What Financial Records Need to be Kept for Your Small Business

Do you feel like you are drowning in paperwork? It can be hard to keep up with the requirements of running a small business, especially when you feel like you need a secretary dedicated to bookkeeping and filing. Even though these financial records can feel like a burden, it is essential that you have a good system in place so that you can locate the paperwork if it is needed in the future.

Why Record Keeping is So Important

Why does it matter if you keep the paperwork with details about your business finances? No matter your industry, bookkeeping and accounting need to be a priority for your company. Not only do you need the paperwork for your own records, but there are requirements from federal and state taxing authorities to maintain documentation of your income and expenses.

Here are a few reasons why you need to keep financial records:

  • What is Your Financial Situation? If you don’t have a good financial system, then you are running your business in the dark. The best way to make good decisions for your company is to know where the business stands every day, week, month, quarter, and year. Is your business profitable? Or are you losing money? Will there be enough cash in the bank to cover the overhead costs this month? These details give you more control over your business practices, helping to set your company up for success in the future. As a result, you can improve your efficiency and productivity, which helps to maximize the possibilities that can be achieved.
  • Documentation for Tax Obligations: Taxes are a necessary part of business ownership, and many people agree that their stress goes up when it is time to talk about taxes. You need to keep documentation of your business records to ensure that you have the right numbers for your tax filings and payments. These records need to show the money that is coming in from your clients and customers, as well as the expenses that you are using as deductions. If money changed hands and the transaction was related to your business activities, then you need to have documentation of that transaction.
  • Potential Business Investors: When your company is expanding, there are times when it makes sense to bring in investors. But, it is hard to convince people to invest in your company if you can’t show the history. You need reports and paperwork that outline the history of the business, as well as anticipated sales reports for the future. Additionally, investors often want to view details regarding assets and bank accounts.

Keeping good financial records is one of the best things that you can do to maintain order in your company. If you know the numbers, then there won’t be big surprises in the future about the costs that are due for taxes or inventory expenses.

Even though it can be a lot of work to keep up with these financial records, it is one of the most important things that you can do to set your company up for success. Don’t assume that you need to manage the business records by yourself. Instead, find a trusted company that offers bookkeeping and accounting services so that you can outsource the busy work.

What Documents Need to Be Kept?

The legal requirements vary depending on your business and industry. So, the best thing that you can do is get personalized recommendations from an accounting team. Your accountant can provide a list of the paperwork that needs to be kept, ensuring that you are maintaining everything that might be needed in the future.

If there is a question about whether a financial document needs to be kept, then it is best to err on the side of filing the document for a while. Keep in mind that you don’t have to keep all of the paperwork indefinitely. Instead, you can hold onto some documents for a few years before shredding the paperwork.

Follow this overview of paperwork that you need to hang on to:

  1. Business Documents: If you have paperwork that shows the legality of your company, that it needs to be filed in a safe place. Hold onto records that show your right to be in business, such as a business license, certifications, and more. Also, keep copies of the by-laws for your company, articles of incorporation, and other applicable paperwork.
  2. Business Contracts: Do you have signed agreements with clients or subcontractors? Signed copies of these files need to be kept on record. If a dispute or question comes up in the future, then you can always pull up the contract to ensure that all parties share the same understanding. These business agreements might also include documentation for employees, suppliers, vendors, and more.
  3. Financial Records: Anything that shows money changing hands needs to be documented and filed. This category includes accounts receivable, which is the money that you receive from your clients or customers. Additionally, you need to keep records of any business expenses that are being used as deductions. Other applicable paperwork includes tax filings, payroll details, and more.
  4. Executive Meetings: If you have a board of directors or an investors meeting, then it is a good idea to keep records of the minutes of the meeting. These details might include major business decisions that could impact the future of the company.
  5. Business Assets: Whether you have company-owned computer equipment or you bought the building where the business is located, you need to hang on to the paperwork that details the assets for your company. Your accountant can help with the purchase, sale, and depreciation details. You need to hold onto the paperwork that shows any transactions related to these assets. Keep in mind that financial gains or losses in assets can have an impact on your tax filings, so you might need to keep the details for potential audits in the future.
  6. Employment Taxes: In addition to income taxes and other business taxes, you are also responsible for the records and filings of employment taxes. These records need to show the details of every employee, including their legal status for working in the United States. You also need to track paychecks, dates of employment, tax withholdings, tax payments, and more. The IRS has requested that businesses hold these records for a minimum of four years.

Do You Need Hard Copies or Electronic Files?

We live in a digital world, and there are many times when you can keep digital files to avoid the mess of a full filing cabinet. If you want to simplify your business records, then it is best to keep a digital file where all of the documents are kept in their corresponding folders.

For example, you might have a folder for all of the invoices that are sent to clients, another folder for tax filings, and another folder where business receipts are kept. Minimizing the paperwork eliminates the need to print every page. Plus, a cloud-based storage system gives you full access to the information from anywhere in the world.

Another benefit of a digital filing system is that your accounting and bookkeeping team can access your financial records. If you want to free up your time, then you need to use an outsourced accounting service so that you don’t have to sort through the busy work of your business records. You can upload the files and let the pros handle the document filing, data tracking, reporting, taxes, and more.

If you choose an electronic filing system, then it is essential that you have a good backup service in place. Your business could be devastated if you lost all of the documents due to a computer failure. Many cloud-based storage solutions offer automated backups. You can also set up a private service that syncs your files to another cloud-based location.

Finding an Accounting Team to Help with Your Financial Records

Do you have a good accountant to help with your business files and records? There is no reason why you should be handling these details without the support of a financial professional. Outsourcing the bookkeeping and accounting for your company is one of the best things that you can do to ensure that you aren’t overloaded with busy work.

Our team can handle the financial details, freeing up your time to focus on activities that will boost the success of your company. We are experienced with small business accounting and know the best methods to help you take control of your financial records.

Are you ready to learn more about the benefits of outsourced accounting? Then you need to talk to our team at Easier Accounting. We are happy to cater your accounting services to match the needs of your company. We provide a range of services, ensuring that you get the best results to match your needs. If you have questions or you would like more information, then we invite you to call our team right away: (888) 620-0770

Accounting Advice: How to Cut Expenses for a Start-Up Business

Starting a new business is an exciting adventure. You are moving forward with big dreams and hopes for a better future, putting in the effort that is needed to build a company that will succeed for many years. Whether you are taking over a family business or moving forward on a passion project, it is essential that you have a good business plan in place to set yourself up for success. You need to consider the money that is coming in, as well as options to cut expenses.

Moving to a Positive Cash Flow

Costs are inevitable when you are pursuing business efforts. It doesn’t matter if you are building a local office or running a home-based business out of your garage; money will be needed for some up-front costs. In the beginning, you will be spending more money than you are making, especially if you need to put cash into inventory or other important setup costs.

There’s nothing wrong with spending money on these business expenses. Keep in mind that this cash is an investment to build your company for the future. There’s a saying in the business world: “It takes money to make money.” It’s true that you need to have some upfront cash to get your company off the ground.

But, just because you are burning through your cash reserves in the beginning, doesn’t mean that you shouldn’t be careful to turn things around as quickly as possible. The goal is to make your company profitable right away so that you can have extra money in the bank, instead of spending everything on your business efforts.

Once you move to a positive cash flow, meaning you are bringing in more money than you are spending, then you will have the option to re-invest and grow the company. Or, you can pull some of those profits to enjoy the benefits of your labors.

Two Ways to Manage Cashflow

There are two things that you need to consider when you are working to manage cash flow:

  1. Bring in more money
  2. Cut expenses

Business owners are always focused on bringing in the income that will keep money flowing into the bank. Even if you have strong earnings every month, your business will struggle if you don’t stay ahead of the expenses at the same time. So, you need to evaluate the money that you are spending to identify areas that can be addressed.

Yes, it is important to look for ways to increase your incoming cash. But, don’t overlook the importance of managing your expenses as well. A good accounting team can assist with these efforts.

