREPARED
We are officially down to the last two months of the year. It’s also the 3-year anniversary of Balance Financial Solutions! I want to take a moment to thank you all for the support and trust you have so graciously given me during these three years in business. It has been an amazing experience and I look forward to growing the business with you and being on your team to help you understand the story behind your business numbers.
Thanksgiving is a favorite holiday of mine and a time to be grateful for all that we have. This also applies in business. There are many ways to be grateful in your business such as for the growth you may have experienced or the ways you have been able to impact the lives of the clients you serve.
I’d like to take a moment to list ways that you can be grateful for being prepared when it comes to your business accounting.
You will be able to understand your numbers and know how to effectively communicate this information.
You will have a good idea of the direction your business is going in and the areas that need to be worked on for the future goals of the new year.
You will understand your bottom line, knowing if your business is making a profit or incurring a loss.
You will understand receivables that need collecting and payables that need to be paid.
You will understand if you can grow your business or if you need to trim down the costs.
You will know what it costs to produce your product or provide your service.
You will be prepared for tax time and spend less time and money with a tax accountant.
Finally, the fear, frustration, and stress of business accounting will be just a memory.
Lastly, be sure to take a moment this month to enjoy the holiday by spending time with your loved ones. Wishing you a wonderful month and a Happy Thanksgiving!
Accounting 101-Issue 59
Fear in Business:
Avoid Fear in Your Business Books
Just like that we have entered the last quarter of the year and 2019 is almost over. It is no surprise that the year has gone by as quickly as it has. When you are running your own business, you more than likely find that time is an elusive commodity. Wearing as many hats as we do, it is no wonder that we have reached the last quarter and have no idea where the time has gone. This is usually about the time where fear starts to set in as business picks up, holidays are around the corner and the end of the year approaches. These four tips will help you avoid that fear and put that energy into running your business successfully to the end of 2019. After all, let’s leave fear where it belongs, around Halloween.
Fear in Business:
Avoid Fear in Your Business Books
Just like that we have entered the last quarter of the year and 2019 is almost over. It is no surprise that the year has gone by as quickly as it has. When you are running your own business, you more than likely find that time is an elusive commodity. Wearing as many hats as we do, it is no wonder that we have reached the last quarter and have no idea where the time has gone. This is usually about the time where fear starts to set in as business picks up, holidays are around the corner and the end of the year approaches. These four tips will help you avoid that fear and put that energy into running your business successfully to the end of 2019. After all, let’s leave fear where it belongs, around Halloween.
The first tip is to be Prepared for the end of the year. Take note of the business finances as they stand today and make a plan to make sure your books are up to date. If you feel that you cannot possibly bring your business books up to date, then make it a point to invest in a bookkeeper. Communicate with your tax accountant on steps to take for the end of the year with regards to your business.
The second tip is being Persistent with your business books. This is the time to assess your books and devise a plan if need be to bring those books up to date. At the same time put together a plan that will enable you as a business owner to be persistent with your books. This is absolutely necessary in order to avoid the fear and anxiety that comes once the year is done and your business books are a mess.
The third and fourth tip work hand in hand with each other and help avoid fear of issues with your business cash flow. Be Particular in how you choose to spend the funds of your business. You may see a large influx of cash in this last quarter, choose to invest it wisely so that you are able to sustain your business for both growth and the slow times ahead. The last tip is to be Proactive in your collections efforts. Make the time to spend actively collecting the receivables that are due especially those that are past the due date terms.
Accounting 101-Issue 58
School Is In: Back to Business
It is September, and the theme everywhere is back to school. Back to school involves the end of Summer and vacations along with the beginning of schedules and increased business activity. It is a great time to take steps that will ease us back in during this time period and the rush of the last four months of the year.
School Is In:
Back to Business
It is September, and the theme everywhere is back to school. Back to school involves the end of Summer and vacations along with the beginning of schedules and increased business activity. It is a great time to take steps that will ease us back in during this time period and the rush of the last four months of the year.
There are ways to alleviate the overwhelm of this time period and get back into a business routine that fits you as a business owner. Do not say yes to every opportunity that is given to your business. This is not a good business practice; it will lead to overwhelm and burnout. Thus, causing you to run yourself and possibly your business to the ground. Manage your time wisely, make sure that what you are charging for your product/service does convert to a profit after costs/overhead are taken into account. Remember your time is valuable, costs are not just the actual material that goes into the product. Lastly, be consistent with your books, create a schedule that involves checking in on your books and performing reconciliations if this is not outsourced work.
