What Happens if Your Company is Audited?

The mention of an audit strikes fear in the hearts of small business owners, even if they are proactive to be compliant with the laws and regulations. As a business owner, there is no reason to worry about an audit if you have the right team of bookkeepers and accountants in place to help.

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Do you know what is involved with an audit? Most small business owners don’t know a lot about the auditing process, which means that they fear the unknown. Here is a little information to educate you about potential audits that might occur:

Potential Types of Audits

Being audited doesn’t necessarily mean that someone from the IRS will be knocking on your door. There are several types of audits that can occur, and your accounting team can help with all of these scenarios. Potential audits might include:

  • Mail Audit: If the IRS needs more details about your tax return, then they might send a letter in the mail requesting specific documentation.
  • Correspondence Audit: This type is similar to a mail audit, except the communication could happen through an electronic channel of communication. Typically, a correspondence audit happens when the IRS is collecting unpaid taxes or needs supporting documentation to back up claims made on the business tax filing.
  • Field Audit: The type of audit that has given the name a bad reputation. In this situation, an IRS employee will come in person to view your business records.
  • Examination/Interview Audit: In this situation, you might be asked to visit the IRS office to provide documentation or receipts to back up claims.

Just because an audit is happening, doesn’t mean that your stress levels need to go through the roof. You can relax if you know that your records are in order. The best way to stay on top of the financial tracking required to protect you in an audit is to have a professional accountant helping with your business management.

Accounting Services to Prevent an Audit

Instead of waiting for an audit to happen, there are a few things that you can do to reduce the likelihood of an audit. An experienced accountant will be able to offer specific recommendations catered to your personal situation. So, it is important that you have an experienced accounting team by your side throughout the year.

At Easier Accounting, we are experienced with small business accounting. If you are interested in more information, then you are invited to contact us right away: (888) 620-0770

Why is an Accountant Necessary for Business Tax Filings?

During the first few years of business, many small business owners are looking for every way to save money. Finances are tight, and profit margins are slim, so it makes sense that business owners want to reduce annual expenses.

Even if you are focused on saving money, there are a few things that you should invest in to protect the interests of your company. One example is hiring a small business accountant to offer ongoing advice and help with tax preparation.

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The truth is that business taxes are more complicated compared with filing a personal tax return. So, you should consider the benefits of using an accounting team to help instead of attempting a do-it-yourself tax filing.

Here are a few reasons why working with an accountant is an investment:

Tax Laws and Regulations

Tax regulations and laws are constantly changing, making it difficult for a business owner to keep up with the changes each year. It is essential that you are working with someone who stays up-to-date with the moving target. Small business accountants work with many businesses like yours, so they make it their job to stay informed. You can tap into this expertise by hiring an accountant to help your company.

Reduce the Likelihood of an Audit

If your tax return is filed incorrectly, then it is possible that you might be facing an audit by the IRS. Business owners that do their tax preparation on their own have to shoulder the full responsibility of the audit.

On the other hand, an accountant can help you with reducing the likelihood of an audit happening. Preventive measures can be put in place to keep your business protected. At the same time, your accountant will stay by your side if an audit occurs.

Proper Deductions for Business Assets

Certain business assets can be used as tax deductions, but you need an experienced accountant to help you maximize your deductions in the right way. Your accountant will ask about any potential deductions that might be related to credit cards, physical assets, office equipment, property, and more. It can be complicated to understand the best way to take these deductions, so you should let an accountant handle the details for you.

At Easier Accounting, we are available to help with your business tax filings. We invite you to contact our team right away to learn more about the services that are available: (888) 620-0770

Should You Use a Desktop Software or an Online Program for Your Accounting System?

Whether you are setting up an accounting system for the first time or you are updating an old system, it is important to consider how the software will carry your company in the future. Having the right accounting system provides a foundation that impacts many aspects of your company. If you don’t have the right financial tracking program in place, then it is possible that you might be hindering potential business growth.

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Desktop Software vs. Online System

For years, accounting software programs were designed to be installed on a desktop computer. The software program could be run using the processing system on the computer, and all of the files were stored on the hard drive. This system was revolutionary compared with the old manual processing systems that were used before computers were invented.

The accounting industry has continued to transform, and now many accounting programs offer a cloud-based platform for your business finances. Instead of storing the files on your computer, all financial details are tracked on a cloud software that can be accessed from any location.

