The Pros and Cons of Small Business Loans

Cashflow can be a challenging detail to manage in your business, which is why it can be helpful to have credit cards and/or a line of credit available to get you through the lean months. The way you structure the credit should depend on the needs of your company and the financing options that are available. For example, small business loans might work for some people, but others prefer to use credit cards.

Small Business Loans: Getting Started and Business Growth

There are two points when a small business loan can be quite valuable to your business:

  • Getting Started: When you are trying to get the company off the ground, cash is needed to help you get things rolling. Some people have personal funds that are put into the business, but this money will only get you so far. Not only do you need money for marketing, website design, inventory, and more, but you need to be sure there is enough cash to keep you going in the beginning. Small business loans can be used upfront so that you can get your company launched. The bank that provides the loan will use your personal credit score and reputation in determining the amount of money that is available and the terms of the loan.
  • Future Growth: If you have an established business, you might face cashflow issues when it is time to grow. Expansion requires money, which can make it a tricky situation to navigate if you don’t have the cash in the bank. Future growth is much easier if you have a loan to tap into for the funds that are needed. This money can be used for business development, marketing, inventory expansion, and more.

Sometimes, the loan is structured as a set dollar amount that is paid to your business, and then you can use the money as you see fit. Another common option is to use a small business line of credit. This solution works similar to a credit card with a balance that can go up and down over time. The difference is that cash is available to ensure that you have the money when it’s needed.

What Do Lenders Want?

Small business loans aren’t automatically handed out to every person who has a business idea. When you talk to the bank, they will determine the risk of the loan and how much money will be available. The goal is to ensure that you will be able to pay the loan back in full. So, the lenders will be looking for a few key points to ensure that you are a safe and reliable customer.

Since the primary concern of the lender is that the loan is paid back in full, they are going to look at your personal credit history and track record. If you want to qualify for a business loan, then it is helpful to have a good personal credit score to show that you have a track record of paying back the money.

Additionally, the bank will ask for your business plan and other details about your company. You might need to show how the money will be coming in from customers, and potential details that you should anticipate in the future.

Each lender will set the terms of the loan based on your risk and qualifications, which means that there are various possibilities for interest rates, loan caps, and repayment schedules. If you are a high-risk borrower, then it is likely that you will have a high interest rate and a lower amount for the loan. One option is to shop around with various banks and credit unions to find the best terms that you can qualify for.

Also, don’t feel disheartened if one lender rejects your application. If you receive a rejection, then talk to the lender to learn why the loan wasn’t approved. This information can be valuable so you can change your future applications to increase the likelihood that you will be approved. Some lenders will let you reapply after the concern has been fixed. Or, you can use the feedback to improve your application with other lenders.

Paperwork to Provide with Your Business Loan Application

What are the specific requirements that will be requested by your lender? You need to be prepared with paperwork and other information when you are completing the loan application. These are some of the most common requirements that lenders might request:

  • Purpose of the loan
  • Desired amount for the loan
  • Personal credit score
  • Business credit score
  • Business plan
  • Time in business
  • Type of entity
  • Industry
  • Business permits and licenses
  • Bank statements
  • Accounting reports
  • Tax returns (both personal and business returns)
  • Rent or lease agreements
  • Business ownership information
  • Disclosure of current debt
  • Proof of collateral
  • Legal agreements or contracts currently in place

The best thing you can do is put yourself in the lender’s shoes. What are they looking for? How can you show that you are a reliable borrower? The more information you provide, the better you can show that you are a great customer for their lending business.

Pros and Cons of Small Business Loans

Is a small business loan the right solution for your situation? Here are a few pros and cons to help you decide if you should move forward with the loan:

  • Pro – Additional Capital: What could you do if you had access to additional capital for your business? This financing can be essential to help you stay afloat during the lean months and build your business when things are going well. Many business owners have trouble with cash flow, which is why a loan or line of credit can be essential in the hard times. The money can be used for business costs as needed.
  • Con – Interest Accrual: Whenever you are borrowing money, it is going to cost you in the form of interest expenses. The lender is offering the money with the purpose of making a profit on the deal. Interest expenses aren’t always a bad thing if you can leverage the cash to help your business grow. But if you aren’t careful with money management, then these interest costs could start eating into your profit margins.
  • Pro – Cashflow Management: It is common for small businesses to have ups and downs. For example, companies in the retail business refer to “Black Friday” as the turning point of the year when the real profits start to flow. Then, sales often start to slow down in January. If you are worried about cash flow management in the future, then a business loan can give you the peace of mind for those difficult months.
  • Con – Money Management: Just because money is available through your small business loan, don’t let that be a reason that you make poor money management decisions. Some business owners find that they are more risky with their money because they have a credit line to tap into. If you put your cash into a questionable business investment that falls through, then you might find yourself between a rock and a hard place when you can’t get access to the cash that is needed for paying the bills.
  • Pro – Build Business Credit: Did you know that your business can build a credit history, just like your personal credit score? Borrowing money through your business can help you establish a reputation that opens up options for more loans in the future when needed. Even if you don’t need access to the cash right now, it is smart to build your business credit so you are ready with the money when things get lean during your slower months.

Can You Get a Loan if You Have Bad Credit?

Just because you have no credit history or a bad credit score, it doesn’t mean that you won’t be able to qualify for a loan. But it might be necessary to offer collateral – giving the bank something to fall back on if you miss the payments.

Collateral can be offered in the form of property. For example, if you own an office building and hold equity because the mortgage has been paid down, then the building could be offered as collateral. You need to know the consequence if the loan isn’t repaid. Often, the lender will place a lien on the building, so the repayment will occur when the building is sold in the future.

Also, consider alternative lenders if you can’t get a loan through the bank. Sometimes, angel investors are willing to put up the money for a share in the business profits. Connect into some of the business networking groups in your area to see if you can find people who are interested in investing.

Manage Your Business Finances

Staying ahead of your financial tracking and management is key to protect your cash flow and help you position for a small business loan if needed. When you have accurate bookkeeping and accounting records, it shows the bank that you are responsible with your money, which increases the likelihood that they will be willing to lend the cash to you.

Our team at Easier Accounting is here to help with your financial management. If you are interested in learning more about the bookkeeping and accounting services that are offered, then you are invited to contact us today: (888) 620-0770.

Take a Holiday Break: How to Automate Your Business

Many employees enjoy the holiday season because of the time away from work for both Thanksgiving and Christmas. On the other hand, the time-off during the holidays depends on the industry. For example, retail employees and managers often find that this season is the busiest time of year. But office employees and managers can take a much-needed break to focus on time with their families.

As a business owner, is there a possibility to take some time away from your computer this season? You deserve a break, but it’s not as easy as clocking out at the end of the day. Since you are running a company, a few details need to be arranged to ensure that everything can continue moving forward while you are gone. Business automation is key so that you can relax without worrying about the details in the company.

Why Time Off is Essential

Do you find that the natural inclination is to check your phone throughout the day, in case emails, calls, or text messages come through about your business? Most business owners have a hard time stepping away completely. It’s amazing to live in a digital business environment, but that means that your business follows you… even if you are on the beach in a tropical location.

Whether you are taking a few days away from the office to spend time with family or you have a fun vacation planned at a distant destination, is it likely that your phone, tablet, and/or laptop will come along so you can stay connected? It’s nice to have the convenience of staying in touch with employees and customers. But you need to consider how this habit is affecting your mental health.

In fact, scientific evidence shows that time away from work is essential so you can maintain good physical and mental health. Some researchers have been bold enough to say that a good vacation actually increases productivity at work. Yes, it is important to make sure that things are going well for your business. But if you want to show up as your best self, then you need to ensure that you are giving yourself a break every now and then for the mental health benefits.

Don’t Opt Out of Vacation Time

It is estimated that more than 40% of Americans will go an entire calendar year without taking a day off. Among those people who choose to take a vacation, many of them continue working while they are away.

Even though the vacation days are available, it’s easy to get pulled into deadlines and responsibilities in the office. Are you getting caught in the trap of prioritizing your work life over relationships, hobbies, and personal activities? Then it might be time to change your habits so you can find more balance in these activities. The holiday season is the perfect time of year to help you get started.