Fall is my favorite season and it is a good time to make sure you are practicing good business basics. These business basics help to make sure that you are running your business like a business and not a hobby. Those basics include but are not limited to: set up business bank accounts and use them, invoice customers promptly, use some type of software even excel to start, store receipts digitally, communicate with your tax accountant and utilize a bookkeeper or accountant when the time comes.
Lastly, September marks the end of the third quarter. This means that tax payments are due in October and more importantly the last quarter of 2019 will begin. This is the time to kick the energy into high gear in order to complete the goals you set for your business in 2019. This is also a time to make sure that your business finances are on track and not in a shoe box. If that is the case for your business finances, you need to take the time in the last quarter to organize the business finances and end the year in the best financial position possible.
Accounting 101-Issue 57
Creating Profit: Is your business positive?
Many small business owners understand that their numbers are important and that they should be looking at them. However, many small business owners are confused by what they should look at and what the numbers actually mean in a financial report at the end of each month.
Creating Profit:
Is your business positive?
Many small business owners understand that their numbers are important and that they should be looking at them. However, many small business owners are confused by what they should look at and what the numbers actually mean in a financial report at the end of each month.
This newsletter will concentrate on one of the most important financial reports in your business, the profit & loss report. This report is key to running a business as it reveals the business’s bottom line, is your business creating a profit or a loss. Prior to getting to the bottom line, there are certain areas that as a small business owner would be crucial for you to understand. These areas consist of understanding profit margin, pricing your product/service, costs of creating your profit/service and ways to increase margins in your business.
Profit margins are essential to any business, it tells a business owner how much income a business makes in relation to sales made over costs incurred. This margin is one of the key indicators of how well a business is performing financially. Understanding this margin and how it is calculated would give any business owner a key reference to keep track of in their business.
Pricing your product/service is key in any business and can be an entire newsletter all by itself. For the sake of brevity and staying on this newsletter topic, there a few things to keep in mind when pricing your product. First, knowing what it cost to make your product or provide your service is the starting point when it relates to pricing. You want to make sure that you are at least pricing high enough to cover the costs. Secondly, take the time to understand all the costs involved in your product/service. Lastly, market research that includes your competition will help in what your pricing strategy should.
Finally, there are certain ways to increase profit margins in your business which would have a direct effect on income and cash flow for a small business. Both crucial in running a small business. Increasing sales and decreasing costs are two key ways to increase a business’s profit margin. Each of these areas lend themselves to numerous directions that an owner can possibly take with their business. An accountant can certainly help small business owners with any of these areas as well as create a plan so that there will be consistent positive growth into the future of the business.
Accounting 101-Issue 56
2019 Half Over: Build Healthy Business Financial Habits
It is surprising but true, half of 2019 is done. Checking in on business finances should be done monthly at the very least, but the halfway mark for the year is a great time to look at financial reports and have enough data on which to make decisions. This is also a good time to not only look at your books but also all of your business goals in general to measure the progress and make any course corrections as needed.
2019 Half Over:
Build Healthy Business Financial Habits
It is surprising but true, half of 2019 is done. Checking in on business finances should be done monthly at the very least, but the halfway mark for the year is a great time to look at financial reports and have enough data on which to make decisions. This is also a good time to not only look at your books but also all of your business goals in general to measure the progress and make any course corrections as needed.
There are steps that should be taken at the half-way mark in order to make sure your business financials are in order and you are in the best position to take on the rest of 2019 and beyond.
Be proactive with your books: Do not leave your books to last minute or tax time. If you haven’t looked at your books at all this year, it is quite difficult to remember what expenses were from January in July. Also, without having your books done, there is no way to know how your business is doing financially. Decisions are difficult to make without the data to support them.
Build a paper/digital trail: Take the time to be organized with your record-keeping. Either keep receipts in order in a proper filing system or take copies of them and store them properly in a digital system such as Dropbox. Regardless of the system you choose to create the trail, be detailed, either write or type the details of the purchases.
Track your results: In setting goals for 2019, being at the half-way point in the year, is a great time to take a look and see how your business is progressing against the goals you set. You can make sure you are on track or adjust as needed so that you can achieve those goals. This is also a good time to change those goals if they no longer apply or can no longer be met and the priorities of the business has changed.
