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Starting a New Business? How to Set Up a Solid Accounting System

Can you feel the excitement in the air? Starting a new business is an adventure and a risk wrapped into one experience. The possibilities are limitless, but you need to be willing to step out of your comfort zone to create opportunities for the future.

As an entrepreneur, how are you creating the right systems to support ongoing business activities? It is common for people to be too focused on the implementation and growth of a new business that they overlook some of the foundational details that will influence the future of the company.

Getting the business off the ground is just the first step. When you are starting a new business, you need to be sure that you are prepared with the right systems that will minimize problems in the future. Financial systems are critical to tracking profitability, managing expenses, and staying ahead of the other accounting responsibilities that need to be managed over time.

Why Your Accounting System Matters

We understand how easy it is to push bookkeeping and accounting aside. When you are excited about new product development, marketing campaigns, and other details that affect your business growth, then it seems boring to crunch the numbers and run Profit and Loss reports.

But, neglecting your accounting system is a surefire way to set your business up for failure in the future. You need to know where the money is coming from, how much is coming in, and all of the expenses that are required to keep your company in business. The right accounting system provides the structure and framework so you can keep up with these details without putting in a lot of time for data entry and number crunching.

Starting a New Business: Accounting Tips

Most business owners don’t have formal accounting training. If you don’t know where to start, then you should consider the investment of hiring an experienced accounting team for assistance. DIY might seem like an effective option for reducing expenses. But it is likely that you will be losing money if there are errors or problems in your accounting system.

Here are a few things that should be a priority when you are starting a new business and creating a functional bookkeeping and accounting system:

  1. Register Your Business: It’s important that you can legally run a business from your location, which means that the first step is to obtain a business license. Once this paperwork is in place, then you can move forward with the other steps needed for your financial system.
  2. Open a Bank Account: New businesses often start in the basement or garage of your family home. These startups don’t need to be glamorous or elaborate to have the potential for future growth. But the problem is that business expenses are often mixed in with personal spending, making it hard to track expenses and profits. When you are starting a new business, it is critical that you open a new bank account so all of the finances can be separated from your personal spending.
  3. Hire an Accountant: Even though it might feel premature to bring on an accountant, it is critical that you consider this professional advice for your company. Don’t hire a full-time accountant, because it isn’t common to need 40 hours a week of accounting services. Instead, it is smart to hire an outsourced accountant who can walk you through the process of starting a new business. Make sure that your accountant of choice has experience working with small businesses and entrepreneurs.
  4. Choose an Accounting Software: There is no reason why you should be doing accounting and bookkeeping by hand. Technology enables business owners to avoid busywork by using accounting software that automates these processes. If you aren’t sure what software to use, then talk to your accountant to learn about recommendations based on your unique business needs.
  5. Track Expenses and Profits: Now that your accounting software is in place, you need to be sure that you are prepared with ongoing maintenance of the transactions that are moving through your account. If your bookkeeping and accounting reports are going to be accurate, then it is essential that you build a solid foundation of accurate transaction tracking. Not only do you need to pay attention to the money that is coming in, but you also need to be detail-oriented with the expenses that are required to keep your company running. Tracking these expenses helps you build financial statements, itemize expenses that can be deducted on your annual taxes, and ensure that you are ready when tax season rolls around.
  6. Organize Paperwork: You will have invoices and receipts coming across your desk, which is why you need a good system for organization. A filing system will enable you to pull up receipts when they are needed in the future. It might be as simple as designating a file-folder system in a cabinet next to your desk. Or, you can consider a digital filing system if you don’t want to juggle stacks of paperwork. These receipts and invoices are necessary in case the IRS decides to complete an audit of your business in the future. At that point, you will need to provide documentation that backs up any deductions claimed on your taxes.
  7. Handling Payroll: Depending on how your business is structured, you will need to evaluate how payroll will be managed. This task is another area where your accountant can assist to ensure that the money is managed efficiently. When starting a new business, you might be the only employee. Eventually, your company will grow and it will be time to hire outside help. You have the option to bring on an employee or pay the person as an independent contractor. The worker classification will influence how the person is paid. Not only do you need to ensure that timely payments are provided to your workers, but you need to be prepared for other payroll-related paperwork in the future (such as 1099 forms or W2s).
  8. Tax Systems and Procedures: The specific taxes that need to be paid vary depending on the type of company that you are running. For example, if you are selling physical products, then it is likely that sales taxes need to be collected and paid. A variety of factors influence how sales tax is managed, such as where your business is located, where the goods are shipped, and any tax exemptions that might apply. Your accountant can provide guidance to ensure that you have the right system in place for the collection and payment of sales tax. Other taxes that need to be considered include quarterly taxes, self-employment tax, income tax, employment taxes, excise taxes, and more.
  9. Assess Profitability: The goal of running a business is to bring in a profit for yourself and any investors participating. When you are starting a new business, you can see the possibility of making money. But you need to be sure that your sales are matching up. Are you earning more than you are spending? It is common for new businesses to be “in the red” for the first few years. Even if you aren’t making any money yet, you need to show that your company is moving in the right direction. Your accounting reports are key to evaluating profitability and calculating margins that are available. These numbers provide a clear picture of your current financial standing. Then, gross margins can be improved by cutting costs and optimizing sales.
  10. Funding for Growth: When you are starting a new business, you probably aren’t ready to bring on investors at this point. As your company grows, you will eventually need more capital to boost your business to higher levels of success. Even though you aren’t ready to connect with investors right now, you need to consider how you will access funding in the future. The steps that you take in the earliest stages of business growth will contribute to the possibilities that can be achieved in years to come. If you want to be able to secure funding, then you need to be sure that you are tracking financial details. If money is needed right now, then you might be able to obtain the funding through a small business loan based on your personal credit history.