Instead of pressuring yourself to stay tied to the computer, you can be proactive in creating a business environment that will keep going while you are away from the office. Not only will you enjoy the break, but it is helpful to ask your employees to carry a bit more of the day-to-day responsibilities.

Set a goal to spend more time with your family over Thanksgiving and Christmas this year. If you want to meet this goal, then you need to prepare right now so that you can step away from the office for a bit.

Small Business Automation Tips

Here are a few simple strategies that can be used to improve automation in your small business. By improving your systems, it will free up your time so you are available to take more time off. Owning a business means that you have the benefit of schedule flexibility, so you might as well take advantage of this opportunity!

Keep in mind that these tips don’t apply to every business. Each industry is unique, so it’s important to consider the needs of your company as you are making changes. A personalized approach is the best way to ensure that you are creating a system built to last.

  • Repetitive Tasks: What are the small tasks that eat away at your time each week? If there are activities that you do over and over again, look at options to build a system so that you don’t have to put in the manual work all the time. For example, if you are spending time on purchase orders every week, there might be a way to set up an auto-ship agreement with your supplier. Or, adjust your requests so that you can order 1 – 2 times a month instead of weekly. Certain tools can be used to track your current inventory and reorder when needed, such as PurchaseControl, which consolidates all relevant information in a single place.
  • Outsource Payroll: When you have employees, payroll processing is a task that never goes away. If you want to maintain the right company culture, then it is essential that your employees are paid on time when payday rolls around. Sometimes, payroll processing falls to the company owner because they don’t want to hand over the financial information to an employee. Instead of spending a few hours every-other-week on payroll calculations and check printing, consider hiring a payroll processing service. This service is well worth the cost if you are looking for ways to automate your business.
  • Task Management: How often do you manage small, busy-work tasks because you don’t want to take the time to explain the details to someone else? It’s nice to have the assistance of employees and/or freelancers, but you probably aren’t leveraging these services to the fullest extent. Not only do you need to know who is working on which tasks, but you need to be able to keep track of project progress and deadlines that are coming up in the future. Consider using a tool such as Trello or Asana that makes it easy to create assignments, set due dates, and manage the overall workflow. Task management tools can assist with delivery dates that will need to be met while you are away from the office.
  • Bookkeeping Services: Management of accounts payable and accounts receivable can be a handful, especially when you are juggling this busy work with other business responsibilities. Bookkeeping is one of the first things you should outsource if you are looking for ways to free up your time. A great solution is to hire a bookkeeping service that pairs automated accounting software with the services that are offered. This cloud-based bookkeeping and accounting system helps to streamline the transactions as they are moving through your bank accounts. Then, the bookkeeping team can complete reconciliations and oversee the process to catch potential errors or issues that pop up.
  • Hire an Assistant: Hiring an assistant could be one way to free up your time, allowing you to focus on strategy instead of the menial tasks throughout the day. The right assistant can help with calendar management, phone calls, and administrative work like photocopies, vendor coordination, and more. It is important that you find someone who is proactive in their job. If the assistant is always waiting for instructions from you, then you might run into problems. The ideal solution is an assistant who is looking ahead and helping you stay on top of the tasks that need to be addressed.
  • Email Messages: When you are stepping away from the office for a few days, set up an autoresponder that notifies people when they send you an email. This message should list the dates you are gone, as well as a back-up point of contact if they need immediate assistance. Setting up the automated message allows you to ignore your inbox while having the peace of mind to know that someone is available to pick up the slack.

Schedule Vacation Time on Your Calendar

You know that the holidays are coming up, which means that right now is the time when you need to block out the calendar so that you can have a break. Schedule the days that you are planning with your family, then honor your commitment to take those days off. It might be tempting to fit in a quick phone call or meeting on one of those open days, but you need to remind yourself that it is important to honor your desire to take a break.

Even though there are high-priority tasks that need to be handled in the office, these things will still be waiting when you get back from your vacation. So, take time to share holiday traditions with your loved ones, without the worry about work getting in the way.

If you need help with business outsourcing, then our team is here to assist. At Easier Accounting, we provide small businesses with financial solutions that work. Contact us any time to learn more about the way we can personalize your bookkeeping and accounting systems to help you automate your business. Call our team at Easier Accounting to learn more about the available services for your small business accounting needs: (888) 620-0770.

Small Business Accounting: How to Choose a Service Provider

One of the most important steps a business owner can take is hiring a pro to help with small business accounting. Not only will you have confidence knowing that your records are up-to-date at all times, but it is important to tap into the financial strategy available from someone who has industry experience.

Don’t Wait for Small Business Accounting

If you don’t already have a small business accountant to help with your financial records, why wait? Sometimes people make excuses about the cost of the accounting services. Even though you will need to add another expense to your business records, it is well worth the investment when you see how much money can be saved.

Here are a few reasons why you should consider small business accounting services as soon as possible:

  • Ongoing Tax Strategy: Your accountant can provide tax support throughout the year to ensure you are on track for the upcoming annual tax filing. Business taxes are more than crunching a few numbers before April 15th. You need to be strategic with your spending, business entity, and overall financial strategy if you want to minimize your tax burden. Since taxes are necessary for every business owner, it makes sense to enlist a tax specialist as soon as possible so you can minimize the impact on your bottom line.
  • Free Up Your Time: It is common for business owners to find it hard to step away from their offices. You are wearing many hats during the day to keep your company running. All of these responsibilities are important, but it can be burdensome to keep up with everything. If you are still managing your books, then it is time to hand the bookkeeping and accounting responsibilities over to a pro. Hiring the right accounting team will free up your time so you can turn your attention to other requirements within your company.
  • Optimize Profits: Owning a business can bring personal fulfillment, but the ultimate goal is to bring in a profit. You wouldn’t be running the company if you can’t take a paycheck home! Yes, there are times when you need to be careful with your spending, especially in the start-up stages of owning a business. With time, the right financial strategy can help you increase your profit margins so you can enjoy the full benefits of being a business owner.

Options for Accounting Services

Many business owners don’t know much about the accounting industry, which can make it overwhelming to hire a service provider. Not only do you need to know the difference in the various financial specialties that are available, but you also need to consider the specific services that are offered for your business.

Some of the most common accounting services offered for small businesses include:

  • Bookkeeping: These services focus on the ongoing financial tracking to ensure your records are up to date. Software programs can be used to automate banking transactions; then, the bookkeeper keeps track of the transactions to identify potential issues or errors that might need to be addressed.
  • Taxes: Hiring a tax accountant can be beneficial when you need to file paperwork for the IRS. The topic of tax accounting is huge since the forms vary depending on the way your business is structured. As a business owner, you don’t need to worry about tax laws and rules. Instead, let your CPA do the tax accounting. This service often includes both paperwork preparation and strategy that can be used to reduce your tax liabilities each year.
  • Strategic Services: As your business grows, it can be helping to have a financial expert who offers advice about management accounting. These services are focused on the financial data within your company, helping to create a long-term strategy that will ensure sustainable growth. These services can be expensive, but are worth the investment to ensure you are prepared for the future.

What are the Unique Needs of Your Company?

Before hiring a small business accounting expert, it can be helpful to determine which services will be a good fit for your needs. What are your business goals? Where are you falling short when it comes to your financial systems? You might not have specific answers to these questions until you have a conversation with an accountant.

Keep in mind that an experienced accountant can help you avoid common problems that arise with business growth. You don’t have hands-on experience with these aspects of business management, which means there are pitfalls that might be encountered without someone who can help you avoid these issues.

Talk to your accountant about your priorities and goals for the business. Then, ask about the best accounting services to fit your needs. Also, open the conversation to learn more about accounting services that might fill in the gaps for issues that you could potentially be overlooking.

Characteristics of a Great Small Business Accountant

We live in a digital business world, which means that you aren’t limited to hiring an accountant who is close to home. You can look online to find service providers, but it can be a challenge to choose from the many accounting firms located across the United States.