Cost-Cutting Ideas to Reduce Small Business Spending

Start by evaluating the money that you are spending. Categorize your spending into transactions that are necessary and transactions that can be cut. You might need to change your thinking a little bit to look at your spending with new eyes.

Here are some of the easiest, most effective ways that you can cut your business costs:

  • Secondhand Furniture and Equipment: Why pay for new materials and supplies if you can save a bunch of money by choosing secondhand items? If you need a new desk for your office, you can go to the local furniture store and pay thousands of dollars for the right desk. Or, you can skip paying retail and look for deals on Craigslist or other online marketplaces. In many circumstances, you can save as much as 50 – 70% by choosing secondhand items. Use caution if you are buying electronics though… computer technology is moving fast, and you might be able to avoid a lot of problems by buying new.
  • Rent or Mortgage Costs: A rent payment can be one of the most expensive bills for small businesses. Do you have a local office in a high traffic area, but most of your business is completed online? There’s no reason to pay the surcharge for a premium office space. Consider moving to a different part of town where the rent costs are lower. Yes, it will cost money to move and it takes a lot of effort. But, the rent savings can add up over time. Better yet, look for options to buy a building and rent out a portion of the space to other businesses. These rent payments can help you pay off the mortgage, creating a valuable asset for your company.
  • Utility Expenses: Ongoing utility expenses offer another potential area where you could be saving money. Get creative to see if there are ways that you can reduce utility costs. For example, you might be able to drop your landline and use a VOIP phone number instead. Invest in energy-efficient appliances and switch out the lightbulbs. Install a smart thermostat that will manage climate control throughout the day. Call the internet provider to see if there are options to reduce the amount of money that you are spending on your business package. Sometimes, a few questions to a utility provider can go a long way to bring the ongoing costs back down.
  • Assess Inventory: Are you storing a lot of inventory that won’t be needed for a while? Not only does extra inventory cost money because of the expense of buying the products. But, you also need to spend cash on the warehouse space that is needed to hold everything. Look for lean business options to minimize your inventory while ensuring that you always have product on hand when your customers are ready to buy.
  • Bid Out New Projects: Instead of assuming that you need to hire more employees, consider the option to talk to multiple contractors to get the best price on services that are needed. This bidding process will help you minimize costs and maximize the services that are available. Seeking out multiple bids is essential so that you can see if your preferred contractors are overcharging for the services.
  • Offer Telecommuting Options: As the business grows, it can be hard to maintain the office space that is needed for the expanding team of employees. Instead of moving into a bigger office, look for options to share the office space more efficiently. You can invite employees to telecommute, helping to reduce the number of people that you are managing in the office each day. This option allows the desks to be shared and reduces the amount of space that is required for employee housing. At the same time, employees will be happy that they can avoid commuting costs.
  • Go Paperless: Paper waste can cost your company a lot of money. Not only do you need to pay for the cost of the paper reams, but you also have expenses for the printing as well. You will spend money on the cost of buying a printer, paying for ink cartridges, and ongoing maintenance as needed. Plus, many companies spend money on recycling and shredding services for old paperwork. These expenses can be reduced by keeping digital records instead of filing printed paperwork.
  • Pay Off Business Debt: Business debt can make it hard for you to keep up with cash flow. Not only do you need to make the payments on the costs that are due, but you are also taking on a lot of expenses for the interest costs. How much are you paying every year in credit card interest? If unexpected costs pop up, then it is common to put those expenses on a credit card. Unfortunately, the interest expenses will really add up, potentially costing your company thousands of dollars a year in avoidable costs.
  • Save for a Rainy Day: It is essential that you set aside cash for the future. This emergency savings account will help you pay for taxes and anything else that might come up unexpectedly. There are always times when you need to dip into the bank account. Make sure that you have money set aside so that you can avoid running up the business credit cards.
  • Maximize Tax Write-Offs: As a small business owner, many things can be used as a business write-off to minimize tax burden. You could save hundreds or even thousands of dollars by using the right tax strategy. Maximize these tax write-offs so that you can minimize the amount of money you need to pay at tax time. The best thing that you can do is hire the services of an experienced accounting team who can help with your tax strategy.

As you can see, there are many ways that you can be creative with your business spending to reduce expenses. If you need assistance, then make sure that you have the services of an experienced accounting team. We can assess your spending habits and provide recommendations that will help to minimize expenses in the future. Financial expertise can offer a valuable way for you to level-up your business efforts and reach higher levels of success.

For more information about small business accounting services, you need to talk to our team at Easier Accounting. We understand the financial requirements that are needed to run a small business. Our team is here to assist with anything that you need: (888) 620-0770

Taxes are Due April 17: Are You Ready?

Tax season is drawing to a close, leaving many entrepreneurs and sole-proprietors rushing to gather the last-minute details that are needed for the filing. This time of year can be stressful if you haven’t been consistent with your expense and income tracking throughout the year. But, there is still time available to gather the information that is needed for taxes so that you can optimize the results of your tax filing.

Why April 17th?

Usually, tax filings and payments are due on April 15th, so why is the due date different this year? If April 15th falls on a weekend, then the tax day will be adjusted to a weekday. This year, the 15th falls on a Sunday, so the IRS adjusted the due date to the 17th instead. Now, everyone has two business days after the standard due date to finish up the filing details and submit all of the paperwork and payments.

Even though you have an extra two days this year, don’t delay the preparation of your paperwork and payments! It is important that you take action right now so that you aren’t pushing the deadlines as the final due date approaches.

In fact, it is often a good strategy to finish your paperwork in advance. Then, you can relax at the end of tax season knowing that everything is already done.

What should you be focusing on to prepare for your tax filings? Here are a few things that you need to do to make sure that your small business is ready for tax time:

Gather Deduction and Write-Off Details

One of the benefits of owning a small business is that you can maximize the deductions and write-offs that are related to business expenses. Any time you spent money that has an impact on your business activities, then that cost can be considered a write-off.

But, these transactions aren’t beneficial for your taxes if you don’t track the expenses. Keep a record of the costs that were incurred throughout the year. Then, this information needs to be provided to your accountant to ensure that everything is included in the right categories on your tax paperwork.

Common write-offs include office supplies, computers, cell phones, inventory, contractor work, website maintenance, and more. If you have a home-based business, then don’t miss the benefits of writing off a portion of your rent or mortgage, as well as some of your utilities. Your accountant can help you determine the right amount that needs to be written off for these payments.

Even the smallest write-offs can add up to big savings in the future. Make sure to maintain a conversation with your accountant with anything that could be used as a write-off. For example, you might consider tracking your miles to use the travel as a write-off. Anytime travel or entertainment is needed for business purposes, a portion of the food, tickets, and hotel can also be used to reduce your tax burden.

Keeping track of all of the money that is spent will add up to a significant tax benefit over time. If you don’t already have records to provide for your accountant, then right now is a great opportunity to gather the details for the upcoming tax filing.

DIY vs. Professional Tax Filing

Start-up business owners are always looking for ways to save money. Even though it might sound like a good idea to use software for DIY tax preparation, it is common for inexperienced business owners to make huge mistakes with their paperwork. One missed line item or mistake in the way the information is entered could change your tax liability by thousands of dollars.

Yes, you will need to spend a little money for assistance with your tax filing. But, these services are invaluable when you compare the amount of money that is saved from professional tax preparation. Spend a little bit of money right now so that you can improve your tax strategy and save a lot of money on the taxes that are due.

Also, consider the benefit of having ongoing tax support throughout the year. You should be talking to your accountant more than once a year. Most business owners turn to financial professionals when the tax due dates are looming. It is a mistake if you aren’t leveraging their knowledge and tax strategy throughout the other months in the year though. For example, you might adjust your budget or the spending cycle to manage your tax bracket. Keeping your income in a lower tax bracket can be a big deal if you want to save a lot of money on taxes.

