CPA vs. Accountant Responsibilities

When deciding whether you need to hire a CPA or a general accountant for your small business, it’s essential to know the difference. There are a variety of accounting services that you can outsource or hire an in-house accounting team to address. Bookkeeping and day-to-day accounts payable and receivable do not necessarily require hiring a person with a degree in Accounting.

There are more in-depth accounting services that you would need to hire someone who is educated with an accounting degree. A CPA is a Certified Public Accountant with even further education and has passed a test to earn that title. They must adhere to a code of ethics as well to keep their certification.

For a greater understanding of which accountant professional may be right for your small business, let’s look at the roles of an accountant and a CPA.

Accountant Responsibilities

While many accountants are trained to do many of the duties that your small business may require regarding accounting, some tasks may need a CPA’s expertise. What are the responsibilities of an accountant who doesn’t have their CPA credential?

  • Has a Bachelor’s Degree in Accounting: A general accountant will have a Bachelor’s Degree in accounting or have a degree with a large number of accounting credits.
  • Oversees Bookkeeping: A general accountant should be experienced in managing bookkeeping and signing off on the processes.
  • Consults on Financial Strategy: A general accountant will have a broader view of your company and offer advice on how to save money in the long run.
  • Sets Up Business for Taxes: An accountant can register your small business as an LLC or whichever category is best for your tax situation.
  • Manages Cashflow: An accountant will keep a close eye on the cashflow and have boundaries set on how much cash goes out in order to maintain ample working capital.
  • Projects Future Earnings: A general accountant can collect data and look at the earnings and growth over a period of time. They will use this data to predict earnings for the future.
  • Runs Reports and Analyzes for Optimal Savings: A small business accountant will also run reports to compare and contrast month-to-month or even week-to-week reports. They should also be experienced in recognizing opportunities for savings within your company.
  • Business Planning: They can help with business planning and offering advice on the financial side of your business. Having an accountant in on the meetings with big ideas for the future is always a good idea.
  • Tax Planning: Every business has a strategy with taxes that helps them save money and utilize tax credits. A small business accountant will be very familiar with the best tax strategies for your business.
  • Files Business Taxes: An accountant can file taxes for your business and make sure there aren’t any errors that could lead to red flags that alert the IRS for an audit.

A general accountant can get the job done when it comes to running the financial side of your business. They are well-versed in business planning and helping businesses thrive. There are some things that an accountant cannot do without the CPA certification.

CPA Responsibilities

It changes state to state, but a CPA generally has a Bachelor’s Degree with a certain amount of accounting credits. And on top of that, they either have to have a Master’s Degree or 150 credits total to be able to sit for the CPA exam. Once they have passed the exam, they participate in continuing education to keep their CPA license valid.

Here are the responsibilities of a CPA:

  • Legally Defends Your Company in an IRS Audit: If the IRS audits your small business, a CPA can defend your business and act as a representative. Choosing a CPA with their tax expertise will minimize the fees that may be required by the IRS.
  • Creates and Signs Off Audit Reports: When a CPA signs off on an audit report, they are putting their name and reputation on the line. A CPA signature means that you can trust anything on the report is accurate.
  • Has Expert Tax Knowledge: If you are looking to file out of state taxes or have a complicated tax return, a CPA will have knowledge of all the various tax laws. They will be able to help you with your unique tax return.
  • Offers Advanced Tax Strategy Advice: A CPA will have advanced knowledge of tax strategies for small businesses.
  • Adheres To a Strict Code of Ethics: The reputation and career of a CPA are on the line if they were to break any rules or sign off on an audit without thoroughly checking it for accuracy.
  • Signs Off on All Financials for Publicly Traded Companies: If your company is publicly traded in the stock market, then all financials that are presented must be signed off by a CPA. The public isn’t going to trust your profit margins until you have a CPA’s stamp of approval.

As you can see, it takes special training and effort to receive a CPA credential. Because of this, their work is more valued and sought after. If you need help with an IRS audit, a CPA can help. And you can always know that they have to be honest and ethical to keep their license.

What is an EA?

An enrolled agent, or professional tax preparer, also has to sit for an exam and adhere to a code of ethics. An EA has the expertise in the tax side of the CPA certification. Their roles include:

  • Preparing Complex Tax Returns: If you are looking for an expert in tax preparation and strategy, then an EA will help you with that. Their role is primarily to prepare taxes and execute tax strategies that are best for big and small businesses.
  • Specialized Knowledge in Tax Law: An EA will know all of the tax laws and fix any problems in your small business that may be bad news to the IRS. They can also defend you if the IRS were to accuse your company of breaking any tax laws.
  • Representing Your Business Before the IRS: An EA is qualified to defend your business before the IRS, just the same as a CPA. They will fight for your business during an audit and reduce fees and present the proper paperwork throughout the process.
  • Negotiating Payment Plans with the IRS: An EA can work with the IRS to negotiate payment plans if there are back taxes that are owed. They can also advocate for your small business and cooperate kindly with the IRS demands.

An EA may be an excellent option for your company if you are looking for an accountant to help you with an IRS audit. They are well-qualified and tax experts. Most of the work an EA focuses on is in the tax side of accounting, so they will always be a great option to take care of your small business taxes.

Which Accountant Professional Is Right for Your Small Business?

Here are some questions you might ask yourself to decide what accounting professional is right for your small business:

  • Is my company private or public? If your company is public, then you will need a CPA to certify all of the financial documents that you present to the public.
  • Do I need help with specialized accounting? For any complex accounting processes, a CPA will be the right person to use their further education to help your small business.
  • Do I need help with daily bookkeeping and simple accounting? A general accountant can help you with any bookkeeping processes and help get your company organized.
  • Do I need representation in an IRS audit? A CPA or an EA can represent you before the IRS. These agents are used to working with the IRS and have the negotiation skills to save you the most money.
  • Am I seeking financial advice for my business? An accountant or CPA is an excellent option if you are seeking big picture advice for your business.
  • Do I need help with taxes? An accountant, CPA, or EA can help you file your taxes and remember all the tax credits for which you qualify. A CPA or EA may have more specialized knowledge and more experience. Plus, their certification is on the line if any big mistakes were to occur.

The answers to these questions should get you started on which path to take when choosing the right accountant for your company. Doing the proper research beforehand will save you from having to hire additional help in the future. The last thing you want is to be audited just to find out that your accountant isn’t qualified to help you with the IRS.

Contact Small Business Accountants Today

When you sign up for accounting services, you want a team who can help you with every need that you have. With Easier Accounting, we have a team of qualified accountants and CPAs who specialize in small business. Our experts can relieve your stress related to bookkeeping or taxes, or day-to-day checks and balances. Invest in your small business by hiring small business accountants today. Give us a call at (888) 620-0770.

Advice for Making a Small Business More Diverse and Inclusive

Being an entrepreneur can come with many brainstorming ideas that are made into a reality with your drive and go-getter personality. An essential part of owning a small business is surrounding yourself with people from all backgrounds and demographics who can help you learn about all perspectives. If you were only surrounded by people who think as you do, you would never be able to reach a broad audience.

What Does Diversity in Small Business Look Like?

Diversity in business can involve many aspects, including:

  • Age: Having a wide array of generations on your executive team is an asset to a company. Yes, hiring a 21-year-old fresh out of college can feel like a risk. It can also have a big payoff by gaining a new and innovative perspective from someone in a different stage of life than you. On the flip side, someone with a lifetime of experience will know shortcuts and life lessons that you may not have experienced yet.
  • Gender: Many successful businesses have spoken out about hiring more women on their teams, and their companies are thriving. Getting input from both men and women can widen perspectives and bring in better ideas.
  • Socio-economic Status: Surround yourself with people from all walks of life in your small business. It is essential to have people from different socio-economic backgrounds so you can discuss price points with real input from your team. Choosing a diverse accounting team is crucial as well, in age and experience, and background.
  • Race: Diversity can look like a wide array of racial backgrounds. You can provide the representation of success and power in hiring people who aren’t exactly like you.
  • Place They Were Raised: An employee raised in the Northeast could have different ideas from a person from California. When you have many regions represented on your team, you will reach audiences all over the country and world with your online business.
  • All Abilities: Open your mind to hiring someone who is deaf or has any disability. Small changes in the workplace to make it more accessible can take care of any initial differences. And you can enjoy the skills presented by a valued employee.
  • Sexual Orientation: Great perspectives and a more extensive reach will result from people who have a variety of life experiences. Celebrate the differences in your work community.