Accounting 101-Issue 55
There’s an App for that…
As we step away from a busy first quarter that included taxes, we move into the second quarter which can mean many different things to different business owners. Business might be picking up as we get to the warmer months or business may be slowing down as the summer months may be your slowest business time. Whichever situation you find yourself in as a business owner, there are ways to make this time easier and smoother going forward. Technology has provided us business owners with the gift of apps to enable us to run our businesses smoother and with greater ease. In this newsletter, I will describe different areas that apps can be applied in your business.
There’s an App for that…
As we step away from a busy first quarter that included taxes, we move into the second quarter which can mean many different things to different business owners. Business might be picking up as we get to the warmer months or business may be slowing down as the summer months may be your slowest business time. Whichever situation you find yourself in as a business owner, there are ways to make this time easier and smoother going forward. Technology has provided us business owners with the gift of apps to enable us to run our businesses smoother and with greater ease. In this newsletter, I will describe different areas that apps can be applied in your business.
Accounting Apps: This area is of most importance because these apps will enable business owners to stay on top of the accounting for their books. Financial systems usually have their own apps that can be downloaded, such as Quickbooks. Mileage and receipts are two areas that are important when opening a business. MileIQ is an app that is good for tracking mileage while Expensify is an app that is good for keeping and tracking receipts.
Payment Apps: Payment apps are increasing in popularity quickly. It enables business owners to get paid quicker and with relative ease. Payment apps include but are not limited to Paypal, Venmo and Zelle. Each app is different in its use and offers so be sure to read the fine print and how these services work.
Business Apps: Business apps are apps that assist a business owner in running the business every day. It allows owners to have their business information with them while meeting with a client, giving project specifics on site or while networking and promoting their business. These apps are Dropbox, Asana and Evernote. They each offer their own benefits and work well together.
These apps are just the tip of the iceberg but they will enable business owners to run their business with more ease. As business owners there are so many things we need to remember, having these apps allows us to continue running our business while we wear the many hats required.
Accounting 101-Issue 54
Taxes Done, Now What?
Just When You Thought You Were Done Thinking About Your Finances This Month
April has arrived and there are a few important things that are happening this month. It will start to feel more like Spring, for most of us tax season will come to a most welcomed end and the first quarter is done. There is much to cover this month so let's get right to it.
Taxes Done, Now What?
Just When You Thought You Were Done Thinking About Your Finances This Month
April has arrived and there are a few important things that are happening this month. It will start to feel more like Spring, for most of us tax season will come to a most welcomed end and the first quarter is done. There is much to cover this month so let's get right to it.
It's hard to believe but the first quarter is already completed for 2019. This is an important time in small businesses especially. Many small business owners choose to leave the accounting of their business to quarterly. The reasons for this range from not having enough activity during the individual months or having so much on their plate leaving little to no time to tend to their books. It cannot be stressed enough the importance of reconciling your books monthly. However, at minimum quarterly should be the time you reconcile your books and actually assess where the business is financially. It is also a great time to look at the business financial goals and see how the actual numbers measure up. This analysis will allow a small business owner to make the necessary changes to ensure the business is financially solid.
April 15th is also around the corner; tax returns are due along with tax payments if necessary. It is important that you work closely with your tax accountant during this time. Surprises in regard to taxes and payments should be kept to a minimum. If you are in the position to owe taxes and cannot make those payments, do not ignore the situation. Create an action plan with the IRS to make a payment plan, understanding the penalties and fees of creating such a plan and making sure you are committed to making the payments within the plan. This is also the date that first quarter payments for 2019 are due. Again, if you are in a position that you owed taxes for 2018, making timely quarterly payments for 2019 will help greatly to ease that tax burden next year. Be diligent in working with your tax accountant in regard to these and all other tax issues you may be having.
Lastly, many confuse the different types of accountants that a business owner can utilize in their business especially during this time of the year. Make sure that you as a business owner understand the type of accountant you are utilizing in your business and that this person can help you in the way you need. A tax accountant may only offer tax services and not be able to assist a small business owner in their business finances.
Accounting 101-Issue 53
Spring Into Action-
It is hard to believe but we are already in the last month of the first quarter. For some of us, it is the much-anticipated return of Spring. It is also time to spring into action in regard to your business finances. With the end of the quarter quickly approaching, it is an important time to actually look at your business reports and make any changes if necessary. Take the time to review your books, taking a look at your Profit and Loss and Balance Sheet within your financial system. These should be relatively easy to run in a financial system.