Don’t overlook the benefit of reduced stress levels when you have an experienced tax professional handle the filing for you. Instead of spending your evenings and weekends stressing over tax preparation, you can relax and enjoy time with your family. Your accountant will handle the paperwork and number crunching, helping you achieve the best results that are available from your tax filing. You can relax and watch your stress levels drop when you don’t need to worry about these details by yourself.

Employees, Contractors, and More

As you are calculating expenses, it is important that you distinguish the differences between employees and contractors. When a person is on your payroll, there are specific payroll taxes and other costs that need to be calculated every time a check is cut. Then, these costs need to be paid to the government at certain times throughout the year. At the end of the year, the totals need to be calculated and reconciled, ensuring that the right information was submitted with the payments.

In comparison, a contractor is paid without the burden of employee taxes. You can cut a check to the contractor to pay for the invoice, without a need to subtract a certain percentage for taxes that need to be withheld for the payments.

Both employees and contractors should receive tax forms at the end of the year if they were paid $600 or more in a given calendar year. Employees should receive a W2 that outlines their payments and taxes that were withheld. Contractors need to receive a 1099-MISC form. Missing these payments and forms is a common mistake that could impact the legality of the people that you hired.

Implement a New Tax Strategy for Next Year

If you found that tax preparation was too stressful this year, then it might be a sign that you need to implement a new tax strategy. Consider the option to wait until the dust settles after tax season is over. Then, you can schedule a time to talk to your accounting team about new systems or strategies that need to be used for the new year.

Most accountants are quite busy through tax filing day, and even a little bit after tax season is over due to extensions. But, there is plenty of time to discuss proactive strategies after April 17th. You need to have a good relationship with your accountant so that you can tap into their expertise throughout the year. Ask questions to learn about tax strategies. Look for solutions so that you can apply these new techniques in your business.

Go Digital

Are you still collecting receipts in a shoebox or filing folder? These old-school accounting practices are outdated and inefficient. As a result, tax season can be a nightmare if you are sifting through the paperwork to double-check the data-entry.

Instead of creating more work by managing manual accounting transactions, look for ways that you can digitize the system. Using a good software program is a great option to simplify the ongoing workload and ensure that you don’t miss important transactions. Recording everything electronically means that your expenses archive will be ready when it is time to file taxes next year.

Many of these accounting systems are designed to enter transactions automatically based on the line items that move through your bank account or credit card statement. You can set up filters that categorize certain transactions automatically. For example, a transaction from Staples or Office Max is always categorized as office supplies. Then, a few manual adjustments will be needed for uncommon transactions, such as a one-time plane ticket purchase for a conference that you are attending.

Working with an Accountant is a Valuable Way to Improve Your Business

If you aren’t already working with an accountant, then it is essential that you step into the wonderful world of outsourced accounting. These services give you access to top-notch financial guidance and recommendations, without the need to spend money on another employee. You will notice a big difference in the profits and success of your company when you are leaning on the expertise of an experienced financial team.

Are you ready to learn more about the benefits of tax preparation services and ongoing financial advice? You need to discuss the available services with our team here at Easier Accounting. We specialize in accounting services for small businesses and entrepreneurs. Our team understands the challenges of starting a company, so we are here to assist with your tax preparation and financial strategy. Call to learn more: (888) 620-0770

Essential Factors to Evaluate Before Hiring an Outsourced CPA

An outsourced CPA can be a great resource to improve your financial systems and boost your business results. There’s no doubt that your company will benefit from experienced advice and guidance to help with cash flow and profit evaluation. But, there are a few things that need to be considered before you rush into the decision to hire a CPA.

Follow these guidelines to ensure that you have the right services and skills that are needed to support your business efforts:

Look at References and Reputation

What is the reputation of the company that you want to hire? Considering references and the business reputation can give you an idea about the quality of service that you can expect. Search online for the company name to uncover reviews and information shared by other customers.

These reviews can be biased, so you need to keep an open mind when you are reading through reviews. Not only can good reviews be planted by the company’s marketing firm, but bad reviews could be placed by a competitor. So, you need to read the reviews to get an overall feel for the type of experience that you might expect if you choose to hire the outsourced CPA.

Asking for references can be one way that you determine the quality of services that are provided. Before you hire the team, ask for contact information for references that can answer your questions. A good accounting team won’t hesitate to provide references upon request. You can talk to satisfied customers to know that you will be receiving services from a reputable company.

Compare Expenses for the Services

Hiring an employee can cost you thousands of dollars per month, which is why many CPAs try to charge high amounts for their ongoing accounting services. Even though you are tapping into the professional experience of the team, you don’t need to pay that much for good accounting and bookkeeping services.

As you are comparing options for accounting services, you need to open up the conversation about the ongoing costs that are expected. Plus, you deserve to see a breakdown of the services that will be provided for the investment. Evaluate the value that you will be receiving for the money that is spent. Don’t be afraid to compare various services to ensure that you find an accounting plan that matches the needs of your company.

Many small business owners find that it is cheaper to hire an online accounting service instead of paying for a local company to help with accounting. If you hire a local accountant, then the fees will be higher to cover the costs of the office and storefront. In comparison, many online businesses can reduce overall expenses since you don’t need to have face-to-face meetings.

Just because you aren’t meeting in person, doesn’t mean that you will receive subpar services. You always have the option to open up a conversation over the phone. A good outsourced CPA will offer ongoing support, giving you access to their expertise throughout the year. You need an accounting team that you can lean on for advice on an ongoing basis, instead of only talking to your accountant once a year.

Before you sign an agreement, make sure that you are clear about the amount that you will be paying and the services that will be offered. These details will ensure that everyone is on the same page regarding the outcome of the services that you will be receiving.

You are Running the Business; the CPA is Assisting in the Efforts

When you hire an outsourced CPA, you might think that you can hand over the responsibility to reduce your stress load. While the accounting services will help to offset the busy work and oversee the financial strategy, they won’t take over the decisions that need to be made for your company.

In fact, many business owners use caution when they start working with a new accounting team. Instead of handing over all of the financial details and accounts right away, you might consider the option to work together for awhile to build trust first.

The CPA should offer tax preparation services, payroll, bookkeeping, and more. They can complete the calculations that help you evaluate cash flow and potential tax liabilities in the future. Even though this information is provided, remember that you are still the owner of the company. You have the final say in the decisions that are made. You can use the information to improve your decisions, without handing over all of the power to an outsourced team.

If you allow the accountant to make decisions on behalf of your company, then it is essential that you at least keep an eye on the transaction and the things that are happening. Otherwise, you could be at risk for fraud or other issues that could pop up if the books aren’t handled appropriately.

Why an Outsourced CPA instead of In-House Employees?

Why should you hire an outsourced CPA instead of bringing on another employee? While it might seem like a benefit to having a financial professional in your office, no real benefit can’t be gained from outsourced services.

In-house employees can be expensive, especially when you are paying a salary for an experienced accountant or CFO. Add up the costs of the salary, as well as employment taxes and employee benefits. Don’t overlook the cost that will be paid for additional office space, furniture, computers, and office supplies. All of these factors cut into your bottom line, making it hard to maximize your profits.

There’s nothing wrong with hiring an employee when it makes sense for your company. But, take the time to evaluate outsourced services before you rush to bring another employee into your office. With an outsourced accounting team, you always have someone there to answer your financial questions. At the same time, you can reduce the costs since you don’t need to be paying for someone to be in your office on a full-time basis.

It is interesting to see that outsourced services might actually be more valuable compared to an in-office employee. When someone is working in your office, they are always focused on the same project. As a result, they could have a narrow-minded perspective regarding potential systems or strategies that could be used for your company. It is easier to get stuck in a rut if you aren’t getting an outside perspective.

In comparison, an outsourced accounting team is always working with a variety of business owners. The experience can be used to improve your systems since the team understands the best practices in the industry. Choose an accounting team that specializes in small business services to ensure that you receive personalized information to match the needs of your company.

Where to Find a CPA You Can Trust

There are a variety of options that you can use if you need to find a CPA to help with your business. Some people look to network and industry contacts to find these services in the local area. A personal recommendation or referral can be a valuable resource. Just make sure that you trust the person who provided the referral. It is best to ask for these referrals from other like-minded business owners.