Advantages of an Online Accounting System

It is important that you keep up with the times, which means that you should implement a cloud-based software program if you don’t already have one in place. Here are a few of the advantages of using an online accounting system instead of a desktop software:

  • Easy Access: You can be anywhere in the world and have easy access to your financial reports and transactions. These cloud-based programs allow you to manage your finances from many different devices. All you need is an internet connection.
  • Protect Your Files: If the accounting files are stored on your computer, then it is possible that you could lose the information if something happens to the computer. A loss of financial records can be very damaging to your company. Protect your files by using a cloud-based system that maintains backup records of your files. If your computer crashes, then it’s no big deal because you can still access the information from another computer.
  • Online Accounting Services: Instead of handling all of the financial management in-house, there are benefits to bringing on an outsourced accounting team. You can save money and still have access to top-notch accounting services for your company. To take advantage of these services, you must have an online accounting system in place.

As you can see, there are many benefits to online accounting. If you are planning to implement a new system, then make sure that you have a team of professionals to get it set up right. Call Easier Accounting for more information about the services that we offer: (888) 620-0770

What to Look for When Hiring an Accountant

Hiring a small business accountant is an important step to prepare your company for future growth and development. There are many benefits to having an experienced financial professional who can offer advice to manage the finances of your business.

When you are ready to hire an accounting team, take some time to evaluate your options and find the services that are the right match for your needs. Here are a few qualifications that you should consider:

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  • Online Bookkeeping Management: We live in a digital world, which means that you should take advantage of the online tools that are available for bookkeeping management. Ask your accountant about the software programs that will be implemented for your company.
  • Proactive Business Strategy: If you are going to spend the money on an accountant, then you deserve to work with someone who is proactive to help by improving the profitability and financial health of your company. Look for an accounting team that will assist with managing business deductions and tax strategy to maximize profits as much as possible.
  • Consistent Financial Reporting: One of the biggest advantages of working with an accountant is that you have up-to-date financial information about your company at all times. Talk to your accountant about the frequency of financial reports such as Profit and Loss, payroll, and more.
  • Accessibility and Communication: It can be frustrating to send a message to your accountant and have to wait for weeks before hearing a response. A good accountant will be available to answer your questions when they arise, and the accountant will manage phone calls and email inquiries in an efficient way. Ask about anticipated response time and the best form of communication.
  • Reconciliation to Protect Your Company: Ongoing reconciliation helps to avoid theft and fraud. Look for accounting services that will reconcile the books on a regular basis. Set up a schedule for reconciliation and auditing if necessary.
  • Trustworthy and Reliable: When you are handing over the financial details for your company, it is essential to be sure that you are working with a reliable and trustworthy accountant. Look for information about the accountant before you provide financial information about your business.

If you are looking for all of these requirements in an accounting team, then you have come to the right place! Here at Easier Accounting we offer high-quality services to every customer that we work with. Contact us today to learn more about the way your company can benefit by working with our team: (888) 620-0770

What You Can Learn By Looking at Profit & Loss Reports

One of the advantages of working with an experienced accounting team is that you have access to detailed financial reports about your company. This information is invaluable to help you know the current financial situation of your business, helping you to make better decisions on a daily basis.

The Profit & Loss statement is a report commonly used to assess business financial health. Here are a few things you should be looking for in this report:

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Is Your Company Profitable?

It is fun to see the overall revenue that was brought in during the month or year, but this number doesn’t mean anything if your expenses are higher than the top-line revenue. Look at the bottom of the statement to see the final numbers after the expenses and costs are calculated into the numbers.

Do you have any retained earnings that can be used to reinvest in the company? If there is nothing left over or your business is in debt, then you should reevaluate expenses and income. A few tweaks in your systems can make a big difference to free up cash flow and improve the profitability of the company.

What are the Gross Margins of Your Product Sales?

Once you have accounted for the direct costs associated with the production of your products or services, how much of a margin is left over? For example, if you sell $10,000 worth of products and it cost $7,500 to make the products, then your gross profit margin is 25%.

When there are slim margins, it could spell out trouble for the future. In this scenario, look for ways to reduce the cost of manufacturing or increase the product price. Make sure that you compare the prices of competitors when you are deciding on the price of your product.

Overall Value of Your Company

A P&L report can provide important information about the value of your company. Even if you aren’t planning to sell right away, keeping an eye on this number will help you know what to expect in the future. This information can also help you to see if you are credit worthy, which will give you the advantage of gaining more credit to invest in your company if needed.

Are you interested in having an accounting team that can keep you informed about the financial health of your company? Contact us at Easier Accounting for details about the accounting and bookkeeping services that we offer: (888) 620-0770

How to Avoid the Headache of Small Business Accounting

How do you feel when it is time to manage the accounting tasks for your business? Most small business owners don’t have experience with financial management, and they dread the thought of tracking financial details, reconciling the accounts, or preparing tax paperwork.