Professional Accounting Services for Your New Business

The best investment that you can make is hiring an outsourced accounting team to support the growth of your new business. Don’t let yourself be distracted with the reporting and bookkeeping that needs to happen each week. Instead, you can free up your time by letting the pros handle these details.

Our staff at Easier Accounting is just a phone call away. We invite you to contact us in the earliest stages of starting a new business. We’ll help with the implementation of accounting and bookkeeping systems that will set you up for growth and success in the future. Call us at (888) 620-0770 to learn about available services.

How to Create a Growth Culture in Your Business

As you are expanding product offerings and working to connect with new customers, have you considered how you are supporting the growth culture for your business? Too often, business owners get so caught up in the day-to-day tasks that they overlook the way culture impacts current results and success in the future.

The truth is that developing a growth culture might be one of the most important things you can do for your company. This strategy can be designed to promote improved productivity, tap into new skill sets among employees, and boost overall engagement in many aspects of your business systems.

What is Growth Culture?

Every company has a business culture, regardless of how proactive you are in creating the culture that you desire. If you aren’t deliberate in designing a culture built on growth and productivity, then it is likely that your company is falling into a culture of stagnation.

The key is to develop a growth mindset that can be shared with employees and management. This mindset will naturally affect every aspect of the business, including customer interactions, product development and more.

Your growth culture should be founded in the belief that skills and systems can be improved, and the development of these growth opportunities is an important part of the work that is completed on a day to day basis. Designing a growth culture is the process of developing an environment that supports continuous improvement for all team members.

Why Your Business Culture Matters

Why does it matter if you are proactive with designing the right company culture? When you create a work environment that promotes ongoing development among team members, it boosts employee performance and engagement. This trickle-down effect impacts profits and customer satisfaction, which is the perfect recipe for helping your business grow in the future.

It’s been found that employee engagement is a critical driver for business growth. When employees are motivated, day-to-day activities have a direct impact on customer ratings, overall productivity, and profitability.

At the same time, the opposite is true: poor company culture results in unmotivated employees. As a result, team members are doing the bare minimum to get by each day in the workplace. You are either developing a cycle of success or an environment of mediocrity.

Creating Growth Opportunities in the Workplace

Employees won’t naturally seek out growth opportunities without the right support and encouragement at work. As a business owner, you can help employees engage more effectively by providing situations that help employees with continuing education, stronger certifications, and the development of new skill sets that support company needs.

This engagement with employees can help to reduce missed days at work and improve overall employee satisfaction. The positive benefit is that happy employees are willing to stay with a company long-term, which means that investing in growth culture can be an effective way to reduce turnover each year.

As a business owner, it is important to understand that investing in your employee’s professional, personal, and financial growth can potentially result in excellent returns on your investment in the future. Your staff is motivated to improve performance, which is essential if you want to help your company grow in the future.

7 Tips for Developing a Growth Culture

Setting the intention of developing a growth culture is just the first step. Implementation can be a challenging path to follow, especially if you are working to overcome a negative company culture that is currently in place. Here are a few things you might consider if you want to ensure optimal success with a change in growth for your company culture:

  1. Employee Buy-In: These positive changes will only impact your company if employees buy into the initiative. Growth will only happen if the employees are willing to engage in the process and focus on personal development. Instead of forcing specific types of development, it’s important to understand the desires and interests of each employee. Then, potential opportunities can be offered that match a wide range of preferences.
  2. Immediate Implementation: As an employee is developing a new skill set, it is essential that they have the opportunity to use these skills as soon as possible. Reducing the gap between learning and implementation is critical so they don’t lose the skills or fall back into old systems again.
  3. Start at the Beginning: The communication that happens in the hiring process and through onboarding will set the tone for the way new employees will engage in the workplace. Look for ways you can show encouragement and growth opportunities from the moment a new hire steps through the door for their new job.
  4. Mission Statement: Spell out your growth culture goals in the company mission statement. Not only does your mission statement bring in the right types of employees who fit your desired culture, but it reminds current employees that there is a strong emphasis on continuous learning and growth.
  5. Build Skills: Employees need tangible ways they can build new skills and knowledge. Create trainings and potential ways for people to learn both industry-specific skills and soft skills that can boost daily performance. For example, an employee might benefit more from learning how to manage distractions in the workplace compared to a long lecture about industry-specific laws. While it’s important to maintain current information in your industry, it is more important to help your employees develop a mindset where they are interested in learning new things.
  6. Connection and Communication: Building a strong team environment is the foundation for creating a growth culture. When people are working together, they can help each other overcome common weaknesses and issues along the way. Look for ways you can create more cohesiveness among team members. If employees don’t have a lot of face-to-face time with other people in the organization, then technology can be used to increase interaction among employees.
  7. Long Term Initiatives: Remember that your company culture won’t change overnight. While the hope is that your employees will be engaged in the process right away, it often takes time to shift mindset within an organization. Your growth culture initiatives need to be focused on the long-term goal of changing how the company moves in the future. You will start noticing benefits from the moment these changes are implemented, but the most notable benefits are still a few months (or years!) down the road.

With the right company culture, it is possible to empower employees and help them strive for their highest potential. These learning opportunities show individuals that anything is possible when they are striving for optimal levels of achievement. There is no limit to possible growth when a person is engaged and proactive in their personal development.