Diversity comes in many forms, and all ways are beneficial to your business. Making small efforts to invest in your business’s diversity will be steps toward making your small business the best that it can be.

Where to Start?

You don’t have to clean up shop and overhaul your team all at once. Company culture doesn’t change overnight. There is power in awareness and then taking the steps toward diversifying your team, little by little. When you all are on the same page and moving in the right direction, real strides can be made toward executing change. Here are some ideas on where to start:

  1. Educate Your Small Business on Diversity and Why It’s Important

The first step is educating your current employees and executive team. You can talk about the benefits of surrounding the business with contrasting ideas and opinions. A company culture of diversity and inclusion isn’t only the right thing to do – it will give your company a competitive edge and help your business grow into financial success.

When the whole team is educated on how important it is to invite differing opinions and views to the table, they will all be on board to move forward with the initiative. Unity in this intent is essential in a business so that everyone is genuinely working together to make a change in company culture.

  1. Start with One or Two Goals

Of course, you can’t fire everyone on the team and start fresh. And you also can’t hire a bunch of new employees without work for them to do. Implement initiatives to drive your current employees into the state of mind surrounding inclusion and diversity.

When the company changes its culture and way of thinking, a new team member will feel more welcomed when starting work at your small business. Employees in a small business can be tight-knit, and your team can work on inclusion strategies before the need to hire a new employee comes up.

  1. Celebrate the Differences Among Your Employees Regularly

You can implement programs in your company to promote the employees to show who they really are and what they love. This can look like a simple basketball or book club that meets after work hours together. Or you can also start service initiatives where the company comes together to serve in the community, and employees take turns choosing charities they are passionate about.

The worst culture you can have is a standard where everyone is expected to conform and hide who they really are. Encourage sharing and learning from one another. Maybe you can spotlight an employee in each staff meeting, highlighting personal achievements and passions. Let people know that opening up and sharing are welcome in your business.

  1. Make a Plan for Recruiting

In order to open your mind to finding diverse talent for your small business, you can create a navigation plan. This can include a diversity component to your interview scorecard. If you are evaluating a potential employee, how would they contribute to your company in a way that would stand out?

Another strategy for hiring a new employee is to try a blind resume assessment. Have the names, schools, and the city they live removed from the resumes and look through them with fresh eyes. This way, you can be freed from quick judgments. When you don’t know their gender or University, you can decide based on qualifications alone. This will set the tone for the interview process and keep yourself aware not to make snap judgments based on appearance as well.

When hiring new employees with diversity in mind, be sure to highlight the steps your company has taken toward educating and making goals around diversity and inclusion. You never want a potential employee to feel like a token hire to check a box. Be genuine about your end goal and the small steps you are taking to achieve it.

  1. Represent Your Company in Advertising Honestly

A lot of times, a company uses models of different ages and races to advertise their business. While this is a great way to show that your company has representation, be sure that your employees also reflect a picture of diversity. Customers want to know that the people involved in making the decisions with the company also look like them.

It can be overwhelming to know where to start when implementing diversity in your small business. When you make your intentions known and implement small initiatives to revamp your company’s culture, you will make the transition more natural. Surrounding yourself with a variety of voices and celebrating those differing opinions will create ideas that are on the next level, ready to propel your small business into a success.

What Are the Benefits of Diversity in the Workplace?

There can be so many benefits to having varied voices and opinions in your small business. One person in charge of making decisions without consulting with others will always lead to a dead-end in innovation. When you brainstorm with a small group of people, especially people with diverse backgrounds and beliefs, you will find success with fresh and new ideas.

Here are some benefits to having a diverse team for your small business:

  • Multiple perspectives
  • Fresh ideas
  • More creativity
  • Increased collaboration
  • Faster problem-solving
  • Higher profits
  • Respected company reputation

When you take the small steps toward building up your small business’s diversity, you will see great results. It takes more than just big talk. You have to act on your ideas and set measurable goals. When you hold yourself accountable for making change, your business will gain a reputation of inclusion and being a safe place for people of all backgrounds to work.

Now Is the Time for Diversity and Inclusion

If it has been heavy on your mind to make changes in your small business surrounding diversity and inclusion, put your money where your mouth is. Taking the necessary steps toward altering your company culture and hiring people with fresh and exciting ideas will help your small business thrive.

When you have a team that is filled with broadened horizons and problem-solving skills, it may genuinely be the revamp that your business needs. Make a plan and invest in the diversity of your small business today.

Contact an Expert Accounting Team

Our team at Easier Accounting can help you with your small business accounting needs. If you are looking to diversify your team, let us take the stress of day-to-day bookkeeping and accounting off your hands. You will be left to focus on the growth of your company with increasing big and diverse ideas. Contact Easier Accounting to learn more about delegating out your small business accounting so that you can focus on what really matters. Please call us at (888) 620-0770.

Start the New Year Off Right for a Small Business

As you go into the New Year with your small business, you may find yourself feeling energized and ready to make 2021 your year! There were likely some hard lessons learned in 2020. But you made it through, and now your company has the potential to grow and thrive. What can you do for your small business to make sure that you start the New Year off right?

Looking Back to Find Fresh Ideas for the New Year

How can you look back on 2020 and turn your experiences into even better results for your small business in 2021? With great analysis and dedication, take a look at these ideas on how your past unexpected adventures can serve great benefits for your small business:

  • Contact Existing Customers: Get in touch with your existing clientele to find out what your business is doing right. What keeps them coming back to your website or store? Is it the friendly employees? Is it the cleanliness? Is it the store layout and modern style? Is it the quality of the products? When you find out why people stay loyal to your small business, you can emphasize those areas of your business to attract new customers.
  • Survey Previous Customers: It’s not easy to hear criticism on your small business, but it helps know why customers are not returning. When you reach out to people who only have one purchase from your company, you can discover why they didn’t return. Maybe the reason is that they loved the product so much, they never needed a replacement or a reason to return. But other reasons could be helpful to know: was it too busy, was the interface complicated, was the product defective, did they have a terrible customer service experience? These things would be vital to know so you can move forward in improving your small business.
  • Look at your ROI on Marketing Strategies: Write out the numbers of how much money you invested in marketing, and find out which marketing strategy brought in the most business. You can find out how people heard of your business through a short exit survey. Or you can send out coupons through email, social media, and the mail, and see which coupons are used the most. If you can pinpoint where your marketing paid off the most, you can put more money into that investment.
  • Review Your Small Business Sources of Success: What is the source of success in your small business? Maybe you initially set out to start a headband business, and you discovered that your greatest strength was in the design prints and fabric choices. With those strengths, the sky is the limit, and your small business can expand into designing workout clothing or athleisure. Maybe your strength is building a community and connecting with customers. Then you can put your efforts into growing your social media following and obtaining loyal customers that will get behind all of your business ventures.
  • Celebrate the Best Performing Months: When you look back at 2020, which months were your best sales months? 2020 was a unique year, but you can learn at what point during the pandemic that your company found its footing with tweaked safety procedures and a big move to online sales. How can you continue that growth into the New Year?
  • Glean from What Worked and Move On from What Didn’t: Do not be afraid to admit failure on an idea and move on from it. You don’t have to stay loyal to your ideas if they are sucking money from the business. If an innovative marketing strategy didn’t work for your business, cut it loose. This will relieve you from unneeded stress and a more significant loss from holding on too long.

Collecting and analyzing data in your small business can work toward your benefit. If you are in over your head with an accounting system, then eliminate the stress and find a team you can trust to do your small business accounting. One of an entrepreneur’s best characteristics is recognizing what’s failing early and making the change to minimize your losses.

Looking Ahead and Start the New Year with a Bang

Whether your business barely made it through 2020 or had the best year yet, every small business owner has pros and cons to look back and learn from over the course of a year. Take what you have learned, and now look to the future. How are you going to make the New Year the best year yet for your small business?