As you are researching your options, here are a few things that will help you choose the right small business accounting service:

  • Experience: For optimal results, it is beneficial to work with an accountant who has been in the industry for years. While book-smarts can be useful, nothing beats the skills that come from the day-in-day-out application. Find an accounting team that offers specialized services focused specifically on small business accounting.
  • Professionalism: Customer service matters because you need to be sure that your accountant will respond when you need to have a conversation. Not only does professionalism indicate the service you will receive, but you also feel good knowing that they will be detail-oriented with your tax return and ongoing services. Consider the interactions you have with the company to get a feel for the level of professionalism you can expect.
  • Credentials: In the United States, specific education and certification requirements need to be met before someone can offer accounting services. Just because someone knows how to use Quickbooks doesn’t mean that they are qualified to offer small business accounting advice. It is smart to check your accountant’s credentials before selecting their services.
  • Recommendations: Consider the option to talk to business contacts for accountant recommendations. Conversations with other business owners can help you find a trusted provider.
  • Accounting Team: While you can get the required services from a single accountant, there are bigger benefits that come from hiring an accounting team. You always have access to talk to someone for accounting advice, even when your point of contact is out of the office. Plus, an accounting team means that you are tapping into the experience and specialized skill sets of various industry pros, which can help to optimize the overall results that are achieved.
  • Cost: Small business accounting services are an investment. While it is worth the cost to bring in a team of experts to help with your business finances, make sure that you aren’t overpaying for the services. Compare the costs of the available services with other providers. Make sure that you are making similar comparisons – for example, the rate should reflect the same scope of provided services from each accounting team.
  • Software: One of the most effective ways to design your accounting system is by using a software program that can automate various aspects. For example, the software can pull in bank account transactions and other financial information. Then, your accountant can reconcile the numbers and use this information to help your business as needed. Ask your small business accountant about their recommendations for software programs.
  • Ongoing Services: Ask questions about the frequency of reporting, how often you will be in contact, and what the ongoing services will entail. Setting this expectation in the beginning will ensure that your needs are met throughout the year.

You can research various accounting firms to find potential providers, but don’t overlook the importance of finding a provider that has the right personality to match your preferences. Personality fit matters, especially when you will be working with the person throughout the year. You need to be sure that you get along with the accountant so that you are comfortable talking to them about your questions and needs.

Easier Accounting Offers Quality Business Services

We are dedicated to providing high-quality services for small business owners and entrepreneurs. Our team offers years of experience in the accounting industry and a proven system that works. When you choose our team for accounting services, you can have the peace of mind to know that you are working with a group that cares about your success.

Customer satisfaction is a high priority for us, which is why we are happy to customize your services based on your individual needs. If you have questions about available services, then you are welcome to contact us at any time. Reach out to have a conversation with us at Easier Accounting: (888) 620-0770.

Accounts Payable: Best Practices for Small Businesses

Two essential aspects need to be addressed for maintaining your books: the money coming in (Accounts Receivable) and the money that is going out (Accounts Payable). Most small business owners are familiar with these two phrases, and they understand the general concept. But it can be a challenge to know how to implement the right bookkeeping system to track these numbers.

Whether you are looking to rework your bookkeeping and accounting system, or you need to start from scratch for your new company, it can be valuable to tap into advice from an experienced outsourced accounting team.

Accounts Payable: What Does it Mean?

Sometimes, products and services are paid on the spot. For example, if you go to an office supply store to purchase items that are needed for the office, then you will likely pull out a credit card or cash and pay for the items immediately.

There are times when businesses share relationships that allow products and services to be provided on credit, then the vendor will send you an invoice for the amount due. These outstanding balances fall into the category of “Accounts Payable” (AP). If you add up the AP balances for your business, then it is the total amount currently owed to suppliers and vendors.

AP invoices can be small with local vendors. Or you might have outstanding credit card bills that you are paying for each month. Regardless of the type of debt, you need to be sure that you consider the amount due so that you can work these details into your budget. It is essential to ensure that you are planning ahead, so you’re prepared with sufficient cash flow in the future.

Accounts Payable vs. Accounts Receivable

If you are on the receiving end of the money that is due, then it is marked down as “Accounts Receivable” (AR) in your books. For example, you might be anticipating payments for products or services that have been provided. The AR value in your accounting system shows the total due from your customers.

Tracking both AP and AR is essential because these numbers affect your current cash flow and what you can expect in the future. The most stress-free way to run a business is to stay current with both AR and AP, to ensure that the money is flowing in from your customers so you have the cash available to pay your bills.

Managing your accounting and bookkeeping system might be one of the most important things you can do as a small business owner. Your cash flow management is based on your tracking system and cash availability. If you aren’t keeping up, then you will likely miss vendor payments, which means that your product and service providers could lose patience… which will eventually have an impact on your business success.

Accounts Payable Tip #1: Automate as Much as Possible

It takes valuable time to manually calculate the invoices that need to be paid. Additionally, a manual system can be quite burdensome when it comes to tracking the payments that have or haven’t been finished. Whenever manual calculations are occurring, there are points where human error could interfere with the accuracy of your numbers.

You don’t need to spend your limited time crunching the numbers. Instead, invest in a good accounting system that will automate this process wherever possible. Accounting software has come a long way in recent years, making it easier than ever to keep your books current and accurate.

Accounts Payable Tip #2: Go Paperless

Yes, going paperless can help you save the trees. But this recommendation isn’t about rainforest protection. Going paperless is a way to save both time and money by streamlining your system. If you want to have a truly automated accounting and bookkeeping system, then you need to eliminate the stacks of paperwork that can pile up on the desk.

Not only is a paperless system more convenient, but it reduces the workload that needs to be managed in your office. Eliminating paperwork means that you don’t have to have big filing cabinets, paperwork tracking systems, and office space to manage these documents.

Plus, a paperless accounting system enables you to leverage the services of an outsourced accounting team more effectively. Your accountant will be able to see your numbers remotely, which means there is no need for in-person meetings that cut into your schedule. At the same time, you have the freedom to access your business numbers from any location: in the office, at home, or even on vacation if needed.

Accounts Payable Tip #3: Checking for Errors

Even if you automate your bookkeeping and accounting system, there is always a risk of errors along the way. Small bookkeeping errors might seem insignificant, but they can have a big impact on your financial reports. When you are making financial decisions, you need to be sure that the numbers are an accurate reflection of what is currently in your bank account, and the AR payments that will be expected soon.

Building in safeguards to catch errors not only helps you detect mistakes, but it also shows the red flags if fraud is occurring. The best way to build trust and minimize the risk of losing money internally is to have checks and balances in place. Don’t assume that the accounting software is always accurate. You need to have a third-party who can run internal audits to ensure that everything is adding up.

Additionally, regular account reconciliations are essential to staying ahead of these small errors. This step is one that is often avoided by small business owners because they find it burdensome and boring. You don’t have to crunch the numbers on your own. Instead, let an experienced outsourced accounting team oversee this process.

Accounts Payable Tip #4: Watch Invoice Due Dates

Maintaining good relationships with your providers is critical to ensuring that those products and services will continue to be available when you need them in the future. If you miss payment deadlines, then that vendor will likely be hesitant to work with you again.

So, it is important to watch the due dates and prioritize payments based on the calendar. Not only does avoiding late payments help you maintain good business relationships, but you can also avoid extra costs that are often added on for late fees and interest charges.

Accounts Payable Tip #5: Maintain Open Communication with Vendors

Things happen in business, which means that you might be facing cashflow issues that prevent you from timely payments. If you are dealing with cash flow issues, then it is smart to stay in contact with your vendors. Talk to them about a payment schedule. Be sure to prioritize payments to vendors who are essential for revenue generation within your company. For example, you might be able to live without professional office cleaning services, but you won’t be able to keep the company going without restocking the inventory.

Accounts Payable Tip #6: Negotiate the Terms

When you’ve established a good relationship with the right vendor, you might have the chance to adjust the payment terms if needed. You will have more opportunity to negotiate when you’ve already built trust with the provider.

Everyone makes money when you can maintain a good relationship. So, it’s in the interest of all parties involved to make sure that it is a win-win situation. You might find an opportunity to negotiate better terms for the products or services that are needed. For example, talk to your main vendors to see if they offer discounts for early payments.