Next, you need to evaluate the options that might be available online. Search for companies that offer small business accounting services that are a good fit for your company. The internet has opened many options for outsourced services, giving you the ability to tap into expertise from accounting teams that understand the nuances of your industry. There are many benefits to choosing a small business accountant who focuses on companies like your own, instead of hiring the services of a big firm that offers accounting for small and large corporations.

Specializations are essential if you want to maximize the long-term results of the services that are available. Additionally, look for a company that offers many years of experience in the industry. It is better to hire an experienced team instead of trying the services of someone who is just out of college. Hands-on experience is invaluable and is worth more than the money that you will save on entry-level services.

The Best Outsourced Accounting Team: Easier Accounting

If you are looking for unbeatable outsourced accounting services, then you need to talk to us about the options that are available from the Easier Accounting team. We are focused on the satisfaction of our customers, giving you top-notch solutions for both accounting and bookkeeping. We have many years of experience in the industry, giving you the best options that can improve your business systems.

One of the advantages that we offer is that we specialize in small business accounting services. By focusing our services, we can improve the results for our customers. We invite you to schedule a consultation to learn more about the ways that we can help with your business finances. Call us at Easier Accounting to see how we can help: (888) 620-0770

Starting a Business? Why You Need Good Bookkeeping and Accounting Services

If you are starting a business, then you might feel like you have a long list of items that need to be addressed before you can launch the company. These tasks are essential in the pre-planning stages, as well as the early stages of starting the business. Regardless of your progress on the path to become a business owner, it is essential that you have the support of a financial professional for your business strategy.

Many start-up business owners feel like there are never enough hours in the day because they have so many things that need to be done. But, there is no reason that you need to accomplish everything on your list without the support of other people. Instead of trying to carry every aspect of your workload, it is important that you bring in outsourced experts who can oversee certain aspects of your company. Not only will you free up your time, but you can lean on the expertise that will help your company grow.

Why Bookkeeping and Accounting are So Important

Do you realize the importance of financial tracking for your company? It is easy to get caught up in the daily excitement of an upcoming sale or customer service. But, your business might come crashing down if you don’t have a good financial strategy in place.

Without regular bookkeeping practices, it is likely that expenses will get overlooked and the accounts won’t line up. Plus, you will face the difficult aspect of trying to determine the profits and losses in your company. It can be a challenge to keep up with the reporting if the information isn’t entered into the system accurately.

Even if you are starting small, you need to have these financial services to set your company up for success in the future. Creating a solid financial foundation might be the best thing that you can do to ensure that your company doesn’t come crashing down after it is launched. A large number of start-up companies fail within the first five years. If you don’t have the right strategy in place, then there is a good chance that your business will be one of the failed companies.

These problems can be avoided if you lean on the expertise that comes from outsourced accounting and bookkeeping services. When you are starting a business, you need to make sure that you have an accountant available to help with the strategy. Not only will you be able to navigate the difficulties of launching the company, but you can also have the peace of mind to know that the cash flow will be there when it is time to cover costs in the future.

Data Entry, Balancing the Books, and Other Ongoing Accounting Tasks

One of the problems with in-house data entry and accounting is that important tasks are often overlooked. If an entry-level secretary is handling your data entry, then that person probably doesn’t have the skill set to balance the accounts every month. In fact, it is likely that an entry-level employee probably doesn’t realize that the books need to be balanced!

Reconciliations and balancing the accounts means that you check the transactions to ensure that everything lines up. Even if you are using a great accounting software, there is still a chance that you might encounter small errors or glitches along the way. The best computer program won’t work when human error is involved. So, these reconciliations are essential to evaluate the accounts and make sure that everything lines up in the right way.

Most new business owners aren’t comfortable with these tasks because they don’t have a professional background in finance or accounting. These responsibilities never end, and it can be a heavy task to manage these expenses while you are overseeing the other aspects of running your company. There is no reason why you should try to manage these activities by yourself! Instead, hand off the responsibilities to an experienced accounting team so that you can free up your time and resources.

Bookkeeping and Accounting: Do You Need Both Services?

Even though the terms “bookkeeping” and “accounting” are sometimes used interchangeably, there is a distinct difference between these two services. Bookkeeping is a service that focused on the daily systems that are needed to document the transactions that move through your company. A bookkeeper tracks and categorizes all incoming and outgoing transactions, ensuring that the data entry accurately reflects the money that is spent.

Another aspect of bookkeeping involves regular bank reconciliations. You need to make sure that your accounting software lines up with the numbers that are showing in your bank account. So, these reconciliations are essential to make sure that you are staying on track every month and year.

Implementing a good bookkeeping system is essential if you are going to manage your cash flow. At the same time, cash flow management is critical to ensure that you can keep up with the ongoing costs that come up to keep your company running.

You might have the best bookkeeping system in place, but you shouldn’t overlook the necessity of hiring an accountant as well. An accounting team looks at more than just the daily financial tracking. Accounting services help you forecast future possibilities for your company, implementing tax strategy and other financial plans to support the anticipated growth that you desire.

As you can see, there are differences between bookkeeping and accounting services. If you are starting a business, then it is essential that you have both of these services available to get your company started on the right foot.

Choosing Bookkeeping and Accounting Services

Cash can be tight when you are starting a company, so it makes sense that you should skip the burden of bringing on more employees. Instead, you should consider the benefits of outsourcing these services. You need an experienced team that can assist with your business finances, but it doesn’t mean that you need to carry the responsibility of having a few more salaries that need to be paid.

Before you hire anyone, you need to first consider the needs of your company. Do you already have a bookkeeping system in place? Do you need to bring in an experienced team to set things up from the beginning? Evaluate your needs and then find an outsourced accounting and bookkeeping team that can accommodate your preferences.

Ideally, you should find an outsourced team that can help with everything that you need. For example, it will reduce your stress levels if you can outsource tax planning and payroll processing to the same team. Then, you always have a single point of contact if questions arise regarding your tax strategy. A good outsourcing service will offer ongoing support to answer your questions throughout the year.

Tracking Expenses and Maximizing Tax Write-Offs

As you learn more about bookkeeping and accounting, it is easy to see how these services go hand-in-hand. If you have a good bookkeeping system to track and categorize every expense, then those details can be used for your tax plan. An accountant needs to understand the ongoing expenses that are accrued for your company, giving you the benefits of writing off as much as possible to minimize your tax burdens.

If you are still trying to handle bookkeeping or accountant tasks in-house, then right now is a great time to hire a good team. You can avoid the headache of issues with your financial tracking. Also, accurate financial reports will help you make quality decisions regarding the future of your company.

These outsourced services are essential to build the foundation that you need to expand and grow. Whether you are trying to bring in investors or you want to evaluate the profitability of your company, you need to have detailed reports that show a real snapshot of the financial health of your business.

Local or Online Accounting Services?

Most business owners turn to local accounting services. While it can be nice to work with someone face-to-face, there is no reason why you need to be limited based on physical location. We live in a digital world, which opens up a wide range of services that are available through online resources. You can find an accounting team that specializes in the services that you need, with the convenience of skipping an in-office visit.

Online accounting services offer a powerful, affordable way for you to manage your business finances. If you are starting a business, then you need to make sure that you are using a cloud-based accounting software. Then, everything can be accessed from anywhere in the world. You can oversee the success of your company without the need to pull out a pen and paper to crunch the numbers.

If you are looking for an online accounting service, then we invite you to talk to our experienced team here at Easier Accounting. We understand the nuances of small business financing, and we are happy to offer the ongoing services that you need. Call today to learn about the options that are available for your new start-up: (888) 620-0770

Is it Time to Hire an Accountant for Your Small Business?

Having a strong financial plan for your small business is one of the most important aspects of creating a foundation for the future. If you ignore financial tracking, tax strategy, and bookkeeping, you might be able to get by for a little while. But, eventually you will face the harsh truth that your business growth will be limited without a solid financial system. The best thing that you can do is hire an outsourced accountant to oversee the details in the early stages of your business growth.