  1. Make New Connections

The small business world is a small community of people who are willing to help one another. Meet new people. Get to know other small business owners in your city and share ideas and tips. When you have friends in the industry, you will likely get referral customers from other small business owners. The people who shop small usually like to support small businesses in general, so become a part of that small business network in your community.

  1. Learn Something New

As your industry is growing and changing, stay at the forefront of the changes. Technology is a huge part of small businesses these days. If you have avoided dipping your toes into social media, delay no longer! Create your small business accounts on social media and post consistently. This way of connecting with your customers will help you keep personal relationships with your clients, especially if you are an online-only business.

If your small business is a service business, then learn new services to offer your customers. If you have a hair salon, stay on top of recent up-and-coming trends. If you have a dog-walking service, implement new procedures to offer contactless pickup and dropoff during the pandemic. This may include a simple tracking device on the dog, so the owner knows where you are. New changes are essential and show that your company is innovative and creative.

  1. Don’t Be Afraid of Implementing Significant Changes

It can be overwhelming to decide to revamp a process that your small business has used for years. But if there is a better way, then the change is necessary. Whether you need to reorganize your accounting system or need a brand new website interface, make the changes that keep your company current and modern. Leaping into significant changes for your small business in the New Year can result in huge profits or savings.

  1. Dream Big

Think back to what your main goal was before you started your small business. If you have always wanted to run your own music school and are currently teaching lessons out of your home, what needs to change to go to the next level? Often, it takes an investment of money to get the big results that you dream about for a thriving small business in the New Year. Save up and work toward that dream, and don’t lose sight of it.

  1. Set Lofty Goals

Usually, we are talking about attainable, small goals that will keep you motivated. Those goals are important too. But if you want 2021 to be your big year, then keeping your eye on the big end goal is what is going to get you to hit the ground running. Do you have a goal to double your small business team by the end of 2021? What about a goal to delegate the day-to-day business dealings so that you can focus on growing the business?

If you are looking to achieve big goals, it may be time to get an investor. Finding an investor in the New Year is a lofty goal. If your business is a 3-person small business, it may be time to bring in more money so that you can find a manufacturer, invest in ample inventory, and be prepared for tremendous growth. If you have found your small business at this point, don’t shy away from it. Dive in and see what can happen for your small business in the New Year.

You can jump into 2021 with a positive outlook for your small business. Stick with the things that work and run with your big ideas to achieve even bigger goals. Keeping this idea of growth and unlimited heights at the forefront of your mind will help your small business move in the right direction for the New Year.

Contact Small Business Accountants for Help

This New Year could finally be the year that you let the professionals focus on your accounting system so that you can focus on growing the business. When you hire experienced accountants, you will quickly see your investment return when you have a team handling your money that knows how to save. Your business can only benefit from an organized and strict accounting strategy, including bookkeeping, taxes, and payroll services.

Our team at Easier Accounting has an extensive understanding of small business accounting. If you require a revamped accounting system for 2021, then contact our team for help. We can set you up an accounting system focused on saving your business money and time. Call Easier Accounting to schedule your appointment at (888) 620-0770.

Small Business Lessons Learned to Get Ahead in 2021

If there was ever a year that you learned something as a small business owner, last year was the year. With the pandemic, many businesses were forced to pivot and re-imagine their business plans completely. No one had the experience of what to do when a global pandemic hits. It took flexibility and grit, and a lot of small businesses didn’t survive in 2020.

What did you do with your small business that allowed you to stay in operation during the pandemic? Take a look back on the year and think about the moves you made that were vital to your business succeeding and carrying on when many other small businesses had to close up shop indefinitely. These small business lessons are integral to continuing on and making sure you learn from your 2020 strategies in the future.

Small Business Lessons Learned

Now that you have the year 2020 behind you, look back and think about pivotal decisions that were made to benefit your small business. These small business lessons are some that you want to record so you can remember what worked when you were in a time of crisis. Your list may include:

  1. Step Into Unknown Territory with Confidence

This past year forced many businesses to make changes that weren’t familiar to them in the small business world. Change is scary, and feeling inadequate or inexperienced is even more frightening. But most of the time, that unknown step can turn out to be just the thing your small business needs. Do not be afraid of the unknown.

Take a look at some changes your small business may have experienced and reflect on how you made it work:

  • Moving your business online: For many small businesses, this was a natural progression of their business that was kicked into hyper-speed because of the pandemic. It takes a lot of work to move your business online, including website development, pictures of inventory, finding the right interface for selling your product, and getting the word out. It is vital to offer an online option for your customers who are staying home and staying safe during the pandemic.
  • Offering sidewalk sales: Using your store-front property could have been a pivot that your company made this past year. Offering your customers with an option to shop out in the open air is a huge positive for many customers. The small businesses that implemented safety practices and showed that they cared about their customers’ health were the businesses that thrived in 2020.
  • Virtual classes and services: For bakeries, yoga studios, and art schools, 2020 was a year of virtual courses. This new idea came to light for many businesses, as many people at home were looking for ways to stay busy and educated. It is a business plan that can benefit businesses with or without a pandemic. When a bakery offers a baking kit to pick up and virtually learn together, it will only increase customers who use that bakery for future needs.
  • Partnering with other small businesses: This past year, it was common to see small businesses supporting each other. You could stand in line at a restaurant to pick up your to-go order and find local jams and homemade bread available for sale from a different small business. Or a restaurant invites a dessert food truck to park in their parking lot and add a dessert option to their site. This cross-promotional model only benefits both businesses. And customers recognize the community feel of small businesses coming together.
  • Finding a manufacturer: For some e-commerce businesses, sales went through the roof in a short timespan. A small business lesson learned from these businesses was how to find a manufacturer, and fast, to keep up with the sales. Once you find a way to create your products quickly and from a source that you can trust, it is invaluable for your business going forward. This is a significant next step that many small businesses were forced to take during the pandemic.

When you look back on 2020, you can be grateful for the new ventures your small business had to pursue to change with the needs of the customers during the pandemic. These new changes won’t have to be undone if things ever go back to normal. Going virtual and offering several buying options for your customers will only help expand your business and keep it growing.

  1. Stay Current with Apps and Technology

If you were behind on technology when the pandemic hit, you’re likely caught up now. It’s essential to keep up with the technology changes to be ready to use the platforms when needed. The pandemic may have taught you that social media is vital for your small business.

When a lot of companies had a substantial following built already, you had to start from zero. If you had already been in-the-know with that trend, you would have had that headstart also. So learn from that.

  1. Conduct All Business Virtually and from Home

What a change it was to stop the hustle and bustle of small business life and be forced to slow down. Most business is now conducted virtually or from home, which saves so much time and money. And all of the noise of combining busy schedules to get together for meetings or coordinating where to meet was silenced. As the calm set in during the pandemic, what were your small business lessons learned?

  • Create a Home Office Escape: Make a pod inside your home where you can block out everything else and focus on your work.
  • Set Work Hours to Separate Home and Work: Communicate healthy boundaries around separating work life from home life.
  • Maximize the Time Saved on Commuting and Money Saved on Gas: Write it out – if you are saving 45-100 minutes per day from your commute and 30-60 miles worth of gas, record those savings and make a plan to reallocate the time and funds.
  • Break the Ice with Virtual Calls: How did you help your associates and customers feel comfortable on virtual video calls? Take those small business lessons with you as virtual calls become the norm, and people will continue to feel more comfortable with that.

This change to eliminate the busy-ness of small business life and slow down to focus on what’s really needed for your business was a major bonus of 2020. Take these small business lessons with you as you move on from this past year.

  1. Learn Small Business Lessons by Conducting Surveys

A great way to glean real data from your company is to send out customer surveys. The power of a survey is more than you realize. The opportunity to learn precisely why a customer isn’t returning to your store, whether it be a particular company or a cleanliness issue, is immeasurable. Collect data about customer service, pricing, cleanliness, product quality, etc., and then use that data to turn even larger profits.

Contact customers who had a poor experience and show them that you value their opinion. If you make changes to improve your processes, tell your customers about it so that they can see their survey made a difference.