Accounts Payable Tip #7: Stay on Top of Outstanding Invoices

It’s easy to let unpaid invoices slide for a while, especially when you are busy working on other responsibilities within the business. But even the smallest invoices can add up, resulting in a lot of unpaid money that is owed to your providers.

You need to be sure that you have an effective system in place to follow up on the Accounts Payable invoices that are due. Not only do you need to send these payments on time, but make sure that your vendors received the payment. For example, if a provider sits on a check for a few months, then it could cause problems with your cash flow when the check is cashed unexpectedly in the future.

You need to have an accounting system that shows which payments are still pending. Don’t hesitate to reach out to a vendor if a check hasn’t been deposited yet. Sometimes payments get lost in the mail or end up at the bottom of a stack of paperwork. You can avoid these issues by having a follow-up process in place to reach out to vendors when needed.

Accounts Payable Tip #8: Choose a Reputable Small Business Accountant

One of the best investments you can make for your small business is to hire an experienced outsourced accounting team to assist with your financial details. If you are looking for support with Accounts Payable and Accounts Receivable, then Easier Accounting is here to help. Call any time to learn about the services that will be a good fit for your business needs: (888) 620-0770.

IRS Red Flags for Business Owners: Tax Return Mistakes to Avoid

Taxes are one aspect of running a business that most entrepreneurs dislike. Not only do you need to be sure that the cash is available when tax time rolls around, but it can be a burden to keep up with the tracking and paperwork required for tax preparation and filing.

Taxes are unavoidable, both for businesses and individuals. Even though it seems like taxes are cutting into your profits, it is essential that you maintain proper systems to ensure accuracy in your payments. If tax return mistakes are made with your quarterly payments or annual filing, then you could be paying a lot more in fines and fees charged by the IRS.

Annual Tax Filing: How it Works

The IRS requires that you submit an annual tax report. But this once-a-year paperwork isn’t the only time of year that you need to think about taxes. Often, other reports and payments need to be made throughout the year, such as payroll taxes, quarterly estimates, sales tax, and more.

When mistakes are made on your tax return, then you can expect the IRS to charge fines for the error. Additionally, interest costs are often accrued on the unpaid amounts – usually calculated monthly for the length of time the mistake went uncorrected.

When you file your taxes each year, the IRS is thorough about analyzing your income and deductibles. Potential mistakes are easy to avoid. The key is to stay away from a DIY approach with tax preparation and filing. Instead, it is best to hire an experienced business tax accountant so you can avoid these common tax return mistakes. The small fee paid to an accountant is worth the peace of mind in knowing that your tax paperwork is accurate and ready to be filed with no mistakes or errors.

Underpaying on Your Estimated Payments

When employees are receiving regular paychecks, taxes are withheld and paid through the payroll processing system. As a business owner, you have to make sure that these taxes are paid on time to avoid potential penalties. Even if you aren’t paid a salary paycheck through your company, it is still essential that you are current with your quarterly estimated payments.

If the IRS finds that you underpaid on your taxes during the year, then you could be facing penalties for the underpayment. Not only do you need to pay the difference, but it will be a bigger amount due because of the consequences of underpaying. When the underpayment is seen as an act of fraud or negligence, then the fines are much higher compared to an innocent mistake.

An experienced tax accountant can help with accurate estimates, making it easy to dial in the right amount that should be paid when quarterly deposits are due. The goal is to pay enough to avoid penalties, without overpaying. If your quarterly payments are more than you owe, then you will receive a refund when the annual taxes are finalized. But, the extra money is essentially a free “loan” to the IRS. A good business accounting team can help you dial in the “sweet spot” by looking at your expenses and income to determine the estimated amount that needs to be paid.

Common Tax Return Mistakes

These are some of the most common mistakes that are experienced by small business owners:

  1. Numbers Don’t Match Up: Not only will the IRS look at the numbers on your tax return, but they also compare the data with Form W-2 and Form 1099 in their records. If the income sources don’t match up, then you could be running into a problem. If you report a smaller amount than is listed on the W2 or 1099, then you could receive a bill for the unpaid taxes, along with interest and penalties. The best thing you can do in this situation is to review the numbers with your business accountant to determine if the calculations are accurate. If needed, your accountant can help you with a tax amendment submission.
  2. Failure to File the Right Forms: The necessary tax forms vary depending on the structure of your business. For example, sole proprietors don’t have to fill out some of the forms that are required for certain types of corporations. Make sure that you are working with a small business accountant who understands the various tax forms. This personalized approach can be designed to optimize your tax strategy and ensure that you don’t miss the forms that need to be submitted to the IRS throughout the year.
  3. Timing of Tax Filings: Deadlines matter to the IRS. It is important that you are consistent with submitting the paperwork and payments before the listed deadlines for each of the forms. Serious, expensive consequences might be faced for missing a deadline. Keep in mind that you always have the option to file for a tax extension if you don’t think your tax filing will be ready by the due date. Your small business accountant can assist with the submission of Form 4868 to request the extension. Just because you file an extension, doesn’t mean that you can delay your payment. This process only gives you more time for tax filing, but the payment is still due by April 15th each year.
  4. Record Keeping Issues: You can’t play it fast and loose when it comes to small business accounting. It is important that you are diligent with record keeping throughout the year. This system needs to track both income and expenses down to every penny that is sent and received. In the unlikely case that you are facing an audit, your records need to show how the tax return numbers match up to the transactions that moved through your bank account. These records should include everything from miscellaneous office expenses to the petty cash drawer and cash tips that were received.
  5. Quarterly Taxes: As mentioned above, business owners have an obligation to make estimated tax payments throughout the year. These estimated payments need to be paid on a quarterly basis, instead of waiting for tax day to roll around on April 15th. As a self-employed business owner, you need to file your estimated taxes four times a year. Then these numbers are calculated into your final tax filing for the year. These estimated payments should total at least 90% of the taxes that you need to pay for the year.
  6. Tax ID Mistakes: When one number is off on the Social Security Number or Employee ID Number, it can throw a wrench when the IRS is finalizing your filing for the year. Always check and double-check tax forms to ensure there aren’t any errors in the numbers. If a mistake is made by listing the wrong SSN or EIN, then you might need to refile the full tax return for the year. Another common mistake is a misspelling in the name.
  7. Account Numbers: Another number you need to pay attention to is the account numbers submitted for your bank. Whether you are paying an amount that is owed or receiving a refund, it can be a disaster if the money is moved from the wrong bank account. Make sure you are using the right bank account number and routing information to avoid the tax refund mistakes that result in a refund being deposited into a stranger’s account.
  8. Accuracy of Filing Status: Every person must list their filing status since it impacts the amount paid. For example, employees need to choose single, married filing separately, married filing jointly, head of household, etc. As an employer, you need to require new hires to fill out W4 forms which indicate the person’s filing status. Tax calculations need to correspond at all times. You also need to ensure that your personal filing status is accurate.

Talk to an Experienced Accountant to Avoid Tax Return Mistakes

Most small business owners and entrepreneurs don’t have formal training in accounting, which means that a DIY approach often results in tax return mistakes. Even if you are detailed-oriented and thorough with your filing, there are common mistakes that can be avoided by working with a tax professional.

Hiring an accounting team to assist with tax filing means that you can avoid these tax return mistakes and save money at the same time. Yes, you will need to pay for the accounting services that are provided. But it is a great investment when you consider the money saved through strategic tax strategy and by avoiding expensive fines and fees that will add up if mistakes are filed in the paperwork.

You don’t need to stress over the tax paperwork and financial tracking throughout the year. Let the experts assist with all necessary accounting and bookkeeping services so you can focus your attention on other responsibilities that come with being a business owner.

Easier Accounting is here to offer the full-service accounting systems that you need. Our team focuses on small businesses, which means that we have the hands-on experience you deserve. Contact us today to learn more about the ways your business will benefit from these available services: (888) 620-0770.

Hiring an In-House vs. Outsourced Accounting Team

Bookkeeping and accounting are essential for every business, and there are many opinions on the right ways to find the services that are needed. If you are starting a business or you can see that your bookkeeping and accounting systems need a bit of TLC, what is the right approach? You can hire an in-house bookkeeper or accountant, or you might consider the benefits of choosing an outsourced accounting team.