Why Accounting Services?

Small business owners are always looking for ways to save money. One mistake that is often made is hiring an entry-level administrative employee to help with financial tracking. Instead of bringing on an experienced team, it seems like a cheaper solution to pay someone who can handle the data entry.

While the daily data entry is important, it never replaces the strategy that comes from working with an accounting team. These accounting services encompass much more than simply tracking the transactions that move through the bank account. A good accounting service will incorporate everything from basic bookkeeping to full tax strategy and planning for the future.

Working with an accountant is a strong addition to your business strategy. You have the benefit of a team member who understands the nuances of small business finances. Lean on their expertise, so that you can apply the proven principles to your own business practices.

Benefits of Working with an Accountant

Is it a big deal to hire an accountant? Yes! As you learn about the benefits that come from these services, you will wonder why you didn’t make the investment earlier in your business efforts. Having a great accounting team might be the difference that you need to overcome cash flow problems and set your business up for future growth.

Here are some of the benefits that you can expect when you hire outsourced accounting services:

  • More Time for Business Development: Stop wasting your time on number crunching and data entry. As the owner of a business, you carry the heavy responsibility of overseeing every aspect of your company. The best thing that you can do is outsource some of the busy work so that you can focus your efforts on other activities that will bring in more revenue. Hiring an outsourced accountant is an essential step if you are still involved in data entry, invoices, payroll processing, tax filing, and more.
  • Save Money on Overhead Expenses: When you see that you need financial services, it might seem logical to hire another employee. But, you need to think about the costs that will be incurred by bringing an employee into your company. Not only do you need to carry the responsibility of another salary, but you also need to pay for expenses such as office space, benefits, time off, and more. Save your cash by hiring an outsourced accountant instead. You can tap into the expertise of an professional in the industry, without the need to carry the weight of a full-time salary for another employee.
  • Maximize Tax Write-Offs: You are probably leaving money on the table if you are doing your own taxes. Tax strategy can be complicated, especially since the laws have changed recently. You can’t read a few short articles online and think that you understand tax strategy for small businesses. Instead, you need an experienced CPA who understands the nuances of tax law, helping you maximize your write-offs while staying within the legal guidelines at the same time. Implementing a good tax strategy could save you thousands of dollars each year. Many business owners find that they save more money on taxes than what they spend on the accounting services.
  • Categorizing Assets: Does your company own assets? Whether you have an office full of computer equipment, or you have bigger assets for real estate or vehicles, you need to have a financial expert help with the categorizations for these assets. The way these items are categorized can impact your tax filing. Plus, you can use the assets as collateral if you need to borrow money in the future. Another benefit of proper categorization is to know how much the business is worth, so that you always have a snapshot of the profits and successes of the company.
  • Ongoing Reconciliation and Audits: Even if you are diligent with data entry and other financial practices, it is common for mistakes to be made along the way. Seemingly small issues can add up over time, resulting in bigger problems in the future. So, you need to take a proactive approach to identify the errors and correct them in the early stages. Regular reconciliations and in-house auditing can be invaluable to ensure that you are staying on track for the future. Plus, you will have the peace of mind to know that there is nothing to worry about if you are audited by the IRS.
  • Efficiency with Cashflow: It can be a stressful situation if you feel like you can never stay ahead of the cash flow for your company. Inefficiencies in your financial system can be identified and corrected by an experienced accounting team. Correcting these issues can improve daily, weekly, and monthly systems. As a result, the money will be there when it is needed, giving you the flexibility to manage your business without feeling like you are running out of cash. An accountant will oversee the ongoing strategy and forecasts to ensure that you always have the cash that is needed for accounts payable and payroll.
  • Planning for the Future: Not only can you keep up with the current needs of your company, but you can also think about the future possibilities that can be achieved. If you want to be ready for expansion, then you need to make changes right now to set yourself up for success in the future. Set goals for the revenue growth that you want to experience. Then, talk to your accounting team to design a system that can accommodate the growth as it occurs. You need to think about various options such as tax strategy, business entities, and more.

Start with an Accountant Right Away

If you don’t already have the services of an accountant for your small business, then right now is a great time to get started. You can have the support that you need for the upcoming tax season. Plus, you will be able to lean on the financial expertise throughout the year.

A good accounting service encompasses more than one conversation a year for tax strategy. You need to have someone who watches your business trends throughout the year, giving you the professional advice that will keep your business on track for the success that you desire.

It is amazing to see the difference it can make to hire the services of a professional accountant. Not only will you have someone who can answer your financial questions at any time. But, you will have access to accurate reporting and information when it is time to make big decisions about your company. There is no way to put a price tag on the benefits that you will receive from outsourced accounting services!

Don’t Hire a CPA; Call for Outsourced Accounting Services Instead

Save the money that you would spend on an outsourced CPA and bring in an experienced outsourced accounting team instead. You will have a full range of experience in the industry, plus you can save the cash that you would have spent if you hired a CPA.

What will you do with the extra cash? Saving thousands of dollars will give you the options to invest in new office equipment, consultations with experts in your industry, or a company retreat. Or, you could use the money for business development, helping to expand the products or services that are available for your customers. These investments can have long-term benefits for your company, helping to maximize your profits in the future.

Outsourced accounting services offer all of the benefits of having an in-house CPA, without the expense of another employee. You can call your outsourced team at any time if you have questions about your tax or financial strategy. We are always available to answer your questions and support your needs, giving you the expertise that you need to manage the stressful side of running a business. Instead of crunching the numbers and trying to navigate financial reports, you can focus your efforts on other business tasks. We will do the heavy lifting to ensure the financial health of your company.

Are you ready to learn more about hiring an outsourced accountant? Our team is here to assist with anything that you need. We encourage you to call us to learn more about the services that we provide for small businesses and entrepreneurs. Contact us at Easier Accounting to see if our services match your needs. We are happy to cater your accounting plan to make sure that everything is in alignment with your business goals. Call for more information: (888) 620-0770

The Serious Consequences of Bad Bookkeeping on Your Small Business

There are many things that you need to worry about as a small business owner. Not only are you evaluating cash flow to make sure that you have enough money for payroll, but you are also carrying the burden of overseeing employee management, budgeting, business development, customer service, marketing, and more. These responsibilities can add up, making it easy for important tasks to slip through the cracks. Certain tasks can be handed in the future, but don’t procrastinate financial matters resulting in a situation where you are facing bad bookkeeping practices.

Bookkeeping and accounting encompass all aspects of the financial side of running a business. It is essential that you are tracking the money that is coming in and going out so that you have detailed information for tax filings, profit and loss reports, and more. Without the right financial tracking, you are setting your business up for failure.

Some small business owners attempt to manage bookkeeping in-house. If you have professional experience as an accountant, then you might have the skills to handle these responsibilities. Even though you have the skills, there are advantages to outsourcing these tasks. For example, it can be a challenge to keep up with the changing tax laws and other factors that impact your finances. Plus, most business owners don’t want to spend their free time crunching numbers.

What Do Accounting and Bookkeeping Encompass?

Many aspects of your business fall under the umbrella of bookkeeping and accounting. If money or value is changing hands, then these details need to be addressed by your accountant. These transactions can include everything from payments and earnings to purchases, sales, and receipts.

The goal of your financial system is to track the money that is flowing in and out of your business. Every penny needs to be accounted for to ensure that you are making the right decisions to support the future of your company. This information is necessary to help you with tax calculations. Additionally, you need accurate reports so that you can calculate your profits and make good decisions regarding the spending and business plan for your growing company.

Are There Problems with Your Financial Records?

