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Signs it’s Time to Invest in New Accounting Software

Gone are the days when business owners need to spend hours with a manual accounting ledger. As technology has advanced over the years, accounting software tools have been developed that can be used to automate business financial systems and improve overall results for a company.

Are you satisfied with your accounting software? If the software doesn’t perform the full functions that are needed, or if you haven’t implemented an automated system yet, then it might be time to talk to an accounting provider for assistance. Creating the right foundational systems for your company might be the most effective thing you can do to set yourself up for a successful future.

What is Accounting Software?

What does accounting software do for your company? This fundamental application is created to track and record the way money flows through the business accounts. Not only does this information need to be documented for external and internal review, but it is also necessary to have the records in case auditing is required.

Accounting software is used to determine the financial health of a company. The numbers show the inflow and outflow of income, which has an impact on the cash flow that is available. Business owners need to consider these requirements to ensure legal compliance and internal systems.

A variety of features are available through the software program. Some of these accounting features are standard throughout the industry, but there are differences in the way the computer programs manage your financial information. Common tools available through a reputable accounting software provider include accounts payable and receivable, billing, inventory, purchase orders, and the general ledger. Often, business owners can also choose software programs that include payroll processing, expense management, budgeting, timesheet tracking, electronic payments, and more.

Why Accounting Software Matters

Why does it matter if you have the right accounting software program for your business? If you want to point your company to future success, then you need to be sure that the financial information can be tracked quickly, effectively, and accurately. Your software program will be able to provide an instant snapshot that shows the overall financial health of the business. You can run reports to see profits and losses, as well as a variety of other financial transactions that might impact the success of your company.

When a business owner has access to up-to-date financial reports, it is easier to determine the real financial situation that is faced at any given moment. Too often, business owners make financial decisions in the dark. They can check the current bank accounts, but don’t know where the true standing of the company lies when it comes to cash flow. Making big decisions without accurate information could cause financial issues in the future.

For example, you might choose to invest the available money into a marketing plan or new inventory development, only to find later that you are unable to keep up with tax payments or payroll expenses that are due because the money was already spent. These issues are easier to avoid when you have a clear picture of your current and anticipated expenses, as well as reports that show the money that is coming in. Not only do you need to see the current totals in your bank accounts, but it is also important to evaluate the way your money will be flowing over the next few months.

Minimizing Labor Intensive Tasks

While accounting software can be helpful so that you can avoid legal issues and tax problems, it is also important to see the internal benefits that are available for your business. It is important that you are tracking the tax burden that will need to be paid when it is time to file annual taxes. Additionally, you need to know whether your business is profitable or not, allowing you to make changes with ongoing decisions that could impact your overall success.

Have you considered the time and labor burden that goes into a manual accounting system? Some business owners are stuck using old technology, such as manually calculating costs and revenue on spreadsheets or using a handprinted ledger. These systems worked in the past when automation wasn’t available. Now that systems can be used to automate the tracking, it doesn’t make sense to waste hours and hours of time each week on manual calculations. A better system is to implement a good accounting software, then have regular account reconciliations to ensure that nothing is slipping through the cracks.

As business owners implement the right software solutions, they can see how accounting technology brings in new opportunities for business development and growth. If you want to grow your company, then it is important that you are using all of the tools available.

Benefits of Accounting Software

We’ve already mentioned a few of the notable benefits of accounting software. Here is an overview of all of the benefits that business owners enjoy from a good software program:

  • Simplicity: Eliminate the need to spend time on complicated calculations and manual tracking.
  • Savings: Since the basic calculations are completed within the accounting software, you can save money on the labor and financial management services. Also, costs are reduced by using a digital program instead of the need to print and file documents.
  • Financial Clarity: At any given point, you can run reports and see full clarity and transparency of your business.
  • Productivity: Don’t waste your limited work hours on manual accounting calculations. Let the accounting software do the heavy lifting so you can turn your attention to other business responsibilities that need to be addressed within your company.
  • Avoid Mistakes: Manual calculations always pose the risk of mistakes that could occur. Avoid these human errors by implementing a good accounting system. You don’t need to worry about inaccurate data when an effective system and accounting service is used.
  • Future Forecasting: Not only will financial reports help with paying the current bills, but you can also look ahead to the future to determine the trends and patterns in your company.
  • Taxes: It is important that you are detailed in your accounting to determine the tax burden. Also, rest assured knowing that your software helps you maintain compliance based on requirements established by the IRS.
  • Information Security: A good accounting program will have security features that keep your information safe. No need to worry about your financial information being jeopardized when you choose a reputable service.

Upgrading Your Accounting Systems

Now that you see the benefits that are available, it’s time to evaluate whether or not you are leveraging the full advantages for your company. It might be time to upgrade your systems by investing in new accounting software. Here are a few signs that your company needs a new accounting system:

  1. Business Growth: As your company expands, you need to be sure that your accounting software will be able to keep up with the growth. Consider your current business size and anticipated growth. If you are anticipating big changes in the future, then it can be beneficial to implement a new accounting program now to minimize the growing pains in the future.
  2. Reporting Needs: Are your current financial reports sufficient to provide the information needed for your business decisions? Sometimes companies need more detailed reports showing the profitability of the company and cash flow trends. If your accounting system doesn’t have these automated reporting features, then it might be time to upgrade.
  3. Specific Features: Also consider the specific features that might be needed for your business. For example, if you have two separate systems for payroll and AP/AR, then you might consider switching your software services so that you can keep all of this information in the same accounting software. Talk to an accounting professional to determine the specific software features that are needed for your business.
  4. Transaction Details: How many transactions are moving through your company each month? Some of the startup accounting software services are designed for companies that have just a few transactions moving through here and there. If you are growing and the number of transactions is expanding, then it is probably time to implement a new software service that can handle the growth.
  5. Cloud-Based Services: Where is your accounting data stored? If the information is kept on your computer hard drive, then you face the risk of losing all of this valuable data when the computer crashes. Hardware doesn’t last forever, and it could be devastating to lose the financial history of your company. Instead of relying on a desktop system, you should make a move to a cloud-based software as soon as possible. If something goes wrong with your computer, you can still access the essential files since the information is stored in the cloud.

Learn More About the Right Accounting Services for Your Company

At Easier Accounting, we are experts in small business accounting services. If you are considering your options to improve your accounting software, then our team is here to assist. We offer full-service accounting solutions for small businesses and startups. Call today to discuss the solutions that will meet your needs: (888) 620-0770.

Why Should You Choose Outsourced Accounting Services?