Spring Into Action
It is hard to believe but we are already in the last month of the first quarter. For some of us, it is the much-anticipated return of Spring. It is also time to spring into action in regard to your business finances. With the end of the quarter quickly approaching, it is an important time to actually look at your business reports and make any changes if necessary. Take the time to review your books, taking a look at your Profit and Loss and Balance Sheet within your financial system. These should be relatively easy to run in a financial system.
If you do not have a financial system and are using a program such as Excel or Numbers, then it is important for you to have proper classification of the financial transactions that take place each month for your business. The classification of your expenses especially is important because it allows for you to understand if you are spending too much in certain areas. Also try not to have too many types of expenses when classifying, this becomes too cumbersome to maintain.
Lastly, in the last month of the quarter it is time to prepare for the transactions that normally take place during this time period for business owners. These can include but are not limited to quarterly payroll taxes, quarterly tax payments for this year and year-end tax filing and payments for last year. This time period can be overwhelming on business owners, but with proper planning and preparation as business owners we can get ahead of the process.
Accounting 101-Issue 52
Loving Your Books-
February has long been known as the month of love. In continuing with that theme for this month's newsletter, there are many ways that love is a component of having a small business. It is the most important necessity when it comes to having your own business. It is because you love what you do that you are able to invest tireless amounts of your time, energy and money into your small business. Without that love and passion, it would be incredibly difficult to achieve the business success you desire in your business.
Loving Your Books
February has long been known as the month of love. In continuing with that theme for this month's newsletter, there are many ways that love is a component of having a small business. It is the most important necessity when it comes to having your own business. It is because you love what you do that you are able to invest tireless amounts of your time, energy and money into your small business. Without that love and passion, it would be incredibly difficult to achieve the business success you desire in your business.
There are many hats that we wear as small business owners and we don't necessarily have love for all those areas. One of the hats that you may not love is the accounting hat for your business. There are ways to increase that love and decrease the overwhelming nature of having to handle the accounting portion of your business. Here are some ways to increase the love:
Do not put off taking the time to reconcile your books monthly: this lessens the load and assures that your books are done correctly when the transactions are still fresh in your head.
Be sure all transactions are done using your business bank account: this assures all your business finances are in one place and easier to track.
Do not mix your personal and business transactions, keep them separate: this is a key business practice that should be followed.
If you have cash transactions, be sure to have a receipt: this is proof of the business expense.
Use some type of financial system right from the beginning: this assures easy tracking and less headaches during tax time.
Invest in a bookkeeper/accountant: this eliminates the load, calms the anxiety, and allows you to put the love into the hats you do actually love to wear in your business.
Accounting 101-Issue 51
Small Business Owners-Accounting Goals: Have you started them?-
Happy New Year! It is already January in the new year, seems like yesterday we were planning our goals for 2018. Nevertheless, it is a great time to reflect on past results and prepare to take on 2019 by storm with your small business. The beginning of the year is a great time to set those goals in motion that you have for your business. It is a time to set the foundation so that you can put yourself in the best possible place to achieve them in 2019.
Small Business Owners
Accounting Goals: Have you started them?
Happy New Year!
It is already January, seems like yesterday we were planning our goals for 2018. Nevertheless, it is a great time to reflect on past results and prepare to take on 2019 by storm with your small business. The beginning of the year is a great time to set those goals in motion that you have for your business. It is a time to set the foundation so that you can put yourself in the best possible place to achieve them in 2019.
If you haven’t set any goals, then now is the best time to create those goals based on past results and future objectives for your business. As you start to put together the goals for your business, being clear on the type of growth you want your business to have specifically in the area of revenue is crucial. This will be your guide in regards to products and services, price points and costs to create the product and services. The more specific you are in regards to your business goals, the easier it becomes to keep track of the goals themselves and measure progress.
Along with the goals that you will be putting together for your business, this is also the time where there are many filing requirements for year end. There are payroll filings, 1099 filings, yearly filings depending on business types and finally business tax filings. It is important that if you have neglected your books last year and are behind, to take the time now to get your business accounting books up to date before you enlist the help of a tax accountant. The more organized you are, the less time and money you will spend in the tax accountant’s office.
Lastly, if you are having a difficult time staying on top of your business books, this is the time to work with an accountant to stay on top of your books. You can start the year on the right foot financially in enlisting the help of an accountant to keep your books organized and correct, thereby creating less fear and stress around your business accounting.