  1. Connect with Your Customers and Share Your Personal Story

A big focus of running a small business during a crisis is showing vulnerability and letting your customers see the heart of your business. Something that sets you apart is your origin story. Share that with your customers and connect over shared struggles and successes.

Some ways that you can connect with your customers are:

  • Send thank you cards
  • Give holiday gifts
  • Share how you started on social media
  • Highlight your personal life on your business page regularly
  • Follow up with customers who connected with you
  • Run customer appreciation promotions
  • Spotlight valued customers

These simple ideas are wonderful ways to make your customers feel seen and appreciated. You may not be able to contact each customer that uses your business, but even just reaching out to a few customers a week will show your efforts. Customers share touching experiences with their friends, and your small business reputation will reach a greater audience.

  1. Be Prepared for the Unexpected

If there were ever a small business lesson to learn, it would be that you are surviving a pandemic. Maybe your small business is even thriving during a pandemic. If you can achieve that, you can achieve anything. A pandemic came your way; nobody saw it coming. Nobody had pandemic insurance or pandemic procedures written out in their employee handbooks.

What did you do to meet the unexpected head-on and turn it into a strength in your business? Be prepared to do it again as you’ve learned your lesson that anything is possible, and you should be prepared for disaster or success to come your way.

You may have made it through 2020 and don’t want ever to look back. But by reflecting on the small business lessons that you learned and making goals on how you can be even more prepared for the future will only benefit your business. Don’t be afraid to look back and be proud of your wins from this past year.

At Easier Accounting, we can help your small business succeed. If you are looking for ways to save money in 2021, we are here to help! Our accountants specialize in working with small businesses, which is why you know you can trust our team to maximize your savings. Schedule your appointment by calling (888) 620-0770.

New Year’s Resolutions for a Small Business

It’s a new year and time to give your small business a boost with New Year’s resolutions. Finding ways to improve your company continually is a vital part of being an entrepreneur. The smallest changes can make a big difference in your business. Take a look at some great examples of New Year’s resolutions for your small business.

2021 Small Business Resolutions

Revamp your business with these New Year’s resolution ideas:

  1. Delegate More So You Can Focus on Building the Business

If you are caught up in the day-to-day dealings of your small business, you will not have time to focus on growing your business. For roles like customer service, accounting, fulfilling orders, inventory counts, and other daily tasks, leave them to your team. When your time is freed up due to delegation, you can turn your energy toward marketing your business and helping it grow.

  1. Call for Weekly Planning Sessions

Yearly and quarterly planning meetings are essential for keeping a small business in check. But take it a step further and plan out your business strategies each week, cluing in the team on your goals and working together to implement them. You will find that setting aside time for planning meetings will actually save you time overall.

In each planning meeting, you can take a look at the New Year’s resolutions you are implementing and tweak them to serve your small business in the best way possible. Letting too much time go by can really set you back if you don’t catch a lousy business practice right away.

  1. Promote Your Small Business Continually

Sometimes you can get so busy that you lose your focus on continual marketing and promotion of your small business. Even when times are slow and money is tight, regular and consistent promotions will keep your company at the top of people’s minds. Running promotions and finding ways to get customers back on your site or get their foot in your door will always benefit your business.

Make a New Year’s resolution to pay for marketing in 2021. Keep track of the cost and find out if the ROI makes sense for your small business. Many e-commerce companies find success with social media advertisements. If that is something you have been hesitant about, take the jump into investing in marketing for your small business.

  1. Connect With a Local Small Business Networking Group

Each city or community has a networking group of small business owners that get together and share ideas, share referrals, and build relationships with one another. By joining a networking group, you will be on the business owner’s mind when a customer asks where they should go to get a good or service. If you are an artist, a local boutique can recommend your custom paintings to buy for a frame from the shop.

  1. Schedule In “Me Time”

Self-care is the buzz word as of late, and for a good reason. If you don’t ever take the time to slow down and focus on yourself, it can be detrimental to your business. As a small business owner, your business will receive more attention to detail and love if you first take care of yourself.

  1. Learn a New Skill

In reading each New Year’s resolution, you may be overwhelmed where all the time is going to come from to fit all of these goals into your year. The time will come from the delegation and planning that you are also mastering this year. All jokes aside, expanding your small business may take further education or the introduction of a new product or service. To keep up in your small business industry, you must be in-the-know about what’s trendy.

If you own a nail salon, you will need to educate yourself about gel nails and the processes that come with them. If you have an e-commerce site with baby products, then stay up-to-date with the prints and textiles that are selling the quickest in the baby industry. This may come with learning a new stitching style or finding a new designer. Continual education and growth are vital as a small business owner.

  1. Get Involved in the Community

A great way to get your name out is to sponsor the local elementary school or a little league baseball team. You can attend the events and meet people who are interested in your service. A lot of times, people don’t know where to start when it comes to finding a realtor or an orthodontist. If they know your business invested in their child’s school, they will think of your business first when a need arises.

Donating and working with a charity is also a great way to improve your business. The most successful entrepreneurs spend a portion of their time volunteering to help people who are not as blessed as they are. Giving back will bond your team together as you regularly serve others and take the time to think outside of your business.

  1. Embrace Diversity

It’s an important question to ask if your small business team represents very similar demographics, whether it be age, race, or socioeconomic status. Surrounding yourself with people of different backgrounds and experiences will allow you to expand your customer base. Diverse ideas are vital in a small business – to learn from people who think of fresh concepts that are new to you.

  1. Build Up Your Reputation Always

In everything you do, do it with your reputation in mind. Even when you start out and are low on capital, choose quality over quantity. Do not take shortcuts. Handle all deals with integrity and honesty. Your small business reputation matters, and it’s a meaningful New Year’s resolution to make that a priority.

  1. Connect with Your Customers

A great way to bond with your customers is to send thank you notes for their business. You can do this at Christmastime, or you can sprinkle it throughout the year. Anytime you have a quiet moment, write out a thank you note to a valued customer and mail it to them or leave it to collect the next time they stop in. Phone calls can also be meaningful. Or even a quick text to check up on a new development in their life that they shared with you.

These subtle changes to your small business will help you achieve the ultimate goal: to spend less and earn more. When you put your heart into your business, you will reap great rewards. New Year’s resolutions like getting involved in the community and making time for yourself may not sound like they will directly benefit your company, but it’s all a part of the big picture. When you are happier and more well-rounded, your small business will expand.

Tips on Achieving Goals

Sometimes writing down your New Year’s resolutions is not enough. It would be best if you made a plan to implement and execute your goals.

  • Set Sensible Goals: All entrepreneurs have big ideas, but be careful to make your New Year’s resolutions attainable. When you set resolutions that are practical to achieve, your positive results will motivate you to keep working toward your goals.
  • Look at the Big Picture in the Far Future: Don’t forget to step back and think of your 5-year and 10-year plan for your business and make sure that your New Year’s resolutions are working toward those big picture goals. When your yearly goals align with your long-term goals, then your small business will always be headed in the right direction.
  • Do Not Settle: It can be tempting to work toward a goal, and then just before you reach it, you decide it’s close enough and never fully achieve what you were working toward. Everything you do must be intentional toward working to build your small business.
  • Embrace Setbacks and Move On: Sometimes, it can be best to throw out a New Year’s resolution once you realize it’s not benefiting your business in the way you thought it would. It is a good business practice to be able to recognize when a strategy isn’t working and move on.

Your New Year’s resolutions are achievable with hard work and planning. Big ideas are the first step to building a successful small business. But hard work goes hand-in-hand to help realize those ideas.

Make 2021 Your Best Year Yet

Get inspired and display your New Year’s resolutions front and center in your office. Remind yourself that this year can be the best year of your life as you grow your small business. Scaling a small business isn’t something that happens accidentally. Setting and keeping New Year’s resolutions will contribute to substantial growth in your small business.

For help in setting purposeful goals for your small business, you can contact Easier Accounting. Our team is here to help! With extensive experience with small businesses, our expert team will help your small business save money as it grows. Call us at (888) 620-0770.

Does a Small Business Need a Bookkeeper, a CFO, or a Controller?

