Accounting Checklist: Essential Tasks for New Businesses and Startups

It is both exhilarating and scary to start a new business. You have an idea for products or services that will be popular in the market, and you’ve come up with the cash to get the company off the ground. While you are building the business and launching it into the world, it is important that you follow this accounting checklist to ensure that you are meeting all financial requirements for your company.

Yes, bookkeeping and accounting can be daunting. Most business owners want to spend their time focused on product development, marketing, customer outreach, and other tasks that have a direct impact on cash received. While these tasks are important, you need to be sure that you have a solid financial plan in place to set your company up for success in the future. Failing to take care of these essential tasks on your accounting checklist could cause your business to fail due to poor practices and a lack of cash flow.

Even though accounting and bookkeeping can be time consuming, you don’t have to put in the hours to take care of these tasks. One of the best things that you can do as a business owner is to hire the right contracting service to handle these details. You’ll have a better outcome and be proactive in protecting the financial interests of your company.

Consequences of Neglecting Your Accounting Checklist

What will happen if you neglect the important tasks on your financial to-do list? At first, you might not encounter many issues. But these problems tend to compound over time, resulting in big problems in the future that could take your company down.

While tax and financial compliance are time consuming, it is a critical part of building a solid foundation for your company. These tasks give you the information that is necessary for making accurate decisions for your business. Plus, you can avoid hefty fines and an expensive tax burden by implanting a good financial strategy.

Not only do you need to be educated on the right accounting practices for your small business or startup, but you also need to develop the right systems to ensure ongoing compliance and maintenance. The following tips will help when you are launching a new company so that you can build a financial picture for success.

Step #1: What Accounting Services are Needed?

The first step is to learn about the industry and identify the accounting services that will best suit the needs of your new business. Why does accounting matter? These financial reports give you accurate information that affects the decisions that are made for your business. Additionally, you need to comply with legal requirements as outlined by the IRS.

The easiest solution to learn about your options for accounting is to talk to an accounting service for information. Yes, you can find details online with a Google search. But it can be overwhelming to identify the right accounting checklist for your new company. Instead, you need to lean on the services and expertise of someone who understands the best processes for small businesses.

Our accounting team can evaluate the needs of your company and provide recommendations that will suit your preferences. We want to be sure that your accounting services are a perfect fit to set your company up for success in the future. During this initial conversation, we’ll understand more about your business, growth patterns, and anticipated changes in the future. Then, this information will be used to create the perfect setup for your business going forward.

Step #2: Setting Up an Entity

Don’t overlook the important step of creating the right entity for your business. Various legal structures have benefits and drawbacks. As you talk to a legal professional, you can understand how these pros and cons will affect the long-term outcome for your business efforts.

During this step, you need to talk to both an accountant and an attorney. There are many intricacies of the corporate tax code, which can be overwhelming to a new business owner who doesn’t understand the legal jargon and other details that need to be addressed. But a good team of professionals can explain your options and help you in finding the solutions that will suit the needs of your company.

You can use this advice to determine the proper legal structure for your business. Then, the accounting and bookkeeping system can be structured to match the structure that has been created. Not only do you need to get the system set up in the first place, but there are also requirements for ongoing compliance. The easiest solution to handle these details is by engaging an accounting team for ongoing services.

Step #3: Financial Reporting and Ongoing Bookkeeping

Now that your business structure is in place and you have the systems established, it can be a trick to maintain consistency with the ongoing tasks that need to be handled. Ongoing accounting and bookkeeping requirements should include the tracking and categorization of all business transactions. Additionally, you need to have a separate business bank account created so that there is no crossover between personal spending and business expenses.

In this step, it is smart to invest in good accounting software. There is no reason why these transactions need to be tracked by hand. Instead, you can maximize the benefits of automation as much as possible, helping to reduce the problems associated with manual tracking and calculations. If you have questions about any of these transactions, then a tax advisor or CPA can review the information and offer advice about the best way to handle these details.

The step of creating the right reporting and tracking system is crucial in helping you avoid common mistakes. When mistakes are made with tax strategy, then often leads to heavy fines from both the IRS and the state. Good software will help with the creation and maintenance of financial statements.

Plus, you can use this information when making decisions regarding the financial health of your company. If you need to invest money in marketing or business development, you will be well-informed due to the information that is available in the reports. Enhanced financial forecasts can be valuable assets to help with the leveraging of your business efforts in the future.

Step #4: Be Prepared for the Future

You never know when you might be facing an audit, so it is important that you are proactive right now so that you are prepared for anything that might happen in the future. Good accounting practices make it easy to navigate a potential audit because all of the information is organized and clear. You need to have documentation to back up the write-offs and deductions used for your tax strategy. Additionally, you need to have a clear line of paperwork showing where your money is coming from when customers are paying for the products and services.

One aspect of preparing for the future is in the management of your cash flow to ensure that you are ready for slow months. It is inevitable that some months will be more profitable than others. Having a good financial strategy in place will give you the emergency savings that will carry you through the months when cash is tight. Sometimes you can anticipate these fluctuations, but other times the cash need is unexpected due to unanticipated costs and details that affect your business.

It is smart to have regular internal audits and bank reconciliations to ensure that all of the accounts are in order. A little bit of proactive work right now can go a long way to helping you avoid a big headache in the future.

Keep your records up-to-date and make sure that you are abiding by all of the financial regulations and laws in your area. There are many benefits that can come from engaging the services of an experienced accounting team.

Do You Need Accounting Services?

Most small business owners don’t have professional accounting skills to manage their business finances without support. You might attempt a DIY system, only to find that you encountered problems that could have been easily avoided by tapping into the services of an experienced accounting team.

If you want to set yourself up for success in the future, then the best thing that you can do is lean on the expertise offered by a small business accounting team. We are here to help with your accounting checklist to ensure that you are starting on the right foot. Then, our ongoing accounting services will support your needs going forward.

Easier Accounting is here to assist with anything that you need for your business financial tracking. If you are looking for small business accounting or bookkeeping services, then we invite you to contact us to learn about the services that are offered. We are just a phone call away when you need answers to your questions, and our team will explain the benefits that are available when you choose to engage the services of a small business accounting team: (888) 620-0770.

How Your Company Will Benefit from Small Business Accounting Services

Do you get stressed when walking into your office because of the financial paperwork and mess of documents piled high on your desk? As a business owner, you are carrying a load of responsibilities to keep your company running and ensure a positive outcome for your business efforts. Often, some of the small tracking and organizational details can fall through the cracks, resulting in a situation where you are unable to keep up with ongoing responsibilities. One of the best things that you can do is engage an expert team that offers small business accounting services.

What is the current financial standing of your company? Can you run financial reports and review the information with confidence, knowing that all of the transactions are up-to-date? If you are having a hard time finding important documents and you don’t know the true cash position of your business, then the best thing that you can do is invest in small business accounting services. This support will make an incredible difference to help in creating a strong foundation for your company.

Here are a few benefits that you can expect that will be available when you engage the services of a trusted accounting team:

Setting Up the Right Software Solution

We live in a digital age, which means that incredible tools are available to improve your business efforts. No longer do business owners need to track transactions by hand and do the calculations on a ledger. Instead, a good software program can automate the busy work and give you a powerful tool that shows the financial details of your company.

Too often, business owners attempt a DIY approach with software implementation. They are trying to save money by implementing something that was found online. A Google search will uncover hundreds or even thousands of options that can be used for business tracking and financial management. But, which service is the right solution for the needs of your company?

Without professional experience in the industry, it can be hard to understand how these software programs will affect the financial health of your company. Instead, of making the mistake of putting time and effort to set up an ineffective system, the best thing that you can do is talk to an industry professional who can guide your decisions. A small business accountant will evaluate the needs of your company and offer recommendations that will optimize your efforts.

The right accounting software will make it easy to keep track of your bills and invoices. Ongoing tracking keeps your company organized and on track for future success. But it is essential that you find the right system that will work for you, which is why you shouldn’t make this decision without the support of someone who understands small business accounting.