If you get a headache just thinking about these accounting tasks, then right now is the perfect time to hire an experienced accounting team to help. By outsourcing the accounting, you can focus your time and efforts on other responsibilities within the company instead.

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Here are a few things that you need to do to avoid some of the common problems that cause accounting headaches:

Outsource the Accounting Tasks

There is no reason that you need to handle the accounting on your own! Hiring an experienced team can make a big difference to free up your time. At the same time, you will have higher quality financial reports and details about the health of your company. This information can be very important when you are making big financial decisions.

Get Rid of the Papers

Is your filing cabinet overflowing with old papers like bank statements and invoices? This information can be a hassle to keep up with, especially if you have a lot of paperwork moving through your office each day. Consider implementing a digital system to keep track of all of the transactions using technology. Then, certain invoices, receipts, and other documents can be printed if you need to keep a physical file on hand.

Ignoring Cash Flow

What do you do when it is time to cut paychecks, and there isn’t enough cash in the bank? If you aren’t proactive to manage the financial health of your company, then you might be facing big cash flow problems. These moments can be stressful! Even if you have payments coming in later this month, it won’t help at the moment when employees want to deposit their paychecks. Talk with an accounting team to learn more about cash flow management so that you can avoid these stressful situations.

Manual Accounting

Spreadsheets and handwritten books are a thing of the past. Instead of manually entering each line item, it is better to have a good system in place that will digitally track your expenses and income. There are many software programs designed to help small business owners, and you can talk with your accounting team about the right software program for your company.

Right now is a great time to put away the headache medicine and call an accountant instead. Contact us at Easier Accounting to learn more about how we can help your small business: (888) 620-0770

Hiring an Accountant vs. Do-It-Yourself Tax Filing

Every dollar counts for small businesses and start-ups. If you are getting your company off the ground, then it is likely that you are looking for ways to conserve cash flow and save money. Many small business owners fall into the trap of working long hours because they are trying to handle everything on their own.

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It is smart to be careful with your spending. But, there are a few areas where it can be beneficial to outsource the tasks that need to be handled. Accounting is one area where you can reduce your stress and busy work by letting a professional handle it for you.

Before you decide that a do-it-yourself tax filing is a right solution, consider some of these factors:

Time and Busy Work

If you don’t have a thorough understanding of tax law, then it can take a lot of time to sort through the necessary paperwork. Tax filings get more and more complicated each year, and most small business owners don’t put in the necessary time to understand the changes.

You don’t have to read through the current laws and sift through mounds of paperwork. These tasks are often a waste of time because they pull you away from other important responsibilities within your business. Instead of trying to manage everything on your own, it is better to hire a professional accountant to help.

Mistakes and Overlooked Paperwork

The risk of a tax mistake goes up if you handle the tax filing on your own. It is much easier to avoid the potential problems by getting the paperwork done right. When these mistakes occur, you might receive information from the government later on that you need to fill out additional paperwork or pay more in fines and fees.

Missed Deadlines

There are several tax deadlines throughout the year that needs to be addressed. Sometimes payments are required, other times tax paperwork needs to be submitted to the government, your employees, or contractors that you have hired.

Do you feel confused by all of the deadlines during the year? Missing these deadlines can result in stressful penalties and other problems. Instead of overlooking the problems, it is better to hire an accounting team who will manage the deadlines for you.

Here at Easier Accounting, we offer affordable tax filing and other types of accounting services. Our goal is to make it easy and affordable for you to outsource your small business accounting needs. Call our company today to learn more about the services that we offer: (888) 620-0770

3 Biggest Mistakes Business Owners Make with their Accounting

The quality of your accounting system will have a direct impact on every aspect of your business: current cash flow, future growth, and long-term business success. If you are a business owner or entrepreneur, then it is essential to make sure that you have a quality accounting system in place.

Even if you have an accounting system, it doesn’t necessarily mean that all of the essential tasks are done. These are some of the common mistakes that we see in small businesses:

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Mixing Business and Personal Expenses

Even though you have a home based business, it is essential to keep the finances separate between your personal life and business spending. Blurring the lines between business expenses and personal needs can lead to confusion when tax time rolls around.

Make it a point to set up a business bank account and credit card, and don’t let the lines blur between your business and personal spending. Whenever a business expense comes through, it is important to document the transaction so that you can use it as a tax write-off. Keep a file of receipts and share the transaction details with your accountant.