How to Motivate Employees in Your New Growth Culture

In most work environments, it is necessary to find the right motivation that will help employees buy into new initiatives. These are a few methods you might consider that can help employees take personal responsibility for looking at what drives their development and performance:

  • Recognition: It feels good to have a pat on the back and acknowledgment for a job well done. Design a program to recognize employees for outstanding behavior. This positive reinforcement will encourage people to continue striving for more.
  • Mentorship: Newer staff members have a lot to gain by working side-by-side with the more seasoned employees. Create a mentorship structure that enables interactions between all team members. This mentorship system needs to be built on both inclusion and diversity.
  • Money: It’s no surprise that the main reason why employees continue showing up for work is because of the paycheck. Employee growth can be incentivized monetarily by rewarding specific accomplishments. Designate a portion of your budget that allows a cash bonus system as appropriate. Gift cards, a bonus pay-out, or small gifts can go a long way in providing tangible reinforcement of the culture you want to develop within your business.
  • Modeling Behavior: Management needs to be fully engaged in the process to show their teams how they can be growing professionally. Managers can influence behavior by leading by example. When everyone is working together on growth, it is easier for individuals to do their part in contributing to the team effort.
  • Promotion Opportunities: It is important that employees see a way forward in how their careers can develop in the future. If you invest in employee growth without giving them a potential for promotion, then it will likely result in a turnover as the employees look for new opportunities with other businesses.

Implementing the Right Business Systems

Also, don’t overlook the importance of implementing business systems that support productivity. For example, a good bookkeeping and accounting system is critical for reducing financial mistakes and minimizing data entry and other busywork.

If you are looking for ways to create a growth culture and improve your business financial systems, then Easier Accounting is just a phone call away. We specialize in small business accounting services. Contact us for a consultation to learn about the available services: (888) 620-0770.

Sole Proprietor vs LLC: The Pros and Cons of Each

One of the most important decisions you can make as a small business owner is choosing the right structure for your new company. Even though the business structure seems like a minor detail, it impacts the taxes that are paid and paperwork that needs to be filed with the IRS. In this article, we are breaking down the differences so you can choose between a sole proprietor, LLC, or another type of business structure.

Types of Business Structures

Selecting the right type of business structure is key for finding the best balance of protection while optimizing available benefits. Here are some of the most common business structures used for small companies and startups:

  • Sole Proprietor: Many business ventures start as a sole proprietorship, which is the most common type of business structure. It means that one person is the sole owner and operator of the company, which is a good solution if you want to manage all of the details of the company. There is not a separate business entity, so it means that all personal income and business expenses are filed on the personal tax return.
  • Limited Liability Company: The nickname for this structure is LLC. It is a flexible structure that gives you the benefits available through both corporations and sole proprietorship. The business is structured as a separate entity, so business and personal liabilities are not mixed. LLC requirements vary in each state, so it is important to work with a professional to ensure the proper formation of this structure.
  • General Partnership: When two or more people are owners in the company, then a partnership agreement can be formed. In this situation, all partners are responsible for the business and hold ownership of the debts and liabilities of the company. The losses and profits are shared equally among partners. Similar to a sole proprietorship, profits are also taxed through personal income.
  • Limited Partnership: The minimum requirements for a limited partnership is that there must be at least one general partner and one limited partner. The general partner is involved in the day-to-day activities of the business, as well as major business decisions. On the other hand, the limited partner has no rights to the business decisions, they only act in the capacity as an investor. The general partner maintains responsibility and liabilities, which means that the limited partners hold ownership without the risk.
  • C Corporation: Commonly referred to as a C- Corp, this business structure is created as a separate entity from the owner. The business is structured as an independent legal entity. The benefit of this separation is the protection against personal liability. Specific tax requirements and regulations need to be met, including extensive reporting and recordkeeping. It is a complicated business structure but sets the business up for future expansion if desired. Double-taxation occurs with this business structure.
  • S Corporation: Commonly known as an S- Corp, this structure passes the profits and losses through the business owner’s personal income, without the cost of corporate tax rates. The corporation has a max limit of 100 shareholders. Strategies can be used to avoid double taxation, with the owners and shareholders being taxed.

Small Business: Choosing Between a Sole Proprietor vs. LLC

In most cases, it makes sense for small businesses to be structured as a sole proprietor or LLC, depending on the needs of your company. You don’t need to read the fine print to know all of the details and differences. Instead, talk to an experienced accountant and business attorney for advice in structuring your company.

Also, know that this business structure is just the starting point. Your accountant can offer recommendations in the future when it is time to grow, depending on the trajectory of your business success. Sometimes businesses need to be restructured to manage taxation and liabilities.

In the next few sections, we will break down the benefits and drawbacks of both sole proprietorships and LLCs. This information will give you a general overview of your options. Then, you can talk to your accountant and/or business attorney with a clear understanding of how the structure will impact your business.

Sole Proprietor: Pros and Cons

There are advantages and disadvantages to structuring your business as a sole proprietor:

  • Pro – Simplicity: As a sole proprietor, you don’t have to go through any paperwork or complicated systems when setting up the company. In the beginning, there is no state paperwork that needs to be filled out and filed. Additionally, you don’t need to worry about annual state filing.
  • Con – Liability: Since the business assets are in your name, you will be held personally liable if anything goes wrong. If your business is in debt, then your personal assets could be at risk. For example, a creditor could go after your car, home, or other personal property of significant value to repay outstanding debts.
  • Pro – Maximizing Business Deductions: Any time you spend money on business expenses, those costs can be written off your personal tax filing as deductions.
  • Con – Restructuring as the Business Grows: Once you reach a threshold of annual earnings, it is usually best to restructure the company to optimize tax payments. Maintaining a sole proprietorship could cost more money, in the long run, depending on how much money you are earning. Talk to an accountant for personal recommendations.
  • Pro – One Tax Filing: As a sole proprietor, there is no need to file a separate tax return for your business. If you have a corporation, then two returns need to be filed (one for your personal taxes and one for your business taxes).
  • Con – Building Busines Credit: Since the business expenses are in your name, it can be difficult to build business credit. A lack of business credit could have an impact on your ability to get financing in the future when needed. As a result, it might be hard to get funding when your business is expanding.
  • Pro – Managing Business Taxes: Since all profits and losses are passed through your personal tax return, you only need to pay federal, state, and local taxes, as well as Federal Insurance Contributions Act (FICA). Some of your personal expenses can be leveraged as business expenses, such as your home or car that is used for business activities.