Solid financial strategies are key to the success that is possible in your business efforts. Are you setting your company up for future growth and expansion by implementing an effective accounting system? Most small businesses are coming up short when it comes to financial reporting. If it is time to improve your current system or you need to implement a new financial software, then outsourced accounting services might be the right answer.

Strategic Alignment for Your Financial Goals

It’s easy to get caught up in the current responsibilities of running a company: employee management, inventory restocking, product development, and marketing campaigns. These tasks are essential to keep your business going through all of the ups and downs along the way.

Unfortunately, many business owners come up short in one important aspect: financial reporting and strategy. You might be too stressed right now trying to pay overhead expenses and keep up with current costs that you overlook the strategy needed for the future. But looking ahead is one of the best things you can do to set yourself up for success. If you don’t have experience in financial management and business strategy, then hiring an outsourced accountant can be a great solution.

Staying consistent with financial tracking and reporting will give you a clear picture of the financial health of your company. This information can influence the decisions that are made along the way, helping you optimize the current efforts to build for the future. Having a big-picture mindset ensures you will be ready to face anything that might affect your business.

Accounting and bookkeeping services can help you implement an ongoing tracking system that reports details about your spending, income, and movement of the cash through your accounts. Even if your company is profitable, you could face issues if you don’t have enough cash flow to cover overhead expenses. So, it is important you are looking at these financial reports regularly, giving you the option to make small changes and adjustments along the way as needed.

Consequences of Poor Accounting and Bookkeeping Practices

It’s easy to be lulled into a false sense of security if you have money coming into your bank accounts through the sale of products and services. But, one of the most common issues we see among small businesses owners is that they are lacking foundational principles for good bookkeeping and accounting practices.

We understand how overwhelming it can be to set up and maintain a comprehensive system that includes all accounting processes, bookkeeping tasks, and financial administrative responsibilities. You are already carrying enough responsibility in the daily management of your company. Do you feel burdened by adding more to your to-do list with bookkeeping busy work, such as bank account reconciliations?

Most startups and small businesses are facing the challenge of limited staff and no hands-on experience in process management. Your employees are already tasked with ongoing job duties. They don’t have the time or experience to take on complicated responsibilities such as accounting systems and financial reporting. As a result, implementing a good accounting and bookkeeping system often feels impossible for small business owners.

Without the right system, you will see problems start to arise. For example, if you are receiving past-due notifications on accounts payable and you don’t have a good system in place to track client payments, then there’s a pretty good chance that you’re running into cash flow issues. Seemingly small problems right now add up to major issues in the future. Eventually, poor financial reporting and planning could be the downfall of your company.

Are Poor Accounting Practices Hurting Your Company?

How do you know if your lack of accounting organization and structure is hurting your business? If you can answer “yes” to any of these questions, then it’s a sign you need to call an outsourced accounting team right away:

  • Do the accounting and bookkeeping tracking tasks fall to the back burner because you are too busy with other responsibilities throughout the day?
  • If your bookkeeping employee left the company, would you be lost trying to figure out where to pick up the pieces?
  • Have you assigned bookkeeping responsibilities to an employee who doesn’t have formal training or hands-on experience in accounting and bookkeeping?
  • Do you feel like you can never rely on financial reports since the transactions aren’t up-to-date?
  • Is it difficult to identify your exact profit margin without extensive manual work and calculations?
  • Are you using a manual entry system for tracking, such as an Excel spreadsheet?
  • Do you find it difficult to keep up with big payments, such as taxes and payroll, because cash flow is too tight?
  • Are employees using multiple software programs and computer systems without synchronization or tech integration?
  • Is it common that you are always pushing up against tax deadlines and other financial reporting dates because the work was procrastinated?
  • Is it difficult to maintain a consistent schedule with closing and reconciling the books each month?

Don’t beat yourself up or feel overly guilty if you can answer “yes” to one or more of these questions. Instead, recognize that it’s a good indication your business needs more professional support. Now that you recognize the gaps that are occurring in your bookkeeping and accounting system, the next step is to bring in an outsourced accounting pro who can help you get your business finances back on track again.

In-House Employee vs. Outsourced Accounting Services

Now that you can see the need to bring in an expert to help with your accounting systems, it’s time to act to resolve the financial issues you are facing. The most common assumption is that you need to hire an in-house accounting expert. While there is nothing wrong with bringing in another employee when needed, don’t overlook the other options that are available.

Before you hire an employee, you need to understand the burden you are taking on. Not only are you responsible for that person’s training and performance, but you also need to think about the overhead costs that will be incurred. For example, you need to pay for office space to accommodate the new employee’s desk. Additional costs add up for recruiting, hiring, and onboarding. Plus, you have other expenses for computer equipment, office supplies, employee benefits, and more. You aren’t only paying for the person’s wage; you need to carry the financial expense of bringing another fully-burdened check onto the payroll each month.

On the other hand, it is possible to save thousands of dollars every month by leveraging the services of an outsourced accounting team. Instead of paying for an expensive salary and benefits for an in-house accountant, you can only pay for the financial services that are required. Outsourced accounting is significantly cheaper than the overhead costs of an in-house employee.

Industry Experience from a Knowledgeable Team

There’s no reason for you to reinvent the wheel by starting a new accounting system from scratch. One of the biggest mistakes made by small business owners is attempting a DIY approach when it comes to financial reporting. Yes, you can find information online about setting up a bookkeeping system or how to compare various accounting software programs. But these online tutorials don’t compare to the services available from someone working “in the trenches” in the accounting industry.

Choosing outsourced accounting and bookkeeping services can be a valuable way to tap into the knowledge and experience of someone who is working with other companies. This real-world experience with small businesses and start-ups can be a great way to infuse your business with tools and strategies that work. Our accounting team has already built accounting and bookkeeping systems that work. You can rest assured knowing that your business doesn’t need to be the testing ground to find new solutions in the bookkeeping and accounting industry.

Hiring Small Business Accounting Services

Now the question at the top of mind is: where should I go to hire an outsourced accounting service? You might be able to find a local accountant that offers business services. But does that person have a wide range of experience that comes from a company who specializes in small business accounting?

We live in a digital world, which means you have access to some of the best accounting services with the click of a button. An online search can uncover options for your accounting needs, helping you tap into a proven system created for small businesses like yours.

If you are going to hire an outsourced accounting service, then it makes sense to research the company’s reputation. Learn more about the business and their experience before jumping into the services that are offered by them. For more information about quality services for bookkeeping and accounting, our team at Easier Accounting is available to help.