Accounting 101-Issue 50
Happy Holidays-Business Accounting Plans-New Year-
It’s the last month of the year, at this time you may be running in a million directions in your business. For some of us this month is our busiest, for others it’s where business tends to slow down significantly and yet others are already in planning mode for the new year. In whatever situation you find yourself in your business, as this year comes to close, it is the best time to assess where you are at financially in your business.
Happy Holidays!
Business Accounting Plans-New Year
It’s the last month of the year, at this time you may be running in a million directions in your business. For some of us this month is our busiest, for others it’s where business tends to slow down significantly and yet others are already in planning mode for the new year. In whatever situation you find yourself in your business, as this year comes to close, it is the best time to assess where you are at financially in your business.
As a business owner, it’s important to understand your business books and with that knowledge you are able to plan for the year to come. You should run yearly statements to be able to understand the financial story of your business. Assess areas that did well and areas that need improvement. With the new year also comes the filings that are required of all business owners such as payroll filings, 1099 completions and of course, tax filings.
The new year can be a stressful time for business owners especially small business owners. This is the time to put actions in place to make this time easier. If you have a box of receipts for your business then put a new financial system in place. If you have not completed bank reconciliations all year, create a plan to utilize the services of a bookkeeper. If you feel that your business did great for revenue but feel loss as to how to decrease costs or increase cash flow, develop a strategy with an accountant to plan your business growth. Whatever stage you are in your business, take the time, ignoring the finances is not a plan.
Lastly, take the time to enjoy this time of the year. I hope you have a chance to step away and spend time with those you love this holiday season.
From my home to yours, wishing you peace and love this holiday season and into the new year!
Accounting 101-Issue 49
Small Business Accounting-Benefits of Being Prepared-
We are officially down to the last two months of the year. It’s also the 2 year anniversary of Balance Financial Solutions! I want to take a moment to thank you all for the support and trust you have so graciously given me during these first two years. It has been an amazing experience and I look forward to growing the business with you and being on your team to help you understand the story behind your business numbers.
Small Business Accounting
Benefits of Being Prepared
We are officially down to the last two months of the year. It’s also the 2 year anniversary of Balance Financial Solutions! I want to take a moment to thank you all for the support and trust you have so graciously given me during these first two years. It has been an amazing experience and I look forward to growing the business with you and being on your team to help you understand the story behind your business numbers.
Thanksgiving is a favorite holiday of mine and a time to be grateful for all that we have. This also applies in business. There are many ways to be grateful in your business such as for the growth you may have experienced or the ways you have been able to impact the lives of the clients you serve. I’d like to take a moment to list ways that you can be grateful for being prepared when it comes to your business accounting.
You will be able to understand your numbers and know how to effectively communicate this information.
You will have a good idea of the direction your business is going in and the areas that need to be worked on for the future goals of the new year.
You will understand your bottom line, knowing if your business is making a profit or incurring a loss.
You will know what money is owed to you and what money you will need to pay out.
You will understand if you can grow your business or if you need to trim down the costs.
You will know what it costs to produce your product or provide your service.
You will be prepared for tax time and spend less time and money with a tax accountant.
Finally, the fear, frustration, and stress of business accounting will be just a memory.
Lastly, be sure to take a moment this month to enjoy the holiday by spending time with your loved ones. Wishing you a wonderful month and a Happy Thanksgiving!
Accounting 101-Issue 48
Small Business Accounting-Top Tips for Your Business-
One of the areas that most business owners seem to dread and put off until they can no longer ignore it, is accounting. Most times this area is only touched upon once a year, at tax time. There are many instances when business owners just do not understand the accounting of their business. With the tax season quickly coming to an end, I have put together a list of top tips when it comes to small business accounting. Regardless of how the accounting was done for your business last year, with these tips you can right the ship for your business this year.
Small Business Accounting
Top Tips for Your Business
One of the areas that most business owners seem to dread and put off until they can no longer ignore it, is accounting. Most times this area is only touched upon once a year, at tax time. There are many instances when business owners just do not understand the accounting of their business. With the tax season quickly coming to an end, I have put together a list of top tips when it comes to small business accounting. Regardless of how the accounting was done for your business last year, with these tips you can right the ship for your business this year.
Tip #1
Do I need to keep my business financials separate from my personal financials?
It is imperative to keep the two separate for a few reasons:
Keeping them separate allows you to be able to keep accurate accounting books for your business.
You are able to tell relatively easily if your business is making a profit.