Prepare for Tax Season

Taxes are an unavoidable part of managing a small business. You need to meet the legal requirements established by the IRS and state laws. Even though taxes might seem like a daunting aspect of managing a small business, a good bookkeeping system will make tax season a lot less scary. You will find that your stress levels go down when your company is organized and prepared for the tax burden that lies ahead.

As a small business owner, you shouldn’t spend your time trying to navigate tax laws and other requirements that affect your company. It can be hard enough to identify how tax laws affect your business efforts. Most business owners get a headache just thinking about the time and effort that it will take to read through the small print in the tax laws.

Instead of wasting your time trying to navigate this confusing industry by yourself, it’s worth the investment to enlist the help of an accountant that can offer guidance and recommendations. Hiring an accounting and bookkeeping service is truly an investment that will pay for itself in the future. These services will keep your finances on track so that you can leverage tax deductions and ensure that no details fall through the cracks.

The best solution is to hire an accounting service to handle the tax preparation required for your business. You don’t have to get caught in the paperwork and financial details. Instead, focus on other important tasks to keep your business running and allow your small business accounting services to do the hard work related to tax preparation.

Reduce Your Time Spent on Busy Work

Add up the hours that it will take to track transactions and reconcile your accounts, and you will likely spend hours each week on this busy work. You already have enough to worry about without the headache of sorting through transactions and paperwork! Time is valuable, especially when you are getting a new business off the ground. Instead of dedicating hours of your day to accounting tasks, it is better to outsource these services so that you can focus on other essential tasks that will affect the success of your business.

Engaging in small business accounting services can save you both time and money in several ways. For example, when a good accounting software is implemented, then you don’t have to spend time on manual tracking and calculations. Automation is a great way to minimize the amount of time required for these tasks.

Next, you can engage the services for ongoing accounting and bookkeeping support. Our team can oversee all of the details relating to your business efforts, including payroll processing, invoice tracking, reconciliations, and more.

You should be focusing your time on money-making tasks instead of getting caught in the busy work. Imagine how much your business can expand if your hours are focused on new business strategies and sales meetings instead of sorting through transactions and inaccurate financial reports. Do what you do best, and let the accounting pros take care of the rest.

Effective Cash Flow Management

It can be time consuming and stressful to figure out where customers have neglected their payments. A necessary part of keeping your company running is ensuring that you are current with the collection of accounts receivables. If you can’t keep up with it all, then it can be beneficial to hire the services of an accounting and bookkeeping team.

Implementing a good system means that you can get paid on time. As a result, you will have the cash available when it is needed. It is inevitable that you have bills that need to be paid in the future for overhead costs and business development. If you aren’t collecting on the money that is due, then you will run into cash flow issues.

Not only do you need to have money for the current expenses, but you also need to be thinking about the possibility of slow months in the future. Every industry ebbs and flows throughout the year. It is essential that you have a good cash system in place so you are prepared for any financial changes that might happen in the future. An emergency savings account means that you can keep the company running, even when the income slows down for a season.

Good cash flow practices also help you avoid any financial mistakes that could hurt your company. For example, if you need to lean on debt to keep the business running, then you will be facing expensive interest costs and potential late fees that can really add up. Staying on top of your payments with good cash flow management is a strategy that can save you thousands of dollars each year.

Lean on the Services of a Trusted Accounting Team

Full-service accounting support will make a difference in the success of your company. You can lean on the experience offered by our team and rest assured knowing that we are overseeing the important aspects related to your business finances.

It is nice to let go of the stress and worry about your company financials. Instead of spending your valuable time on tasks that are necessary for financial tracking, it is nice to lean on the services offered by a team that understands your needs.

Small business accounting services are critical to helping you avoid expensive mistakes that often happen when business owners attempt a DIY approach. A little bit of proactive work right now will go a long way to ensuring that you are prepared for anything that might come in the future. Plus, you can let go of the stress that comes with tax laws and understanding financial regulations on a federal and state level.

As you are getting your small business off the ground, it is good to know that you don’t have to carry the financial burden without support. Our team is here to help you with the accounting services that will be a good fit for your company. Reach out to us at Easier Accounting to learn more about the services that are offered and the benefits that are available for your company. We are here to help with any accounting support that is needed for your company: (888) 620-0770.

To-Do List for Successful Relationships with Independent Contractors

The gig industry is exploding at an incredible rate, with many companies turning to the services of independent contractors as an alternative to hiring employees. As a small business owner, it is likely that you are working with contractors, and you might also offer contract services to other businesses. In fact, it is estimated that contractors will make up 40% of the workforce by 2020!

Whether you are thinking about hiring a contractor for the first time or you are already working with contractors, it is smart to consider the right strategy to protect your business, maximize results, and maintain a successful business relationship at the same time.

Benefits of Hiring Independent Contractors

Why are many companies turning to independent contractors instead of hiring employees? In decades past, it was common for a business to bring in new employees when manpower and additional skills were required. But the business climate has changed, and business owners are shifting their strategies to accommodate these differences. Here are some of the common reasons why business owners choose independent contractors:

  • Reduce Overall Costs: Since contractors are self-employed, they manage the behind-the-scenes details such as insurance benefits, employment taxes, and other admin functions. Reduce these overhead costs, and you can decrease your overall expenses for the services that are required. Plus, you have the option to hire the contractor for the weekly work that is needed, without the obligation to pay a full-time salary if you don’t need that many hours.
  • No Need for Office Space: Another way that you can reduce your costs is by eliminating the need to make space for another person in the office. Independent contractors don’t work in-office, which gives you the option to reduce your rent by selecting a smaller office space. Additionally, you don’t have the overhead expenses of office furniture, computer equipment, office supplies, and other details required for setting up an office for that person.
  • Temporary Support: Sometimes you need services for a short time, making it beneficial to bring someone in for temporary support. Paying on a project basis gives you the option to choose how long you will continue working with the contractor. When these services are no longer needed, you don’t have to worry about lay-offs or unemployment claims. These temporary contractor services are great for one-time projects such as a website redesign, or if you need seasonal assistance when you can’t keep up with the busy season in your industry.
  • Self-Management: Since you are hiring a contractor who is an expert in the industry, you don’t have to worry about high levels of management. The person is hired to handle their responsibilities in the project. You can expect those services to be completed without the need to drive the project with focused management every step of the way. Contractors tend to have higher levels of “self-starter” skills compared to standard employees.

As you can see, there are many reasons why you might consider working with a contractor instead of bringing on another employee.

Tips for Getting Started with a Contractor

Now that you can see these benefits, you might be ready to jump in by hiring contractors to assist with your workload. But there are a few must-do things that need to be completed to ensure you are protecting your company and staying in the bounds of the law. Here are a few tips that should be added to your to-do list:

  1. Tax Documents: The contractor doesn’t need to sign a W4 because they don’t have employment status with the company. A W4 is the IRS document used to calculate the Federal taxes that need to be withheld from the employee’s payment. Since you are hiring a contractor (not an employee), this person will receive a vendor payment instead of a paycheck. So, you don’t need to worry about any tax withholdings because the contractor is responsible for the necessary tax payments. The correct form that they should sign is Form W-9, which should be completed before work commences. This paperwork ensures that you are hiring someone who is legally allowed to work in the US. They will need to provide their resident or citizen information, and then this information is submitted to the IRS each year along with the amount of money that was paid for services.
  2. Send Form-1099: When a contractor is paid $600 or more in a calendar year, then you are required to file tax paperwork documenting the income. This paperwork needs to be postmarked by January 31st for the previous calendar year. Additionally, a 1096 transmittal form needs to be sent to the IRS, summarizing the payments that were provided to contractors.
  3. Signed Contract: A handshake deal is a recipe for disaster. Never assume that you have a common understanding of the project without creating an agreement that is signed by both parties. This contract lays out important details such as the payment structure, the scope of work required, and ownership of intellectual and physical property when the project is complete. While you aren’t legally required to have a signed contract, it is a smart step to protect the interests of your company.
  4. Work Expectations: Be careful about the expectations that are placed on the contractor. There is a fine line between contractor and employee, and you need to be sure that you aren’t crossing that line. For example, a contractor needs to flexibility to choose when and where the work is performed, and the worker must use their own tools for the work that is completed. If you require the worker to be on the project at certain times and you are supplying all of the equipment and materials that are required, then it is likely that the person should be paid as an employee instead. If you have questions about the difference between a contractor and an employee, then it is smart to talk to a payroll expert for advice.
  5. Maintaining Records: In the same way, you need to track employee payroll and performance, it is necessary to keep records of the details related to your contractors. Store a copy of the contract on file, as well as other essential information such as invoices that are billed for the work completed and proof of payment. Make sure there is a paper trail documenting communication and payment so that you can show the details if questioned about the payment and services provided.
  6. Payment Schedule: If the contractor demands up-front payment, then you might find yourself in a tricky situation if the work is not completed according to your agreement. It is common for payment terms to be established in advance. Make sure that you have a shared understanding about when invoices will be sent, the timeframe in which payments need to be received, and how much will be paid for the services. Many business owners have found that it was a mistake to issue full payment upfront, especially when the contractor isn’t motivated to perform or finish the work when the payment was sent in full. You might agree to a payment schedule of half up front and half upon delivery or completion. Or, create a monthly billing schedule with the contractor sending an invoice each month for the work that is completed.

These tips might seem simple, but they are essential to help you in protecting your company and maintaining a strong working relationship with the contractor that you’ve hired. A little bit of proactive work goes a long way to ensure success of the project.

Services to Outsource

When does it make sense to hire an outsourced contractor instead of an employee? Here are examples of services that you might choose to hire a contractor for assistance:

  • Online Marketing: Digital content can be produced by a contractor so that you don’t have to worry about having an in-house marketing expert in your company. Many business owners find that online marketing is more affordable and more effective when hiring a marketing firm instead of attempting a DIY approach. These services might include tasks such as graphic design, content writing, ad management, and more.
  • Bookkeeping and Accounting: Having a strong tracking system for your business expenses and financial reports is essential to ensure success with your company. The busy work of tracking transactions and managing your business financial information can take up a lot of time each week. Turn your attention to other business responsibilities by hiring an accounting and bookkeeping team for assistance instead.
  • Payroll Processing: While this topic can fall into the category of bookkeeping and accounting, it deserves mention on its own. Payroll has a long list of requirements and can be a burden on your company. Hiring independent contractors for assistance ensures that you are staying current with the latest laws and regulations.

If you are searching for a great team of independent contractors to assist with your bookkeeping and accounting tasks, then Easier Accounting is here to assist. Call us to learn about the way your small business will benefit from these available services: (888) 620-0770.

13 Essential Tools, Services, and Resources for Every Small Business Owner

Finding the right tools, services, and resources for your small business can have a significant impact on the overall success of the company. Even though these things might seem like simple details, the smaller efforts add up to great results. At Easier Accounting, we love serving small businesses and our team is always looking for resources and support that will boost your business efforts. Whether you are just getting established or your business has been around for a few years, you might find some of these resources useful.

Some of these recommended tools are free, and others require an upfront or ongoing payment. But they are worth the investment because of the benefits that are available. If you can find solutions to save time and leverage your efforts, it is possible to speed up the growth of your company. We want to help with your financial success, which is why we are sharing this article with great resources for you.

Getting Started on the Right Foot

Entrepreneurship is growing with each year, opening up opportunities for anyone who wants to own a business. Even if you don’t have a background in business or financing, it is possible to start a company that can be run from your home or a local office.

While the excitement of starting and running a business can be exciting, many people find that it can also be overwhelming to navigate the tools and systems that are available. Instead of trying to “reinvent the wheel” by exploring all of the options that are offered, why not tap into the knowledge of others who understand what is necessary for small business success? You can follow in the footsteps of other successful startups, making it easier for your business since you don’t need to navigate new territory.

Keep in mind that if your competitors are using these business tools and you are late in getting started, then your company is going to be left in the dust. Technology has transformed the business industry, making it more important than ever to keep up with the trends.

Work Smarter, Not Harder

You don’t have to work nonstop to support your business growth. Instead, consider the idea that the right tools allow you to work smarter, not harder. You can support the needs of your company and maintain a balanced lifestyle with family and friends at the same time.

The right business systems make it easy to maintain productivity and boost efficiency throughout the days and weeks. Your time will be focused on the tasks that are most important for your company, instead of getting caught in the weeds with the busy work that takes up too much time.

Tools for Your Business

Every business is unique, so you might not need all of these tools that we are sharing. But it can be beneficial to consider the benefits and features to see if they apply to your needs. Save yourself the hassle of research and wasted money by using some of these recommendations, instead of testing an unproven business platform.

Here are some of our top recommendations if you are looking for new business tools:

  1. GSuite: Google developed a suite of tools that make a great software package for businesses of all sizes. This system includes essential tools such as setting up email management, domain purchasing, website analytics, ad campaign management, and more. GSuite is designed with apps, so you can pick-and-choose the features that support the individual needs of your company. It’s nice to have all of these tools in one, easy to access, centralized location.
  2. ScheduleOnce: A good calendar system is essential to keep track of appointments, deadlines, and important dates. Some businesses use the Google Calendar through GSuite. For improved functionality, consider ScheduleOnce that syncs with Google Calendar. This system allows you to give clients the opportunity to book an appointment on your calendar, without the hassle of person-to-person communication to schedule these meetings.
  3. Slack: Step into the 21st century by using this dynamic online team communication tool. Instead of emails and messages getting lost in the shuffle, Slack can be used to streamline communication so that you can be sure that all of your team members are on the same page. This platform allows you to centralize messaging, phone calls, file-sharing, and even fun ways to interact with the group.
  4. Trello: While Slack is a communication platform, Trello is a complementary option to manage workflow and task assignments. You can create different boards for various departments and groups in your company. On each board, cards are set up and assigned to team members who are responsible for those tasks. The system gives flexibility so that you can manage the due dates, tasks that need to be completed, notes about each project, and more. It is a great way to structure the workflow and keep track of the tasks that need to be completed.
  5. Evernote: This app can be used across devices, giving you one location where you can take notes, organize information, keep track of files and more. It’s basically an “external brain” so that you don’t have to keep all of the small details in your head. The notes are cloud synced and can be shared with others if needed. If you have a quick thought or need to keep a running to-do list, then Evernote is a solution to consider.
  6. GoCo: Small businesses don’t often have the resources to bring in an HR expert. Instead of hiring another full-time employee, you might consider the benefits of using a Human Resources service that is based online. This system is designed to help with everything required for employee management and benefits, such as onboarding, paperwork management, PTO tracking, benefits administration, performance reviews, legal compliance, and more. One of the benefits of this system is that it can integrate with your payroll system.
  7. GoodHire: Another great HR resource is GoodHire, which can be used to run new hire checks for background screenings, credit history, driving records, identify verification, employment verification, drug screenings, education verification, and more. When you are hiring new employees, these services are priceless to ensuring that you are bringing in the right team member.
  8. LegalZoom: Paying for expensive legal services can cut into your startup costs. LegalZoom is a good alternative that covers all the basics needed for small business management and even your personal life. You can form a business entity, create an estate plan, file trademarks or patents, or talk to an attorney about your individual needs. This website makes it possible to save thousands of dollars in legal fees by creating basic legal documents without paying expensive, hourly attorney costs.
  9. Shopify: If you want to build an online store, there’s no reason to start from scratch with the website coding. This online service provider simplifies the e-commerce You can create an integrated shopping experience for customers that fit into the structure of your existing website. Additionally, you can track the back-end details of business management, including payment processing, order management, and inventory tracking.
  10. Upwork: Maybe you are looking for services, but you don’t want to bring in another employee? Hiring a freelancer is a great solution to access independent contractors from around the world. You can benefit from the quality services that are offered, without the burden of paying the overhead costs of bringing in a full-time employee. You’ll find anything and everything you might need, ranging from website design to content writing, administrative assistants, social media managers, and more. The great thing about hiring freelancers through Upwork is that you can see their work history and reviews left by other clients.
  11. Telzio: If you are looking for solutions to set up an office phone system, consider an online system. Your entire team can manage messages and phone calls using any device, from any location. The pricing is simple and clear, and you don’t have to worry about locking into a contract.
  12. InfusionSoft, by Keap: This software is commonly known as InfusionSoft, falls under the name Keap A Customer Management System is essential so you can keep track of names, contact information, sales data, and more. The benefit of InfusionSoft is that you can centralize your marketing automation, making it simple to automate your systems so that you are capturing leads and converting them to paying customers.
  13. EasierAccounting: We are proud to add our services to the list of must-have tools for business owners. We have one of the leading accounting and bookkeeping teams, with a focus on small business services. If you can’t keep up with the transactions, reconciliation, payroll, tax paperwork, and more, then we are here to help.