We are proud of the unblemished track record we’ve built with our customers. Over the years, we have worked with many small business owners, helping to create systems that address common concerns such as tax strategy and cash flow management. You can learn more about the services that are available by calling Easier Accounting at (888) 620-0770.

Small Business Owners: Why it is Essential to Track Your Miles

If you are a small business owner, then it is important to have a system in place to keep track of your write-offs and other expenses that can be used as tax deductions. Most people are pretty good at keeping track of inventory costs, employee payroll, and office supplies. But, do you track your miles? If you aren’t doing it already, then right now is the perfect time to get started with mileage tracking so you can maximize your tax deductions for the year.

Focusing on Revenue vs. Take Home Pay

One of the reasons why deductions like mileage fall through the cracks is because your focus is turned to the activities that are bringing in revenue. While it is important to be proactive about increasing your receivables, you are making a big mistake if you aren’t also thinking about your costs as well. The amount of money you spend on business line items will cut into your profitability and reduce your take-home pay.

One of the best ways to manage your profitability is to design a system so that you are maximizing your deductions. This process helps you see the money that is moving in and out of your account. You can evaluate each of the transactions to determine if it is essential for business activities and growth. Then, these transactions can be recorded to be used as deductions when it’s time to do your taxes for the year.

Personal Vehicle Deduction

Most likely, you are using a personal vehicle to get around town for business purposes. In this case, you can’t write off every penny spent on buying the vehicle, the monthly loan payments, maintenance services, or gas. But these costs add up, especially when you are driving for your business. The most effective solution is to track your mileage. Then your accountant will use this information to calculate the deduction for motor vehicle expenses.

The IRS allows you to deduct a portion of the costs of using your personal vehicle. Even though the car is used for personal activities, such as driving the kids to school or picking up groceries, some of the miles used are necessary to keep your business running. For example, if you are driving to meet a client or you need to go to the bank, then you should track your miles to use as a deduction.

It is important to note that you can’t deduct your commute between home and work. But you can deduct the miles for every trip related to your small business. Every time you get in the car, evaluate whether the trip is for business reasons. Examples might include:

  • Picking up office supplies
  • Meeting with a vendor
  • An appointment at a client’s office
  • A trip to the bank
  • Driving to a conference or expo
  • Moving between offices
  • Driving to the airport for a work trip

Even if you don’t feel like the miles are significant, you might be surprised to see how much they add up when you are keeping track. For example, if you drive an average of 10 miles per day throughout the year for your business, then it is over $2,000 in potential deductions.

How Much is Your Mileage Worth?

Is it worth the time and effort to track your miles? Some business owners don’t worry about this write-off because they feel it is too time-intensive. The truth is that the miles add up over the course of a year, and could be worth a lot in terms of deductions that are available for your tax calculations.

The IRS has a standard mileage rate deduction that changes each calendar year. The mileage rate in 2019 is $0.58 per mile, which is higher than the $0.545 in 2018. So, if you drive 10,000 business miles in 2019, then it means that it could be worth a $5,800 deduction if you track your miles. This deduction can be an effective solution if you are looking for solutions to reduce your overall taxable income.

IRS Rules for Tracking Your Miles

If you are planning to write off a portion of your personal vehicle, then you need to be sure you have documentation to back up the write-offs on your taxes. This information will be essential if you are ever audited in the future. The IRS isn’t going to take your word for the write-offs and they don’t like to calculate deductions based on ballpark figures. You need to keep a detailed record of your mileage so you can claim the mileage deduction.

This mileage log doesn’t need to be filed with your taxes. But you should hold onto the information and keep diligent records in case there are questions in the future.

Creating a Log to Track Your Miles

Once you have a good system in place, it can be easy to keep track of the miles that are driven for your business. Your mileage log should include:

  • # of miles driven on each drive
  • Date of the trip
  • Destination
  • Purpose

The simplest and cheapest option is to have a manual mileage log that is kept in your car. You can have a small notebook and pen where you record the date, mileage, and business purpose. Keep it handy, so you remember to track the information when you are driving for business errands. Then, the miles will need to be tallied and calculated at the end of the year to provide this information to your accountant.

The drawback of this manual system is that you have to remember to write it down each time. It is surprisingly easy to forget to check your odometer, especially when you are in a rush to get to a meeting. Many people forget to log the miles because they are preoccupied with other details of the day.

Mileage Tracking App

The easiest solution is to leverage technology, so you don’t have to get caught in the details of mileage tracking. For example, a mileage tracking app can be installed on your smartphone. There are a variety of app options available in the industry. These apps are designed to provide automated mileage tracking, which means you don’t need to worry about remembering to write down the odometer details each time you get in the car. Using GPS, the app can keep track of the exact mileage driven. Then, the value of the drives can be calculated, providing a report that can be given to the IRS if required in the future.

Do your research to find an app provider that you can trust. For example, some of the free apps make their money by selling your information to third-parties. As such, some business owners prefer to use a paid app to maintain privacy.

Taking Your Mileage Deduction at Tax Time

You are already carrying a load of responsibility as a small business owner, so it is smart to outsource your tax calculations and filings to a trusted accounting team. In this situation, you don’t need to waste your time crunching numbers or trying to figure out how the tax forms should be filled out. Instead, the information and documents can be provided to your tax professional, giving you more time to focus on other responsibilities within your company.

When tax time rolls around, your accountant will mark down your mileage deduction in the “expenses” section of your schedule C tax form. Depending on the situation, you might need to provide the following information:

  • Number of miles tracked during the year
  • Business miles per vehicle (if multiple vehicles were used)
  • Beginning and end odometer readings
  • Parking or toll road expenses incurred while driving

Keep in mind that you have the option to deduct the actual vehicle expenses instead of mileage if you prefer. But this accounting strategy requires more record-keeping, and most business owners find that it isn’t worth the hassle. This system could potentially result in a bigger deduction, though, so it is important to evaluate your options.

Consult with an Accountant

As with any accounting strategy, it is always best to consult with your account. You can read information online about deduction strategies, but nothing beats a conversation with a financial professional who has a clear understanding of your business finances. Most business owners don’t have formal accounting or bookkeeping training, making it invaluable to hire an accounting team for assistance.

A small business accountant is a great investment so that you can maximize more than just your miles. Your accountant will offer recommendations relating to your business spending, payroll processing, and more. Making the transition to outsource these services instead of trying to handle it yourself means you can free up your time to focus on the tasks that will help your business grow.