LLC: Pros and Cons

Does it make sense for you to set up a Limited Liability Company (LLC) for your new business venture? Here are a few pros and cons that should be considered before moving forward with this business structure:

  • Pro – Various Benefits: The main reason why people choose an LLC is to take advantage of the benefits available as a sole proprietor, with the protections that come through a corporate structure.
  • Con – Limited Lifespan: If the business structure changes, then your LLC might be dissolved. For example, if a partner joins or leaves, then it might be necessary to restructure.
  • Pro – Flexibility: This business structure is flexible, making it easy to adjust the structure based on your individual needs.
  • Con – State Requirements: Every state is unique in the way LLCs are managed, so the tax liabilities vary depending on where your business is located. It is important to learn about state requirements before deciding whether an LLC is the right structure for your business. Sometimes industry-specific licensing is needed in addition to the state requirements.
  • Pro – Avoid Double Taxation: Double taxation occurs for most corporations, with taxes required for the business and the individual. An LLC protects you from double taxation.
  • Con – Paperwork: Not only do you have paperwork that needs to be completed for the formation of an LLC, but there are often annual state filings as well.
  • Pro – No Business Debt Liability: LLCs protect small business owners from personal liability for the business debt. If a creditor is demanding payment or your business is facing a lawsuit, it means that your personal assets (such as your home and car) are safe.

Choosing Between Sole Proprietor and LLC

Is it time for you to structure your new business venture? As you are getting started, it is helpful to talk to industry pros to learn more about the most strategic approach for your unique needs. This conversation should cover a variety of details that can impact the success and long-term profitability of your company, including:

  • Tax burden and how to minimize the amount you will be paying each year
  • Cost of setting up and maintaining the business structure
  • Legal liabilities carried by the business, yourself, and partners
  • Flexibility of the business structure and how it meets the needs of your company

Easier Accounting is Here to Help

If you need accounting and bookkeeping assistance for your small business, then our team at Easier Accounting is just a phone call away. We specialize in small business bookkeeping and can help with a variety of business structures, including a sole proprietor, LLC, and corporations. We take care of the financial details so that you can keep your focus on other business responsibilities to help your company grow. Call to learn more about how we can assist: (888) 620-0770.

The Pros and Cons of Small Business Loans

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

Small Business Loans: Getting Started and Business Growth

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

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

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

What Do Lenders Want?

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

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

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

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

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

Paperwork to Provide with Your Business Loan Application

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

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

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

Pros and Cons of Small Business Loans

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

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

Can You Get a Loan if You Have Bad Credit?

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

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

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

Manage Your Business Finances

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

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

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

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

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

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

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

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

Tax Preparation Can Feel Like a Chore

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

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

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

Assessing your Current Situation

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

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

Basic Steps for Tax Preparation

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

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

Using a Professional for Small Business Tax Services

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

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

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

Quality Tax Preparation Services for Your Business

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

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

When Should Internal Audits Be Done for Your Business?

Most business owners cringe when they hear the word “audit” because this word is associated with stress, the IRS, and frustrating paperwork. But you shouldn’t be scared of auditing. In fact, internal audits might be the best way that you can improve your business and maximize your results going forward. If you don’t have a system in place for internal audits, then it is time to talk to an outsourced accounting team to learn more about the options that are available.

What are Internal Audits?

An internal audit is a process of assigning an employee or accounting provider to provide an objective and independent evaluation of your business finances. This process helps you identify any areas that need to be improved so that you can avoid big problems in the future.

Internal auditing is a proactive way to care for the needs of your company. In the same way that you take your car in for regular oil changes and tune-ups, you also need to be proactive with preventive maintenance for your company. A little bit of work right now ensures that systems are working and you are staying on the right track. At the same time, you can identify areas of improvement to reach higher levels of success in the future.

Auditing is the answer so that you can reflect on the progress that has been made as well as the goals that need to be set in the future.

Responsibilities of Internal Auditors

What are the responsibilities carried by internal auditors? You can identify these responsibilities and assign them to an in-house employee. But many businesses find benefit in hiring a contractor or outsourced accounting team to ensure that it is a third-party, objective evaluation.

These routine audits are important to ensure that you are maintaining your competitive edge in the industry. Auditors help by:

  • Assessing, analyzing, and monitoring the controls and risks of the company
  • Reviewing your compliance with both state and federal laws
  • Identifying errors or opportunities for improvement
  • Providing recommendations to streamline systems and optimize business practices

The goal is to gather information on the operations of the business. Then, this information is used to show the areas that are going well and identify aspects that are in need of improvement.

It is important that the auditor is objective. When an auditor has a personal connection to the company, then the results can be skewed. For example, as the business owner, you may unintentionally place more focus or attention on things that are at the top of your mind, instead of looking at other aspects of the business that have been sitting on the back burner this year. Getting a fresh perspective is essential so that you can see your business financial situation with fresh eyes.

The Difference Between External Audits and Internal Audits

When you implement internal audits, you have the flexibility to choose the contractor that completes the work and when the audits are performed. This flexibility is nice because you can work around the busy season for your company. The goal is to improve company practices and optimize systems for further growth.

On the other hand, external audits might be done to verify financial reports for shareholders or the IRS. The owed responsibility goes to the entity that initiates the audit, such as the IRS or shareholders. Reporting to different people affects the way the recommendations are presented.