The pros and cons of each option vary, especially based on the person or team that you choose to hire. Today, we are sharing a bit of information about hiring an in-house employee vs. an outsourced accounting team so you can the best way to meet the needs of your company.

Common Problems with In-House Employees

There are potential benefits that come with having a bookkeeper or accountant in-house. Many business owners choose this approach because they want to feel like they have control over the way the books are being run. While it is important for you to know what is happening in your business finances, one of the best things that you can do is hand the financial responsibilities over to an industry expert.

While benefits can be enjoyed if you hire an in-house bookkeeping or accounting team, you will also face serious issues that can arise. Here are some of the most common problems faced by businesses who choose in-house accounting and bookkeeping:

  1. High Costs: Look at the numbers, and you will see that it’s far more expensive to bring another full-time employee onto payroll. Not only do you need to pay for the person’s salary, but other overhead expenses should be considered as well. The fully-burdened cost of another employee includes insurance coverage, paid time off, office space, computer and office equipment, ongoing training, holiday pay, and more. When you compare these costs with the price of hiring an outsourced accounting team, you’ll find that it is much more affordable to choose outsourcing.
  2. Hiring, Onboarding, and Training: How much time and effort goes into the recruiting process when it’s time to hire a new employee? It can be a burden to go through the process of posting the job opening, interviewing candidates, bringing them into the company, and then training the person on systems and procedures. On the other hand, an outsourced team of accountants already has proven systems in place. When you choose these services, your business doesn’t need to worry about onboarding or ongoing training.
  3. Wasted Work Hours: The hope of every business owner is that employees will perform optimally throughout the day. But the truth is that water-cooler conversations are bound to happen, which means that you are paying someone even when they are on the clock and not choosing to be productive. On the other hand, outsourced accountants only charge for the billable time spent on your business, so you don’t need to worry about unnecessary costs for wasted time.
  4. Low Quality of Work: Accounting and bookkeeping aren’t simple tasks. The person needs to stay fresh with mathematical skills, attention to detail, and industry experience. A single in-house bookkeeper or accountant doesn’t have the vast amount of experience that comes from an outsourced accounting team. As a result, you could be facing quality issues and even costly mistakes, which often slip by unnoticed in the office. Outsourcing means that you have services from a team of experts with knowledge about accounting in a variety of situations.
  5. Right Workload for an Employee: In-house accountants or bookkeepers often face workload issues. Either there isn’t enough work to keep the person busy, which means that a lot of paid hours go to waste throughout the week. Or, the business is growing so quickly that the person is unable to keep up… and the only solution is to hire another employee. You need to be sure that your accounting services can adjust to the needs of your company, which is why it can be beneficial to hire an outsourced accounting team that can adjust as your business grows in the future.

As you can see, the time and money investment of hiring an in-house accountant can be a burden on your business. If you want to save money and optimize the quality of financial services you are receiving, then hiring an outsourced accounting team might be the right solution for your business.

Additional Benefits from an Outsourced Accounting Team

A few points were mentioned above to show how outsourcing can be a solution to solve common problems that occur with an in-house employee. The benefits of outsourcing go beyond the information already listed in this article. Here are some of the other benefits you can expect if you choose to invest in an outsourced accounting team:

  • Pay for What You Need: Instead of committing to the cost of a full-time salary, outsourced accounting allows you to pay for what you need. For example, you might choose a monthly service plan that includes bookkeeping, payroll processing, and more. Then, if you need additional accounting services outside of the standard offerings, you can pay for what is needed. The ala carte approach with outsourcing will save you thousands (or even tens of thousands) of dollars every year. When you outsource, you know exactly what you are paying for, and there is no reason to overpay for time or services that aren’t required each month.
  • Access to Systems and Tools: Also, consider the value that comes from working with an experienced accounting team that already has proven systems in place. You can have confidence knowing that your accounting team is familiar with the top tools in the financial industry. These software programs can be a great investment to streamline your bookkeeping, reporting, and tax preparation. Pairing good software with quality accounting services is the most effective way to streamline and organize your business.
  • Industry Knowledge and Expertise: When you are working with an outsourced accounting team, you have a team of specialists who have a wide variety of expertise in the industry. The many years of experience exceeds the expertise you can get from a single employee. Also, consider the cost and time required to gain these specialty skills. It can be a huge burden to train in-house staff to develop the financial skills that you need and want.
  • Option to Scale in the Future: You can have confidence knowing that your accounting system can be scaled as your company grows over time. An in-house employee only has so many hours in the day, which means that you will eventually reach the limits of what that person can offer. If you anticipate that your company will continue to grow, then it can be valuable to have a full team of accountants who can help with your business efforts.
  • No Down Time: When an in-house accountant is sick or leaves on vacation, it means that you no longer have the support of a financial expert for your business needs. On the other hand, you don’t have to worry about downtime when you are working with an outsourced accounting team. If one person is away from the computer for personal reasons, then there are always other team members who can assist with your financial reports and accounts.
  • Minimizing Risk: Team effort is essential if you want to minimize the risk of fraud and theft. Leaving one person in your company to oversee all of the financial details means that you could be exposed to undetected theft. The best way to avoid fraud and the chance of someone stealing money is to have multiple people overseeing the project, with proactive checks and balances in place to identify red flags. An accounting team uses accountability and built-in security with account reconciliation. Having multiple people looking at the financial accounts means that issues will be identified in the early stages, so you can fix the problem and mitigate risk.

Bookkeeping and Accounting are Essential for Your Business

In the day-to-day workflow, it often feels like bookkeeping and accounting are burdensome for your business. The truth is that these financial services shouldn’t be a nuisance. Quality, accurate, organized financial systems are key if you want to enjoy business growth and success in the future.

You need to find the right system to ensure that you are prepared for whatever may come into your business. A strong outsourced accounting team can be an invaluable resource so that you have a good financial foundation for your company. Most business owners don’t have formal accounting or bookkeeping training, which is why it makes sense to hire the experts.

If you are considering the benefit of outsourced accounting for your small business, then Easier Accounting just a phone call away. We provide full-service accounting that can be catered to the unique requirements of your business. You don’t have to carry the responsibility of financial tracking without the support of an experienced team. Call us to learn more about the ways your business will benefit from our services: (888) 620-0770.

Risk Management: Essential Tips for Small Businesses

Risk is an unavoidable part of owning a business. But just because you are investing in something that could be a profit or a loss, doesn’t mean that you should be exposed in areas where the risk can be minimized. When it comes to risk management for a small business, a few specific steps can be followed to help you diminish the loss potential.

Risk Management Needs Change with Time

Keep in mind that risk management changes with time. The steps that were effective when you started your business many years ago might no longer be sufficient for what is required in our modern day. The business world is changing each year, and technology means that your business is exposed if you aren’t proactive about your risk management practices.

Even if you have a few risk management initiatives in place, it is smart to check with industry experts to evaluate systems and look for potential improvements. For example, work with a tech team to ensure that your website is secure and protected against hackers and malware. You can also hire an outsourced accounting team to evaluate the financial systems that are in place, helping you to avoid possible theft or fraud by employees.

Managing Risk is the Foundation of a Successful Business

The long-term sustainability of your company depends on what you are doing right now to minimize risk and maximize profits at the same time. If you are sloppy with your risk management, then mistakes will cut into your profit margins and eliminate the extra cash that could have been used for reinvestment.

You can’t avoid every possible risk that might affect your business. But you can be smart in your industry and pay attention to some of the most critical factors that have proven to be problems for other business owners.