If you have questions about tracking your miles or you need help with accounting services, then Easier Accounting is here to assist. We invite you to contact our team at your convenience to learn about the accounting and bookkeeping services that are available for your business: (888) 620-0770

Warning Signs It’s Time to Hire an Outsourced Accountant or Bookkeeper

Are you carrying more responsibility than you need to within your small business? As a business owner, it can be hard to let go of the control of certain tasks that need to be done. Too often, business owners spend their time on busy work, resulting in a situation where there isn’t enough time left for some of the most important activities to help the business grow. Right now is a great time to consider the support available to help your company. For example, there are many benefits to hiring an outsourced accountant or bookkeeper.

Strain of Accounting and Bookkeeping on a Business Owner

You are already carrying the stress of business development, employee hiring, management, and more. Why overwhelm yourself with the added strain of accounting and bookkeeping as well? Instead of spending your free time with your head buried in the financial records, you can hire an outsourced accountant or bookkeeper for assistance. It is amazing to see how much your stress levels drop when you can lean on the services offered by an industry professional.

There’s no question that maintaining an organized set of books for your business can be both confusing and time-consuming. Not only do you need to track the numbers that are moving in an out of your accounts, but you also need a way to keep track of receivables and payables. If you don’t know much about accounting, it is likely you will waste hours of time searching the internet trying to find tutorials or information. Even with the best of systems, business accounting and bookkeeping can turn into a full-time job that is hard to manage.

Some business owners try to solve this problem by hiring an in-house accountant or bookkeeper. But you will likely encounter problems with this solution. For example, you still hold the overall responsibility to ensure the employee is doing what needs to be done. Plus, you are carrying the added burden of paying for their salary and overhead costs that come from another employee in the office.

Hiring an Outsourced Accountant or Bookkeeper

Most clients reach out to us at Easier Accounting because they are overwhelmed with everything it takes to manage bookkeeping tasks. When the business is growing, business owners don’t often have the patience or time to keep up with these bookkeeping and accounting requirements. Instead of beating yourself up because you are behind with your bookkeeping, remind yourself that this process is a normal part of business growth.

It’s a good sign because it means that your business efforts are expanding and moving forward! This overwhelm also means it is the perfect time to reach out to an outsourced accountant or bookkeeper for the assistance that is needed.

The truth is tapping into the expertise offered by a financial professional might be one of the most effective decisions you could make for your company. Your accounting team can provide recommendations that will propel your business efforts forward and help you reach higher levels of success.

Warning Signs that You Need Accounting and Bookkeeping Help

How do you know when it is time to finally hire an outsourced accountant or bookkeeper? Here are some of the warning signs that indicate you need to hire the help that is needed for your business finances:

  • Working Too Much: Do you find yourself doing bookkeeping date entry or tallying tax deductions late into the night? If your business efforts are cutting into family time or personal hobbies, then it means you need to bring in extra support. You work hard throughout the day on business development, brand strategy, client relations, and more. These daily activities should take priority, often causing the busy work to fall to the backburner. Working late to the point where it cuts into your sleep means you are on the fast-track to burnout. Instead of spending your nights trying to stay current with the bookkeeping tasks, bring in the experts so you can turn your attention to your services and customers.
  • Behind on the Paperwork: A quick glance at your desk can be revealing about your ability to keep up with the bookkeeping tasks. If you have a stack of paperwork that needs to be addressed, then you should find expert help to get ahead. Staying current with Accounts Payable and Accounts Receivable are essential so you keep the money coming into your business, and you don’t fall behind on the payments that are owed. Be realistic about your efforts and ask yourself if your books are currently at this moment. If you know that the reports would be inaccurate due to inaccuracies with the transactions, then the best thing you can do is call an accounting team right away.
  • Outdated Financial Systems: Even if you have an accounting or bookkeeping system in place, you need to evaluate whether you are keeping up with industry trends. Accounting technology can be used to simplify your processes and optimize the reports that are available. If you are still tracking your business expenses manually on a spreadsheet or notebook, then you are leaving benefits on the table. Hire an outsourced accountant to get support with setting up your new system and implementing the right technology that can support your business growth.
  • Taking Time Away from Customers: Another warning sign you need an outsourced accountant or bookkeeper is that the paperwork is taking up so much time you no longer have enough time in the day to offer to your customers. When the accounting and financial reports take precedence over your clients or customers, it is a sure sign you need expert assistance.
  • Starting a New Company: Even though you have positive expectations about a DIY approach for the first few years of your new startup, you need to consider the potential consequences of skipping professional accounting services from the beginning. The best thing you can do when starting a new company is to ensure you have a solid foundation and a good financial system in place. Starting on the right foot means you are setting yourself up for success in the future. An experienced accounting team will offer advice and suggestions to help you avoid common pitfalls and problems encountered by other business owners.
  • Lack of Compliance Understanding: When it comes to tax calculations and business write-offs, it is essential you have a clear understanding of IRS requirements, as well as state and local laws. Maintaining compliance for your business efforts is not only time consuming, but it can be stressful if you don’t understand these laws. In fact, the laws often change, which means it is more effective to lean on the services of someone who truly understands the financial industry. Making a mistake could be costly, resulting in hundreds or even thousands of dollars in fines and penalties. These issues can be easily avoided by hiring an industry professional for assistance.
  • Missing Payments from Customers: Without money coming in from your customers, your business won’t be able to keep going each month. Unfortunately, it is common for businesses to have overdue payments from customers. You need to have a system in place to follow up on these payments to ensure you have the cash flow to keep up with your business expenses. There’s no doubt outstanding payments can result in a domino effect that could topple your business in the future. If you aren’t consistent about tracking and following up with payments that are due, then it is best to let someone else handle this aspect of your business. Hire a bookkeeping or accounting professional for assistance.
  • Mixing Personal and Business Finances: It is a huge mistake to be using the same bank accounts and credit cards for both personal and business transactions. Not only is it complicated to extrapolate the transactions, but you might find yourself tapping into personal finances when business operational costs need to be covered. Using the same accounts for business and personal spending is a sign you don’t have a good tracking system in place for your business. The best thing that you can do is hire an accounting team to get your business system set up so you can create clear boundaries with your spending.

As a business owner, it can be a relief to know you don’t have to carry this financial burden without support from an experienced team. If you are ready to hire an outsourced accountant or bookkeeper, then we are here to help. Not only can we assist with the ongoing tracking and financial reports for your business, but our services can also include essential tasks such as tax calculations, payroll, and more.