Why You Need to Schedule Internal Audits

Even though it takes a little work and effort, scheduling internal audits might be the best thing you can do to boost your company growth. Here are some of the benefits that you can expect from auditing services:

  • Top of Game: Since full transparency is needed for an audit, this process keeps management and employees at the top of their game. When people know that the work and progress will be tracked, then productivity goes up as everyone strives to meet expectations.
  • Reduce the Risk of Fraud: Regardless of your industry, it is necessary to be proactive to protect your company against the risk of fraud. The auditor will be able to identify any errors or issues that have already happened. At the same time, weak points in the system can be located to reduce the chances of fraud in the future. While you want to trust your employees and customers, it is important that protections are put in place to minimize the opportunities for theft or scams. Not only does auditing help to protect against dishonest activities of employees and customers, but you can also reduce the risk of cybersecurity concerns.
  • Measure Progress: It is easy to assume that your business is thriving when you don’t have a clear picture of the progress that is being made. When you are making big decisions about hiring, business development, and more, it is important that transparency is available to support the decisions that are addressed.
  • Maintaining Compliance: If you are in a business that is governed by state or federal compliance laws, then it is important to ensure that you are implementing all of the necessary activities to maintain compliance. For example, healthcare businesses need to audit the way data is stored and recorded to ensure that HIPPA compliance is respected. Most companies have compliance requirements that need to be met for payment processing and other aspects of running the business.

What to Expect During the Audit

Now that you can see the benefits of having an internal audit, it is time to identify the right company to help with these efforts. You need to know what to expect during this time so that you aren’t caught off-guard by the activities that are happening.

The auditor will come in and request access to documents, financial reports, computer systems and more. They will use this information to analyze the way the company’s performance matches objectives. At the same time, the observation will determine the effectiveness of different strategies that are implemented.

This work can take a few days or a few months, depending on the size of the company. If you have a small start-up or home-based business, then it won’t take long to review all of the financial details and reports.

When Should You Schedule Internal Audits?

You can choose the timeline when internal audits should be scheduled. Some business owners choose to implement a full auditing practice, while others bring in an auditor for a specific focus within the company. For example, you might audit the bookkeeping records to ensure that everything is accurate for tax filings.

Here are some of the common times when internal audits are implemented:

  • Before an Investment or Loan: If you are trying to bring in investors or you need a business loan, then you need to be sure that your financial information is ready for the scrutiny that will occur. It can be embarrassing to have inaccurate information presented to the investors! Instead, complete an audit to ensure that your financial statements are accurate.
  • Mistakes are Identified: Have you recently noticed a mistake in your books? If an error is identified, then it could be a red flag that other issues need to be corrected as well. It is common for mistakes to happen, which is why internal auditing is essential to keep everything on track. The auditor can identify the errors and provide recommendations to fix the discrepancy. Even tiny discrepancies can add up over time, costing you more money in the future.
  • Cash Flow Problems are Happening: Are you having a hard time identifying why you are experiencing cash flow problems in your business? If you are running into issues where sales are made, but you don’t have enough to pay the bills, then there could be internal inefficiencies that need to be corrected. For example, you might be overlooking the monthly expenses and paying too much in overhead costs. An audit can help you find ways to cut down the expenses so that you can maximize your profitability.
  • Consistent Schedule: You don’t need to have a specific reason to implement auditing practices. Instead, you might set a schedule so that you can be proactive with your business goals. Problems with the business could indicate the need for an audit. On the other hand, you can implement auditing practices before the problems arise. Checking the financial health of your company is as important as regular visits to the dentist or doctor to assess your physical health.

What do you need to know about internal audits? If you have questions, then contact Easier Accounting. We will gladly answer your questions and help you identify the right outsourced accounting services to support your business goals. Our team specializes in small business bookkeeping and accounting. We know the best practices to support your financial reporting and other processes that need to be implemented for long-term business success. When you are ready to learn more, you are invited to contact us to discuss your options. We can be reached at (888) 620-0770

Warning Signs: Is Your Business in Financial Distress?

Everyone hopes for the best when starting a new business. In the beginning, the hard work is often fueled by big dreams and future possibilities for the company. It is exciting and challenging at the same time, and owning a business can have incredible payouts in the future. But, as things are progressing, it is important that you watch for a few warning signs that might indicate potential problems for your company. When you see the signs of your business in financial distress, then a few changes can correct the course and help you avoid disaster.

Look for Clues about the Financial Health of Your Company

It is easy to get caught in the assumption that everything is going well. Then, you might feel blindsided when things start to fall apart… especially when you didn’t see it coming. The truth is that there are always clues that indicate the success of your company. If you notice these small issues, then it is time to adjust your strategy and habits so that you can avoid bigger problems in the future.

Sometimes, these clues show up in the financial reports. But, other times, the clues might be in sales patterns or other indications that could impact the bottom line. The most important thing that you can do is pay attention to the financial statements and the ongoing patterns of the success in your company. Then, you can seek assistance if you notice anything unusual. This proactive approach is essential so that you can avoid problems later on.

If you don’t have experience with accounting and bookkeeping, then it can be helpful to enlist the services of a team that understands small business strategy. Tapping into this expertise can help you identify things that will impact the future of your company.

Here are a few things that you should be watching for that indicate signs of a business in financial distress:

Sign #1: Cash Flow Problems

If money is coming in, but there is never enough to pay the bills, then it is an indication that you need to look at the cash flow for your company. The profit margins are found in the difference between receivables and expenses. You can bring in large sums of money. But, you aren’t profitable if your expenses are higher than the amount of money that is coming in.