7 Tips for Small Business Risk Management

Here are a few important things that should be considered as you are designing a risk management program for your company:

  1. How Much are You Willing to Risk? It doesn’t matter if you are investing in a new product or trying a different marketing campaign; you need to know how much money you can afford to risk. Current, accurate reports through your accounting system provide you with detailed information regarding cash flow, liabilities, and extra money that can be used for the investment. Work with your outsourced accounting team to understand the details of the report so you can use this information while making decisions about the amount of money you can spend. Always avoid a new investment or venture that requires so much cash that you will be unable to stay in business if something goes wrong.
  2. Investment in Insurance Coverage: A good insurance policy can go a long way to ensure that you are protected if something goes wrong. Talk to an insurance expert to identify the coverage that might be a good fit for your business needs. It’s smart to have insurance coverage on your real estate holdings or rental properties, which will cover the costs if your building and inventory are damaged in an emergency. At the same time, you need Worker’s Compensation insurance to cover possible injuries on the job, as well as liability coverage if something happens when a customer is in your store. Some industries, such as medical professionals, can invest in malpractice insurance if needed.
  3. Create a Risk Culture: Not only do you need to train your management and upper-level staff on risks within the company, but all team members must understand how various risks might affect the success of the business. Ongoing training regarding beliefs, attitudes, and policies ensure that everyone is on the same page in the way the decisions are made on a daily basis. This risk culture starts with the top management, then works its way down through all team members.
  4. Identify Potential Risks: Specific risks vary depending on the industry, as well as the products and services that are offered. Any circumstance or event that could have a negative impact on the business can be considered a risk. For some businesses, there is a risk of theft if employees or visitors steal inventory or equipment. On the other hand, a digital company might be at risk due to website hacking and data theft. In the construction industry, employee injury can be a risk that could cripple a business financially if something goes wrong on the job site. Since risks vary from business to business, it’s up to you to identify the specific risks that could be impacting your company right now (or in the future).
  5. Manage Identified Risks: When possible, put various systems in place so you can manage the risks that have been identified. Potential management strategies might include monthly reconciliation and regular account checks to avoid financial theft. Or, you can invest in a great security team if needed. This proactive approach will help by minimizing the problems associated with certain problems that could affect the profitability and reputation of your company.
  6. Prepare Contingency Plans: You don’t want to expect the worst, but you need to be sure you are prepared if something happens that affects your business. This contingency planning means that you know how to handle the situation if your business can’t operate because the building is damaged, or a key person is unable to work for a time. Also, you should have contingencies in place for large contracts and big transactions.
  7. Ongoing Risk Review: Just because you are implementing good risk management strategies right now, doesn’t mean that you are set for the future. Mark your calendar to review your risk plan at various points throughout the year, ensuring that you are staying ahead of new risks that might pop up.

Common Business Risks

What are the risks that could affect your bottom line? These are some of the most common business risks that can occur:

  • Safety
  • Security
  • Property loss
  • Technology
  • Customer management
  • Business interruption
  • Delivery services
  • Financial systems
  • Employee injury
  • Compliance with regulations and laws
  • Reputation
  • Key person loss

If you expose your business to the wrong risks, it could be the downfall of the company if the risk is too high. While you need to take risks to start a company and grow the business, you should always be strategic about the risks you are willing to take.

Finding the Balance Between Profitability and Peace of Mind

As a business owner, you can’t hide and hope that nothing bad happens to your company. If you want to be profitable, then you need to take various risks. At the same time, you need to evaluate the weight of these risks and make the right decisions that will give you peace of mind in the future.

If business risk isn’t anticipated and addressed, then you could be facing serious repercussions in the future. When something goes wrong, it could result in a setback for your company, or worse… business failure. The key is to find the right balance between the risks you are willing to bear and the services that are offered to your customers.

Your goal is to provide customers with excellent services and products, while maximizing the money that comes in and containing the money that goes out. This process helps to boost profits. But your profits can be lost in a moment if something happens unexpectedly and you aren’t prepared.

Work with a Financial Expert to Minimize Risk

When it comes to risk management, it all comes down to the numbers. You need to know how much risk your business can bear without experiencing too much loss or damage. Too often, small business owners procrastinate this work because they aren’t willing to dedicate the time and effort that is needed to get a clear picture regarding the financial health and stability of the company.

If you have been leaving your financial reporting and strategy on the backburner, then it might be time to hire an experienced accounting team for assistance. These services can be used to evaluate your business success, potential losses, and create a plan for the future. Support from a trusted, experienced accountant is invaluable and can have a positive impact on the long-term trajectory of your business.

Call Us at Easier Accounting

Why should you choose the services offered by our team at Easier Accounting? We understand the unique challenges faced by business owners, and we offer years of experience working with entrepreneurs and small businesses. Our goal is to help you create financial systems that minimize the risk of fraud and theft, while also providing the reporting necessary so you can make accurate, clear decisions for your company.

Whether you are getting ready to start a business, or it’s time to overhaul your current financial system, Easier Accounting is here to assist. We offer full-service accounting solutions to support the unique needs of your company. Call us any time to learn about the way our services can be used to reduce potential risk in your business efforts: (888) 620-0770.

Tax Savings Secrets Every Business Owner Needs to Know

Most business owners agree that taxes are the most expensive and stressful part of running a company. Not only do you need to track ongoing expenses and write-offs, but you also need to pay attention to paperwork and payment deadlines throughout the year. Even though tax savings can take a bit of work, it’s worth the effort because of the reduced tax liability.

When working as an employee, you probably didn’t think much about tax calculations since your own taxes were automatically withheld from your paycheck. On the other hand, self-employment is a whole different ballgame since you need to calculate profits from your business and remit payments quarterly. Other tax responsibilities come into play, including employee taxes, sales tax, and more.

Taxes are inevitable, and everyone needs to pay. But the amount you are paying can be reduced if you are diligent about a good tax strategy. As a small business owner, you can save thousands of dollars per year on taxes, helping to optimize your profit margins.

Designing a Tax Plan

One of the biggest mistakes you can make is failing to design a tax plan for yourself and your small business. You know the tax bill is coming, so you need to be sure there is enough money in the bank to cover the costs. At the same time, your tax plan should be custom-designed based on the needs of your business. The smartest decision you can make is hiring an experienced accounting team to assist with tax savings and planning.

One important point you need to keep in mind: there is a BIG difference between tax evasion and tax planning. We are not talking about deliberately underpaying on taxes… tax evasion is an illegal practice and can result in serious consequences! Instead, the right tax savings plan is built on leveraging the guidelines established by the IRS so you can take advantage of all available tax write-offs.

Your tax plan should include systems that help with tracking transactions, including both expenses and income. These details need to be calculated to determine how much you owe after business expenses are factored in. Then, you need to have a strategy in place that keeps you current with the owed taxes, as well as the paperwork and reporting that needs to be submitted throughout the year.

What is the Difference Between Tax Planning and Preparation?

Some people talk to their accountant once a year for tax services. When the accountant assists with your paperwork and filing in April, this service is known as tax preparation. While tax preparation is an important service, you are missing out if you aren’t working with an outsourced accounting team that also assists with tax planning.

Here is the difference in services:

  • Tax Preparation: This accounting service is focused on the preparation and filing of annual tax returns. You provide the financial records, and then the accountant works through the numbers to calculate the amount that is owed. These services are provided to ensure that you are maintaining compliance with the IRS. Most people only use tax preparation services.
  • Tax Planning: On the other hand, tax planning involves ongoing services and analysis based on the business financial details throughout the year. Instead of only talking to your accountant once a year, you have the opportunity to work hand-in-hand with an outsourced accounting team that can guide your financial strategies and processes all year long. The goal is to minimize tax liability and ensure that you are ready when it is time to prepare your annual taxes.

To put it simply: tax planning helps you reduce the amount of money you spend each year on taxes. Tax Preparation is the service to prepare your paperwork and numbers for submission to the IRS each year.

If you haven’t had a direct conversation with your accountant about tax planning and reducing your tax burden, then it is likely that you are only receiving tax preparation services, not planning services.

Tax Saving Strategies to Reduce the Amount You Owe

Now that you understand the difference between tax preparation and tax planning, what is an actionable way that you can change your financial practices to reduce the amount that you owe each year? It all comes down to your ongoing strategies regarding expenses, tracking, and more. Your outsourced accountant can offer guidance and insights regarding a proven system that can streamline your finances.