Jotting down a transaction on a piece of scrap paper isn’t good enough for your financial tracking. Instead of “getting by” with unproven systems, right now is the perfect time to implement an effective accounting and bookkeeping program. This step will help you overcome some of these common mistakes that happen when an inexperienced person handles bookkeeping for a company:

  • Lack of consistency where transactions are recorded
  • Hand-written accounting, instead of using a computer system
  • Only using manual calculations
  • Overlooking small transactions
  • Missing tax payments and paperwork
  • Lack of communication with a bookkeeper or accountant
  • Organizational problems causing lost invoices and paperwork
  • Falling behind on data entry
  • Failing to complete regular audits and checks
  • Hiring an inexperienced person to do the bookkeeping

Tracking your financial records might be the most important thing that you can do to support the future success of your company. If you let these tasks fall to the backburner, then you will face big challenges that need to be overcome before you can lead your business to the goals that you desire.

Why Do You Need a Bookkeeping Professional?

It seems easy to hire a secretary to oversee the financial transactions. Isn’t it easy to do a little data entry from the receipts and sales invoices? Yes, a low-level employee can oversee some of these tasks. But, they need the training and understanding to make sure that they aren’t missing important parts of the financial tracking.

In addition to the daily data entry, it is also important that higher-level strategy is used to plan for the future. Not only do you need to assess cash flow and profit/loss reports, but you need to be prepared for tax filing. Correct information on your financial reports will have an impact on the taxes that you pay and the amount of money that you can save due to write-offs

An experienced bookkeeper could cause a domino effect that impacts many aspects of your business. Even though a missed transaction or mathematical error might seem minor, it can play a big part in the accuracy of your reports in the future. When it comes to finances, it is essential that you have an expert team overseeing every detail. Hiring a professional accounting and bookkeeping service not only ensures the accuracy of your reporting, but it also helps with the long-term success of your company.

What Will Happen if You Have Bad Bookkeeping Practices?

If you don’t know a lot about accounting and bookkeeping, then it is possible that you don’t understand the serious implications of bad bookkeeping. Here are a few consequences that you might face:

  • IRS Audit: Resulting in time, stress, and money for accounting services to work through the audit. If incorrect information is discovered on your tax filing, then it is possible that you will be facing expensive fines and fees that could negatively impact your current cash flow. The best solution is to have an experienced accountant who will help you follow the rules and avoid the risk of an audit.
  • Cash Flow Problems: What will happen if it is time for payroll and you don’t have enough money in the bank to pay your employees? Costs come up every month for business development, payroll, office supplies, and more. If you aren’t tracking your inflow and outflow, then you might be caught in a difficult situation where there isn’t enough money to pay the bills. These problems can be avoided by hiring a good accountant who will track the records and help you avoid cash flow problems.
  • Poor Business Decisions: How can you make accurate decisions for your company if you don’t understand the current financial health of the business? When you are facing decisions about hiring employees, business development, or marketing costs, you need an accurate picture of the financial health of your company. This information is essential so that you can run financial reports and then make decisions based on the current financial trends that you are experiencing.

Important Principles of Good Bookkeeping and Accounting

So, what should you be looking for when you are ready to hire someone to help with bookkeeping and accounting? First, make sure that you find a team with many years of experience in the industry. You need an accountant with hands-on experience working with other small businesses. For example, you will get better results hiring an accounting team that focuses on small business services, instead of hiring someone who usually does personal tax filings.

Next, it is important that your accounting and bookkeeping team has a good system that is implemented to track financial transactions and generate reports. Everything should be done using a software program, instead of using hand-written records or manual tracking on a spreadsheet.

The system needs to be able to categorize expenses so that you know how much you are spending on various things. Breaking down these details can help you see where you are spending the most money on unnecessary costs. You can also evaluate the most profitable aspects of your company, helping you maximize cash flow by focusing on the activities that are bringing in the money.

A good accounting system needs to account for every penny that moves through the company. There are also taxes and other things that need to be accounted for as well. For example, sales tax, quarterly tax payments, and other details need to be tracked and paid along the way.

Finally, it is important that your accounting team offers a reconciliation of your bank accounts. Even if you are consistent with data entry for the transactions, there are times when the numbers are off, and everything needs to be adjusted. These small discrepancies can be identified if regular reconciliations are happening. This effort is basically a small audit to make sure that all of the accounts match up and everything is in alignment.

Don’s Stress Over DIY Accounting

There is no reason why you should be handling the stress of managing the accounting for your company. As the business owner, you have enough to worry about for the business development, employee management, and more. Let a professional team of accountants and bookkeepers oversee the financial tracking for your company, freeing up your time to focus on other activities that will help your company grow,

DIY accounting is often a bad idea because it results in many problems with inaccurate reports and missed transactions. Instead of making a mistake by handling the accounting in-house, it is better to hire an outsourced team to help.

The Easier Accounting team is experienced in all aspects of small business accounting and bookkeeping. If you need a trusted team to help with your company, then we invite you to call us today to learn more about the services that we offer. We are here to help with the financial success of your company: (888) 620-0770

IRS Audit: How to Survive the Stress of a Tax Audit

It often comes unexpectedly: you start a normal workday answering emails and talking with a few business contacts. Then, the mail delivery comes, and you find the dreaded notification letter from the IRS. They want to audit your company to make sure that the tax filings match your business records. This news can be terrifying for many business owners, and you might feel overwhelmed by thinking about the things that you will need to do to prepare for the audit.

There is no reason to stress if you have an experienced accounting team to help with your business finances. These ongoing services are essential so that you can stay current with the financial information for your company. At the same time, tax planning is important to reduce the likelihood that you will be audited.

Are You Running a High Risk of an IRS Audit?

How do you know if the IRS will be auditing your company? There is no certain way to determine if you will be the lucky person chosen for the auditing process. But, there are a few things that can be done to minimize your risk. An accountant can help you follow the important tax laws, helping you stay under the radar each year.

As a small business owner, you run a higher risk of an IRS audit compared to someone who files an individual tax return without business activity. This increased risk doesn’t mean that you shouldn’t be pursuing your business efforts. Instead, you need to make sure that you are maintaining the right reporting and documentation to back up the financial claims if an audit happens.

Here are a few other red flags that might increase the risk of an audit:

  • If your profits were between $200,000 and $1 million in a fiscal year
  • Being a property owner and reporting rental losses
  • Showing a history of unaccounted income changes each year
  • Hiding foreign bank accounts or transactions
  • Large donations to charitable organizations

Even if these factors apply to your business, it doesn’t mean that you will be audited. In fact, it is estimated that less than 1% of small businesses are audited each year.

What is the Purpose of an IRS Audit?

If you have been selected for an audit, then you are probably asking a common question: why does the IRS want to review my business financials? The goal of the audit is to ensure the accuracy of the reporting, helping to claim unpaid tax funds if the paperwork was filed incorrectly. It has been estimated that there might be as much as a $125 billion gap in unreported income by business owners.

Just because you have been chosen for an audit, doesn’t necessarily mean that there is a problem with your tax filing. Instead, the IRS is doing routine checks to ensure the validity of the paperwork that has been filed. The selection process is based on a few red flags that might come up in a computer screening. There is also a random selection element based on a statistical formula.

The algorithms compare your business tax return against the “norms” for other similar companies. If anything looks out of place, then you might be selected for the audit. You might also run a higher risk of an IRS audit if you have any relationships with transactions related to partners or investors who were also selected for an audit.

What to Expect with an Audit

After you have been selected for an audit, an experienced auditor is assigned to review your paperwork. Keep in mind that audit notification is always done by mail. You will never receive a phone call notifying you of the audit. There are common phone scams right now that claim that you are being audited, but these calls are hoaxes and should be reported.

The audit can be handled by mail, or they might schedule a time for an in-person interview. This interview can be scheduled in a variety of locations, such as the IRS office, your place of business, your accountant’s office, or at your home. When the letter arrives, it will have specific instructions that need to be followed, as well as the contact information to schedule the meeting if necessary.

For audits that are handled by mail, your notification letter will contain a request for additional information. The letter will specify the details that need to be provided, such as documentation for itemized deductions, expenses, or income.

Regardless of the way the audit is performed, you will need to provide the requested information. The records may vary depending on your individual circumstances. Sometimes electronic records can be provided, such as the reports that come from your tax software. Other times, hand-copy receipts might be needed. By law, you are required to maintain all of the records relating to your business. This information needs to be stored for at least three years after the filing of the tax return.