Your taxes are that much easier to complete with accurate business books.
Tip #2
Do I need accounting software to keep my business books?
It depends on what your plans are for your business. When you first start, you may be able to get away with a simple Excel sheet as a tracking mechanism. However, most business owners want to grow their business. In order to do so with relative ease and accurate record-keeping, it is best to use accounting software.
Tip #3
Do I need to keep my receipts for my business expenses?
Yes but you do not need to keep paper copies. With technology, you can scan or take a picture of your receipt and store it on your phone or laptop. Utilizing Dropbox or Evernote, both free, is an easy way to store your receipts and also categorize/date the files.
Tip #4
Should I invoice my customer even if I don’t have accounting software?
Yes, invoices can easily be created using other software such as Word. An invoice is proof of a transaction, enables collection efforts and keeps your business books accurate.
Tip #5
Should I be tracking the accounting of my business more than just at tax time?
Yes, you should never leave the accounting in your business to once a year. If you don’t know what your accounting books are made of then you don’t know if you are losing money, where you should cut expenses or how to grow your business.
Tip #6
How do I keep track of my inventory?
The best way to keep track on your inventory is to have an accounting software that will do the legwork for you. If you choose to use Excel, then make sure to record all transactions pertaining to your inventory that includes dates, amounts and item description. Not only would you be recording when you receive inventory but also when you sell it and what you sold it for.
Tip #7
Do I need a professional accountant other than at tax time?
Yes, a professional accountant can help you with the following:
Help you set up your business books
Help you decide if a software will be used and which one
Help you understand how you can make your business grow
Prepare your books so that you are spending less time and money with a tax accountant
Help in many areas such as:
Collections
Expenses
Cash Flow
Payroll
Statements
Accounting 101- Issue 47
What type of accounting professional does my business need?-
There is much confusion over what type of services are offered by which type of accounting professional. The more common types of professionals that are used interchangeably are bookkeeper, accountant and tax accountant. While the services they each offer do build upon each other, they each offer their own type of services. Below is a list of services that each type of professional may offer. This will assist in deciding which type of professional you need based upon the needs of your business.
What type of accounting professional does my business need?
There is much confusion over what type of services are offered by which type of accounting professional. The more common types of professionals that are used interchangeably are bookkeeper, accountant and tax accountant. While the services they each offer do build upon each other, they each offer their own type of services. Below is a list of services that each type of professional may offer. This will assist in deciding which type of professional you need based upon the needs of your business.
Bookkeeper- A bookkeeper will record financial transactions for the business books. This person normally keeps the day to day and makes sure the transactions are kept in order. They may summarize data on financial reports. They lay the groundwork for accountants.
Accountant- An accountant will review, analyze and interpret the financial reports of the company. They can make sure the reports are following financial standards and requirements. They can act as advisors to business owners to assist in making informed business decisions. They can provide management, budgeting and forecasting services. They can provide both bookkeeping and accountant services. They work in conjunction with tax accountants.
Tax Accountants/CPA- A tax accountant/CPA (certified public accountant) will provide services to review financial reports and prepare taxes for the business. They can make sure that the business is compliant in regards to tax policies and requirements. A firm will be the business liaison for tax related matters with the tax government authorities such as the Internal Revenue Service. They will work with the business bookkeeper and/or accountant.
Keep in mind that an accounting firm may provide all three professional services above. A business may also choose to have a bookkeeper in house and outsource their accountant and only have a tax accountant once a year, at tax time. It is important that a business have an accountant and a tax accountant, as a business owner you want to know how your business is doing not just at tax time but throughout the year.
Accounting 101- Issue 46
Lean Beginnings: Starting Your Business Small-
In our quest to start our small business, we may think that we need to spend on everything to begin. But the reality is as small business owners just starting out, lean is the best way to go. Don’t over-complicate or do so much that you begin and are already behind financially. You do not have to sign up for everything nor have the latest and greatest systems in place.
Lean Beginnings: Starting Your Business Small
In our quest to start our small business, we may think that we need to spend on everything to begin. But the reality is as small business owners just starting out, lean is the best way to go. Don’t over-complicate or do so much that you begin and are already behind financially. You do not have to sign up for everything nor have the latest and greatest systems in place.