Here are a few important strategies that every business owner needs to follow:

  • Track Receipts: It seems obvious that you need to hold onto receipts for business expenses. But it’s easy to let small receipts fall through the cracks. If you don’t have an awareness of how much you are spending on business costs, then it is likely that you are missing out on transactions that could be calculated as deductions. You need to know how you spent your money. Proper organization and tracking of your receipts ensure that your deductions are logged, giving you accurate information for your tax filing. Not only does this process help you maximize the deductions, but you also have documentation in case the business is audited. The IRS will request paperwork to prove the validity of these deductions.
  • Don’t Pay Late Fees: Missing a tax payment is not only a hassle, but it can be an expensive mistake when you add up the costs of late fees, interest costs, and more. If you aren’t paying attention to the quarterly tax payment schedule, then you could be doing yourself a disservice by adding unnecessary fees on your tax bill. The simplest solution to ensure that you don’t miss tax payments is to enlist the support of an experienced accounting team that can help with tax planning and implementation.
  • Business Restructuring: The way your business is structured will impact the amount you are paying in taxes. You need to consider the structure of your business entity and the way taxation deductions and policies affect annual calculations. The rules and forms change, depending on the way you choose to structure the company. Even if you’ve had the same business entity for years, it doesn’t mean that the structure is still the right answer for your tax planning. Talk to your accountant about the various options. It might make sense to restructure based on your bottom line and long-term goals.
  • Use the Right Accounting Software: Calculating tax deductions by hand is not only time consuming, but it also increases the risk of mistakes. You can save yourself hours of time by using a tax preparation and filing software that handles the automatic calculations for you. Choose a cloud-based software so your outsourced accounting team can access the reports remotely to assist with your tax planning strategy.
  • Retirement Accounts: Since you own a business, you have the benefit of certain retirement strategies that can be used as tax deductions. For example, you can reduce your reported income by contributing to an individual retirement plan, such as a 401k or an IRA. Some of these accounts need to be opened by the end of the year to qualify for the deduction. Other types of retirement savings accounts can be used with delayed payments for the previous tax year. For example, you can contribute to the account in the early months of 2020 and have the contributions count for your 2019 tax calculations.
  • Healthcare Costs: Also consider ways you can save taxes on money used for healthcare needs. Medical costs are always increasing, and you need to be ready with the cash for future bills. A Health Savings Account (HSA) can be opened to be paired if you have a high-deductible health plan. This strategy allows you to deposit money pre-tax into the account. Keep in mind that money deposited into an HSA account can only be used on qualified medical expenses.
  • Travel Expenses: Do you often travel for both business and pleasure? If you have a justifiable business purpose for the trip, then you can write off the travel expenses. Business owners often look for ways to pair their personal time with business travel, giving them the benefit of writing off a portion of the flights, food, hotels, entertainment, and more.

Of course, this is not a comprehensive list of tax savings strategies. There are other ways that you can maximize your tax deductions to reduce tax liability. Every situation is unique, which is why it is important to work with an experienced outsourced accounting team for assistance.

Need Help with Your Tax Savings Strategy?

You don’t have to go through the headache and hassle of trying to decipher tax law. Instead, our experienced team at Easier Accounting is here to help. We specialize in small business tax preparation and planning, and we’re just a phone call away if you have questions about your taxes. You are invited to contact us at your convenience to learn about the various strategies that can be used to streamline your tax strategy and minimize the amount that is paid in taxes each year. Call us for more information: (888) 620-0770.

Small Business Tips: How to Manage Your Money

The ultimate goal of running a business is to not only offer quality products and services, but also maximize profits at the same time. Even if you understand your ideal customer and have a great marketing strategy in place, your business will fail if you don’t know how to manage your money. Money management will make or break your company, which is why you need to be intentional about the way you are structuring your finances.

Freedom Through Money Management

Too often, people feel like money management is another to-do item that needs to be added to a never-ending list of responsibilities. How can you keep up with the books when you are worried about business development, employee reviews, customer service, and more?

The truth is that a good money management system actually frees up your time, allowing you to focus on other tasks within the company. When you are using the right software, paired with an experienced outsourced accounting team, you don’t have to focus your effort on busy work and tax calculations.

Learning how to manage your money gives you the freedom to run your business in the best way possible. You always have a clear picture of your accounts, including both income and liabilities. This information optimizes the business decisions you make each day, which has a domino effect on improving your long-term results.

Money Management Doesn’t Have to be Overwhelming

If you don’t know much about finances or money management, then you likely feel overwhelmed at the idea of implementing a new system. This process doesn’t need to be complicated. Instead of trying to reinvent the wheel, you should lean on the advice offered by an experienced accounting team.

Your accountant can do the heavy-lifting to design and implement a new financial system for money management. Then, you simply need to learn the right way to use this system to support your financial goals.

Be Proactive in the Way You Manage Your Money

The key is to take a proactive approach in the way you choose to manage your money. Instead of always stressing over immediate bills and trying to “put out fires” in your bank account, you need to be thinking ahead and anticipating the upcoming costs.

For example, sometimes business owners make the mistake of spending money that is available in the bank account, when that cash should have been set aside for an upcoming tax bill. Even though the money is in the account right now, it doesn’t mean that it can be used for extra expenses or a new project. It is important that you consider your cash flow and have a specific system in place, so the money is saved and ready to go when the payments come up in the future.

Being proactive means that you aren’t making decisions based on a quick, limited snapshot of your current bank account. Instead, you are evaluating financial trends, looking at the way the cash usually flows through your account, and preparing for unexpected things that might come up in the future.

How to Improve Your Money Management Strategies

Here are a few simple steps you can follow to improve the systems you are using to manage your money. While these tips are geared for business money management, don’t overlook the benefits you can enjoy by also applying these tips in your personal finances as well.

  • Debt Evaluation: It is difficult to keep a business going without good debt, but the debt burden can become too heavy and eventually take down the company. How much debt are you carrying right now? What are your debt ratios? If the credit cards and lines of credit are creeping up, then it means that you are spending more than you are bringing in. Look for ways that you can cut costs, so you have more cash to pay down the credit lines as quickly as possible. Not only are these accounts demanding cash flow each month, but the balances are going up due to interest costs and fees.
  • Cut Unnecessary Costs: Take a real, honest look at how you are spending your money to find ways that you can reduce unnecessary line items. Don’t underestimate the power of trimming your expenses. Even the smallest monthly costs can add up over time, resulting in hundreds or thousands of dollars spent over the course of a year. Sometimes you can reduce unnecessary costs, such as switching service providers or eliminating monthly subscriptions that aren’t being used. Go through your expenses line-by-line and consider the value each expense is bringing to your company. Then cut anything that isn’t contributing to your business goals so that you can reduce your spending.
  • Create a Rainy-Day Fund: It is normal for all businesses to have busy and slow seasons. When sales are up and the cash is flowing, it is the perfect time to ensure that you are ready for the rainy days that are sure to come in the future. Creating an emergency fund means that you will be prepared if something goes wrong with a product shipment or you are facing repair work on your building. Having a 6-month emergency fund will give you peace of mind to know that you are prepared for whatever might happen in the future.
  • Separate Business and Personal Expenses: It’s easy to let the personal spending get mixed in with business expenses. Unfortunately, things get complicated if you don’t have a clear line drawn with your accounts. Make sure you have separate accounts and credit cards. Be deliberate in the way expenses are paid so that your bank statements are accurate in reflecting the money spent on the business. If you have disorganized records, then it means that you could be missing tax deductions and potential business growth opportunities in the future.
  • Purchases and Inventory Timing: When big expenses are coming up, such as inventory restocking, consider the way you can time the purchases to ensure there is enough money in the bank. For example, if you can avoid restocking inventory in the same month that a tax payment is due, then it helps to balance out your cash flow for the month. Don’t tie your cash up in too much inventory that just sits on the shelf and collects dust throughout the year.
  • Set Financial Goals: These goals need to be realistic and achievable. How much do you think you can bring in this year? What are your anticipated costs? Design a budget based on these financial goals. Remember to be conservative in your estimates so you have room for mistakes and issues that might pop up. Not only do you need to work through the numbers, but you also need to be sure that you have action steps to follow that will support future growth.
  • Don’t Miss Payments: Even when cash flow is tight, it is important to make sure that you are keeping up with all payments. Your budget and emergency fund will help by ensuring that you have money available when the bills are due. Be strategic and determined never to miss a payment! It might seem like a small thing to be late on a payment, but you need to consider the consequences that can occur if you aren’t diligent about payments that are owed. For example, missing vendor payments means that they might not be willing to work with you in the future, which could potentially hurt your ability to provide the products your customers desire. Additionally, on-time payments help you avoid costs due to late fees and interest expenses.
  • Ongoing Financial Strategy: After reviewing your current financial situation, the next step is to ensure that you have a plan in place so you are prepared for the future. This ongoing financial strategy should include details such as the use of a good accounting software, services from an experienced accountant, and daily/weekly/monthly tasks, so you don’t fall behind on your financial tracking and reporting. The easiest way to ensure that you are consistent you’re your financial strategy is by enlisting the services of an outsourced accounting team that offers full services throughout the year.