You deserve to have a proven accounting system to support your business needs. So, it is time to call the experts at Easier Accounting. Contact us right away to learn about the services that are available for your business needs: (888) 620-0770

How the Right Cash Flow Strategy Can Save Your Business

Encountering cash flow issues might be one of the most stressful things that you face as a business owner. It can be hard to keep the company running if you don’t have enough money in the bank to pay overhead costs, payroll, and other ongoing expenses. Instead of waiting until money gets tight, it is essential you implement a good cash flow strategy right now so you are prepared for the future.

Profitability and Cash Flow

It’s easy to assume money isn’t going to be a problem if you have built your business to the level of profitability. But just because you are bringing in more than you are spending, doesn’t mean that the cash will be available at the times when it is needed. It is normal for a business to have ebbs and flows with payments that are due. For example, you might feel the pinch when it is time to process payroll, but you have a few outstanding Accounts Receivable invoices that haven’t been paid yet.

Too often, business owners feel like they are gasping for air… barely keeping their heads above water as they navigate the challenging aspect of bringing in enough money to keep up with expenses. Rest assured to know you are not alone in these cash flow challenges. An article on Entrepreneur stated that 82% of small companies and startups fail because of poor management of cash flow.

Just because you have good ideas for your new business, doesn’t mean you have the experience with the necessary accounting and bookkeeping practices that are needed. If you want to fix your business cash issues, then you need to tap into the expert advice from someone who can recommend a good cash flow strategy.

Lack of Cash Flow Strategy Could Bring Your Company Down

Even if you have a great product and customers who are interested in the things that you are offering, you won’t be able to continue with your business efforts if you can’t keep a roof overhead. The quality or popularity of your products doesn’t matter if you can’t keep up with the expenses required to keep you in business.

In fact, cash flow strategy should be high on your priority list. When you have sufficient cash flow, it enables you to focus on other business-building techniques, such as marketing, product development, and more.

Be Honest about Your Current Situation

Are you ready to turn things around with your cash flow management? Then you need to be brutally honest about where you are spending money and how the cash is moving through your account. Finances can be a stressful topic, causing many business owners to turn their attention to other business responsibilities such as employee management or product development. But ignoring the “elephant in the room” isn’t going to fix your cash flow. Instead, you need to evaluate your current situation and put together a proven strategy that will help to turn your business around.

Start by tallying your current cash flow situation. How much money is available in your bank accounts? Do you have room available on credit cards or a line of credit? Next, you need to evaluate the anticipated expenses and receivables in the future. This information will help you see the overall picture so you can determine the potential pitfalls that could leave you in a stressful situation.

The best solution is to have accounting software that calculates these numbers for you. Yes, you can do the calculations by hand on a spreadsheet. But it is time-consuming and quite a burden to keep up with ongoing calculations. There’s no reason for you to spend your valuable time on busy work when tools and outsourced services can easily take care of these details for your company.

Anticipate Upcoming Costs

Now that you know your current standing and the amount of money that is available, it’s time to consider the costs that are coming up. Certain expenses tend to come in cycles, such as tax payments and payroll. Look at the amount of money you need for general overhead costs each month. Also, list out quarterly and annual payments that you will need to meet. Creating a cash forecast for the next 12-months will give you the numbers that need to be met to ensure you can keep up with your payments.

It can be a challenge to see all of these details without evaluating the payment history. Look at the transactions that moved through your company last year. Note any transactions that you anticipate will be repeated this year. If you have the information, it can be helpful to review several years of business transactions so you can see the overall patterns and trends.

As a startup, you might not have the luxury of looking at historical information for your own company. But you can learn from the experts by talking to an accounting team that has worked with other startup companies. Your accountant will know the industry patterns and expectations. You can use this information to build in the cushion that you need to ensure cash is available at the right time.

Decrease Your Spending

Looking at the upcoming costs can be a powerful way to help you identify the areas where you might be wasting money. Is there anything that is taking too much cash? Look for areas where you can cut your spending to streamline your overhead costs.

While overhead expenses are unavoidable, you shouldn’t be spending on unnecessary line items. Distinguish necessary costs from the luxuries so you can cut back your spending and reduce the amount of cash that is needed to keep your business running each month.

Follow Up on Receivables

One common pitfall with cash flow strategy is that the expenses are coming in faster than the receivables. It is easy to be focused on product development, keeping up with monthly expenses and paying the taxes. If these accounts payable items are taking up all of your attention, then you might consider putting the focus on the money that should be coming in.

Create expectations with your clients regarding payment terms. You should have clear boundaries regarding when invoices need to be paid in full. At the same time, your business needs to have a follow-up system to ensure you are reaching out to customers when the payments are due. Too often, customers wait until the last minute before the invoice is due before sending the payments. Delayed payments impact the amount of money in your bank account, which means you might not have enough cash to keep up with inventory restocking or employee payroll to keep the company going.

One option is to offer a discount to customers who pay their invoices right away. For example, offer a 2% discount when payment is made on the day the services are rendered. Before you offer this discount, evaluate your profitability to ensure your price-point can bear the discount that will be given.

Evaluate Your Credit Options

Racking up loads of debt isn’t the best choice for you or your company. But credit can be a fail safe if you find yourself in a difficult situation for the month. The most important thing you need to consider is preparing ahead of time with this fallback plan before you are facing the immediacy of cash flow problems. If you are already too leveraged with your current lines of credit, then financial institutions will be hesitant to offer more credit to your business.

When you are in a good cash position, reach out to your bank and other financial providers. It will give you peace of mind knowing that a line of credit is available in case you find yourself in a challenging cash flow situation. Use this credit as an emergency-only option that will save your company from going under due to cash flow.

Talk to a Pro

You aren’t expected to know everything related to running a business. Sometimes it is important for business owners to swallow their pride and look for outside help. Enlisting the services of a bookkeeping and accounting team might be the best decision you can make to take control of your cash flow. These services will help you evaluate your current financial situation, look at forecasts for the things that are coming up, and determine the right system that will ensure that money is flowing in faster than it is flowing out.

If you don’t systematize your business spending and receivables, then you are almost guaranteed to run into financial problems in the future. You can get ahead of these issues by talking to our team to learn about the accounting services that are offered. We will help you create a strong foundation, so you don’t have to worry about cash flow issues in the future.

For more information, Easier Accounting is here to help. Call our team for information about the small business accounting services that are offered: (888) 620-0770

Accurate Financial Records Will Impact the Value of Your Company

Are you consistent with maintaining accurate financial records for your business? Many business owners are so caught up in the challenges of keeping the company running that they overlook the essential steps of financial management and tracking. It is easy to get distracted by employee management, cash flow concerns, and product development. If your attention is turned to other business priorities, then your financial records might fall to the backburner.