How much money is in the bank account right now? What are the upcoming expenses that need to be paid? One common problem that happens with cash flow is that the company has money in the account right now, but the money is spent leaving nothing leftover for expenses in the future. For example, it’s no surprise that taxes will need to be paid regularly. But, if you use the excess money in the savings account to buy more inventory or equipment, then you might not have the cash available to cover the expenses for the tax bill.

Cash drains can lead to the downfall of your company. Not only do you need to make sure that you are bringing in money to cover the costs. But, you also need to be sure that you don’t have high spending and overhead expenses that affect your cash flow. These are some of the most common reasons your bank account is being drained:

  • Excessive overhead costs
  • Heavy debt loads and high-interest payments
  • Poor spending decisions
  • Outstanding accounts receivable

Keep in mind that it is normal for companies to have fluctuations in sales numbers. You might have a great month with a large amount of cash flow. Make sure that you have money set aside so that cash is available to cover the expenses in the lean months that will inevitably happen in the future.

Sign #2: Increasing Overhead Costs

When the business is thriving, it is easy to slip into a pattern of overspending. If money is in the bank, why not use it for business investments, marketing, or more inventory? It isn’t necessarily a bad thing to increase overhead costs. But, you need to make sure that the receivables increase accordingly.

Also, keep in mind your spending patterns throughout the seasonal changes in the industry. Your spending might go up in the busy season. But, you need to be prepared to drop those expenses in the future when things start to slow down again.

If you can see that your spending and overhead costs are increasing but your receivables are staying the same (or even decreasing), then it means that you are heading towards financial problems. Eventually, you will burn through the cash in the bank and face a difficult situation because there’s no money left over to pay the bills.

Take some time to understand why your expenses are increasing. Where are you spending the most money? Are there any spending categories that can be adjusted to reduce the amounts that you are spending? There might be small costs that add up quickly, such as interest expenses or other non-operating costs that pop up. Or, there could be monthly subscriptions that are no longer needed. Don’t let these cash suckers eat away at your profits. Be proactive to make sure that every dollar spent is going towards an essential product or service that is impacting your company in a positive way.

Sign #3: High Levels of Outstanding Receivables

It’s great to see that sales are increasing. But, if you are selling products and services and the outstanding receivables number is growing, then it could be a potential indication of an issue. When your business profits are tied up in invoices that are outstanding, then you don’t have the cash in pocket that is needed to keep the company running.

The key is to ensure that customers understand the credit policies. Communicate the payment terms upfront, and then make sure that your team is consistent about following through on the collections. Sometimes, it takes a little work to ensure that you are collecting the money that is owed by your clients. But, it is worth the effort to collect the outstanding invoices so that you have money to keep your company going.

Sign #4: Sales are Decreasing

Even after a strong season or year, there might be times when the sales start to slow. It might seem like an obvious financial warning sign, but there are times when business owners don’t notice the changes in sales numbers. If you don’t have money coming in through product sales, then it is time to figure out the problem.

You need to get to the root of the issue to find the area where you can have the most impact to increase sales. The stagnation could be seasonal changes, which means that you can anticipate that things will increase again in the future. But, these revenue decreases could be due to adjustments in your marketing campaign or a difference in the inventory that is available.

It is essential that you know what your customers need and want so that you can be sure that your products and services are designed to match their needs. Then, your strategies can be catered to increase the likelihood of repeat customers.

Sign #5: Customers aren’t Coming Back

The easiest way to help your company grow is by increasing the rate of repeat customers. It takes a lot of money to generate new customers through marketing efforts. The simpler (and cheaper) method is to continue selling products to people who already trust your company.

You need to maintain communication with current and previous customers, helping them know where to go when it is time to make another purchase. Keep your company at the top-of-mind so that people know that you are always there to support them when they need help in the industry.

Run reports to look at the patterns of sales. Then, use your marketing strategy to reach out to customers who might be interested in buying again. When you are consistent with customer communication, then it is easy to build business relationships that last for many years.

Business in Financial Distress? Talk to the Experts

If your business is having financial problems, then you might need to bring on a team of experts to help with the cash flow and strategy. Make sure to choose a team of bookkeepers and accountants who understand small business strategies, ensuring that you receive services that are catered to the needs of your company.

At Easier Accounting, we have specialized our services to match the accounting needs of startups and small businesses. We understand the challenges that you are facing as you work to grow the company. So, we offer the services that you need to manage your ongoing financial tracking and reporting. At the same time, you can tap into the tax strategy to help you leverage all of the financial benefits that are available from working with an experienced team. If you are interested in learning more, then it is time to talk to our expert team for a consultation. Call today to see if our accounting services are a good fit for your company: (888) 620-0770

How-To Guide: Tips to Improve Your Business Bookkeeping and Accounting

If you want to improve the results for your company, then you need to take it back to the basics by upgrading the systems that influence every aspect of business management. By creating the right foundation with good business bookkeeping and accounting practices, then you can make a difference with the long-term success that is possible. The key is to pay attention to the details and hire the right team to assist with the implementation.

Many business owners have good intentions to improve critical systems, such as financial reporting and accounting details. But, it is common for these activities to fall to the backburner because the attention is focused on immediate needs. It is easy to ignore the stack of paperwork that needs to be addressed when you are spending your time talking to potential customers and business contacts. Instead of procrastinating these efforts, you need to understand the importance of good systems so that these things are pushed to the top of your priority list.

Common Options to Improve Business Bookkeeping and Accounting

Even though you know that your business bookkeeping and accounting systems need to be improved, where should you start? You need to think about the overall system as well as the ongoing tasks that should be addressed on a daily, weekly, and monthly schedule.