Don’t hesitate to reach out if you need assistance with your business finances. You will see that we have an excellent reputation in the industry, offering unbeatable business accounting services at an affordable price. Learn more about your options by contacting us at Easier Accounting. Call to talk to an industry expert about the financial services that are needed for your company: (888) 620-0770.

Clearing Up Confusion about Common Jargon in the Bookkeeping and Accounting Industry

Hiring bookkeeping and accounting services might be one of the best decisions you will make for the financial success of your company. It is essential that you have an experienced team to guide your financial tracking and decisions that will affect the well-being of your business. But, do you feel like you are in over your head trying to understand the jargon in the financial industry?

It can be confusing for a new business owner to decipher terms that are standard in the bookkeeping and accounting world. Instead of bringing in a translator to explain these things in layman terms, you can use this guide to break down some of the common topics of conversation that come up with your bookkeeper or accountant.

At Easier Accounting, our name says it all: we are striving to make accounting as easy and as simple as possible. We are proud of the quality services and simplicity offered to our clients. Our expert team can help with the financial tasks that need to be handled. At the same time, we want you to understand what is going on with your business accounts so that you are clear about the benefits your business is receiving from these services.

Common Terms and Jargon in the Bookkeeping and Accounting Industry

These are some of the common terms that you might hear as you are working to gain a greater understanding of your business finances and reports:

  • Accounting Method: Your accountant might talk to you about the accounting method that is used. This process is the strategy that is implemented in reporting expenses and income. Two methods can be used for proper reporting to the IRS: either accrual accounting or cash accounting.
  • Accounts Payable: These numbers can be accessed in a report that shows the total amount of money the business needs to pay in bills. When your vendors submit invoices or payment requests, then they are categorized as Accounts Payable. These amounts are liabilities since you need to have the cash to pay for the products or services.
  • Accounts Receivable: On the other hand, the money that is collected from your customers or clients falls into the Accounts Receivable category. If a customer owes money but hasn’t paid yet, then it is an asset that will hopefully be collected in the future.
  • Accrual Accounting: This form of accounting maintains reports based on when expenses are incurred, and income is earned. Businesses have a bit of flexibility in determining when the expenses and income are recognized, as long as the management of these numbers matches IRS regulations.
  • Assets: Does your company own anything that has value? A variety of things can fall in your assets category, such as inventory, real estate owned by the business, vehicles, equipment, and more. Even your outstanding Accounts Receivable falls into the category of business assets.
  • Balance Sheet: One important financial report is called your business balance sheet. This statement shows the changes in your liabilities and assets in a given accounting period. Understanding the difference between these two numbers is critical to determining the current success and trajectory of your business.
  • Cash Basis Accounting: An alternative to Accrual Accounting, this method records the expenses and revenues when the payments are sent or received. It is a straightforward method of accounting that is often used for small businesses or new startups, especially when the company is running on a cash basis or doesn’t have an inventory to manage.
  • Cash Flow: The order in which money flows in and out is critical so that you can manage your expenses and profits. Revenue and expenses should be coming in regularly, but it doesn’t always mean that there is money in the bank to meet your Accounts Payable needs. Even if your business is profitable in a given accounting period, you will face cash flow issues if the expenses need to be paid before receipt of the revenues. For example, some companies need to pay suppliers upfront before the customers send payment for products or services.
  • Depreciation: Some assets are purchased, and they lose their value over time. For example, equipment or vehicles can wear out due to regular use. Your accountant might recommend that depreciation is used to reduce the listed value of the asset each year on the balance statement. This strategy spreads out the loss over multiple years, which helps to manage taxable income in some cases.
  • Double Entry Bookkeeping: It is common for businesses to use a double entry system for bookkeeping. This process requires each transaction to be listed twice in the accounts since two effects are happening. If you buy $10,000 in inventory, then an entry needs to show a reduction of cash reserves. At the same time, a second entry shows that assets are increased by $10,000.
  • Expenses: Your business will require a variety of costs to keep the company running. Any time these costs are accrued, they fall into the expense category. Expenses that result from revenue-generating activities might include business development, marketing campaigns, inventory purchasing, payroll, and more.
  • Financial Statements: This broad term can cover a variety of reports that might be run through your bookkeeping system. These documents show the activities of your business in a given period. Common reports that fall in the Financial Statements category include Profit and Loss Reports, Balance Sheets, General Ledger, Equity Statements, and Income Statements.
  • Financial Year: Depending on the way your business is structured; your financial year might not run according to the calendar year. There are times when reports are run from January to December, but there are many instances where the 12-month period for a company doesn’t align with the calendar year. These dates need to be recorded and tracked for reporting and tax purposes.
  • General Ledger: The master sheet that shows every transaction is known as your General Ledger. Data for all other reports are pulled from this ledger.
  • Income Statement: Commonly known as a “Profit and Loss Report,” an income statement shows the profits for your business in a specific timeframe. Both revenue and expenses need to be calculated to determine the profitability of your company.
  • Liabilities: Money that your business owes to another company or vendor falls in the liability category. These balances need to be tracked so that you have the cash flow necessary to pay the expenses.
  • Revenue: A revenue report shows the amount of money your business receives for products or services sold in a given time frame. This total might include the exchange of assets, net sales, interest received, and any other transaction that brings money or value into the business. Revenue is usually calculated before expenses are factored in to determine profitability.

If you encounter any other terms that you don’t understand, then your bookkeeper or accountant can help with a definition of the jargon. It is helpful to ensure that you understand these concepts so that you know what your financial team is talking about in conversations about the financial reports and tracking for your company.

Enlisting the Services of an Experienced Accounting Pro

Business owners have a lot of stress and responsibility in keeping the company running. Are you feeling overwhelmed trying to keep up with everything that needs to be addressed? Not only do you need to oversee product development, employee management, marketing campaigns, overhead expenses, and more… but you also need to consider the financial health of your company.

The most important thing that you can remember is that you don’t have to do it all by yourself. If you don’t have training or experience with bookkeeping and accounting, then it makes sense that you should hire an experienced team to assist with these tasks. Ongoing services can go a long way to improving the financial health of your company and ensuring success in the future.

Choosing a Bookkeeping and Accounting Service

Understanding the jargon is just the first step in determining the right financial plan for your company. It is also essential that you hire an accounting and bookkeeping team that you can trust. A little bit of research in the beginning can go a long way to ensuring the financial success that you desire.

It is smart to hire an outsourced accounting service instead of attempting a DIY approach. The best solution is to choose a team that specializes in small business services. You need to work with an accounting pro that will understand unique challenges and situations that might apply to your business.

Also, consider the reputation of the company. As you look online, you can find information about the accounting service to determine whether the company is reliable and reputable. Make sure that the team holds the right accounting certifications.