The truth is that we can’t place enough emphasis on the importance of business financial records. These numbers show the story of your business success and weak points. Having the right financial information available will implement the strategies that are important for your company, as well as the decisions that are made going forward. Your financial records can literally show whether your company will be increasing or decreasing in value.

Here are a few ways that your financial tracking and reporting can have a positive influence on the value of your company:

Transparency for Better Decisions

When you are making decisions about how money will be reinvested in the company, it can be a challenge to make the correct decision if you don’t have accurate information. It is essential that you maintain transparency in your financials so that your decisions will align with the reality of what is happening in your company.

You can look at reports to see the revenue that was earned over a period of time. Keep in mind that this information is only a piece of the puzzle. You should also evaluate the actual cash on hand, as well as expenses or anticipated costs that will affect your cash flow.

If anything is reported inaccurately, then it can have a domino effect on the success of your company. At the same time, these problems are easy to avoid if you implement the right system for tracking and auditing. A good accounting and bookkeeping team can help you understand the performance of your business so you can implement the strategies that will change your trajectory for the future.

How Much are You Paying in Taxes?

Tax liabilities are directly tied to the accuracy in your financial situations. As a corporation or small business owner, your tax liabilities can be high, which has a negative impact on your cash flow and profitability. How much money will you have left after paying the government? Accurate financial records will give you a clear picture so you know the funds that will be available for future business costs.

Strategies can be used to reduce your tax burden. An experienced accountant will be able to offer advice regarding the write-offs and deductions that fall within the acceptable lines for the IRS. Not only do you need to create a clear, accurate picture for the IRS. But you also need to be consistent about your financial tracking so you can back up the numbers if there are ever questions about the transactions that are moving through your company.

Reducing your tax burden comes down to the way you are managing your expenses and claiming these write-offs. Even the smallest details might seem trivial, but they can add up over time. Make sure you are recording every dollar that is spent on business expenses so this information can be used when calculating your tax burden for the year.

Good Financial Records Reduce Errors

How often have financial errors slipped through your business, causing you to lose money? If you don’t have a good system in place, then it is hard to determine where you have lost out on money that should have been collected. Your financial systems should be designed with checks-and-balances in place so you can identify any potential transactions or invoices that were overlooked.

For example, many accounting services offer monthly reconciliations. Not only does the accounting team keep up with the daily and weekly transactions, but an internal auditing system is used each month to make sure all of the accounts line up.

If a discrepancy is identified in the services that were rendered and the money that was collected, then it is a good indication that you need to turn your attention to collections on the outstanding invoices. Bringing in more money will ensure you are protecting the overall value of your company by protecting your profit margins.

Plus, the right financial system is essential to identify any potential risks for fraud. Even though you want to trust your employees and management, there is never a guarantee that illegal activity won’t happen in your office. Keeping accurate, detailed financial records will help you catch mistakes in the early stages before they turn into something that brings down your company. It is essential that you have the right system in place to identify internal wrongdoings so you can avoid major issues in the future.

Optimize Payment Trends for AP/AR

Pay attention to the cash flow trends to see if you find a cycle of cash flow issues that pop up throughout the year. If you find there is a trend or theme in the times that you are facing challenges with managing your cash flow, then it might be time to make some tweaks with your Accounts Receivable and Accounts Payable systems.

But you need to take a step back to ensure that you have accuracy in your financial statements. Inaccurate invoices can make it difficult to understand the clear picture regarding money that is flowing in and out of your business. You need to be sure you have correct information about the anticipated money that will be flowing into your company. At the same time, these financial records can help you be prepared for expenses that are coming up: wages, dividends, taxes, business development, rent, utilities, credit payments, and more.

Poorly kept financial records will make it almost impossible to keep up with these obligations because you don’t know when the payments are due. As a result, you might face late fees and interest charges, which can have a domino effect to make it even harder to keep up with your cash flow. Running proper calculations and implementing a good cash flow system is essential to help you avoid the credit issues that could be the downfall of your business in the future.

Financial Information Ensures Quality Decisions

What it all comes down to is one simple concept: you need to be sure you are making the right decisions to support the needs of your company. These decisions can influence the possibilities for your company in the future. When a business owner is always making decisions reactively, it means they are scraping enough money together to pay the immediate bills. It is a struggle to look to the future and plan for possibilities if you can’t keep up with the current requirements.

On the other hand, the right strategy for your financial records can help you evaluate the reality of the numbers for your company. You can find the areas where the business needs a little more attention. This process is a great way to fill in the gaps where you are losing money or missing out on profit potential.

Don’t underestimate how much your financials will affect all other aspects of your company. When the finances are unorganized, then it creates a huge mess that can be hard to turn around in the future. Instead of waiting for the problems to surface, you need to be proactive with implementing the right systems right now to be sure you are prepared for the future.

Choosing the Right Services to Improve Your Finances

Now that you can see the importance of improving your financial records so you can protect the value of your company, you might be wondering where you need to start to turn things around. If you don’t have accounting or bookkeeping experience, then it means you need to look to someone who understands this aspect of your business.

You have the option to hire an employee, but you will need to bear the burden of their salary and overhead costs. Instead, the smart solution is to find an outsourced accounting service that can help you build the right foundation. Our team is here to assist with the implementation of good accounting software, giving you a strong financial base that will support the future growth of your company.

Not only can we assist with the process of setting up the right system for your company, but we are also here to offer the ongoing support that you need. These services encompass everything from tax strategy to payroll management. When you let our team take care of the financial tracking and strategy, then you can turn your attention to other responsibilities that will help with the growth of your company.

Easier Accounting is just a phone call away. When you are ready to improve your business financial systems, then we invite you to call us for information about the services that are offered: (888) 620-0770

Bad Habits that are Sabotaging Your Business Finances

Even if you have the best intentions for your business, it is likely that bad habits (both big and small) are sabotaging your efforts. Have you identified habits that might be impacting your bookkeeping practices, business finances, cash flow, and more?

Small Habits are Worse Than You Think

Some of these habits might be obviously bad, but they don’t seem to be impacting your business in a terrible way. But, don’t let yourself be fooled. The smallest habits can have a compound effect over time. In fact, your daily, weekly, and monthly habits are key indicators that will affect your business success in the future.