As a small business owner just beginning, be sure that what you do spend funds on is an investment that will bring back a return. Choose wisely where you intend to spend those funds even before you actually start the business itself. There are some expenses that are unavoidable such as a website or business cards. But understand that those are things that can be improved upon over time and keeping expenses in your business lean is the best way to ensure you don’t end up out of business before you even start. The internet is boundless with free information, be sure to do your research before you decide to spend money for paid information.
Finally, be sure to invest in a financial system that works for your business and that will grow with your business. An excel spreadsheet may be free but will not support your business growth. However, a top of the line system is not necessary for your small business either. Invest wisely and keep it lean in your start-up years.
Accounting 101- Issue 45
Mid-Year: Is your business accounting in order?-
It’s already July, that means half the year is over. All those goals that you had set up for your business in 2017, should be theoretically half completed. Hopefully you will take the time now to look at those business goals and perform an honest evaluation.
Mid-Year: Is your business accounting in order?
It’s already July, that means half the year is over. All those goals that you had set up for your business in 2018, should be theoretically half completed. Hopefully you will take the time now to look at those business goals and perform an honest evaluation.
You may be well on your way to completing some business goals or some goals may need to be adjusted or completely taken off the table for this year. Whatever your business goals were, it is important to have business financial goals. In order to meet financial goals, you need to know where the business is, where it needs to be, and how to get it there. It’s not too late to create business financial goals for 2018.
Some good financial goals for a small business are:
-Increase cash flow by a certain amount
-Decrease debt by a certain amount
-Increase working capital
-Reduce collection time or increase vendor payment cycle
-Install a system such as a financial system to improve efficiency
As with any goal, these goals should be specific and measurable. It is best you work with your accountant or bookkeeper who knows your books and can assist in this area. If you don’t have neither, one of your goals should be to consult with one and see how they can help you achieve your business financial goals this year.
Accounting 101 - Issue 44
Accounting Reports: Have you looked at yours?-
Small business owners should make themselves very familiar with certain reports for their business. This allows owners to not only see how the business is doing but also allow them to make changes and improvements along the way.
Accounting Reports: Have you looked at yours?
Small business owners should make themselves very familiar with certain reports for their business. This allows owners to not only see how the business is doing but also allow them to make changes and improvements along the way.
Balance Sheet- This report is a rolling picture of the business’s financial position at a moment in time, normally at month end or year end. It shows the business’s assets, liabilities and owner’s equity.
Profit & Loss- This report is the most important to a business owner. It reveals if the business is achieving its profitability goal and generating an acceptable income. The profit & loss summarizes the revenues earned and expenses incurred over a specific period of time.
Statement of Cash Flows-Cash flows reveal the inflows and outflows of cash in a business. This report would reveal the cash produced by the business as well as any investing and financing activities that have taken place during an accounting period.
Accounts Receivable Aging- This report is a detailed presentation of all the accounts receivable that is open and outstanding, owed to the business. It is beneficial for controlling and limiting receivables from becoming aged longer than the accepted terms of payment.
Accounts Payable Aging-This report is a detailed presentation of all the accounts payable that is open and owed to outside vendors. It is beneficial for keeping track of what payables are owed and when they are due.
Accounting 101- Issue 43
Automation In Accounting-
When you open a business, as an entrepreneur, we wear many hats in the beginning. As you start to piece your business together, you will find that there are two processes that will help immensely in your business. Those processes are automation and delegation. Automation is when you set up processes in your business to run by themselves. Delegation is handing off tasks to others in the business.
Automation In Accounting
When you open a business, as an entrepreneur, we wear many hats in the beginning. As you start to piece your business together, you will find that there are two processes that will help immensely in your business. Those processes are automation and delegation. Automation is when you set up processes in your business to run by themselves. Delegation is handing off tasks to others in the business.
Delegation is harder to achieve especially at the beginning of the business when it’s only you in your business. However, automation is important to achieve so that you can concentrate on the more important tasks of your business. There are ways that an entrepreneur can use automation in accounting for their business. Below are ways that automation can be used when it comes to running the accounting for your business. These processes can be used within a business that has a financial system in place such as Quickbooks.
Sending an invoice automatically via email to your clients. Once a sale is made, an email address should be collected for all your clients so that you are able to automatically email the invoice to your client. This creates automation, saves time and assures the collection process begins quickly and smoothly.
Transactions that are processed in your books should be taking care of quickly and efficiently on a frequency that does not allow the transactions to build-up with out being tended to. This allows for the bank reconciliation to be automated with little work each month since all the leg work has already been completed throughout the month.