Here are a few common practices that need to be considered if you are looking for ways to improve your accounting and bookkeeping:

Practice #1: Common Understanding with Vendors and Business Contacts

It can be a challenge to juggle the invoices that are coming and going when you have different systems in place for business contacts and vendors. For example, are some of your vendors stuck in the old process by sending invoices through the mail? We live in a digital age, which means that hard copies are no longer necessary. There’s no reason why you need to hold onto the paperwork.

Talk to your vendors to see if they offer digital invoicing. Then, make sure that you have the right system in place to keep the files sorted when they come through. For example, all of the invoices should be sent to the same email address. Next, the attachments need to be imported into the accounting system or saved in a cloud storage folder for future reference if needed.

Creating the same system and understanding with all of your business contacts can help to simplify the work that needs to be done in your office. It takes a little bit of effort to systematize this process, but it is worth the long-term benefits that are available.

Practice #2: Identify Bad Practices

Are there any bad habits that are dragging down efficiency or impacting profit margins? You need to evaluate the things that should be changed so that you can work on optimizing processes for the future. Sometimes, it is easy to overlook these bad practices when they become a normal part of your business activities.

The best solution to find the bad practices is to bring in an outside perspective to evaluate the way you are handling your regular activities. For example, important tasks might be falling through the cracks if you aren’t tracking the progress of various projects or invoices. Or an accounting team might help you find unnecessary costs that can be dropped so that you can minimize your overhead expenses.

Even though the changes might seem small, they can have a significant impact on the success of your company in the future. If you want to improve your results, then you need to improve the way you are managing all of the details in your company.

Practice #3: Be Clear about Bookkeeping Duties and Responsibilities

One of the most common reasons why important tasks are overlooked is that people don’t take responsibility for the things that might be handled by another employee. Don’t wait for employees to step up and take ownership for essential tasks, such as reconciling the books or sending invoices. Instead, you need to choose the people who should oversee the task and ensure that everyone takes personal responsibility for the areas where they are assigned.

You might have in-house employees who can help with bookkeeping, invoicing, and more. Or, you might choose to outsource these services so that a professional company takes responsibility for the tasks that need to be completed. It’s up to you to choose the system that will work best for your business. At the same time, be clear about expectations so that employees or contractors take the lead on their responsibilities.

Practice #4: Use the Latest Automation Features

Automation can have a transformational impact on your accounting and bookkeeping practices. If you are stuck in old habits and systems, then right now is the perfect opportunity to make the changes that are long overdue.

We live in a world of technology, which means that you need to be looking for options that fit your industry. There is no reason why your employees should be spending time on tasks that can be automated. For example, some businesses still practice data entry for every transaction that moves through the office. But, often these transactions can be automated by syncing the bank accounts and credit cards with the bookkeeping system.

A good bookkeeping system will pull in the transactions and even set up categories based on your predefined parameters. This automation reduces the need to spend valuable time on busy work. Instead, you can let the system handle the details so that you can focus on other aspects of growing your company.

Practice #5: Managing Inventory and Spending

It is common for businesses to get caught in the trap of overspending and poor management of cash flow. If you are spending too much on inventory and business management, then you will be able to see the trends in the reports. But, if you don’t have a good reporting system in place, then it means that these important details are probably slipping by without the attention they deserve.

Make sure that you always have the right amount of inventory on hand. Even though you want to bring in a large amount of inventory so that you never run out of products that can be sold, you might accidentally burn up your cash flow with products that won’t be sold for a while. So, it is important that you manage your spending by being careful with the amount of inventory that is purchased.

Also, look for other areas where you can reduce overall spending. Can you identify spending patterns that aren’t essential for business growth and management? There are often simple solutions that can be used to reduce overhead costs so that you can minimize your spending and maximize profit margins simultaneously.

Practice #6: Plan for Big Expenses

Even though business might be good right now, you never know when an unexpected expense will pop up. You can’t predict when an emergency might happen. But, you can always expect that something will happen eventually. So, you need to be sure that you are ready with money in the bank when these details need to be addressed.

Upcoming big expenses might be accrued for a variety of reasons, such as tax responsibilities, inventory purchasing, equipment and computers, employee payroll, and more. It takes money to run a business, so you need to think ahead to ensure that you always have the cash flow to keep things rolling. It is wise to have a few months of business expenses set aside as an emergency fund.

This emergency fund can be used for one-time costs that might come along. At the same time, the emergency money can also be helpful to get you through the lean times if things slow down in your industry.

Practice #7: Hire the Industry Experts

There’s no reason why you should reinvent the wheel when industry experts have already created and improved the systems that can be used for business bookkeeping and accounting. If you are looking for the right solutions to improve your company, then you need to turn your attention to the advice offered by the experts.

We’ve been offering these services for many years, giving us the experience and education to know the best ways to maximize the results from accounting and bookkeeping. When you choose our experienced team, you can tap into the knowledge that we will share about the options that are available for your company. As we have helped other small businesses, we’ve gained the knowledge and information required to ensure the long-term results that you deserve.

Why Easier Accounting?

Why should you enlist the services that are offered by our team at Easier Accounting? We know that you have many options for accounting and bookkeeping services. But, our team is working hard to provide the custom results that are best for small businesses and startups. If you are looking for assistance with payroll processing, bookkeeping, tax preparation, and more, then you need to contact us as soon as possible. We are here to help so that you have the best options available for your industry: (888) 620-0770

Essential Factors to Consider When Choosing an Outsourced Accounting Team

If you need accounting support, then the most common approach is to find an accountant in your local area. There is nothing wrong with working with a team that is close to home. But, you shouldn’t overlook the other options that are available in the industry. Before you rush into this decision, the best thing that you can do is learn more about the benefits of outsourced accounting.