When starting a small business, it may be tempting to stay in control of your finances and do all of the bookkeeping and accounting yourself. Some entrepreneurs choose a trusted family member to help with small business accounting. When a small business owner begins their business venture, their passion doesn’t always lie in accounting. Understandably, accounting services get put on the back burner, and business owners make do with the limited knowledge they have.

A lot of businesses start out with the DIY approach to accounting. While this may make sense at the beginning of a startup, you will soon find that professional accounting services can offer real value and financial return to your small business.

What Are the Benefits of Hiring a Professional for Small Business Accounting?

Running your accounting system by yourself or asking a friend for help will not result in the savings that professionals in the industry will implement for you in your small business. Accountants are in charge of your money and have a responsibility to know how to save the most money and run the business seamlessly. Take a look at the potential savings:

  • Tax savings
  • Vendors and manufacturing savings
  • Payroll services
  • Reports and big picture snapshots of the financials
  • Risk mitigation with insurance and checks and balances to prevent fraud
  • Simplifying operations and processes to save money
  • Avoidance of fines, late payment fees, high-interest penalties from missed payments, and dings to your credit score

It may be an initial investment to hire a small business accountant. But when you look at all of the savings that result from having a professional behind your accounting system, you will quickly recognize the return on investment. While you can put your passion into building your business, a small business accountant can use their expertise to save you money every step of the way.

Does a Small Business Need a Bookkeeper, a CFO, or a Controller?

Once you decide that you need to hire out for small business accounting services, what service is required for your specific company? What are the differences between a CFO, Controller, and Bookkeeper?

Services Offered by a Bookkeeper

A bookkeeper keeps track of all transactions regarding money going out and money coming in. They do not offer expertise when it comes to business strategy or expanding your business. Some bookkeeping tasks include:

  • Accounts receivable and accounts payable
  • Keeping a list of all small business costs
  • Managing payroll, including tax and federal withholdings and insurance deductions
  • Preparing reports
  • Paying the bills on time
  • Tracking inventory
  • Preparing taxes

A bookkeeper is responsible for the necessary accounting transactions and helps you keep your small business finances organized with all records up to date. A detail-oriented bookkeeper may be all you need when your business is small. If you’re not looking to be advised on your business’s growth and the right financial path for growth, then use a bookkeeper.

When A Small Business Needs a Bookkeeper

If you find yourself putting more time and energy into keeping up with your books, then it may be time to hire a bookkeeper. You can outsource bookkeeping services instead of hiring an in-house employee. It is an excellent time to hire a bookkeeper if you don’t fully understand the accounting.

If you are unfamiliar with tax code and how to save the most money in taxes for your business, a bookkeeper can help. If your business experiences rapid growth and keeping the books becomes overwhelming, then you can hire out.

When seeking investors or presenting to shareholders, professional reports may be preferred and can be drawn up by a bookkeeper. The level of professionalism in which you present your company can rely on whether you have a professional handle your bookkeeping or not.

The Role of a Controller

Another role for small business accounting is a controller. When your company becomes large enough to have one or more financial employees or an accounting team, a controller oversees that team. They are usually mid-level accounting staff, reporting to the CFO or CEO of the small business. The responsibilities of a controller include:

  • Managing the accounting team
  • Running reports for in-house review
  • Financial risk management
  • Budget decisions
  • Final sign-off on accounting services
  • Implementing tax strategies
  • Consulting in regards to investments or business strategy

A controller has a full view of the company’s accounting practices, implementing the most streamlined processes along the way. When leading the accounting team, the controller is the trusted leader who gives the final sign-off on critical financial operations, including taxes and reports for the board of directors.

When a Small Business Is Ready for a Controller

As the business grows to require more than a one-person accounting team, a controller may be needed. Suppose your small business has a board of directors. In that case, it is common practice to have a controller in charge to present finances and take on protecting the company’s assets. A controller typically focuses on accounting services while a CFO concentrates on strategy.

An alternative to hiring an in-house controller is outsourcing your accounting to a firm specializing in small business accounting. The professional accounting team will serve the same purposes as a controller and always have your business’s best interest in mind.

What Are the Responsibilities of a CFO?

CFO’s are involved in all business decisions and work closely with the CEO. As your business grows and turns high profits, a CFO has the responsibility to foresee risks to the company and protect against them. Some CFO duties include:

  • Steering the company through mergers and acquisitions
  • Changing the business structure
  • Implementing expansions
  • Managing stakeholder relationships
  • Setting financial goals
  • Understanding the market and capitalizing on it
  • Making investment decisions

A CFO is vital for a business that is growing rapidly. With a financial expert at the helm of a growing company, the accounting practices will never be neglected. A business cannot succeed without a team that is proactively protecting the assets and implementing business strategy.

When a Small Business Would Benefit from a CFO

For an executive-level financial officer who works hand-in-hand with the CEO and oversees the whole company’s financial operations, you will need a CFO. If your company has grown to the capacity of needing a financial strategist involved in every business decision, it is time to hire a CFO.

The financial aspect of the company is just as important as the creative process of running a business. And every creative and logistical decision has a financial component to it. That is why the role of a CFO is so vital for a growing business.

A CFO should have expertise in small business operations as well as the financial systems of a company. Hiring out a small business accounting service can benefit your company, and the CFO can keep in close contact with that team to help implement business strategy along the way. The CFO will also present the financials to the board of directors and be your small business financial expert.

In Summary

While you can get away with hiring a bookkeeper while your company is small, it is vital to invest more money into your accounting services as the business grows. A bookkeeper will keep you organized and provide you with a detailed view of your financials each month, making sure payments and payroll are processed on time.

By the time your business has grown to have more than one accountant, then a controller would be the person in charge of overseeing the accounting team. You can always hire an accounting team that specializes in small business to take care of your accounting needs as your business grows.

A CFO would be needed to represent the business’s financial side for a small business experiencing rapid growth and coming up on huge expansion decisions. With a CFO on the executive team, the CEO can focus on growing the business, always receiving input about whether ideas are financially feasible. A business owner relies on the information from the CFO.

Make the decision on what kind of accounting team is right for your small business. Taking shortcuts with accounting can lead your business to miss out and huge savings and ultimately lead to the business’s demise. Arm your team with accounting professionals, and be ready to change the team as your small business grows.

Hiring Small Business Accountants

The benefits of hiring out your accounting services are innumerable. The huge savings you will receive will cover the costs of accounting fees and more. Find an accounting service that has a good reputation in the small business industry. An accounting firm with niched experience will only instill more trust and start your relationship off to a good start.

If you are looking for an accountant specializing in small business services, then Easier Accounting is here to help! Getting control of your bookkeeping and accounting for your small business should be a priority. Instead of doing it all yourself, seek help from a knowledgeable accountant. Call us at (888) 620-0770.

Big Goal for 2021: Start a New Business

As many people are setting New Year’s Resolutions during this time of year, it may be time to set a huge resolution for yourself and make it a goal to start a new business in 2021. This attainable goal is not out of reach. All it takes is careful planning and setting priorities to align yourself with opening a business.

What Does It Take to Start a New Business?

  1. Make a Plan

You can’t start a business without a plan. Hand-write a business plan that is very detailed and thought out. Often, a business plan is presented to investors or when applying for a business loan. It is vital to show that every aspect of your business is contemplated. A one-page business plan can include:

  • A hole in the market that your small business fulfills
  • A business pitch
  • Target audience
  • Strengths and weaknesses
  • Potential threats to your small business
  • Marketing plan
  • Financial breakdown, including the money needed to start a new business and the projected profits

This written out plan will give you a beginning point to start a new business. Once you get the answers to fill in all of the parts of your business plan, you will be knowledgeable to take the next step toward realizing your goal.

  1. Find Areas to Save Money for a Business

When planning to start a new business, you need to save up money for the startup costs. Look for the parts of your budget that you can save money on, like coffee runs and eating out. These costs will add up little by little each month and help you save up for your small business.

If you plan to quit your full-time job and put everything you have into your business, it is sensible to wait until you have the money saved to support yourself for 6-months. A small business owner doesn’t take home a paycheck right away. So if you are quitting your 9-to-5 job to start a new business, have the savings to back it up.