For example, an overflowing filing cabinet with poor organization might seem like a nuisance. But the lack of organization with your paperwork could have a domino effect on your tax deductions, customer billing practices, and more. Not only will important information be overlooked along the way, but you will also spend an unnecessary amount of time sifting through papers when you need to find a specific document.

Instead of letting these small habits take away from the more important business tasks that need to be addressed, it is time to make a change that will improve your practices.

Important Bookkeeping Practices that Need to Be Fixed

Here are some of the worst bookkeeping and accounting habits that are causing problems for your company. You need to be aware of these problems, then commit to making the change that will turn things around for your business going forward:

  1. Messy Paperwork: Invoices, bills, contracts, and random paperwork can make you feel like you are buried in stacks of nonsense when you are sitting in your office. If you aren’t organized with the paperwork, then it will have a domino effect on all aspects of your business. A lack of organization with the paperwork means that you are likely missing deadlines and paying late fees because you can’t keep track of the necessary information. Put together a filing system and set aside time in your schedule to ensure that you are keeping up with the filing throughout the year. Your accountant can offer information and advice about the information that should be kept in your filing cabinet.
  2. Poor Deadline Management: Regardless of your industry, you always have deadlines and due dates that need to be managed. Failing to set these deadlines and adhere to them means that you could be missing key points along the way. For example, do you have a schedule to manage the frequency of when reports are run and analyzed for your business finances? If you are only looking at these reports once a year at tax time, then you are missing out on opportunities to improve your business strategy throughout the year.
  3. Not Saving for Taxes: One of the most stressful things that you can face as a business owner is a hefty tax bill that can’t be paid because you don’t have the cash flow when the deadline comes up. It’s no surprise that taxes need to be paid… you can count on it happening every year. Make sure that you are prepared by setting aside a specific amount of money so the cash is available when the taxes are due. Also, keep track of quarterly estimates and payroll tax deadlines to ensure that you are meeting the tax payment schedule based on the requirements of the IRS. Tax calculations and payroll management can be confusing and stressful, which is why it is important for every business owner to invest in professional financial services.
  4. DIY Financial Management: Just because you know how to balance a checkbook doesn’t mean that you have the bookkeeping and accounting skills for DIY business calculations. Working through tax laws, cash/accrual accounting systems, profit and loss reports, and other requirements for business accounting can be problematic. If you aren’t professionally trained in bookkeeping and accounting, then there is no question that you will benefit from professional support.
  5. Cutting Corners on Bookkeeping and Accounting: Yes, it is smart to save money whenever possible. But you will be making a big mistake if you cut corners by hiring a newbie instead of an industry professional. Even though you can find someone with basic secretarial skills which only costs $15/hour, it’s hard to calculate the opportunity cost of the services that come from a professional accountant. Whether you are hiring an employee or an outsourced contractor, make sure that you are paying the right amount to work with a professional. It’s worth the extra cost to ensure that things are done the right way. In fact, you will likely save money because you can avoid mistakes that could cost you in the future.
  6. Ignoring Software Solutions: There is always a learning curve when implementing a new software program for your business efforts. Even though it takes a little bit of effort to implement these systems, it is important if you want to set yourself up for the future. Talk to your accounting and bookkeeping team to determine the right software solutions that will be best for your industry. Once the software is up and running, you will benefit from the integration that simplifies your life and ensures that everything is running smoothly together. Data synchronization helps to reduce errors that pop up due to manual calculations and will improve efficiencies as well.
  7. Standardizing Business Financial Systems: Failing to have standardizations in place for your ongoing systems is a mistake that could take a toll on your success. Do you have a set schedule and standard practices in place for client billing and management? Consider the ongoing systems that affect the money that flows in and out of your business. Then, create a standardized system so that all employees, managers, and contractors are on the same page with expectations going forward.
  8. Ignoring Financial Reports: When you are busy managing employees, working on business development, and coordinating the new marketing plan, it probably feels like financial reports are low on your priority list. Don’t make the mistake of assuming that you only need to look at business finances at tax time. The most important thing you can do as a business owner is to understand key accounting metrics so you can track this information throughout the year.

Tapping into Professional Support to Change Bad Habits

Now that you’ve identified some of the bad habits that are affecting your business, it is time to make a change. But the best of intentions won’t make a difference if you aren’t willing to change ongoing actions and practices. Without the right systems, you will be facing ongoing problems in the future that will impact the success of your company.

As a business owner, the best thing you can do is tap into the professional support that is available to change your bad habits. Spend the money on services to ensure that your bookkeeping and accounting systems are set up in a way that will support your success going forward. Even though it costs a bit of money for the setup and ongoing maintenance, view this spending as an investment for all of the benefits that are available for you in the future. There’s no question that the right bookkeeping and accounting services can optimize your spending, increase profit margins, and maximize tax deductions that are available.

Let the Pros Fix Your Bad Habits

Often, the worse accounting and bookkeeping habits pop up when business owners attempt a DIY approach with their business finances. You need to be willing to let go of these habits, which means that it is time to implement the advice that comes from an industry professional. Tapping into the expertise that comes from an accounting team means you can get rid of these bad habits. Trust that your financial tracking and reports are in good hands, then turn your attention to other business responsibilities that need to be handled throughout the year.

As you are choosing an accounting team, make sure you find a contractor with experience helping small business owners. This ongoing expertise gives you the benefit of tapping into proven systems and strategies. You don’t need to reinvent the wheel when we already have formulated the best practices that can be implemented into your business.

Will You Benefit from Outsourced Accounting Services?

Right now is a great time to evaluate your business finances and determine the areas that need improvement. As you look at the weak points in your business, you will find that outsourced accounting services can be the perfect solution to fill in the gaps.

Look for experienced contractors that offer a variety of accounting services. It is essential that you find a team for ongoing accounting support, instead of only talking to your accountant at tax time.

Easier Accounting is available to offer the support that you need. Contact us any time to learn about the accounting packages and small business services that match the needs of your business. We will personalize the services based on your preferences and needs: (888) 620-0770.

Last Minute Tax Tips for Small Business Owners

If you have procrastinated your tax preparation and filing this year, then these last-minute tax tips might be just what you need as you are facing the looming deadline. Business owners often agree that tax season is the most stressful time of the year. Not only do you need to worry about paperwork, number crunching, and financial reports. But there are often cash flow concerns as you are evaluating the bills that need to be paid to the IRS.

Even though it can be a stressful experience to file taxes as a business owner, there is nothing to worry about when you have a good team to help. An experienced accounting and bookkeeping team can be an invaluable resource to ensure that your taxes are filed timely and accurately.