Take time to learn about the services that are offered to ensure that these services are a good fit for your business needs. If you need guidance or assistance in choosing the right accounting services, then Easier Accounting is here to help. We’re here to assist with everything from explaining industry jargon to providing the ongoing financial support required for your business efforts: (888) 620-0770.

7 Tips to Maintain Positive Cash Flow for Your Small Business

It doesn’t matter if you are in the beginning stages of a startup or if you have a successful, established business, your long-term success rests on your ability to maintain positive cash flow. Whether you are bringing in $1000 per month or $100,000 per month, you need to be sure that your current business needs are met with cash in the bank.

How is Your Company Doing?

Your cash flow snapshot is a good reading on the current performance of your company. So, take time to review business cash flow statements regularly. This information will help you evaluate the things that are working and things that are hindering your growth. Then, you can use the data to implement changes that will help you reach higher levels of success.

Not only is the goal to avoid negative cash flow or any activities that will hurt your profit margins, but you also need to be looking at the things that will help with expansion and growth in the future. Too often, cash flow analysis is only focused on the current month or quarter. It makes sense that you are evaluating current financial obligations and requirements that are coming up. But you shouldn’t let your current situation overshadow resources that might be required for business development in the future.

It is a learning process as you identify the strategies that support your immediate business needs while preparing for the future at the same time. There’s no question that good cash flow will be required for all of these efforts.

How to Maintain Positive Cash Flow in Your Business

You might conceptually see why positive cash flow is required for your company. But it can be a challenge to identify actionable steps that will have an impact on your cash flow outlook. Here are a few tips that will help you boost profit margins, minimize expenses, and ultimately keep more money in the bank:

  1. Ongoing Spending: How much money is required to keep your business running each month? You should have a clear budget and spending goals to determine how much you need in the bank to pay for rent/mortgage, utilities, payroll, inventory stocking, services, and more. You can’t avoid overhead costs, but there might be solutions to manage the total amount that you are spending every month. Go through the spending report in detail to see if anything can be cut or trimmed down so that you can reduce the amount of money going out the door each month.
  2. Big Purchases: Even if you are keeping up with the ongoing expenses for your business, sometimes the big purchases can be crippling. Whether you are facing a large tax bill or you need to invest in equipment or business development efforts, you can’t sacrifice the payroll cash. Look ahead so that you can anticipate potential costs in the future. Then, shape your monthly saving and spending plan so that the cash is available without the need to dip into credit.
  3. Set Up a Line of Credit: The hope is that you won’t need to rely on credit for your business expenses. But it’s good to have a backup plan in case you get in a pinch. One mistake is to wait until your time of need to run to the bank for a line of credit application. Instead of trying to overcome the problem at the last minute, it’s better to set up the line of credit when you have positive cash flow, and your business is doing well. During this application process, the financial institution will run a complete check on your financial records to determine whether you will be approved for the line of credit. They want to be sure that you will have the cash to pay back the loan, and this information will also affect the loan limits. Securing the line of credit right now could be the difference between keeping your company going in the future vs. not being able to pay your bills because of cash flow issues.
  4. Minimize Interest and Late Fees: It might seem ironic to talk about avoiding debt right after the tip that suggests you secure a business line of credit. But there’s no question that it is harder to manage your cash flow when you are spending high amounts of money on late fees and interest costs. The more debt you accumulate, the more money you will be spending to delay the payoff of that loan. It could result in a domino effect that makes it hard to pay your bills on time, resulting in late-fees being added to your balances. Set up automatic payments and make sure that you always have enough to cover the minimum payments. A better solution is to pay as much as possible every month so that you can pay off the debt and eliminate the loan payments.
  5. Dial in Your Pricing: It might be tempting to offer deep discounts if you are trying to bring more customers through the door. Keep in mind that these discounts could result in problems in the future. Offering discounts to all customers will cut into your profit margins and even devalue your service in the future. See the value in the products and services that are offered to your customers, and avoid the practice of “racing to the bottom” to beat your competitors based on pricing alone. Customers are willing to spend more money when they can see that value and quality are available with a higher price tag.
  6. Stay Ahead of Receivables: You need to follow up on outstanding invoices to ensure that you are receiving payments from your customers or clients. Not only should you keep a detailed list of the money that is owed, but it is smart to put together a follow-up system if these payments are late. When you are collecting overdue money, time is of the essence. Stick to the payment plan and make sure that receivables don’t fall low on the priority list if you are distracted by other business management tasks.
  7. Boost Cash Inflow: Are you receiving an inflow of cash every day or week? Depending on your business model, the timing of customer payments might vary. You need to make sure that you are making sales consistently to receive the money that will keep your company running. It all comes down to the numbers. Look at the target amount of income you want to receive each month. Then do the calculations to see how many sales need to be made on a monthly, weekly, and daily basis. Finally, determine the most effective activities to help you connect with paying customers so that you can close enough deals to meet the needs of your company.

Cash Flow is More than Just Paying the Bills

While it is important to ensure you can pay your bills and obligations, cash flow is about much more than just paying for these ongoing expenses. Creating good cash flow will set you up to make the spending decisions that help your company grow. When you have extra cash in the bank, you have the opportunity to invest in marketing that brings in new customers. You can also put the extra money towards business development and product research to improve the products and services that are offered. Additionally, good cash flow is essential so that you can maintain the right amount of inventory, so these products are always on hand when customers are ready to buy.

Finally, don’t overlook the peace of mind that comes when you know that there is money in the bank. You can’t put a price tag on the lower stress levels you will experience when you have an emergency savings account in place for a rainy day. Good cash flow strategy and management could be the difference between business success and failure, which is why this task should be at the top of your priority list.

Keeping up with Accounting and Bookkeeping

The foundation of an effective system for cash flow management should be based on the right bookkeeping and accounting strategies. You need to track the transactions that are moving in and out of your bank accounts. Data-driven decisions are important to help your business flourish in the future.

As a business owner, do you find it challenging to keep up with the accounting and bookkeeping tasks that are required? You are carrying a lot of responsibility, so it’s understandable that you find it difficult to stay consistent with these efforts.

Instead of stretching yourself thin with too many responsibilities, consider the benefit of bringing in a good outsourced accounting team. These services will improve your financial systems and help you avoid potential cash flow issues. Working with an experienced financial team is one of the best things that you can do to support your business goals.

For more information, reach out to us at Easier Accounting. We are here to help with anything that you need for accounting, tax preparation, financial advice, and more. Call today: (888) 620-0770.

Need a Clean Slate? How to Start Fresh with Business Systems

Are you facing troubles in your business and you feel like it’s too late to make the necessary changes? Or maybe your business is doing fine, but you have hit a plateau and can’t reach the higher levels of success that you desire? Regardless of your current situation, you need to consider how your current business systems are contributing to the growth and success of your company.

You can dream big and hope for great things in the future. But nothing will change unless you implement systems that impact your daily, weekly, monthly, and annual business practices. It’s time to evaluate what is working and what needs to be corrected. Then this information can be used to help you implement the business systems that will increase the opportunities in the future.

Starting Fresh or Adjusting Current Business Systems?

Analyze your current business systems to determine where you are starting. Can you identify practices that are helping your company grow? Where are the areas that are just cutting into your profit margins? Sometimes, current systems can be adjusted so that you can tweak the ongoing practices to leverage higher results in the future. Other times, it is best to scratch your current practices so that you can start fresh with a new system.

You need to have a clear picture in your mind of where you are going and what you would like to create. At the same time, you also need to determine the options that are available to leverage what is already working. If you know that certain activities or tasks always bring in more customers and sales, then spend more of your time, efforts, and resources on those things. On the other hand, don’t be afraid to walk away from long-time systems that aren’t providing the same results you received in the past.