Tax Audit Myths

Don’t be fooled by some of the myths about tax audits. Here are some of the common misconceptions that small business owners hear about the auditing process:

  1. Myth: Your risk of an audit increases if you file an extension. The truth is that filing an extension is as easy as clicking a button on the IRS website. People who are in the military or living abroad automatically qualify for an extension. In the situation where you request an extension, it shows that you are thorough and careful with your tax schedule. So, it doesn’t impact your risk of being audited.
  2. Myth: More deductions will increase the chances that you are audited. As long as you are deducting transactions that make sense, they shouldn’t impact your risk of an audit. Something out of the ordinary might put up a red flag though. For example, if you spend $30,000 on new computers for an office with a hundred employees, then it will likely be viewed as a normal cost of doing business. But, $30,000 for a month of travel expenses and business meals for one sole proprietor might raise some questions.
  3. Myth: Amend your tax filing, and you will be audited. The IRS wants the tax filings to be correct, so they won’t punish you for an innocent mistake. If you are correcting your mistakes on a return that is e-filed, then it is viewed as a good step. Then, the filing will be treated as if it was a new submission and scans are completed to see if there is anything that looks unusual. In the situation where you need to change a filing, make sure that you provide thorough explanations for the adjustments.

What to Do if You Receive an Audit Notification

So, what should you do if you receive the letter in the mail saying that you are going to be audited by the company? The first thing is to take a few deep breaths and know that everything will be all right. If you are working with a good accounting team, then it shouldn’t be a hassle to provide the requested information. So, make sure that you are always staying current with your financial tracking to ensure that you are prepared in case you are audited.

An audit means that your files are going to be reviewed to make sure that everything matches your tax records. When you have good documentation, there is nothing to worry about!

Now that you know that there is nothing to stress about, it is essential that you contact your accountant right away. Together, you can verify that the request is an official document from the IRS, and not some type of phishing scam. Your accountant can help you see if the letter came from a documented IRS address.

You don’t need to carry the burden of navigating an IRS audit without the support from a financial professional. In fact, the outcome will be better if you lean on the expertise of your accountant during this process. Your accountant will understand the procedures and practices for IRS audits, and they can guide you through the steps to provide the information that is requested by the IRS.

An accountant will help you understand the audit and help you see any potential roadblocks that need to be addressed. Getting insight into the process will ensure that you are thoroughly prepared when it is time to sit down with the auditor.

It is important that you gather the requested documents. If you need to send the documents in the mail, then it is best to keep the originals and mail photocopies of the receipts and paperwork. You should always maintain the original documents in your files. Providing a detailed paper trail will ensure that the audit goes as smoothly as possible.

Do you have questions about tax planning, filing or audits? Then you need the support of an experienced accounting team. At Easier Accounting, we offer these services for small businesses and start-ups. Contact us to learn more about the ways that we can support your business efforts. We are here to help: (888) 620-0770

Is it Better to Hire a CFO or Outsource Your Small Business Financials?

How many people are employed by your company? If you need to bring in a specific skill set to help with your business goals, then the first inclination is often to post a job opening and hire another employee. While there’s nothing wrong with hiring employees, it is important that you consider the needs of your business and all of the options that are available.

Not only will you take on the financial burden of one more salary to pay, but you also need to oversee the in-house management of an additional person. So, you should evaluate your motivations for hiring another employee, and also consider the benefits of outsourcing if it makes sense.

Today we are going to compare the options that you might be considering if you need help with your business financials: in-house bookkeeper or accountant, hiring a CFO, or outsourcing the tasks to an experienced team.

Be Prepared if You Hire Another Employee

If you are hiring an employee to help with business financials, then you probably need someone to assist with basic bookkeeping tasks, such as tracking transactions and cutting paychecks. On the other hand, a high-level executive can be helpful if you need assistance with bigger financial decisions.

It can be a hassle to go through the process of finding the right employee that will fit the scope of work that you need. Plus, you will need to ensure that a good onboarding program is in place to help the employee learn more about the in-house practices that you are using.

On top of the logistics of bringing another employee into the office, you also need to think about the monthly costs that will need to be covered. Most small business owners only think about the salary that will be paid. But, you shouldn’t overlook the additional costs that come with employees: employment taxes, benefits, office space, equipment, and more.

The salary is just the starting point… with many other cost burdens that will need to be carried by your company. These expenses go up exponentially if you are hiring a top-level executive instead of an entry-level bookkeeper. You will spend more money for an experienced CPA or CFO compared to the costs for someone who is only looking after the books.

Outsourcing for Efficiency and Affordability

In comparison, outsourcing gives you the access to the skill sets that are needed without the hassle of bringing another employee onto the team. You can hand the financial tracking responsibilities to an experienced team. But, there is no need to pay the costs of a full-time employee or benefits.

Many small business owners see the benefits of outsourced accounting. These services are growing every year, giving you more access to the best in the industry without the need to hire an employee. It is a win-win situation: accountants and bookkeepers love the freedom of self-employment, while small business owners can minimize costs and maximize profits.

What Skills Do You Need?

Whether you are hiring an employee or choosing an outsourcing team, you need to consider the tasks that should be addressed and the skills that need to be provided. If you don’t know a lot about business finances, then it can be hard to know if you should hire a basic bookkeeper, accountant, or CFO.

Here are a few questions that you can ask to help you identify the skill set that will fill your needs:

  • Do You Need Someone to Manage the Invoices and Paperwork? In some cases, business owners already have an accountant to handle tax filings. But, it can be a challenge to keep up with the invoices that come through the office each day. If you are looking for a person to oversee the filing and data entry, then a bookkeeper might be the right solution. There’s no need to pay someone with more experience if you won’t be using their services for financial analysis or tax preparation.
  • Are You Looking for Help with Tax Preparation and Strategy? Then, you will be best served to hire a CPA to oversee these tasks. A CPA knows the current tax laws and they can help with the strategy of minimizing your tax burden. Their job is to make sure that you are staying in compliance with the various state and federal regulations. In most situations, a CPA will keep the financial records and perform regular audits to ensure the quality of the reports. At the same time, they also take care of the reports and paperwork necessary for tax filing. If you face an IRS audit, then a CPA will assist with the proceedings.
  • Do You Need an Expert to Forecast the Future and Design a Financial Strategy Around Your Business Plan? Then, a CFO might be the right answer. CFOs don’t handle the busy work like invoice data entry or payroll processing. Instead, they are looking at the way the numbers are working out to anticipate the future of your business. A CFO can help with the capital structure of your company, as well as assisting with fundraising and relationships with investors. The goal of a CFO is to help a company sustainably reach peak performance levels, helping to improve company profits.

CPA vs. CFO

The benefits of hiring an accountant are if you need someone to oversee your business finances to ensure that the reports are accurate and you are maintaining compliance. A CPA can also assist with clarification of tax law, as well as preparing and filing the tax paperwork. If needed, these skills might encompass other financial tasks such as bookkeeping, payroll preparation, and more.

On the other hand, a CFO is needed if you require higher-level financial analysis. Don’t hire a CFO if you just need help with tax preparation! Instead, a CFO offers the skill set to bring insight and top-level strategy for the operations of your company. CFOs focus on the future of the business, forecasting, anticipated cash flow, and long-range planning to help the company grow. In comparison, CPAs are usually focused on reporting and accuracy of historical data.

One of the biggest mistakes that growing businesses make is hiring an accountant and assuming that they will get the full long-range strategy and business plan designs that should be coming from a CFO. Accounting services are perfect if you need tax strategy services. But, you need to tap into the expertise of a CFO if you need forecasting and financial strategy.

Best Solution? Regular Accounting with Occasional CFO Services

If you are running a start-up or small business, then the highest priority is to make sure that you are maintaining regular accounting services to keep up with the daily financial tracking and reporting. Your accountant can oversee company assets and offer the technical financial knowledge that you need as you are making decisions along the way. Accounting services are also essential to make sure that you are current with internal auditing.

To sum it up, most small businesses need accounting services for tax preparation and more. But, not all companies need to bring on a CFO. Instead of hiring a full-time CFO, consider the benefits of occasional consultations until your company is strong enough to carry the costs of a full-time CFO. In the meantime, don’t harm the future of your company by cutting corners on accounting services. These regular financial skills are essential to make sure that you are staying on track and keeping up with the cash flow demands for your company.

Accounting Services Will Boost Your Results and Decrease Your Stress

Most business owners will agree that hiring an accountant is one of the best decisions they made for their company. Your accountant can take responsibility for the financial reports. Instead of crunching the numbers, you can turn your attention to the business development activities that will help your company grow.

If you want to expand your offerings and help your company grow, then it is essential that you hire a CPA to assist with your tax strategy and preparation. These services are key so that you don’t have to carry the financial responsibility on your own. Plus, you will make better business decisions when you always have accurate financial reports to assess the current status and anticipated cash flow for the year.

Is it time for you to bring in the accounting skills that are needed for your small business? Instead of spending the cash on a full-time employee, consider the benefits of outsourced accounting. You will have full access to an experienced team while saving money on your monthly cash flow at the same time.

Our team at Easier Accounting specializes in these accounting services for start-ups and small business owners. We invite you to call us today to learn more about the options that can support your business goals. We will cater the services to match the needs of your company, helping to create the long-term success that you are working hard to achieve. Call today to learn more about the services that we offer: (888) 620-0770

2018 Tax Law Changes: How the New Law Will Impact Small Business Owners

It was a headline-making story to have tax reform go through in Washington D.C. While there are many news stories about these laws, it can be a challenge to find non-biased information that breaks down the facts. What do these new tax laws mean for your company?

As a business owner, you need to stay ahead of the changes that happen in the accounting and tax industry. But, you don’t need to do the footwork to read the fine print of the new laws. Instead, let your accountant do the hard work to ensure that your business is staying current with the changes that are happening this year.

The unofficial title for the new tax law is The Tax Cuts and Jobs Act, and these new rules went into effect on January 1, 2018. Accountants are facing the task of decoding the rules that have been established by the IRS. The document has about 1100 pages, although these changes may or may not simplify your tax filing. Here’s an overview of a few differences that could impact your business:

What Type of Business Do You Own?

The structure of your company will impact the way the tax changes will impact your business. For example, sole proprietors will experience a different change compared to those who have partnerships or corporations.

The good news is that there are potential decreases in the taxes that will need to be paid for your business. These changes are most favorable for large corporations.

Talk to your accountant about 2018 tax strategy to understand how these changes will impact the type of business that you own. Depending on your current business trends, it might make sense to restructure the company to strategically maximize the tax benefits that are available in the future.

2018 Tax Reform and Depreciations

There are some changes to tax rates, which will be discussed in more detail in the next section of this article. Here is a highlight of some of the other changes that have been put in place with this new tax reform:

  • According to Section 179, businesses could previously write off the cost of used or new equipment and property up to $500,000 in the year the acquisition occurred. This number has been changed, now capping the amount at $1 million.
  • Businesses can choose to speed up the depreciation amount when purchasing new equipment or property. Or, Section 179 expensing can be used if desired. 100% of the cost of the property can be used as bonus depreciation (compared to the previous rules of 50% depreciation).
  • Increases were made to the passenger vehicle depreciation limits.

Losers and Winners of Tax Reform

With the bill being so long, it can be hard to tell who the true winners and losers are. Many people have been asking the question about whether these changes will reduce their tax burden. But, there aren’t clear-cut lines about who will win or lose. As mentioned above, the business changes are impacted by the way the company is structured. There are also individual factors that need to be considered regarding the way your personal tax returns will be impacted.

Consulting an experienced accounting team is the most effective way to ensure that you have the right plan in place for your taxes this year.

  • Corporate Tax Rates: There is good news for you if you have a C Corporation. Instead of using tax brackets, C Corporations now follow a tax rule of a flat 21% rate on all taxable income. The new rates will likely decrease your tax burden, as long as the corporation has a taxable income of $90,385 or more each year. If your taxable income is less than that amount, then your taxes will likely go up since there is no longer a bracket system in place.
  • Pass-Through Entities: Sometimes, businesses are set up as pass-through entities, such as S Corporations, LLCs, Partnerships, and Sole-Proprietors. These types of companies will not be impacted by the changes to business taxes. But, there are individual tax changes that might affect your outcome each year. The deduction is based on 20% of income from the entity, which can be used as a deduction on the personal tax return. As an example, if you have an income of $100,000 in 2018, then your deduction would be $20,000. This deduction is calculated in before the calculations are made for your individual tax rate. There are many nuances to the tax law that need to be considered, but this simplified example will give you a general idea of how the system works.

Small businesses that are structured as pass-through entities will also benefit from the AMT relief as well as other provisions that might apply to the circumstances.

At the same time, certain deductions were reduced, which could impact your business taxes. For example, there is a limitation of $10,000 in deductions on state and local taxes.

Tax Changes for Individual Filing

In addition to filing your business taxes, it is also necessary to file an individual tax return as well. A few small changes might impact your personal filing, depending on your current financial situation.

The new tax laws maintained seven brackets for individual taxes, with changes to those tax rates. At the same time, many of the individual changes were focused on allowed deductions. Tax rates in all seven brackets have decreased, while the dollar amount for each bracket has increased.

Even though the tax rates have been reduced, you need to talk to an experienced accounting team to understand the full impact of these changes. For example, your rates have gone down, but you might be limited in the deductions that are used when calculating your income. As a result, there is a possibility that you might have a higher income on paper, which changes the rates that you will need to pay.

Standard Deductions for Individual Tax Returns

The standard deductions have been increased, which changes some of the itemizations that could be used on a schedule A. The standard deduction is the base amount that a taxpayer can deduct for tax liability if they don’t use a Schedule A for deductions.

Your accountant will help you compare the itemized deductions with the standard deduction; then you can choose the higher amount for the deductions that are used on the filing of your individual tax return. Using the standard deduction can simplify the process for many families because they don’t have to worry about additional tax paperwork and calculations. The goal of this reform to the tax law was to reduce the work that goes into the preparation of individual tax returns.

Whether you are single, married filing jointly, or head of household, the standard deductions have almost doubled. So, many people will find it beneficial to simply take the standard deduction so that they can manage their taxable income in the best way possible.

There were a few changes to itemized deductions. One notable change was the capped mortgage interest. The debt cap for mortgage interest write-offs is now $750,000. Also, joint filers can no longer use active passthrough losses of $500,000.

How Long are the New Tax Laws in Affect?

Most of the changes for business taxes are indefinite, which means that these changes will stay in place until the laws are changed at a future date. On the other hand, many of the individual tax laws have a deadline.

For example, many of the provisions for pass-throughs and individuals expire after December 31, 2025. It is possible that more adjustments could be made in the future which will make these changes permanent.

Putting Together the Best Tax Strategy for Your Business and Family

Taxes can be complicated and confusing, and many people get heartburn when they think about everything that needs to go into a tax filing. There is no reason for you to carry this stress! Instead, hire an expert who can handle the calculations, paperwork, and filing.

As a business owner, it is better for you to focus on the daily tasks that will help your business grow. It takes too much time and effort for you to read through and understand the laws. Instead, lean on the support of an experienced accounting team who will guide your strategy and ensure that you maximize tax write-offs as much as possible.

Outsourcing these accounting tasks will free up your time, giving you the ability to focus on employee management and product development. At the same time, you will be able to enjoy more time with your family because you don’t need to spend the long hours in the office. Let the pros handle your tax preparation so that you can stay focused on the most important aspects of your life.

For more information about tax preparation and accounting services, talk to our team here at Easier Accounting. We specialize in small business accounting, and we will gladly help you put together the best tax strategy for 2018. Call to schedule a consultation to learn more: (888) 620-0770