  1. Conduct Market Research

Do research in the small business industry in which you are interested. If you would like to start a dog walking business, google local dog walking services and see how many come up. Research the average price that is charged and how much demand there is in your area. Visit dog groomers and related companies that may have a pulse on the community’s needs but would not be direct competitors.

Once you have the information gathered, compare it to what you think your product or service is worth. If you are a well-trained music teacher, you do not have to match what other community music teachers are charging. Have confidence in your expertise and find a balance between what you think you’re worth and competitor pricing.

  1. Be Aware of the Risks

Every small business owners have risks associated with their business. Be sure to explore all of the possible risks and find what you can do to protect yourself and your business. Meeting with a small business expert is a good idea to discuss the potential risks specific to the small business that you may not have considered.

  1. Set Attainable Goals

You may have big ideas of growth for your small business, but remember that growth is gradual at the beginning of a startup. As you are learning the industry’s ins and outs and troubleshooting, it is essential to set realistic goals. Checking off small goals along the way will keep you motivated and increase morale.

  1. Ask for Feedback from an Industry Expert

Now that you have a business plan in place, it is good to ask for a second opinion. You don’t want to leave yourself vulnerable to having your dreams shutdown or criticized. Instead of pitching your whole business, ask for feedback on components of your business and the startup process. Of course, it is helpful to ask for advice from someone you love. But sometimes they don’t tell you what you need to hear.

Search for resources in the community with networking opportunities for entrepreneurs like the chamber of commerce. Meeting up with a local entrepreneur can help you get a good idea of how to start a new business in your community. When you seek the advice of an entrepreneur who recently started their own business, you will receive fresh advice that is applicable and easy to implement.

  1. Consider a Partner

If your business requires more starting capital than you can come up with, you should consider taking on a partner. It is also helpful to have a partner to progress the business quicker. With a partner, you can split the workload and see results faster as you put in double the work together.

Take caution in choosing a partner. You want to work with someone you trust, someone whose opinion you value, and someone who can add value to your business. Also, consider what a small business partnership may do to your current relationship with the person.

  1. Choose a Business Name

Before any significant steps can be made in starting a new business, you must choose a name. This is the fun part. Choose a name that is meaningful to you, can be spelled easily, and isn’t too close to an existing small business in the industry. Also, choose a catchy name that is short and sweet. Look to see if there are available website domains for your business name.

It can also be helpful to brainstorm ideas with a friend, sharing ideas back and forth and seeing what sticks. A friend or colleague may recognize something about a name that you overlooked, whether it sounds like an unpleasant item or is hard to pronounce to the general public. Two minds work better than one when dealing with a passion project like naming your small business.

  1. Register Your New Business

While some small businesses wait to register their business until they’ve made money, there are benefits to having your small business registered from the beginning. Whether you choose a sole proprietorship or incorporation, you save yourself from liability when the company is registered. If legal issues come up, it is the business that enters litigation, providing protection of your personal assets.

  1. Implement an Advertising Strategy

Get the ball rolling and put your work behind advertising your small business. It takes grit to start a new business, and you may not see your first sale for a long time. What is your advertising strategy? Will you establish a reputation and social media presence by posting ongoing content, regardless of the growth you see? Will you pay for social media advertisements to get your product out there? There are so many options when it comes to marketing your business.

Why 2021 Is the Perfect Year to Start a New Business

  • E-Commerce Has Grown Immensely During 2020: Although 2021 was a troubling year for many small businesses, online sales saw major growth in 2020. If you have a business that would thrive with online sales or virtual services, then 2021 is the perfect year to take advantage of the opportunity.
  • Downtime Allowed for Introspection and Career-Changing Inspiration: While extracurricular and social activities were canceled in the year 2020 due to the pandemic, many people spent more time at home. This extra time allowed for thoughtful pondering about possible career changes and doing something that you love. Take this passion with you in 2021, and continue to use that spare time to start a new business.
  • Unemployed Workforce Waiting to Work: There are many small business employees in the restaurant, movie, bars, and clubs industry that are now out of work. They are waiting to be employed, and you can make that happen. Tap into the unemployed workforce and offer new jobs to those looking for new opportunities.

2020 was a challenging year for many people with COVID-19 and countless small businesses needing to pivot to adjust to the changing safety protocols during a pandemic. These trailblazing small businesses have implemented processes now that are allowing them to thrive during the pandemic. You can learn from these small businesses and take on the strategies that helped them to succeed.

Contact Small Business Accounting Professionals

So many aspects of starting a small business can require professional guidance. When you hire a small business accountant from the beginning, you can be sure that your business is set up correctly. Our experts can help set up the business plan, pointing out possible risks and setbacks you may face. They can also help calculate the startup costs that will be needed and project when you will take on an employee or pay yourself.

If you are looking to start a new business in 2021, do not delay. You can contact Easier Accounting to learn about the bookkeeping and accounting systems needed to run a small business. Our experts specialize in small business and can answer any of your questions. Call us at (888) 620-0770.

Tax Deductions for Small Businesses: COVID Supplies and More

As you are going over your end-of-year accounting checklist and looking at expenses compared to previous years, you will notice a big difference for the year 2020. The amount that you spent on COVID-19 safety supplies adds up over time. Are these expenses tax deductible?

What Is a Tax Deduction?

A tax deduction is when you subtract a qualified business expense from your total taxable income. Essentially, the amount you spent on the ordinary and necessary business expense is tax-free and does not need to be included in your taxable income.

The words ordinary and necessary are the verbiage used in the internal revenue code. When it comes to your business expense, you will have to explain how it’s ordinary compared to other small businesses in your industry. And you will also have to be ready to prove that it is necessary to qualify for a tax deduction.

Are COVID Supplies Considered Ordinary and Necessary?

Given that we are in the middle of a pandemic, I think it is safe to say that safety supplies for COVID-19 are necessary. Many businesses were closed for the stretch of 6-weeks to 2-months, and when they reopened, they showed they were ready for customers by posting their safety practices. If a small business reopened without any safety measures in place, then many people did not feel comfortable going into that business. It is necessary to have safety measures in place if you want customers to come to your store.

Along the way, masks were mandated in each place of business. If a customer were to forget a mask, then it is helpful for the company to provide a mask. It is also necessary for companies to supply their customers and employees with hand sanitizer, social distancing reminders and cues, and plexiglass shields for employees who meet face to face with customers all day long.

One of the ways that expenses can be distinguished as excessive rather than ordinary is by giving out top-of-the-line free masks. Say your business has some masks available for customers who were not prepared with a mask before entering your store. Paper, disposable masks would be considered an ordinary expense. If your masks-on-hand are embroidered in a fancy print with a customized logo, then that free mask service would be regarded as excessive. That expense would not qualify as a tax deduction.

When it comes to COVID-19 safety measures and the supplies needed to implement them, all of these items are considered tax deductions:

  • Hand Sanitizer
  • Paper Masks
  • Social Distancing Decals
  • Plexiglass Shields
  • Plastic Gloves
  • Employee Reusable Masks
  • Cleaning Supplies
  • Signage Referring to Safety Practices
  • Extra Employees Hired to Implement Safety Practices
  • Thermometers

Your 2020 expenses will look a little different than previous years and will continue through 2021 as well. When you plan for these expenses and remember to include them as tax deductions, you will see the benefits outweigh the negatives. You want your business to have a reputation for safety and compliance. All customers with varying health conditions are welcome to your business and can feel safe there.

What Other Small Business Expenses Are Tax Deductions?

There are many expenses when running a small business that can be considered ordinary and necessary. We can review some of the most common tax deductions for a small business to be sure that you don’t have a big expense that is overlooked. Remember, the more tax deductions, the less taxable income. When you have a lower taxable income and use that number to calculate your tax rate, then you will pay a lower number in taxes.