It’s never too early to get started on your new financial strategy. If you are struggling with money management, then the first step is to talk to an accounting team for assistance. Don’t be embarrassed about the current state of your business finances. Instead, be willing to ask for help so that you can improve your results and ensure that you are prepared for the future.

Talk to the Small Business Accounting Pros

Easier Accounting is leading the industry with personalized tax services for small business owners. We understand the challenges you are facing with cash flow, profit margins, and other financial aspects of running a company. You don’t need to carry the responsibility without support from an experienced, knowledgeable team. For more information about the quality outsourced accounting services that are offered, you are welcome to call us at any time: (888) 620-0770.

Why Tax and Accounting Services are Essential for Small Businesses

As a small business owner, you probably agree that dealing with taxes and accounting is at minimum a chore… and even a headache at times. It can be stressful to sift through tax paperwork and determine the right forms that need to be filled out. Plus, you need to worry about cash flow, tax payment deadlines and more. One of the best investments you can make is hiring tax and accounting services, so you don’t have to get caught in the busy work.

Today, we’re sharing detailed information that you need to know about tax filing for your business. If you have questions, you are always welcome to reach out to our team here at Easier Accounting. Our goal is to support your small business so you can focus on the processes and systems that will set you up for success in the future.

Hiring a pro team will take the stress off your shoulders. Not only will the accounting team do your taxes, but we can also support your business throughout the year by running financial reports and keeping up with transactions that are moving through your accounts.

Step-By-Step Guide for Small Businesses

Here is an overview of the step-by-step process that should be followed if you are setting up your financial system and preparing for taxes in the future.

How is Your Business Structured? The type of entity used for your business will impact the way your taxes are filed. It is important to know your entity in advance so that you can choose the right tax and accounting services to match your needs. The most common types of small businesses include a Sole Proprietorship, Partnership, S Corporation, or Limited Liability Company (LLC).

Record Your Transactions: Don’t wait until tax season before you start working on the preparation for the filing. The truth is that tax preparation should be happening throughout the year. As transactions come through your business, you need to be tracking the money that is flowing in and out of your accounts. Records are the foundation of a successful tax filing. You need to have these records ready to go when it is time to prepare your tax filing.

The specific records that are needed will vary depending on the business entity you are using. As a general rule, you need all information related to both income and expenses:

Income

  • Sales transactions (receipts)
  • Returns
  • Interest from bank accounts
  • Any other money that comes into your account throughout the year

Keep in mind that ALL income received needs to be reported. So, make sure that you are keeping detailed records as the business receives various forms of payment.

Expenses

At the same time, expenses need to be tracked and verified. While it might seem like a hassle to track every penny that is spent, these expenses can add up to big tax deductions. Not only do you need to know how the money was spent, but you need to be able to back up the transaction with documentation, such as a receipt or invoice.

  • Marketing costs
  • Vehicle expenses (mileage log)
  • Fees and commission paid out
  • Outsourced services, including Form W-9
  • Interest costs
  • Office supplies
  • Travel, including transportation, hotel, and food/entertainment
  • Rent or mortgage
  • Utilities, internet, and phone services
  • Maintenance or repair work
  • Insurance premiums
  • Inventory purchases
  • Business development costs
  • Employee salaries, including Form W-2, Form W-3, Form 940, and Form 941

Some of these forms need to be completed and distributed before it’s time to file your taxes. For example, employee tax forms and W-9’s for outsourced services need to be postmarked by January 31st for the previous calendar year. Make sure to hold onto copies of these forms, so they are ready for your tax and accounting services when it’s time to file your taxes a few months later.

Choosing the Right Tax Forms: One of the complicated aspects of tax preparation is the variety of tax forms used by the IRS. You don’t need to file every available form! Instead, talk to an experienced tax and accounting services provider so you can choose the forms that apply for your business entity.

For example, certain forms need to be filled out for an LLC that aren’t required for a Sole Proprietorship. Tax forms might include self-employment taxes, FUTA taxes, Individual Income Tax Return, Profit or Loss from Business, and more. If your business is set up as a Corporation, then you might need to file forms regarding Shareholders, Schedule E, among others.

Why DIY is a Problem

Choosing the applicable forms is just the first step. Once you know which forms are required for your business, then you need to fill out the necessary information. You can search online to find tutorials regarding the various fields and entries that need to be managed on each form. There are also software programs that walk you through the process of entering the information for the forms.

Even though a DIY approach for tax preparation and filing seems like an affordable solution, the truth is that you are likely leaving money on the table due to errors and overlooked deductions. One small change on a tax form can have a drastic impact on the amount of money that is paid each year.

If you don’t have formal training and experience with tax preparation, then the best solution is to hire experienced tax and accounting services to handle the paperwork on your behalf. All you need to do is provide the business and financial information to your accounting team. Then you can sit back and relax, knowing that your accountant will oversee every aspect of the tax filing. Business owners often find that professional tax filing services help to reduce overall costs by minimizing the tax burden each year. Our goal is to keep your tax preparation within the guidelines and bounds set by the IRS, while maximizing write-offs whenever possible.

What You Can Expect from Tax and Accounting Services

Choosing a full-service, outsourced accounting team means that you will talk to your accountant throughout the year. There is no reason to wait until tax season before having a conversation about your tax preparation. Good tax and accounting services provide support before, during, and after tax preparation.

Here is an overview of the year-round support available for your small business:

  • Before Tax Season: The goal is to create a strong, effective accounting system that makes it easy to track your expenses and income throughout the year. The right software will make it easy to gather the necessary information when it is time to file your taxes each year. Ongoing tracking enables you to take advantage of the available tax write-offs. Additionally, your accountant will provide information regarding how tax laws are changing each year, so you can keep up with the newest rates and other details that impact your business.
  • It’s Time to File Your Taxes: During tax season, your accountant will review the financial reports and other applicable information. If you need both a business tax return and a personal tax return, then it is best to have the same preparer handling both filings. These services are designed to maximize the overall tax benefits available for your personal and business needs.
  • After Tax Season: When things quiet down and tax season is over, it feels good to know that your accounting team is always just a phone call away if you need support. Many business owners find it beneficial to have an accounting team assisting with payroll processing and ongoing bookkeeping services. Additionally, it is important to call your accountant right away, so you have representation if an audit occurs.

Do You Need Small Business Tax Services?

How do you know when it is time to invest in small business tax services? In the beginning, paying for professional tax preparation support might seem like a big expense, especially if you are pinching pennies to get your new business venture off the ground. But it is worth the investment to hire an accounting team from the beginning.

Tax and accounting services for small businesses give you the foundation needed that will help your company flourish. A good financial and accounting system gives you a clear picture of the financial health of your company. This information is essential, helping you see potential areas of growth and other ways you might be spending in the wrong categories. An accountant can help with much more than basic tax preparation, which is why it makes sense to start with these services right away.

Our team at Easier Accounting offers years of experience helping small business owners like you. We have hands-on experience with various tax and accounting services, including tax preparation, payroll processing, and more. If you are considering the benefits of hiring an outsourced accounting team, then we’d love to have a conversation to see if our services are a good fit for what you need. Call us right away to learn more about the options for your business needs: (888) 620-0770.