Tax Tips for Your Small Business

At Easier Accounting, we specialize in all of the financial services needed to keep your business running. Here are some of our best tax tips when you are facing the last-minute crunch of finishing your filing for the year.

  • Deductions to Lower Taxable Income: Even though it takes a little more work to sort through receipts and categorize spending, this extra step is essential if you want to reduce the amount that will be paid. Business owners have a variety of deductions that can be used to reduce taxable income. Just make sure that you are staying within the guidelines established by the IRS to avoid raising red flags with the write-offs.
  • Contributions for the Year: As you are finalizing the numbers on your tax return, is your taxable income still higher than you were anticipating? Other strategies can be used to lower your taxable income. For example, you might decide to contribute to an IRA, helping you save for the future and reduce the amount that will be paid for taxes this year. Even though you are filing 2018 taxes and the calendar year is technically over, you can still contribute until the tax filing deadline and have it count. Talk to your accountant for personal recommendations about the type of IRA that will work best for your needs. As a self-employed individual, you might consider opening a Simplified Employee Pension Plan (often called a SEP IRA), which allows you to contribute up to 20% of your annual income.
  • Organize Paperwork: Handing your accountant a stack of messy paperwork is the wrong way to approach tax preparation. While your accounting team can help with financial strategy and tax prep, you shouldn’t be handing off all of the responsibility. As a small business owner, you need to have a general idea about what is going on with your bank statements, financial reports, costs, profitability, and more. Do your best to organize the paperwork so your accounting team can sort through the numbers and support your strategy.
  • Electronic Filing and Payments: Now that you are down to the last few days, it makes sense that you should take advantage of the digital options for tax filing. It’s been found that paper filing increases the potential errors and could result in lost paperwork, resulting in late fees and fines. We live in a digital world, which means you should take advantage of the digital tools that are available. The simplest solution is to work through your professional tax preparer to complete the digital filing. You can also submit direct deposit payments online to avoid the need to visit a post office to mail checks for payments.
  • Filing Without Payment: One reason why business owners sometimes procrastinate their tax filings is that they are worried about how they are going to come up with the cash to pay the tax bill. Even if you don’t have the money in the bank to pay your taxes, keep in mind that financing options are available through the IRS. Remember that it is more expensive to pay the fines and fees that come from not filing than it is to pay interest costs that come with a payment plan. In fact, the penalty for not filing your tax return could be as much as 10x more compared to not paying in full. The costs can add up, resulting in a higher bill in the future. Avoid late-filing penalties by filing by the deadline, then submitting for a payment plan.
  • Filing an Extension: Sometimes it comes down to the wire, and you just aren’t ready to file your taxes by the deadline. If you need more time or you don’t have complete information, then it might make sense to file an extension. This process gives you 6 more months to file your taxes for the year. Keep in mind that even though you have more time to file your taxes, it doesn’t give you an extension to pay. You still need to send the anticipated payment by April 15th to avoid late-payment penalties. That amount can be adjusted later in the year when you finalize your tax filing. If you choose to file an extension, then Form 4868 needs to be submitted. Or, an automatic extension is available when you estimate the tax liability and make an electronic payment.
  • Report All Income: Failing to report money that was received can start a domino effect of problems that you will face with your tax filing. One problem with scrambling to complete your taxes at the last minute is that you might overlook important information that should be included on the tax return. Every time you receive a 1099 form, remember the IRS receives the same information. If you fail to report income that was received, then it could result in a stressful IRS audit. Even if you don’t receive a 1099 form for contract work that was completed, you are still obligated to report the income on your taxes. It is important to track this information throughout the year so you can be thorough with reporting accurate numbers for your income and expenses.
  • Don’t Guess on Deductions: As you are wrapping up the information for your tax paperwork, it might be tempting to guess on some of the numbers for your deductions. Even though you think that you can get close with estimates, it is essential that precise figures are provided. Estimating could be a mistake that hurts you in the future, potentially resulting in fees and fines. If you are audited, all of the numbers need to be documented with paperwork. You don’t want to face the problems that will arise if the IRS catches you in a lie. Make it a priority to spend the time needed to evaluate your expenses and income so you can provide exact numbers for your tax preparer.

Tax Tips: Make Adjustments to Prepare for the New Year

After the stress of tax filing calms down, don’t assume you don’t need to worry about tax preparation or strategy for another year. Post-tax season is the perfect time to evaluate your systems and business practices. Often, business owners identified weaknesses in their financial systems, which are good indications of areas that need improvement to prepare for the next year.

For example, did you find that your books were messy when it came time to calculate expenses and deductions? If you spent hours crunching numbers and calculating all of these details by hand, then it is a red flag you need to improve your system for the future.

It is easy to procrastinate these decisions because you won’t feel the pain of tax preparation for another year. But you will do yourself a favor by implementing the changes right now while the information is fresh in your mind. Make a commitment to improving your accounting and bookkeeping system so you can save yourself the headache and stress when tax season rolls around in the future.

Year-Round Tax Strategy and Support

It’s amazing how much of a difference it makes when you are proactive and prepared for tax season. Too often business owners only think about tax strategy when the tax deadline is looming. But the best solution is to ensure you are working with your accounting team on an ongoing basis so that you are thinking ahead and prepared for the future.

Many business owners choose to implement a digital accounting and bookkeeping system. These software programs can be used to help you stay ahead of the transactions on a daily, weekly, and monthly basis. Then you don’t have the burden of sorting through a year of transactions when it is time to file your taxes. Instead, a simple report can be run so all of the essential tax information is ready at your fingertips.

Finding Support for Tax Preparation

You don’t have to file your tax paperwork without support. The best thing you can do as a small business owner is to outsource your tax strategy to a team that understands your business needs. At Easier Accounting, we are here to help. Call today to learn about the immediate and ongoing financial support available for your company: (888) 620-0770.

Accounting Checklist: Essential Tasks for New Businesses and Startups

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

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

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

Consequences of Neglecting Your Accounting Checklist

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

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

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

Step #1: What Accounting Services are Needed?

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

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

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

Step #2: Setting Up an Entity

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

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

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

Step #3: Financial Reporting and Ongoing Bookkeeping

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

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

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

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

Step #4: Be Prepared for the Future

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

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

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

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

Do You Need Accounting Services?

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

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

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

To-Do List for Successful Relationships with Independent Contractors

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

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

Benefits of Hiring Independent Contractors

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

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

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

Tips for Getting Started with a Contractor

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

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

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

Services to Outsource

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

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

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