It is easy to get confused about what is tax-deductible and what is not when your personal and business world is so intertwined as a small business owner. The most common tax deductions for a small business can include:

  • Gas Use for Business: Keep a clear mileage log when you are using your personal car for business affairs. You can use the standard mile calculation provided by the IRS, or you can keep track of your monthly payment and any maintenance bills for the car. Add that up with the total spent on gas, and then multiply it by the percentage of miles that were used for conducting business. When tracking miles, you cannot include your commute from your home to the place of business. That is considered a personal expense.
  • Business Insurance: You can use premiums spent on various forms of insurance for your business as tax deductions. This can include accidental insurance or worker’s comp. It can consist of insurance for your large assets in your business. It can include group health insurance or life insurance that you provide for your employees.
  • Interest on Business Loans and Bank Fees: If you have interest accruing from loan payments or incur bank fees for using a premium business account, they are tax deductions. If you use a third-party service to process payments like PayPal or Stripe, then the fees for that service can be deducted as well.
  • Home Office: Many people transitioned to working from home this year. If you set up a nice office in your home and purchased a desk and office furniture, then the supplies are counted as tax deductions. The space must be distinguished from the rest of your home as a place of business, so your kitchen table won’t count. You can calculate your deduction by a provided calculation per square foot in your home.
  • Internet and Phone Expenses: If you use your home internet for work, you can deduct the percentage of your time conducting business. A separate phone line or business phone can be deducted entirely. Be sure not to deduct your personal phone bill from your small business taxes. If you are using a phone for personal and business purposes, then your whole bill does not qualify as tax-deductible.
  • Business Meals: In general, you can deduct 50% of meal and beverage costs. Meals with clients or on the road while traveling for business are qualifying tax deductions, as long as it is not extravagant. Meals provided for your employees who stay late to work are also deductible. When it comes to meals at a work party, they are 100% tax-deductible. Proper documentation is needed when using meals as tax deductions. You can save the receipts and write down what business matters were discussed during the dinner.
  • Advertising and Promotions: The expenses incurred from advertising and offering promotions are tax-deductible. If you choose to sponsor a school or an event, that can be a tax deduction. Building a new website or hiring a graphic designer to create a new company logo is also included in this category. Any cost you put toward putting your name out into the community can be tax-deductible.
  • Continuing Education: If you can prove that your education is of value to your business, whether it’s for a license or certification or a degree, then it is counted as a tax deduction. This can include seminars or workshops to improve your skills and inspire you to grow your business. It can also include employee training.
  • Rent: The money that is paid in rent for a brick and mortar office or store is tax-deductible. If you work from home, then part of your rent can be deducted if you use the home office tax deduction.
  • Salary and Employee Benefits: Salary paid to employees, including paying out their vacation and sick days, can be counted as tax deductions. This only applies to employees who are not owners. And the service has to be provided; you cannot deduct a salary if the person isn’t providing you with work. The salary also has to be reasonable, comparable to other employee salaries in the industry.
  • Taxes: This can include sales tax, payroll tax, real estate tax, any taxes that are paid while conducting business are tax deductions. This also includes state income tax. When buying inventory for your business, you are exempt from taxes. And if you have paid them, then you can use that money toward your tax deductions for the year.

When it comes to tax deductions, the list can go on and on. The most important part of adding up business expenses to list as tax deductions is keeping a comprehensive record. If you were to be audited, your documentation should back up all of your tax deductions and explain anything that the IRS may question.

Hire a Small Business Accountant

It is possible that you are missing a chunk of tax deductions that could bring your taxable income down immensely. Invest in a small business accountant and get the return on investment instantly in the tax advice they give. Our team has extensive experience with small businesses and qualifying tax deductions. You will not go wrong when you hire an accountant who works exclusively with small businesses.

If it is unclear whether you can deduct a business expense from your taxable income, contact a professional small business accountant to help. Here at Easier Accounting, we have the expertise to set your business up for success. We can find the best savings available to your business as you file for taxes this year. Call us at (888) 620-0770.

Check it Twice: Year-End Accounting Checklist

As the year comes to an end, it is time to look back on your small business and evaluate what went right and what went wrong. You can celebrate successes and pivots that were made to accommodate COVID-19. You can relax and recover after a holiday rush.

Reflection at the end of the year is essential, and getting your finances in order is also vital. Your year-end accounting checklist is a list of small business accounting tasks to get a pulse on your business. You can use the accounting checklist to nail down exactly how successful your company was this year compared to other years.

As you review your accounting checklist for 2020, reflect on the trials that you overcame in your business. If your business was hurt significantly from the pandemic, make realistic accounting goals for 2021 that will be achievable. Use this comprehensive end-of-year accounting checklist to get your business in order before the New Year.

1. Cash Flow Analysis

There are a number of reports to run at the end of a full year of business. One of them is the cash flow report. When you take a comprehensive view of the cash inflow and cash outflow over the course of a year, you will see patterns. Do you remember specifically when you were strapped for cash in your small business? What went wrong? What can you do better next year?

You can also compare your cash flow to reports from previous years’ accounting checklist. This year will look different because of COVID-19. It was unlike any other year, some small businesses benefiting as online sales went up during the pandemic. How can you continue to bring in cash while being strict about the amount of money that goes out?

Oftentimes, if cash flow has increased, a small business owner may be inclined to spend more freely. If you saw a large amount of cash flow this year that resulted in overall profit for your business, contact a small business accountant. You can review the numbers and make a decision on whether it is smart to make a big purchase to invest in your business with the unexpected year’s profits.

2. Account Receivables Reconciliation

Next up on the accounting checklist is going through your list of accounts receivables for the year and being sure that all is paid and reconciled. You can run a report and find out your turnaround time when it comes to billing clients and receiving their payments.

When you have a clear view of patterns that were set for the year, you will be able to improve accounts receivable for the upcoming year. Did you get paid on time? Were your cash flow problems due to receiving late payments from customers? This is the case with many business owners, and when you don’t have a strict accounts receivable system, it can lead to big problems with needed cash flow.

Use the 2020 accounting checklist to collect all of your outstanding bills and implement a new policy where your accounts receivable will have a shorter turnaround. This way, you will have the money coming in that you planned for when a service has been performed, or goods have been purchased. The smaller the turnaround, the better for your business and accounting practices.

3. Vendor Status Updates

The end of the year is a good time to go through your vendor list. Evaluate which vendor relationships are invaluable. You can send gifts of thanks for their accuracy and timely deliverables. You can compare reports and prices and determine if a particular vendor made good on their promises of savings.

It is also an excellent time to remove any vendors from the list who are obsolete or cannot benefit your business. Keeping your list of vendors short and high-quality will save you time later when you need to consult the list. When you update the list each year, you won’t be caught forgetting that one vendor doesn’t carry what you need or the other vendor can’t compete as well as the others for a particular inventory item.

4. Payroll and Benefits Verification

It’s essential to make sure your employee paychecks are accurate for the end of the year accounting checklist. Your employees will be filing taxes, and your business will be responsible for any mistakes on their paychecks. Backpay of FICA or employee raises can be a large bill that wasn’t planned, so it’s essential to make sure you have that correct the first time around.

The end of the year can also be a time to celebrate your employees. If they worked extra hard through the holiday rush, then reward them with paid time off. Show that you value your employees by giving them benefits specific to your small business.

5. Staff Needs for Upcoming Year

Take a look at your business’s busy patterns vs. slow times and make a plan for hiring staff for the upcoming year. What could you have done better this year to streamline your employees’ workflow? When you look at the year overall, you will get a more accurate picture of how you can improve.

6. Tax Preparation

Collect all of the documents needed to file for taxes. Accounting software can help you identify all the financial reports and documents that you will need. And even better, a small business accountant can help you get everything you need to be done when it comes to taxes on your year-end accounting checklist.

Do you have a tax strategy for your small business? When you consult with an accountant, you will find there are ways to save money with taxes. There is a variety of strategies that could apply to your company, and an accountant can help you identify which one will save you the most money.

7. Accounting Backups

The end of the year is a great time to be sure you have all the backups in your accounting system that you need. If you use a cloud backup service, that is helpful as they backup in real-time. But it is also essential to download specific reports each year to keep on an external hard drive. When you double your backups, you will never lose important files related to your small business.