Missing Tax Deadlines

It is easy to overlook a tax deadline or paperwork that needs to be submitted. Many business owners have too much going on, increasing the likelihood that they forget to send a payment or fill out necessary tax paperwork. These deadlines are important! If you miss the deadlines, then you are at risk of fines from the IRS.

On the other hand, meeting the deadlines will keep your business blended in with the group. Do the best that you can to stick to the deadlines so that you can avoid putting your company in a situation where you are being audited by the IRS.

Hiring an Inexperienced Accountant

If you are going to spend money on accounting services, then make sure that you hire someone who has experience in the industry. A new graduate right out of college won’t be able to offer the experiences available from a team of seasoned accountants. You need to tap into that experience to increase the future success of your company. So, find someone who knows the best practices in your industry.

Here at Easier Accounting, we know what it takes to help your business experience financial success. If you need a professional team to help with accounting and bookkeeping, then we invite you to contact us for more information about the services that are offered: (888) 620-0770

How to Improve Cash Flow Management in Your Company

Your company is growing and expanding, and products are flying off the shelves… so why do you have a hard time managing the cash flow each month? Cash flow is a big issue for many small business owners, resulting in a situation where there isn’t enough cash to keep the company in business. In fact, cash flow management is one of the biggest stumbling blocks encountered by business owners.

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Don’t let your company sink because you don’t have the cash readily available! Instead, it is better to plan for the future with proactive cash flow management. Here are a few things that you need to understand about managing the flow of cash within your business:

What is Cash Flow?

It has been said that cash flow is the lifeblood of business. But, many business owners don’t understand this term! “Cash flow” is the movement of cash in and out of the business. It is normal to have money that is collected and spent for expenses, and this movement needs to be tracked.

When a company has a positive cash flow, then it means that more money is coming in than is going out. If there is a negative cash flow, then it means that there isn’t enough cash coming in to cover the monthly expenses.

The Difference between Profit and Cash Flow

Most business owners know the top-line income and profit of the company. But, they don’t read between the lines to see how the money is moving in and out of the company. It is essential to look at the patterns that are occurring on a daily, weekly, and monthly basis. These patterns give the insight to ensure that there is enough money to buy inventory, pay employees, and cover the payment for the office space and utilities.

Profit is the overall amount of money that is earned throughout the year. Cash flow is whether the money is available at the right times when the bills are due. Timing is the essential aspect of cash flow that needs to be evaluated.

Fix Your Cash Flow Problems

Do you feel like you are dealing with cash flow problems that are making it difficult for you to manage your company? By fixing these issues, you can decrease your stress levels and set your company up for future success.

We invite you to talk with our team here at Easier Accounting. We have experience helping small businesses improve their cash management. We are here to offer the assistance that you need! Call us right away at: (888) 620-0770

Compliance Tips when Hiring Independent Contractors

Many small businesses see the benefit of hiring independent contractors. In this situation, the business gets access to high-quality skills without paying for a full-time employee. The freelancing industry is booming, which has caused the IRS to take a closer look at how small businesses are managing their independent contractors.

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Whether you have one independent contractor or a whole team of contractors, it is essential to be sure that you are following the rules. Here are a few tips to help you maintain compliance with payments and paperwork:

Accurate Information for the Contractor

Before the contractor starts working for you, make sure that you request information about the individual. You will need their full legal name, their Social Security Number or Tax ID number, and contact information. Ensuring the accuracy of this information will save you the headache of problems in the future.

This information will be useful when you are putting together the 1099 tax forms at the end of the year. You can save yourself a lot of time by gathering the information in the beginning and keeping up-to-date files.

Should the Contractor be an Employee?

Don’t push the line of employee vs. independent contractor, because it could potentially get you in the trouble with the IRS. Some businesses try to classify employees as independent contractors to save money on payroll taxes.

If you set a specific schedule for the contractor, and they are required to work certain hours, then that person should be classified as an employee. On the other hand, if you have a project that needs to be completed sometime next week, and the individual can choose their schedule, then they can be classified as an independent contractor.

For more information about the differences between an independent contractor and an employee, the best thing that you can do is talk with an accountant to learn more. You can also find information on the IRS website to find updates about current laws and regulations for payroll taxes.

Issuing 1099 Paperwork

Every January, you are required to provide a 1099 tax form to each independent contractor that earned $600 or more within the previous calendar year. These tax forms can be a burden to deal with, which is why you need to make sure that you have an experienced accountant who can handle the paperwork for you.

Here at Easier Accounting, we are here to help with managing the payments and paperwork for independent contractors and employees. Contact our experienced team to learn more about the services that we offer: (888) 620-0770