Business Systems that Need to be Evaluated

Here are some key points that should be evaluated and reworked to help you achieve better results in the future:

  • Clean Your Workspace: The comfort and appearance of your office and workspace have an effect on your productivity throughout the day. Have you created a space that gives you the inspiration and motivation to do the work that needs to be completed? Don’t let your office become the dumping ground for everything that doesn’t have a place in the building. Remember that physical clutter results in mental clutter, which can distract you from the tasks that will help your company grow. Prioritize the space where you are working, where your employees are spending their work hours, and digital systems as well. For example, you should have business systems in place with digital folders where files are stored so that you can find them when you need them. A clean work environment means you will avoid precious work hours digging for paperwork or items when you need them.
  • Reset Your Mindset: It is important to understand that your mindset creates the foundation of your business success. If you are caught in negative thoughts and dialogue, then it will have an impact on your daily actions… which affect long-term results. Spend time reading business books, listening to mindset podcasts, and investing in training that boosts your intellectual thinking. A little bit of mindset effort can have a significant impact on the results that are possible in the future.
  • Create a New Vision: You don’t need to wait for the start of the New Year to create an upgraded vision for your company. If you want to change your results, then you need to know where you are heading. Creating a vision for your business will help you in moving in the direction that you desire. Setting this intention and sharing the vision with your team can help everyone work together in a way that will maximize the progress and success that is possible. Dream big, then start acting on the smaller tasks that will turn those dreams into reality. Not only do you need to identify the goals for your company, but it is also smart to focus on “goal planning” that outlines the action plan needed to achieve those goals.
  • Honor the Business Cycles: Another thing to consider is that it is natural to have ups and downs in your business efforts. Most industries have slow seasons and busy seasons. During the busy times of the year, your focus is turned to the immediate tasks that are required to keep up with the current demand. Don’t overload yourself with things that aren’t essential for your present needs. When things start to slow down, the timing might be right to invest in new business systems that will leverage your success for the future. Recognize the way these cycles work for your company so that you can find the best times to work on changes that are needed.
  • Don’t Be Afraid to Say “No”: Agreeing to every opportunity that comes along could be detrimental to your progress. As you identify your new business vision and goals, this information can be used to help you identify the areas where you should be saying “no” to various opportunities and people. If your schedule is filled with many obligations and tasks that don’t contribute to your business growth, then your time will be wasted on low priority tasks. Give yourself the opportunity to create a clean slate by letting go of the things that aren’t serving your or your business.
  • Marketing Efforts: One of your highest priorities should be focused on the acquisition of new customers. When you are running a business, new customers will generate the cash flow and network that support the growth of your company. But marketing can encompass many channels, sometimes making it feel overwhelming. Consider your industry, where your target customers are spending the time, and the best way to use your marketing budget to connect with the right people. It can be smart to implement tools such as Facebook marketing, building an email list, and Paid Search Marketing.
  • Filing and Paper Systems: Do you find that your desk is buried in stacks of paperwork? Too much paperwork is not only bad for the environment, but it can also have a negative impact on your productivity. Consider how much time you are spending on paperwork management, then look for systems that will help to cut down on the papers that are moving through your office. Going paperless might be the perfect clean slate to reduce your time commitment and stress levels. A variety of tools can be used if you are ready to go paperless, such as expense trackers, accounting software, task management tools, online contract systems, calendar, and time tracking systems, and more.
  • Leverage Automation When Possible: There is no reason to spend your time on manual tasks when technology is available to automate some of these things on your to-do lists. Software programs can be used to automatically handle things that previously took hours a week to complete. For example, using the right accounting and bookkeeping software means that you don’t have to track every transaction that moves through your company manually. Instead, you can let the software oversee most of the tracking and calculations. These platforms are powerful because they free up your time to work on business efforts that are most effective to help with the growth of your company.
  • Outsource Essential Services: Finally, don’t overlook the leverage that can be gained by outsourcing services that are needed. You don’t have to do everything on your own. You can find opportunities to get top-notch help at affordable prices. Using outside help minimizes the tasks that are on your to-do list each week. Plus, your business systems can be improved when you are using the knowledge and expertise of these professionals to apply better business systems for your company. Why reinvent the wheel when an outsourced team has already found the best practices to apply in your industry? You can outsource accounting, bookkeeping, office cleaning, marketing, legal paperwork, and more.

Being Open to Change

One of the best skills you can have as a business owner is being open and ready to embrace change at the right time. If you are willing to make adjustments along the way, then you can shape your company for incredible growth in the future.

There are times when these changes result in a massive overhaul of business systems so that you can overcome poor habits and improve the things that matter. Other times, small adjustments can have a significant impact on the results that you are achieving.

Is it time to change your accounting and bookkeeping systems? We are here to assist. Our team specializes in small business accounting, and we’d like to support your business systems and goals. You are welcome to reach out to us at Easier Accounting to learn more about the financial services that are available. Our expertise is in services for startups and small businesses. Call for more information: (888) 620-0770.

What You Need to Know about Accounting and Tax Preparation for Start-Ups

Starting a business means that you are juggling many tasks and responsibilities: setting up bank accounts, creating accounting systems, designing a website, building out customer service platforms, tax preparation strategies, business development, and more. Even though it is a lot of work to launch the business, it is worth the efforts because of the long-term benefits you will enjoy.

The truth is that the solid foundation created right now will have a lasting effect on the success of your company. In the beginning stages, it might be tempting to skip a few steps and rationalize that you will work on those systems or processes after the business is up and running. But you could be hindering growth and opportunities by procrastinating the most important aspects that affect the financial health of your company.

The best thing you can do is get it right the first time. Commit to putting in the time and effort to creating systems that are built to last. A few months or years down the road you will be grateful that you didn’t skip these important elements.

Today, we are going to focus on tax preparation and strategy for small businesses. This topic is one that is often procrastinated. Since tax season only rolls around once a year, it’s easy to assume that you can wait until April to work on taxes. It’s time to change your mindset on this topic. Implementing a good tax strategy right now will save an incredible amount of money due to the decreased tax burden. Plus, you will have the processes in place to support bigger tax responsibilities that will come in the future when your business expands.

Tax Preparation Can Feel Like a Chore

Most small business owners will agree that taxes can feel like a chore. Do you get a headache just thinking about the stacks of paperwork and accounting calculations that need to be done? Not only do you need to crunch the numbers, but you also need to stay current with the latest changes in tax laws and other applicable industry regulations.

It is common to feel stressed or worried about the requirements that need to be met for tax preparation. As a small business owner, you don’t need to carry this responsibility without support. You are already focused on product development, marketing, and more. Instead of spending your free time with your head buried in numbers, it makes sense to outsource these services to the pros. A good accounting team is key to help you develop the right tax strategy and transform the results that are available in the future.

Your accounting team will make start-up and small business taxes transparent and clear. Tax preparation doesn’t have to be difficult when you are working with the right team. You’ll find that our staff at Easier Accounting understands the best practices for every industry, helping to take the stress out of tax time. We’ve worked with many small businesses over the years, giving us the hands-on experience to know the optimal way to structure your tax preparation, paperwork, and filing.

Assessing your Current Situation

If you are going to improve your tax strategy, it is important first to assess your current situation. Are you preparing to launch a new company? Are you structured as a sole proprietorship? Did you form a corporation for your business efforts? Do you have a partnership that needs to be included?

These details might seem simple, but they will impact the way the tax strategy is designed. It is essential that you offer as much information as possible to your accounting team, ensuring that nothing is overlooked in your tax preparation.

Basic Steps for Tax Preparation

Whether you are just getting started with your business efforts or you are looking for ways to improve the financial health of your existing company, there are a few basic steps that should always be followed for tax preparation:

  1. Choose a Tax Preparation Provider: The best solution is to choose an accounting team that will work with your company throughout the year. You can find financial experts that offer one-time tax services. But these short-term services don’t create a long-term mindset that is necessary to maximize tax strategy. Pick an accounting team, such as Easier Accounting, that offers ongoing support to ensure your company is on track during every season of the year.
  2. Gather Records and Information: Maintaining documentation of all transactions that move through your company is essential so that you can track every penny that is earned and spent for business purposes. Exact records vary depending on the type of company that you are running. Examples of income records include sales transactions, gross receipts, allowances, cost of sold goods, tax refunds or credits, interest earned from bank accounts, and more. Expense information should include costs for vehicles, marketing, employee payroll, contract labor, office expenses, utilities and rent, maintenance and repairs, depletion, professional services, insurance, inventory purchases, fees and commissions, and anything else that required you to spend money for business purposes.
  3. Organizing the System: It can be a hassle to sort through a year’s worth of receipts when it is time to do your taxes each spring. Instead of spending hours on the paperwork once a year, it is better to have a proven system in place that makes it easy to track and categorize expenses throughout the year. When these transactions are organized and managed on an ongoing basis, then you can simply run a report that shows the information that is necessary for tax preparation.
  4. Filling Out Tax Paperwork: The IRS has paperwork for everything, so you need to make sure that you are filling out the right forms that apply to your company. Most companies don’t need to use the majority of the forms that are out there. Depending on the structure of your company, you may need Form 1040, Form 1040-ES, Form W-2 and W-3 for employees, Form 1099 for contractors, Form 941, Form 943, Form 944, Form 1120S, Form 1065, and more. Do you feel like your head is spinning just reading through all of those options? You don’t need to get into the fine print to figure out which forms apply to your situation. Instead, lean on the knowledge offered by your accounting team. Not only will your accountant provide guidelines regarding the forms that are required for tax preparation. But your accounting team can also handle the information that is entered on these forms.
  5. Submitting Tax Forms: Now that all of the work has gone into the information needed for income and expense categorization and filling out the applicable tax forms, it’s time to submit the paperwork. These submissions need to be sent to the IRS. Additionally, there are deadlines to send specific tax forms to employees and contractors each year. Not only are you responsible for annual tax filings, but other deadlines need to be met throughout the year for employment taxes, estimated tax payments, and more. Your accountant can help you keep track of these deadlines and oversee submission through an e-filing process. The documents can be filed on printed paper as well, although the e-filing is becoming more popular due to the immediacy of the filing results.

Using a Professional for Small Business Tax Services

One of the biggest mistakes you can make is attempting a DIY tax filing when you don’t know much about accounting processes for the IRS paperwork. If you want to set your company up for success, then you need to be sure that you are working with a small business accountant who will oversee every step of this process.

Certified tax preparers help by working through the calculations and information needed for the paperwork. Additionally, your accountant will ensure that the paperwork is filed with the IRS before the deadline.

Keep in mind that scammers try to take advantage of unknowing individuals and small businesses owners. Make sure that you choose a reputable accounting company. Your tax preparer should have a preparer tax identification number (PTIN) that is issued by the IRS. Always research the accounting company before handing over sensitive financial information and business details.

Quality Tax Preparation Services for Your Business

You deserve quality tax preparation services, including ongoing accounting support throughout the year. If you are searching for the right services for your small business, then we invite you to talk to our experienced team at Easier Accounting. We understand the best systems for tax strategy and preparation, and our team is just a phone call away.

Choosing our team means that you have access to a group of knowledgeable tax accountants that will offer personalized recommendations to improve the results for your company. Our goal is to streamline your financial systems while reducing the tax burden and improving overall results for your company. For details about the services that are available, you are invited to contact us at Easier Accounting. We’re just a phone call away: (888) 620-0770.

Effective Budgeting and Accounting Strategies for Businesses Owners

Startups and small businesses shouldn’t overlook the necessity of setting up the right budgeting and accounting strategies to organize financial information. Too often, business owners see budgeting as a practice that adds little value in the beginning. It’s easy to get caught up in the details relating to product development, marketing, and client acquisition. As a result, budgeting and accounting practices are pushed to the backburner.

Don’t make the incorrect assumption that you will put these financial strategies in place when it is convenient. Instead, you need to prioritize your time and activities and understand that budgeting and accounting should be at the top of your list. Creating an effective and reliable budgeting process might be the difference between success and failure in the future.

These systems will help you avoid common problems that pop up in business management. An effective budget will help you oversee the financial health of your company. At the same time, you will have the tools in place to reach your financial goals more quickly.

Assessing Your Current Situation

It might seem overwhelming to look at the books and assess your current situation. Understanding your starting point is key if you want to achieve improved financial results in the future. If you don’t know where you are starting, then you won’t be able to identify the most effective budgeting and accounting strategies that will have a positive impact on your business efforts in the future.

You need a real-time snapshot of your accounts, as well as historical financial data to identify any trends that have been experienced over the years. Reviewing this information will help you recognize positive and negative things that impacted your budget and profitability. Then, you can use the information to create a custom game plan that will support your financial goals going forward.

Gathering the information and doing a self-assessment is just the first step. It is critical that you also get an opinion and recommendations from a financial professional. Talk to your accountant so that you can use their expertise in creating a budget that will work for your company going forward.

Creating Budgeting Goals for Your Business

Now that you have a clear picture of your current financial situation, it is time to determine your goals and strategies. In most situations, these budgets are created by looking at margin targets as well as net income. How much money is coming in that you can work with? What are your anticipated and unanticipated expenses that need to be addressed?

Profitability is desired by all business owners. But you can’t reach the profitable point without understanding the path that should be followed to get there. As you are setting goals, you need to determine action points that will be followed to help you achieve the specific goals.

Here are a few things to consider when you are choosing goals for your company:

  • Business Revenue Goals: You need to have a clear picture of the amount of money that is available for you to use. Look at revenue based on both price and volume to determine the feasibility of your goals. Be realistic about the numbers, giving you some wiggle room if you have a slow month or two. Don’t overlook other investments and resources that might impact your budgeting as well.
  • Business Spending and Expenses: High revenue won’t cut it if your expenses increase faster than the money coming in. You can bring in millions of dollars a year and still have cash flow issues if your expenses aren’t under control. When you are creating a budget for your company, you should consider the ongoing business spending, overhead costs, and any other expenses that could be cutting into your profit margins. You might be surprised to see how many line items can be reduced or eliminated, helping to decrease the out-of-pocket expenses you are carrying each month. A little bit adds up over time, so don’t overlook the small changes that will offer long-term benefits.

Make sure that you are realistic in the way these goals are set and managed. If you don’t achieve the goal, then you need to identify a real explanation to identify what happened to stop the progress. Then, action steps can be identified to overcome those issues, helping you achieve higher levels of success in the future.

Ongoing Adaptation and Strategy

In many situations, especially with new businesses, it is likely that your first budget is going to be off. There are costs and industry trends that you didn’t anticipate, making it difficult to stay on track with the outlined budget. Instead of creating your budget and setting it in stone for the year, it is best to have ongoing analysis and evaluation to help you dial in the process.

Draft your first budget and do the best you can to stick to your goals. Then reevaluate and identify ways that actions and processes can be improved to boost profitability in the future. Reporting needs to be happening every month. At the same time, it is a good idea to assess real results every month to identify discrepancies between the results and the ideal budget practices.

Finding these gaps improves your understanding. Just because you don’t match your first budget draft, doesn’t mean that you have failed. Instead, this budgeting and accounting information can be used to improve the system. Learn from the mistakes, identify the points of success. Then shape a financial system that is catered to the needs of your business efforts.

There are always costs that are infrequent or variable, which means that it can sometimes take as long as a year to identify budgeting details. Ongoing tracking gives you more and more information that will help you identify the things to watch for in the coming years.

Making the Hard Financial Decisions

One of the most beneficial aspects of creating a budget is the opportunity to use the information when you are addressing decisions that will affect the health of your company. For example, if you want to buy new equipment for your employees, it might be tempting to spend a large sum of money on the best products in the industry. But if you look at the numbers and see that your budget is tight this month, then you can change your approach by searching for used equipment. The budgeting and accounting reports can help you time the big purchases so your cash flow is not negatively impacted.

Financial decisions don’t have to be difficult when you have a good accounting plan in place. Instead of feeling emotional about the situation, you can look at things from a logical perspective. The financial reports are just giving feedback about the current status and trajectory of your company. Then, the information should be used to make incremental changes that will help you overcome ongoing issues that are hurting your budget.

Small Changes Make a Big Difference

Just because you want to improve your budget, doesn’t mean that you need to lay off staff members or cut inventory to save money. Instead, look for small ways that you can improve your spending without hurting the long-term profitability of your company.

These strategies vary depending on the type of company you own and your industry. Looking at the trends will help you identify the lean times of the year. Then, you can build a strategy to help you carry through even when things are slow.

For example, if you are busiest during the holiday season because of the many retail sales moving through your company, then it might make sense to bring in temporary employees to assist during this time. Even though your workforce costs will go up, you won’t be locked into long-term payroll expenses that you won’t be able to afford in the slower months.

Evaluate the small costs that are chipping away at your profitability. Are you paying for services or products that aren’t producing the results that you anticipated? Ask questions about every line item to determine the value that is being offered to your company.

Also, ask yourself: “What’s another way?” Looking at alternative options might open up ideas about ways that you can tap into the skills and services that are needed to improve your financial future. One example is hiring an outsourced accounting team instead of carrying the expensive burden of a full-time accountant in the office. Your accounting team will offer the financial advice needed to improve budgeting systems, tax strategy, and more. At the same time, you can reduce overall expenses compared with the burdened cost of an in-house employee.

Financial Services for Your Small Business

If you are ready to improve your budgeting and accounting systems, then our team is here to help. We specialize in small business accounting and would like to help you create the right budgeting systems to meet the needs of your company. Contact us at Easier Accounting by calling for more information about the available services: (888) 620-0770.

Strategies to Reduce Bookkeeping and Accounting Costs

It’s easy to see that good bookkeeping and accounting strategies are important for the financial health of your company. But sometimes small business owners have a hard time justifying bookkeeping and accounting costs because they are worried about managing overhead expenses. Today, we are breaking it down to help you see that good services are an essential investment for your company.

Expense Vs. Investment

Yes, you will need to pay money for services, software, and more. Instead of viewing the money as an expense that is eating away at your profit margins, a better solution is to reframe the spending as a long-term investment for your company.

What is the difference between an expense vs. an investment? An expense is a drain on your resources without adding measurable benefits for your company. In comparison, an investment is a cost that will start paying you back and improve your business efforts.

You need to balance the initial and ongoing costs with the potential benefits and costs in the future. For example, failing to implement a good bookkeeping and accounting system can result in messy finances in the future. Even though you are “saving money” by not paying an accounting service for support, you will likely face expensive consequences in the future such as:

  • Missed opportunities for tax deductions
  • IRS fines for incorrect tax filings
  • Mistakes on payroll and invoicing
  • Cash flow problems from poor tracking
  • Poor business decisions due to inaccurate financial reports

When you understand all of the potential issues that can be prevented with the right accounting services and software, then it will help you see why you shouldn’t delay these investments.

Most Important Investment

What is the most important investment that you can make in your company? People! If you cut corners on the quality of employees, contractors, and service providers that are hired, then it will hurt the performance of your company.

Often, business owners look at the amount that is spent on people as an expense. Instead, ask yourself how much that person is worth to your company. Investing in the right talent means that you can bring in the skill set that is needed to help your business flourish and grow in the future.

As you put together the right team, all of the skills and services will be available to help you accomplish the top goals for the organization. If you are paying for costs that don’t contribute to those efforts, then it might be an indication that you can do without those things.

Tips for Managing Expenses

Even though you can’t eliminate the budget line-item for bookkeeping and accounting costs, there are a few things that you can do to decrease your overall spending. Set a budget, then put your money into the right places that will support your needs. Hiring the right accounting team can have a positive impact on your cash flow and the overall financial health of your company.

Here are a few tips to help with the management of your costs:

  • Cut Expenses: Now that you understand the differences between expenses and investments, evaluate your spending to see if you can find areas where you are spending money on unnecessary items. Are there any expenses that you are maintaining that aren’t adding to or supporting your main business goals? You will need to decide about each item to determine the overall strategy that is best for your needs. Then, use that money for an investment that will have an impact. For example, you might adjust your insurance coverage to save a little money each month. Then use that extra cash to put towards bookkeeping services to ensure that you are staying ahead of the numbers throughout the year.
  • Organize Your Information: Once you’ve hired bookkeeping and accounting services, keep in mind that the costs go up if the team has to do extra, unnecessary work. Instead of overpaying your bookkeeper, look for ways that you can streamline your in-office systems to ensure that everything is neat and orderly for the financial professional. Organization not only saves you money, but you can also save time sorting through paperwork and other busy work. Bookkeepers and accountants only work based on the paperwork and information that is provided. So, you need to be sure that you are offering accurate, effective information. Maintaining this organized system will reduce the number of hours required to manage your books.
  • Professional Advice: Without experience in running a business, setting a budget, or filing taxes, it is likely that you are making mistakes with your financial management. You will find that it is worth the cost to bring in an expert for advice on the services that are required. Even though you will pay a fee for time with the professional, you can identify areas where your finances are managed Small tweaks to your ongoing bookkeeping and accounting systems can result in big savings in the future.
  • Contractor Instead of Employee: When you know that you need specific services or skills, then it might make sense to hire an employee to help. But there are many situations where business owners don’t need the full-time services provided by an employee. Another option is to skip the full salary, benefits, and overhead costs of employment by hiring a contractor for outsourced services. For example, you can save thousands of dollars each month by paying a small business accountant for basic services instead of hiring a full-time accountant to work in your office.

The key is to find ways to cut expenses without harming the well-being of your company. Each business is unique, which is why there isn’t a one-size-fits-all solution for all companies. A personalized approach is the most effective way to be sure that you are avoiding high costs and unnecessary expenses.

The Power of Outsourcing

There’s no question that outsourcing is one of the most effective and simple ways to reduce the amount of money that you are spending on skills and support. We’ve talked about this point in other blog posts, but it’s worth a mention again because of the leverage that is available to help you cut accounting costs.

When you look at the numbers, it’s easy to see why a big team of employees can cut into your overall profits. Hiring an employee can be expensive! You need to look at more than their hourly pay. In addition to these hourly or salary costs, you will also bear the burden of benefits, office supplies, office space, furniture, and more. There are times when it makes sense to bring in an employee because you need full-time services in your office. On the other hand, there are many instances where you can pay a fraction of that amount for top-notch services from an outsourced team.

Contractors offer the same skills that are available from an employee. In fact, there are times when hiring an outsourced team is more effective than employee services since those contractors have experience working with many different companies. You can tap into the expertise that comes from working with other businesses that are similar to your company. This information can be used to improve your systems and help you avoid some of the common mistakes experienced by others.

Lean Strategies to Reduce Accounting Costs

Implementing lean strategies for your company means that you are focused on the measurement, control, accounting, and management aspects to maximize the information that is available when making significant business decisions. If you are trying to decide on a business development investment or whether you should hire more employees, you need to be sure that you have accurate financial information to influence the way the decision is handled.

An experienced accounting and bookkeeping team will ensure that your financial reports and transactions are current. Then, this information can be used at any point to help you determine the right decisions that will have the best impact on your company. Hiring an outsourced accounting service ensures that you have timely reports which can be used to determine the value created for customers. Additionally, you can implement a lean system that reduces overall costs while increasing sales at the same time. It feels great to make these changes, knowing that you are improving cash flow and the potential success for your company.

Do You Need Outsourced Accounting Services?

How do you know when it is time to hire an outsourced accounting team? The truth is that you can probably benefit from these services right away. Many business owners choose to implement these services from the beginning of their startup efforts, ensuring that the financial system has a strong foundation as the business grows.

If you are considering the option to hire outsourced accounting services, then you are welcome to talk to us about your situation. Call our team at Easier Accounting to learn more about the way our services can be matched to fit your needs. We’re here to keep your financial information on track so that you can focus your time and energy on growing your business this year. Call for more details: (888) 620-0770.