Employee, Local, or Outsourced Accounting Services

There’s no question that you need accounting support, especially if you don’t have much experience with financial reporting and bookkeeping. Don’t waste your time on tasks that could be assigned to an industry expert. Instead, you need to look for the right services that will match the needs of your business.

One of the most common mistakes made by new homeowners is that they hang onto many of the responsibilities that could be outsourced. You don’t need to manage control over the busy work. Instead, find the right team to support your efforts so that you can focus on the business building tasks that are required. There’s no reason why you should be sending invoices or managing the bookkeeping transactions that are moving through your company. A better solution is to create the right system to outsource these tasks so that you have the necessary support for the overall efforts and vision of the company.

Bookkeeping and accounting should be the first thing that should be handed off to an experienced team. Here are a few options if you are looking for assistance with your financial tracking and reporting:

  • Employee: You have the option to hire an employee with a background in finance. If you want to have someone in-house, then make sure to choose an employee with experience in the industry. You need to hire someone who can take responsibility for the tasks and ensure the quality of work that is completed. But, you need to understand the drawbacks that come from hiring an employee. If you hire someone, you need to pay the salary as well as the cost of benefits that are required. Plus, employment taxes can add up over time. Most businesses find that an employee is more expensive compared to outsourced accounting services.
  • Local Contractor: You can see that hiring an employee isn’t always the best solution. So, you might turn to the local business results to see if you can find an accountant to help with the services that you need. A local contractor can be helpful in many ways, and some business owners like the comfort of meeting with someone face-to-face. But, if you limit your options to local services, then you might miss out on the benefits available from working with a team in a different location. There’s no reason to limit your choices, especially when the local services are more expensive compared to the outsourced options that are offered
  • Outsourced Accounting Team: Finally, the most popular choice is to choose an outsourced accounting team to assist with your books. Looking online will open up many windows of opportunity. This process allows you to choose a team the provides more than basic accounting services. You can find a company that specializes in small business accounting services to match the needs of your company.

Hiring an outsourced accounting team is one of the best ways to keep your costs low and maximize the benefits that are available. These services are catered to match the needs of your company while ensuring the long-term results that you deserve. We live in a digital world, which means that there is no reason why you need to have someone in your office or down the street. Instead, you can tap into the automation and cloud-based accounting that can improve your business systems with the support of a team offering these services online. If you are interested in learning more, then you need to talk to our experienced team at Easier Accounting for the full details about the ways our services will support your business goals.

Hiring an Accounting Team? Consider These Factors

Now that you can see the benefits of hiring help for bookkeeping and accounting, it is time to hire the experts who are a good fit for your business goals. Here are a few factors that should always be considered before you move forward with the decision:

  • Size of Your Business: It is essential that you consider the size of your business and the volume of transactions that are moving through the company. It is probably unnecessary to hire a full-time employee if you only have a few or a moderate number of transactions that are recorded in the books. This work won’t be enough to keep a full-time employee busy. At the same time, the size of your company should influence the team that you hire. If you are a startup or small business, then you need to pick a team that specializes in small business services (and skip a company that offers big corporate services).
  • Needs for Your Financial Goals: Identify the areas where you need the most support for your business goals. Are you looking for an accountant who only talks to you once a year to complete your annual taxes? Or, do you want a team that will take a proactive approach throughout the year to ensure the long-term results for your company? A variety of accounting services are available, including payroll processing, tax preparation and filing, long-term tax strategy, bookkeeping, invoicing, and more. Find a company that can support your goals with all of the work that needs to be completed throughout the year.
  • Qualifications of the Team: Your financial details contain sensitive information, which is why you need to be cautious about hiring an accounting team that you can trust. Learn about the qualifications, education, and experience of the accountant so that you understand the quality of services that are available. It might seem like a good idea to hire your niece to take care of the bookkeeping at a low hourly rate. But, many potential issues will arise if mistakes are made with the books. Never cut corners on the quality of bookkeeping and accounting services that are used for your business efforts! Instead, choose an accounting team that has hands-on experience with the services that are required for your business.
  • Cost of the Accounting Services: Finally, don’t overlook the price of the services that are available. The goal of outsourcing these services is that you can improve your profit margins, decrease spending, and maximize revenue as much as possible. Consider the cost of the accounting services to be an investment for your company. You need to understand the scope of work that will be provided as well as the cost that you will need to pay for the services. Then, compare this price with the expenses that would be required to support a full-time employee. You will see that it is usually more affordable to outsource these services instead of bringing on another employee.

Remember, that a big price tag doesn’t mean that you will receive the best accounting services. It is important that you hire an accounting team based on reputation, experience, and the scope of work that is provided to support your company. Evaluate the needs of your business and then find an accounting team to match.

You’ll Love the Services from Easier Accounting

At Easier Accounting, we understand that you have many options when it is time to hire the services of a company in the industry. We are here to support your goals and offer the advice that you need, without making you feel pressured into the services that we provide.

The best thing that you can do is have a conversation with our team. We invite you to discuss your needs with us so that we can determine if these services are a good fit for your company. If we discover that we can support your needs, then we can work together to design a custom plan that will ensure the long-term results that you desire.

We are striving to show you how affordable and easy it can be to hire an outsourced accounting team. We offer the full range of accounting services that are required, without the expensive price tag that is usually associated with hiring an accounting. By keeping our business online, we can minimize the overhead expenses so that these savings are passed onto our customers.

Are you interested in learning more about the ways that your company will benefit from outsourced accounting services? Then it is a great time to reach out to our team so that you can have a conversation. We offer information about the accounting packages that are available, so you can take some time to read through our website. Then, call us at your convenience when you are ready to learn more about the ways that our accounting services are transforming the industry. Easier Accounting is always here to help! Call today so that you can see if our services are a good fit for your company: (888) 620-0770