8. Business Organization

Has your store been turned upside down through the holiday rush? Take time to organize your store at the end of the year. Give a deep clean and organize shelves, rotating any inventory that will no longer be needed in the new year. If your business doesn’t have a brick and mortar store, you can organize your files and your website. Be sure that your website has a customer-friendly flow.

9. Inventory Check

Run an inventory report and make sure it matches up with your end-of-year sales. If you neglect counting inventory, especially after an influx of business, you will leave your small business vulnerable to fraud. Performing checks and balances with your inventory may feel tedious, but it is necessary for keeping your business secure.

10. Website Overhaul

Take this time to go through your website, making sure all the links work. Look at it from the perspective of a potential customer – what welcomes you into the website? What may be difficult to navigate? Your accounting checklist can include updating your website to be ready for new sales in the new year.

11. Business Goals

Take a look at your goals from previous years, and see if you met any new goals this year. When your business is goal-driven, you will always have a target you are trying to hit. And your small business will have a progression toward that goal, always working toward improvement. Set new goals for the upcoming year that are even better than the year before.

Focus on the Future

Now that you have gone through everything on your accounting checklist, it is time to wrap up the year 2020 and focus on the year to come! You have a clear view of how your business improved and know what you need to adjust in order to be even better in 2021. Knowledge is power, and it’s up to you what to do with that knowledge.

Looking ahead for your small business, focus on the positive. Which employees are invested in your business with you? Celebrate them. What challenges are up ahead that you are ready to tackle? Make a plan and overcome slow times in your industry. The possibilities for your small business growth in the future are endless. Your business succeeded through a pandemic that no one saw coming. If your business survived that, it could survive anything and maybe even thrive in the year to come!

End the year 2020 with everything in order and ready for greater success in 2021. Our team at Easier Accounting can help you achieve that. Whether you need help with taxes or setting realistic small business goals for the upcoming year, it is best to contact an accountant who can help. Call us to set an appointment at (888) 620-0770.

What is Working Capital?

Working capital is a measure of how much liquid cash a company has after bills are paid. It is a short-term snapshot of the financial health of a company. When you have sufficient working capital, you are able to keep your company afloat. Suppose you find that you have an abundance of working capital. In that case, you can invest in your business by adequately paying employees, investing in software or marketing strategies, and having the cash flexibility to buy larger chunks of inventory at a time.

Working Capital Formula

Short-term Assets – Short-term Liabilities = Working Capital

When you take your current assets and minus your current expenses each month for your business, then you can calculate your working capital. Keep in mind that this is a short-term snapshot. You are working with numbers that are in the now, not projected numbers that you hope to have once x, y, and z are achieved.

What Are Small Business Current Assets?

To calculate your current assets, you can add the cash that you have on-hand to the guaranteed income you have coming in that month. Remember, when calculating working capital, we are focusing on the short-term.

There are a few different sources of current assets:

  • Liquid cash-on-hand and in your business account
  • Accounts receivable, the money guaranteed to come in from clients that month
  • Your inventory’s cash value
  • The current value of any investments

This number can be easily calculated when you keep a detailed accounting of your small business. Your accounts receivable should be easy to find and sum up. The cash value of your inventory could be found on the replacement value of what your inventory is worth today if you were forced to liquidate. And you can look up what your investments are currently worth if you were to cash out your stocks.

When you have identified your current assets, then you can use that number to calculate your working capital. This calculation will help you discover how financially healthy your business is.

What Are Current Liabilities?

The list of current liabilities can be quite long. This number is found by summing together all of your expenses. How much money goes out of your account each month in order to cover the bills? This can include:

  • Accounts payable, any money you owe for goods and services
  • Payroll payments to your employees
  • Payroll taxes and business income taxes that are incurred
  • Outstanding credit card balances
  • Loan payments
  • Rent on your office or store space

When you add up all of the expenses over a month, you will come up with your total in current liabilities. Having a good view of the cash that is outgoing in your small business will only benefit you. You will be able to clearly see how much you’re coming out ahead each month, rather than just guessing that all is well with your cash flow in your business.

How Does Working Capital Calculation Help a Small Business?

Now that you’ve found your current assets and current liabilities totals, you can calculate your working capital. Current assets minus current liabilities equals working capital. When you see your short-term financial balance, then you will see how much money you have to keep your business thriving each month.

If you take it a step further and see how your working capital can turn into long-term savings, then you can decide if you have room to invest that money into further growing your business.

There are several ways that you can invest in your business. Some of them being:

  • Invest in newer technology
  • Marketing and advertising
  • Rebrand with a more modern design of business logo and website
  • Buying more inventory to prepare for a busy season
  • Employee training programs

Investing in your company will set up your small business for future success. It may feel comfortable to stay stable and keep your business profits consistent and even. Why not maintain your business rather than seek constant growth? You will never regret challenging your comfort zone and standing behind your business by growing it.

Before you take all the extra cash that you have each month and invest it all, there is more to working capital. It may be comforting to know that your working capital is in the positive, but you want your current assets to stay higher than your current liabilities. And you can calculate a new number, a working capital ratio, to know how much higher you would like your existing assets to stay.

Working Capital Ratio

The working capital ratio is calculated by taking your current assets and dividing it by your current liabilities. For example, if your small business is bringing in $3000 per month and your total expenses come out to $1500, then the working capital ratio would be 2:1.

A 2:1 ratio is considered to be very healthy for a small business. It is essential to keep your ratio in a healthy range, and it changes business to business. Some industries can have a working capital ratio as low as 1.2:1 to operate sufficiently. Your working capital ratio will be examined when it comes to applying for loans or lines of credit. That’s why it’s always important to know what it is.

How Can a Small Business Increase Its Working Capital Ratio?

One way to increase the working capital ratio is to cut costs. This may mean laying off employees, finding different vendors for your inventory, finding an office or store space with lower rent, or taking a lower paycheck yourself. It may be tempting to keep things as is if you’re not in the red each month, but the focus on increasing your ratio will set you up for long-term small business success.

Another way that you can increase the ratio is to increase short-term assets. This can be done by raising the prices of your goods or services. Adequate research can be done to determine if you have room to raise prices without losing customers. Sometimes a small increase can make the difference in your working capital ratio that you need for your specific industry.

Lastly, you can always apply for a small business line of credit loan or use a business credit card. While these are not ideal solutions, as it will increase your long-term liabilities, it may be the boost your business needs to get through a hard time.

Cash Conversion Cycle

Now that you’ve calculated your small business’s working capital and know your working capital ratio, it is notable to talk about the cash conversion cycle. This is the time in between when money goes out, and money comes in. If you have a 30-day cycle, that means you have paid all your bills and are waiting for funds to come in for 30 days. For those 30-days, money is tight, and there isn’t room for emergencies. Your goal is to get your cycle down to the least amount of days as possible.

This might mean giving your clients less time to pay their bills. If you have a piano teaching business, you may require your customers to pay at the beginning of each month. This is better than paying each lesson day or billing them and giving them time to pay later. It will decrease your working capital cycle.

Or if you have a haircutting business and find it awkward to ask for money in person, you may send out bills each month and give them 7-days to complete the invoice. The goal is to increase the cycle of waiting for payments to not wait between incurring expenses and getting paid. Requiring real-time payments or even asking for payments in advance will decrease your working capital cycle time and be healthier for your small business.

Working Capital Explained

Now that you have all the information regarding working capital, you can use that knowledge to set your business up for success. It is essential to have your working capital in the positive, making sure that your current assets are more than your current liabilities or expenses. And then take it a step further and ensure that the ratio between the two is a healthy ratio for running a business.

Each small business is different, but working capital is universal. A healthy working capital ratio is something that every small business needs to thrive. If you are passionate about other parts of your business, including customer service, marketing, and manufacturing, it may be sensible to consult with a small business accountant.

Small Business Accounting Professionals

When you contact professionals who are well-versed in small business practices, then you will know that your business is in good hands. Take the stress out of working capital and leave it to the experts. You can sit down together and find the best working capital ratio for your business specifically. Save yourself stress by seeking small business accounting services today.

Our goal at Easier Accounting is to make your job easier. With our expertise in small business accounting, we can answer any questions you might have regarding your business. When your accounting is in order, your business is set up for success. Give us a call at (888) 620-0770.