Vendors can be set-up to automatically be expensed to the same account each time a bill is processed so that there is little time spent on entering these invoices. This creates automation in processing these invoices.
Statements should be automated to email to your clients each month when there are past due balances so that collection efforts will be consistent.
Reports should be set up to automatically run and sent via email to you every month. This will automatically enable you to take a look at the company books on a frequent basis and keep you aware of any issues as they arise.
Accounting 101- Issue 42
Top Ways to Get Paid Faster-
In small businesses, there are many activities that need to work smoothly in order for the business to be successful. We need to make sure we create the product or service for our clients, ensure our vendors/suppliers are paid on time and collect the receivables from our clients for what was provided. Each of these areas entail a set of ways to come together in order for the activity itself to run smoothly.
Top Ways to Get Paid Faster
In small businesses, there are many activities that need to work smoothly in order for the business to be successful. We need to make sure we create the product or service for our clients, ensure our vendors/suppliers are paid on time and collect the receivables from our clients for what was provided. Each of these areas entail a set of ways to come together in order for the activity itself to run smoothly.
In the collection of receivables, there are ways that enables your business to receive the payments faster. Some of the ways to get paid faster in your business are as follows:
Ensure each invoice is accurate and contains the correct information.
Send invoices as soon as the product/service is provided.
Email invoices to your clients to ensure secure and quick delivery of the invoice.
Enable your clients to pay you via electronic bank transfer to ensure secure delivery and avoid the lag in snail mail.
Follow up with your clients once the invoice becomes past due.
Offer discounts in order for your clients to pay early.
By following the ways listed above, you are giving your business the best possible chance of not only receiving the payments faster but also keeping your business in a cash flow positive position.
Accounting 101-Issue 41
Small Business Accounting-Top Tips for Your Business-
One of the areas that most business owners seem to dread and put off until they can no longer ignore it, is accounting. Most times this area is only touched upon once a year, at tax time. There are many instances when business owners just do not understand the accounting of their business. With the tax season quickly coming to an end, I have put together a list of top tips when it comes to small business accounting. Regardless of how the accounting was done for your business last year, with these tips you can right the ship for your business this year.
Small Business Accounting
Top Tips for Your Business
One of the areas that most business owners seem to dread and put off until they can no longer ignore it, is accounting. Most times this area is only touched upon once a year, at tax time. There are many instances when business owners just do not understand the accounting of their business. With the tax season quickly coming to an end, I have put together a list of top tips when it comes to small business accounting. Regardless of how the accounting was done for your business last year, with these tips you can right the ship for your business this year.
Tip #1
Do I need to keep my business financials separate from my personal financials?
It is imperative to keep the two separate for a few reasons:
Keeping them separate allows you to be able to keep accurate accounting books for your business.
You are able to tell relatively easily if your business is making a profit.
Your taxes are that much easier to complete with accurate business books.
Tip #2
Do I need accounting software to keep my business books?
It depends on what your plans are for your business. When you first start, you may be able to get away with a simple Excel sheet as a tracking mechanism. However, most business owners want to grow their business. In order to do so with relative ease and accurate record-keeping, it is best to use accounting software.
Tip #3
Do I need to keep my receipts for my business expenses?
Yes but you do not need to keep paper copies. With technology, you can scan or take a picture of your receipt and store it on your phone or laptop. Utilizing Dropbox or Evernote, both free, is an easy way to store your receipts and also categorize/date the files.
Tip #4
Should I invoice my customer even if I don’t have accounting software?
Yes, invoices can easily be created using other software such as Word. An invoice is proof of a transaction, enables collection efforts and keeps your business books accurate.
Tip #5
Should I be tracking the accounting of my business more than just at tax time?
Yes, you should never leave the accounting in your business to once a year. If you don’t know what your accounting books are made of then you don’t know if you are losing money, where you should cut expenses or how to grow your business.
Tip #6
How do I keep track of my inventory?
The best way to keep track on your inventory is to have an accounting software that will do the legwork for you. If you choose to use Excel, then make sure to record all transactions pertaining to your inventory that includes dates, amounts and item description. Not only would you be recording when you receive inventory but also when you sell it and what you sold it for.
Tip #7
Do I need a professional accountant other than at tax time?
Yes, a professional accountant can help you with the following:
Help you set up your business books
Help you decide if a software will be used and which one
Help you understand how you can make your business grow
Prepare your books so that you are spending less time and money with a tax accountant
Help in many areas such as: