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Finding Tax Relief During Coronavirus

Has your business been affected by the Coronavirus pandemic? While many companies have experienced a slowdown or complete loss of income, some businesses are busier than ever trying to keep up with the demand (grocery stores, hospital workers, and more). If you are experiencing a negative impact on your cash flow, then you might be looking for solutions to keep up with overhead costs and ongoing payments. Don’t overlook the benefits available from various tax relief programs that could be used to help your business get through this challenging time.

Why is Tax Relief Available?

Not only is the government working to stimulate economic activity, but these funds are designed to protect vulnerable businesses and individuals. These tax relief programs provide the space and liquidity needed to make it through the reduced spending that is happening due to the virus outbreak. As businesses are closed for health reasons and families are sheltering in place at home, the overall spending has dropped.

It’s a cycle that needs to be corrected: businesses close due to health concerns, causing many employees to lose their jobs. As millions of people across the country are out of work, it slows down the spending happening in all industries. There’s no question that this economic situation will have a trickle-down effect that could last for years.

These tax relief programs are designed to infuse more cash into the economy, helping to mitigate the current concerns and avoid bigger economic issues down the road. The purpose of the programs is to assist with immediate needs and also decrease the potential rebound time as we return to “business as usual” when the crisis is over.

CARES Act: Support for Employers

The Families First Coronavirus Response Act, as well as the Coronavirus Aid, Relief, and Economic Security (CARES) Act have been designed by the federal government to support the economy.

Refundable tax credits are offered for certain employers who continue employee payments during the COVID-19 pandemic. Additionally, penalty relief is offered through the Internal Revenue Service if employers are unable to make timely deposits for employment taxes.

The initial program authorized $2.2 trilling in spending to stimulate the economy, with ongoing decisions to add more money to the fund as needed. The goal is to provide meaningful tax relief to help businesses weather the storm of slow sales or closed doors.

Credits for Leave Wages

Leave wage credits are also offered as a way to minimize the risk of sick employees coming to work. Since the virus can be spread through airborne particles, it is important to keep employees out of the workplace if they have been exposed to COVID-19 or they are exhibiting symptoms of the virus. These tax relief programs encourage employers to maintain good sick leave programs to minimize the chances of employees passing the virus to other employees or customers coming into the business location.

This tax relief is offered in the form of two refundable tax credits:

  • Qualified Sick Leave Wages Credit
  • Qualified Family Leave Wages Credit

Employers are provided with the funds to pay their employees for sick and family leave between the dates of April 1, 2020 and December 31, 2020. These credits are calculated against the portion of Social Security taxes due on wages paid during this same time. In the situation where the credit exceeds the employer’s liability for Social Security taxes, then the credit will be treated as an overpayment – which means the difference will be refunded. Employers must be found eligible to qualify for these tax relief programs.

Employee Retention Credit

One important detail of the CARES Act for employers is a refundable tax relief credit known as the Employee Retention Credit. This tax relief is offered for “eligible employers.” You must pay “qualified” wages to employees between the dates of March 13, 2020 and December 31, 2020.

The credit can cover up to 50% of the paid wages. There is a cap of $5,000 per employee as a maximum credited. As with the Credits for Leave Wages, the Employee Retention Credit is calculated against the Social Security tax due for wages paid during this time. If the tax credit is more than what the employer owes in Social Security taxes, then the difference will be refunded as an overpayment.

Employers can access this credit through their Form 941 filing. But a faster benefit of the credit can be accessed by reducing the amount paid for federal employment tax deposits. Instead of paying the full amount due, employers can decrease their deposits based on the amount they are entitled for Employee Retention Credits.

Employers must meet specific eligibility requirements to qualify for these tax relief credits. For example, the credits are generally offered to businesses and tax-exempt organizations who meet either of these qualifications:

  • Partial or full suspension of operations in the 2020 year because of a “Shelter in Place” or “Stay at Home” order in the local area
  • A significant decrease in gross receipts is experienced in the year 2020

It is also important to note that if an employer received money through the Paycheck Protection Program, then they do not qualify for the Employee Retention Credit. Even if the above eligibility is met, employers can’t receive funds from both tax relief programs.

Tax Filing and Payment Delays

In an earlier blog post here on Easier Accounting, we shared details about the way the economic downturn impacted the tax filing deadlines and payment due dates. Many businesses and individuals have taken advantage of the opportunity to wait on the payments.

To summarize these tax relief deadlines, the due dates for 2019 filing, payments, and estimated tax payments were pushed from April 15, 2020 to July 15, 2020. This change in payment schedule relieves some of the current financial pressure on businesses of all sizes, as well as independent contractors and families. The delayed policy covers most taxpayers – anyone who has been negatively impacted by the coronavirus outbreak.

Other related payments have also been postponed to match the change in tax filing and payment dates. For example, many states have followed suit to push back state tax deadlines to July 15, 2020. Additional postponements include deadlines for HSA and IRA contributions. If you would like to contribute for year 2019, then this deadline has been postponed to July 15th as well.

Individual Economic Payments

Even though many of the tax relief programs are designed to support businesses so paychecks can continue, the stimulus plan also includes economic impact payments paid to individuals. This aspect of the program has been highly publicized through the news outlets, with many families counting on these payments to pay rent and buy groceries.

The payout is $1,200 for an individual or $2,400 for a married couple. Dependent children under the age of 17 qualify for $500 payments per child. Keep in mind that the payments are phased out based on the adjusted gross income (AGI) of the household). The payments are distributed as a tax credit, so you do not need to include the payment as taxable income on your tax filing for year 2020.

Millions of Americans have already received these stimulus payments, with additional checks on the way as the IRS works to distribute the funds across the country.

Personal Tax Guidance for Your Business

Even though we have shared important information about the tax relief programs that have been implemented, you need to be aware that specific eligibility requirements need to be met. Unless you are following the new tax guidelines and ongoing changes closely, and you have a trained background in accounting and finance, it is best that you talk to an experienced accountant for personal recommendations.

Yes, there are tax relief programs available to help employers and individuals. But it is essential to understand the full scope of the programs to ensure proper implementation for your tax credits. Our team is working hard to stay current with all of the changes happening in the accounting industry, giving you access to a trusted group of accounting experts. If you are wondering about your options for tax relief or tax credits, then contact us for more information.

At Easier Accounting, we offer much more than basic tax filing services. We are focused on the ongoing tax strategy you need to keep your business up-to-date with whatever might be happening in the economy. Not only do we evaluate the overall picture, including policies and available tax credits, but we also consider your unique situation to support your tax strategy. The goal is to help you stay within the guidelines as set by the IRS and other government entities, while minimizing your tax burden when possible.

If you are interested in more information about tax strategy, or other accounting services, then feel free to contact us to learn more. We offer a range of accounting services, with a focus on small businesses. Over the years, our team has established a strong reputation in the industry. We’d like to show you the potential benefits your business can receive through our available services. Contact us at Easier Accounting by calling (888) 620-0770.

After Coronavirus: 5 Ways the Stock Market Could Play Out

It’s an understatement to stay that the stock market has been on a roller coaster in recent weeks. The Coronavirus pandemic has caused economic uncertainty across the globe. Some businesses have closed suddenly, while other companies are losing money due to limited sales and customer interaction.

The stock market reports have had significant swings from one day to the next as the markets respond to good and bad news about the current pandemic, stimulus plans, and possibilities for re-opening the economy. If you own a small business, then there’s no doubt that your company has been affected by the news stories. How are you faring in these uncertain times?

Hope for the Future

As the reports come in, many people are holding onto hope for returning to a normal life in the future. Governments are looking at options to relax lockdown restrictions as they feel that the virus is being controlled in certain areas.

While you don’t have any control over the current circumstances or the rules that are governing businesses in your area, there are a few things that you can do to prepare for future business opportunities. During this pandemic, it is a time to shift your business efforts and look for ways to innovate your systems, products, and services. The companies that are changing their approach in doing business are those who will survive the economic changes.

Rest assured to know that there is hope for the future. But you need to be prepared to move forward with a different mindset and approach. Now is the time to take action if you are going to be ready for whatever may come in the future.

Potential Scenarios for Stock Market Movement

One thing that will affect business and sales is the way the stock market responds in the coming days. A recovery is possible, but the stock market trends definitely play an impact in people’s confidence about the economy. When households are uncertain about the current circumstances and future opportunities for income, then spending slows… which has a domino effect in all industries.

Even the best stock market analysts and epidemic experts can’t predict what is in store for the future. Here are a few potential scenarios that we might see in the coming months and years:

Scenario #1: Stock Market Bottoms Before Coronavirus Peaks

The worst-case scenario is that the stock market continues a downward spiral before the peak of the pandemic is reached. If the government can’t maintain systems that keep people safe in public, then the epidemic will continue taking a toll on business sales… which has a negative impact on the stock market numbers.

Not only does this possibility affect business owners and employees, but millions of people across the United States will lose money due to investments that drop in value. It’s impossible to calculate the long-lasting impact it will have for the people who lose their retirement savings that were placed in the stock market.

As economists talk about this possibility, they are anticipating that we could reach recession or even depression levels. The sheer number of unemployment claims, as well as businesses who don’t have cash for overhead costs, will undoubtably result in national and global circumstances that fall within the recession and depression criteria. As a result, it will take years (or possibly a decade or more) before we return to the prosperous trends that were enjoyed just a few months ago.

Scenario #2: Continued Uncertainty, Slow Stock Market Rally

As businesses and individuals continue to adapt to the “new normal,” it is possible that the stock market can rally. When businesses can keep the money flowing, then it can help the economy as a whole so that we don’t hit rock-bottom. It won’t feel comfortable because of the ongoing pressure that companies are feeling as they strive to keep the cash coming in. But this scenario could keep us out of a potential depression.

This scenario is a likely possibility, especially as state and federal governments are proactive in easing a plan that brings businesses back to semi-normal activities. It is obvious that it won’t be an overnight change to go from Stay Home orders to business as usual. Instead, measures will be taken to open business doors as it makes sense, based on the safety of the population as a whole.

As the reports have said, ongoing testing and proactive medical care is essential in avoiding another shutdown in the future. So, businesses need to continue doing their parts in maintaining social distancing recommendations. If hot spots start to pop up, then the weeks of staying at home could quickly be undone.

Scenario #3: Fast Resolution, Fast Stock Market Changes

In the third scenario, the virus is quickly contained and people can return to their normal lifestyles. This scenario is only possible if herd immunity is developed or a vaccine is discovered that can be administered to the population.

A fast turnaround would be an optimal situation, but it doesn’t seem to be a likely scenario. If businesses can stay open and government action can stop the long-term effects of a financial crisis, then there is still a possibility of a sharp recovery occurring in the stock market.

How to Protect Your Business in These Uncertain Times

No industry is immune to the effects of this economic downturn and Coronavirus pandemic. But it doesn’t matter what is happening in the stock market – there are things that you can do to protect your business interests and keep the cash flowing. More than ever, it is time to be innovative and proactive in looking for ways that you can solve the problems people are facing during this challenging time. If you can help people get what they need, then the money will be available for your business.

Follow these tips if you are ready to minimize the impact on your business due to a slow economy:

  1. Business Support Stimulus: Take care if immediate cash flow needs by tapping into the various resources that are available to help struggling businesses during this time. Check out our recent blog post for more information about stimulus programs, small business loans, and other solutions that are currently offered for the Coronavirus pandemic.
  2. Design a Plan: Doing the same thing you’ve always done in your business isn’t going to work for the future. As the stock market fluctuates and the virus continues to spread, you need to be sure that you are implementing safeguards to protect your employees and customers. Write out a detailed plan that lists steps to follow if an outbreak occurs in your business. Look for ways that you can adjust current systems and processes to minimize risk while still keeping the business running.
  3. Digital Interactions: When possible, it can be helpful to encourage employees to work from home. Additionally, are there any options to change the way your customers can purchase products and services? If you have a website, explore options to add payment portals or digital distribution so that customers don’t need to visit your local office in person. Look for ways that you can offer delivery or curbside services. Depending on your business, you might be able to make small changes that support social distancing without harming your sales.
  4. Maintain Communication: Be proactive in keeping your customers updated about changes that are being implemented to protect the safety of everyone. Not only will these updates give your customers the peace of mind to know that the risk is minimal when they visit your store. But employees also need to be up-to-date about current policies and practices.
  5. Upgrade Cleaning Practices: Since the virus can remain on surfaces and transfer from person to person, it is essential that you take your cleaning practices to the next level. Sanitize all surfaces as much as possible, with daily routines to keep everything safe for your employees and customers. Make sure that there are plenty of cleaning supplies on hand, and design a system that engages employees in participating in the cleaning responsibilities. Everyone needs to be trained on proper sterilization methods.

Cash Flow Management for Economic Stability

More than ever, a “rainy day” fund is essential to keep your business afloat when future income is uncertain. If you don’t have an emergency fund in place, then right now is the perfect time to set aside a bit of money in an untouchable savings account.

Also, don’t underestimate the importance of working with a financial team that can assist in your cash flow management. As the stock market moves up and down, you can maintain peace and stability in your company by working with an accounting and bookkeeping team that can assist with your unique financial needs.

At Easier Accounting we understand how challenging it can be to stay on top of your financial reports. If you need assistance with tax strategy, payroll processing, or other accounting services, then we are here to assist. Contact us at your convenience to learn more about how our services can support your company during these times of economic uncertainty: (888) 620-0770.

Financial Emergency Preparedness for Your Small Business

Discussions of emergency preparedness have taken on a whole new meaning in the current economic circumstances we are facing. Not only are individuals and families assessing food storage and self-reliance, but businesses are also looking at their options for financial emergency preparedness. As the economy is slowing, do you have the cash reserves and emergency plan to keep your company afloat?

Whether you are closed due to government restrictions with the COVID-19 pandemic, or you are making ongoing adaptions to stay open for business in these uncertain times, there’s no doubt that things are changing. Every industry is being impacted by the current trends, and many business owners are carrying the uncertainty because they don’t know what is in store for the future.

Updating Your Financial Emergency Preparedness Plan

If you have a plan in place, then this pandemic and economic instability is the perfect reminder to be sure that your financial emergency preparedness strategies are up to date. A few changes or updates might be needed if you haven’t looked at your emergency preparedness in a while.

On the other hand, many businesses are realizing that they don’t currently have an emergency preparedness plan in place. If you are in this situation, then don’t delay in outlining the steps that need to be followed due to emergency circumstances. Follow these tips to help you (and your employees) prepare for anything that might happen in the future.

Tip #1: Gather Financial Information

Even though the COVID-19 pandemic is an invisible threat, it can help businesses see the potential impact if doors need to be closed due to a natural disaster. If you need to evacuate the building quickly, then it is smart to have financial information and valuable business documents in an easy-to-access location.

For example, you might have a fireproof safe where financial records are stored. Be ready to grab these documents and get out fast if there was a fire or another type of natural disaster in your area.

Another option is to ensure that these details are stored safely in a cloud account. Financial information should be carefully guarded to avoid digital theft. Only use cloud-based storage services that are encrypted and offer top-level protection for customers.

Tip #2: Emergency Policies in the Workplace

What policies should be implemented if an emergency happens in the workplace? Not only do these guidelines need to be written and documented, but employees need to be trained on the steps that should follow if needed.

For example, your financial emergency preparedness plan might include steps to follow if employees need to start working from home. Other action steps can be how exposure is limited by monitoring symptoms and minimizing interaction among employees.

Your workforce also needs to be trained on what should be done if a sudden disaster happens. Do people know where to pull the fire alarm or grab a fire extinguisher if flames break out in the building? What policies do you have in place if there is a medical emergency that occurs with one of your employees or customers? It’s easy to assume that the situation will be handled appropriately, but business owners need to be proactive in training managers and employees on the right processes that should be followed in these circumstances.

Tip #3: Encourage Employee Preparedness

Consider additional support to help employees with personal preparedness at home. Your company can lead by example by implementing these practices in the workplace. Maintain open conversation about the financial emergency steps that are followed, and encourage employees to do the same.

Simple steps include setting money aside in an emergency savings account and paying off debt balances. But freeing up monthly cash flow, both businesses and individuals can maintain self-reliance when things get hard.

Tip #4: Location-Specific Disasters

What are the potential disasters that could happen in your area? The truth is that general emergency preparedness and financial emergency preparedness vary depending on your location and industry. Some areas are prone to earthquakes, while other parts of the country might be at risk for flooding or tornadoes. It is important that you know the possible disasters that could impact your community. This information provides a pathway forward as you are designing your emergency preparedness plan.

The U.S. Small Business Administration has outlined checklists and safety tips that can be followed in disaster situations. Instead of listing these details here in this blog post, we recommend that you visit the SBA website for the most up-to-date recommendations for emergency plans.

Tip #5: Insurance for Your Business

An insurance policy gives you peace of mind in knowing that you have support if something happens that damages your business. Specific insurance recommendations vary depending on your industry and business location. Consider talking to an insurance expert to learn more about the recommended policies that are suggested for keeping your company protected in uncertain times.

Some of these insurance policies cover property damages and inventory loss in times of a natural disaster. Other policies are designed to keep you protected if an employee or customer is injured on site.

Even though an insurance premium is another cost to add to your overhead expenses, it is worth the investment to know that you are covered if something happens. Paying a little bit of money right now can save you thousands or even millions of dollars in damages when an emergency strikes in the future.

Tip #6: Know Where to Look for Financial Assistance

If a large disaster occurs, then you need to know where to look to access the financial resources that are needed to help you rebuild. Local and federal government programs might be available to offer money for immediate needs. For example, low-interest loans might be a solution if you need to rebuild a building that has been destroyed or damaged.

When your area has been declared a disaster, then don’t hesitate to take advantage of the programs that are in place to support small businesses. You need help with replacing equipment and machinery, managing inventory, and protecting business assets when these hard times hit.

Financial Emergency Preparedness for Your Small Business

Since every business is unique, it is important that you evaluate the potential risk of your small business in times of disaster. Look at your systems and processes to determine if there are any weak points that could leave you exposed.

What can you do right now to add security and protection for your business interests? A proactive plan is essential if you are going to stay ahead of the potential damages that could occur in the future. Financial emergency preparedness increases the likelihood that you will be able to keep your company going when hard times hit. Not only will you be able to keep your doors open during these challenging circumstances, but you will have systems in place so you can rally quickly after the disaster is over.

Plus, having an emergency preparedness plan brings a great measure of peace and calm to your mind. There is no reason to fear when you have an emergency savings account in place and a plan for how the business will be managed if something happens unexpectedly.

It’s Time to Get Your Business Finances in Order

Are your business financial reports a mess? If you are struggling to keep up with bookkeeping, payroll processing, and tax strategy, then it is essential that you hire an outsourced accounting team for assistance. A little bit of support right now can do a long way to keep your company protected if something should happen in the future.

When your financial systems are strong, it minimizes the impact you will experience in difficult times. Organizing your business finances is one of the most important things that you can do to avoid unnecessary hardship if a disaster happens.

Our team at Easier Accounting offers personalized solutions for small businesses. We want to help you prepare by building financial systems that sustain your business in hard times, and help your business grow in good times. Regardless of what the future holds, we offer the individualized support you need in protecting your cash flow and financial interests.

Financial Emergency Preparedness: Start Today

If you don’t already have a good financial system in place, then we encourage you to contact our team as soon as possible. We’ll answer your questions and assist in identifying the best solutions that will support the needs of your business going forward. Our services are always focused on a personalized approach for every business.

We specialize in small business accounting and know the best strategies to help your company thrive. The simplest way to get started is by reaching out to schedule a consultation. We’ll explain your options, answer your questions, and help you see how your business will benefit from personalized accounting services.

Are you ready for more information? Contact us at Easier Accounting for the assistance you need in designing the right systems for your financial emergency preparedness: (888) 620-0770.

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.

Accounting Steps to Set Your New Business Up for Success

The systems and processes set up in the newest stages of your business will have a profound impact on the long-term success of your company. It is an optimal time to implant a solid foundation that you can build on for years to come. One of the most important aspects of financial success is to implement specific accounting steps so you can track income and expenses within the company.

If you don’t have a formal background in finance or business management, then these accounting steps might not seem intuitive. Too often, new business owners assume that they can maintain their focus on customer acquisition and product development, and then deal with the financial details later. Yes, you can choose to leave accounting and bookkeeping on the backburner… but you need to consider the long-term consequences that might be faced by ignoring these important elements of running a business.

At Easier Accounting, we understand the importance of following a proven financial system when starting a new company. Our team is here to assist with the essential accounting steps, helping you create an effective system that will serve the needs of your company – now and in the future. You are welcome to contact us at any time if you are interested in learning more about how these available services can have a positive impact on your new business.

New Business Idea, But Don’t Know Where to Start?

Starting a new business can be both exciting and overwhelming at the same time. You probably feel like you have a long list of to-do items: business registration, local licensing, product manufacturing, website design, accounting systems, and more.

Don’t let yourself be paralyzed by all of the things that need to be done. Instead, consider the benefits of tapping into information and support offered by experts. Finding specific skill sets to support your business needs can be an invaluable way to share the responsibility. As a result, you don’t have to navigate the rocky road without support.

Our team at Easier Accounting specializes in financial systems for startups and small businesses. We are here to guide you through the accounting steps to create a solid financial system that will support the needs of your company. Here are a few important steps to follow:

  1. Open Business Financial Accounts: Even if you are starting as a sole proprietor, it is important that you have clear boundaries between personal spending and business spending. You need to know where your income will be going and how you will be paying for business expenses. Keeping the business finances separate makes it easier to track the results of your business efforts, and it is much easier to gather applicable information for your accountant when tax time rolls around. Choose a financial institution that you would like to use and find out what is needed to set up a business bank account. Set up a business savings account, checking account, and even one or more credit cards that can be used if needed.
  2. Track All Expenses: The costs can add up, especially when you are getting the business off the ground. Implementing these accounting steps in the earliest stages of your business efforts means that you will be able to maximize available tax write-offs. If you want to claim the deductions, then you need to keep records of the money that is spent for business purposes. A good accounting system can be an invaluable asset in tracking every expense for your business. Also, hold onto any related paperwork, such as receipts, bank statements, canceled checks, bills, proof of payment, invoices, financial statements, 1099 forms, or any other documents related to income or expenses. Get in the habit right now and you will find it easier to maintain the momentum of tracking every transaction and keeping every document.
  3. Implement a Bookkeeping and Accounting System: Using proven computer software can be a valuable asset to track all of the transactions moving through your account. The easiest way to get started with a bookkeeping and accounting system is to hire an accounting expert who can help you line up the financial accounts and integrate everything with your point of sale systems. Not only should you start using accounting software as soon as possible, but it is smart to have monthly services that help you keep up with reconciliations and ongoing bookkeeping. It is a time-consuming and boring task to monitor all of the business transactions, which is why you are smart to outsource these tasks to an experienced small business accounting team.
  4. Payment Processing: Two details need to be considered when it comes to payment processing. First, you need to have a system in place to receive payments from your customers. Next, you need to consider how you will be paid and how the money will be provided for contractors, employees, and accounts payable invoices. Most businesses don’t manage only on cash. You need to have a digital system that can be used to accept payments through mobile apps and/or credit cards. These systems ensure convenience for your customers when they are ready to buy the products or services that are offered. Will you accept online payments only? Or do you need to have the option for in-person payments as well? These details will influence the type of system that is selected to match your business needs. At the same time, you also need to have a streamlined system in place to ensure that you are keeping up with payroll and other bills that are due throughout the month.
  5. Payroll Processing: Setting up a payroll system deserves a mention on its own because of the importance of taking care of your employees. Payroll processing is a bit more complicated than providing a credit card number to pay a bill. This necessary task requires withholding calculations, ongoing deposits for tax payments, benefits calculations, and more. While there are payroll processing software systems that can be used, it is best to work with an experienced payroll provider for assistance. Consider hiring an accounting team that offers both payroll processing and tax strategy so you have the convenience of all financial services from one provider.
  6. Design a Good Tax Strategy: Now is the time to hire an experienced tax accountant who can assist with your tax strategy throughout the year. There’s no need to hire a full-time accountant in your company. Most small businesses don’t have the cash or resources to pay for the accountant’s salary. Instead, consider the benefits of outsourced accounting so you can talk to a tax pro without the need to carry the overhead costs. As you are choosing accounting services, it is best to pick an accounting provider that understands your unique needs and specializes in small business services. Tax strategy varies depending on the type of company and the size of the business. A small business accountant will know proven methods that can be applied to your business, which will optimize your overall results.
  7. Systems for Monitoring Business Profits: It is essential that you monitor profits and losses throughout the year. Even though you might feel like your business is doing well, it can be a surprise to look at the numbers and discover that your margins are tighter than you thought. Implement accounting reports so you can see how much is going out and how much is coming in. This data can help you evaluate the true costs for the production and sales of your goods or services. Then, you can determine if your pricing is accurate to ensure that you are staying in a profitable space with your business efforts. Also, keep in mind that good financial reports are essential if you decide to bring in outside investors in the future. You need to show the history of the company’s success before people will be willing to invest in your business efforts.
  8. Ongoing System Upgrades: Following these accounting steps will ensure that you start in the right place with your new business venture. But you should never assume that your new accounting and financing strategies will last forever. The truth is that you should always be monitoring the effectiveness of your accounting systems. If weak points or areas of opportunity are uncovered, then you can tweak the system to ensure that you are maintaining the highest levels of performance within your company. An experienced accounting team can assist with the ongoing management and maintenance needed for your business financial systems.

These accounting steps show an overview of what you need to be doing for your new business. It is common for business owners to have questions about how the details should be implemented based on the unique needs of their company. If you are interested in learning more about your options, then our team at Easier Accounting is always just a phone call away. Contact us to discuss available accounting services and how this support can have a positive impact on your business success. Call our team at (888) 620-0770.

10 Business Tax Deductions You Should Be Leveraging

Tax Day is still a few months away, but you shouldn’t wait until it’s time to file your taxes before thinking about the deductions that can be used for your business. Are you leveraging the business expenses correctly to take advantage of the available write-offs? One of the benefits of having a small business is that you can deduct certain expenses that are necessary for your business efforts. It can be hard to keep up with all these transactions, which is why you might consider leveraging the services of an outsourced accountant for assistance.

How Tax Deductions Work

A tax deduction, also commonly known as a business write-off, is particularly useful for small business owners and anyone self-employed. Whether you have a small side-gig at home or you are working full-time on a start-up, you can manage your tax burden by deducting expenses that are spent on business costs. Even if you are a W-2 worker and earn income from an employer, you can still write off any expenses related to business efforts outside of your employment.

This process lowers the income on paper, showing a reduced taxable income when it is time to file your taxes. As a simple example, if you collect $100,000 in a given year through the business, but you spent $20,000 on business expenses, then your taxable income for the year would be $80,000.

The IRS has a detailed tax code, which includes allowances for small business owners and self-employed workers to write-off business costs. If you are spending money that is required for your business, then it can likely be listed as a write-off. The best way to ensure that you are following the rules is by hiring an experienced tax accountant for tax preparation and filing. For example, an outsourced accountant will help you in determining the expenses that qualify as tax deductions. The goal is to maximize the write-offs as much as possible, while staying within the guidelines set by the IRS.

IRS Guidelines for Business Write-Offs

The IRS allows deductions for anything that can be categorized as a “reasonable business expense.” A few specific guidelines are in place to help you determine if your expense can qualify as a deduction:

  • The cost is related to your business directly
  • The expense is necessary and ordinary
  • The amount spent is reasonable

Examples of Tax Deductions for Your Business

Here are some of the most common tax deductions that are used by small business owners:

  1. Health Insurance Premium: Most people who are self-employed need to pay for private health insurance. Since you don’t have an employer to provide health care support, you can write off a portion of your insurance premiums.
  2. Vehicle Mileage: Track your miles throughout the year because a per-mile deduction can be used on your taxes. These driving miles need to be related to your business. For example, if you drive to the bank or you are driving to meet a client, then those miles can be included on your log for the year. Your commute to and from work does not count as deductible mileage.
  3. Home Office: Do you work from home? A portion of your rent/mortgage, utilities, and more can be written off as tax deductions. It is important that you have a dedicated space for business activities. Additionally, it needs to be the primary place where your business is operated. Then, this square footage can be calculated based on the overall size of your home and the associated monthly expenses.
  4. Professional Fees: Hiring an accountant or lawyer for assistance with your business can be a tax write-off. Any legal or professional fees that are paid for business purposes fall into this category. For example, if you hire an accountant to assist with tax preparation, then the cost of the accounting services can be included in your list of expenses for the year.
  5. Retirement Savings: Self-employment tax deductions can be used if you contribute money into a retirement savings account. The numbers vary from year to year, so the best solution is to work with your accountant and a financial advisor to determine the amount that can be deducted. Your financial team can also provide guidance regarding the most effective way to invest this money. Options include 401(k)s and IRAs.
  6. Startup Costs: Getting a business off the ground can be expensive. Not only are you putting money into product development, hiring employees, and office supplies, but the marketing and initial costs can add up over time. Keep track of all of these expenses so you can use them as tax write-offs.
  7. Bad Debt: Do you have uncollected money from customers? When accounts receivable turns into bad business debt, then it can be used as a tax deduction. In this situation, you need to have documentation proving that you took reasonable steps to collect on the invoice.
  8. Travel and Food: When you are taking a business-related trip, keep track of the expenses incurred for airline tickets, car rental, taxis, hotel fees, and more. You can’t write off personal vacations that aren’t related to business. But there are times when you can travel for business to leverage the write-offs, while still having a bit of time for entertainment or personal activities.
  9. Charitable Donations: Donating to a charity of your choice is a great way to feel good about giving back to the community. Additionally, these donations can be used as tax deductions as well. The rules change depending on the type of donation, the recipient, and the amount that is donated, so talk to your accountant for more information.
  10. Continuing Education: Most business owners need to continue learning to stay relevant in the industry. If you pay for work-related education, then those costs can be used as tax deductions. Examples include tuition, lab fees, books, supplies, transportation to the classes, and any other expenses related to your participation in the classes. For these expenses to qualify, the classes need to “maintain or improve skills needed in your present work.”

Tips to Maximize Your Tax Write-Offs

As you can see, there are many ways you can increase your tax deductions each year. But it takes work and organization to ensure that you are taking the write-offs your business is entitled to. Taking as many deductions as possible can help to lower your taxable income, which in turn reduces the amount that you will be paying in taxes each year.

Are you leveraging the write-offs for your business? Here are a few tips to follow so that you get the best results possible with your tax deductions:

  • Good Bookkeeping System: It is essential that you are keeping track of all of your business costs. In order to utilize the deductions, you need to know where the money is going. Use a bookkeeping and accounting system to record every transaction that moves through your bank accounts and credit cards. You need to have specific details about the amount of money that was spent, how it was spent, as well as documentation to back up the spending. The IRS won’t accept estimates, and you might need to verify the write-offs if you are audited in the future.
  • Check the Requirements: Talk to your accountant about specific requirements that need to be met for the deductions. For example, you should keep copies of the receipts when purchases are made. You can file these paper copies in a folder for each year. Or, consider a digital system with scans or photographs of the receipts for easy reference. Other requirements include logs or tracking information, such as a mileage log that records the odometer, purpose of the driving, and the number of miles traveled. This documentation does not need to be filed with your tax return, but you need to have it available in case there are questions about your filings in the future.
  • Simplify and Outsource: You can spend your time filing receipts and recording the transactions, but these busy-work activities are a waste of time when you can hire an outsourced accounting team to help. As a busy business owner, you shouldn’t be spending your limited hours on tasks that can be handed off to the experts. Instead, focus on your strengths and skills, and let the pros handle the number crunching and reporting for you. Outsourced bookkeeping and accounting allow you to focus on your business without getting behind on the never-ending paperwork and admin tasks.

When it is time to file your tax return, your accountant will help you claim the write-offs in the correct Schedule C section of your 1040. As this information is compiled, make sure you have open communication with your accountant regarding the rules around the deductions you are planning to take. An experienced tax accountant can provide valuable advice to help you avoid problems with the IRS in the future.

Easier Accounting is Here to Help

Are you ready to maximize your tax deductions for your upcoming tax filing? Our team at Easier Accounting is here to assist. Not only can we help with your current tax prep, but we can also create a system to ensure that you aren’t overlooking important deductions in the future. Call to learn more about available accounting services: (888) 620-0770.

Why Tax and Accounting Services are Essential for Small Businesses

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

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

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

Step-By-Step Guide for Small Businesses

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

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

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

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

Income

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

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

Expenses

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

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

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

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

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

Why DIY is a Problem

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

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

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

What You Can Expect from Tax and Accounting Services

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

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

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

Do You Need Small Business Tax Services?

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

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

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

How to Design the Best Accounting and Bookkeeping Systems for a New Startup

New startup entrepreneurs often experience the same things in the beginning stages of their business efforts: a to-do list that is miles long, and unending tasks to get the business off the ground. Accounting and bookkeeping systems should be a priority, but these tasks often fall to the backburner as efforts are focused on other business-building efforts.

It isn’t easy to start a business, especially when you are carrying the responsibility of managing the finances, product development, customer acquisition, and more. Most small business owners don’t have formal training in accounting and bookkeeping, which is why it can be valuable to enlist the services of an expert team. Accounting services aren’t only needed for tax preparation and filing, but these services can be invaluable to help you track profit margins, expenses, and more.

The right financial reports for your business will empower you in making the decisions that will propel your company forward in the future.

Good Systems Help to Grow Your Business

Your ultimate goal is to help your company grow, which is why it makes sense to spend your time on activities such as product development and marketing. These efforts will bring in the cash flow that will keep the business running. But you need to make sure that you are looking at historical trends and evaluating the possibilities for the future. Accounting and bookkeeping systems are integral to this process.

Tracking financial activity ensures that you aren’t overlooking potential tax write-offs and deductions. At the same time, you can implement systems that support budgeting goals and control spending. Too often, profit margins slip through the cracks, which is why a business financial system is essential for your success.

The Difference Between Bookkeeping and Accounting Systems

People often use the terms “bookkeeping” and “accounting” as synonyms. But there are distinct differences between the scope of work and services available. Bookkeeping and accounting work hand-in-hand, but it is important that you understand the ways they differ. Here’s a quick overview of the differences:

  • Bookkeeping: A person or team offering bookkeeping services might have a certification and/or on the job training experience, but it isn’t required to have a degree in the industry. Bookkeepers are responsible for managing the day and day out transactions of the business. Usually, bookkeeping services do not include audits or tax return filing.
  • Accounting: On the other hand, accounting services are focused more on the strategic side of financial management. An accountant steps in to help with financial supervision, which may include tasks such as bank statement reconciliation, tax strategy, tax preparation, and more. An accountant uses the information provided by the bookkeeping team to be strategic in the financial growth and overall financial health of the company.

It is important to consider both account and bookkeeping systems. Bookkeeping entails the ongoing recordkeeping activities for your company. Good bookkeeping software can be used to track and categorize the day-to-day transactions. At the same time, accounting taps more into the strategic side of running a business, helping you see the best strategies to manage tax burden and help your company grow.

Steps for Setting Up and Implementing Financial Systems

Are you trying to decide where to start with the implementation of a financial system? Here are a few steps that should be followed to help you get started on the right foot:

  1. Choose and Setup Accounting Software: A good software program is key to reduce busywork and improve overall results of your financial system. Not only do you need to select the software you would like to use, but you also need to have systems in place for the ongoing management of the transactions that are moving through your account. Business bank accounts are connected, but accounting and bookkeeping services are still needed for data entry, reconciliation, and more. Accounting programs are designed with checks and balances in place that help to reduce errors and automate the processes as much as possible.
  2. Open a Business Bank Account: All of your personal and business transactions need to be kept separate, which is why it is smart to open a new bank account dedicated to your business. Not only do you need checking and savings accounts, but it can also be helpful to have a business line of credit and a business credit card. Make sure all business transactions are moving through these accounts without getting mixed up in your personal spending.
  3. Hire a Financial Pro: It can also be helpful to hire professional services for accounting and bookkeeping. You are already juggling many responsibilities for your startup. Adding more busywork to your schedule only increases your stress levels and makes it harder to keep up with everything. If you find it challenging to be consistent with these ongoing bookkeeping tasks, consider the benefits of bringing in an expert team to oversee the details.
  4. Stay Consistent with Financial Tracking: Keep in mind that setting up the financial system is just the first step. It won’t help you to have a bookkeeping or accounting system if you aren’t using the available tools. Even though automation is implemented to track the money moving through your account, you need to be consistent about reconciliations and reviewing the details. Your decisions can be based on the financial health of your company, but this information is only accurate if you are consistent about ensuring the accuracy of the recorded transactions.
  5. Look to the Future: It can be beneficial to evaluate upcoming costs and potential areas of growth in your business. When you are proactive with maintaining good accounting and bookkeeping systems, then you can turn your attention to the strategic element of helping your company grow. You can rest assured, knowing that financial reports are accurate. At the same time, you can anticipate expenses that are coming up to help you manage the way your money is being used.

The Benefits of Bookkeeping and Accounting Services

As you learn more about the available benefits for your company, it’s easy to see how accounting and bookkeeping services can be valuable to boost your success and set you up for future growth. A good system helps you with the separation of personal and business finances. It is important to have a clear distinction by using different accounts and financial systems.

Also, bookkeeping and accounting services help you avoid common financial errors. Not only are you tracking the way the money flows through your accounts, but the reconciliation processes help to catch potential mistakes and fraud in the early stages. Identifying these problems right away is essential so that you can implement steps to stop the issue before things progress.

The most important benefit that you will find that is that accounting and bookkeeping systems are effective in streamlining your tax strategies, helping you maximize tax deductions. It feels good knowing that you are prepared for the upcoming tax deadlines, with enough money set aside to pay the bills. There is no reason for you to spend your valuable time crunching the numbers. Your accounting team can handle these details and provide the reports that break down your tax burden each year.

DIY Accounting and Bookkeeping Mistakes

The most important thing that you should keep in mind is the potential for mistakes and errors when you attempt a DIY approach for setting up these systems. Too often, startups are looking for ways to save money, so they implement a DIY accounting system. The problem is that errors are occurring and the system isn’t structured correctly.

Even though it seems like a savings in the beginning, the long-term costs can add up and make it more expensive in the long run. When the accounting and bookkeeping systems have been set up incorrectly, it can be expensive when an experienced accounting team needs to step in to redo the work.

The most effective and efficient solution is to get started with an experienced accounting team from the beginning. The money spent on these services is truly an investment that will help your company avoid common mistakes. By side-stepping these common issues, you can save yourself both time and money in the future.

Instead of cutting corners by trying to save money on accounting and bookkeeping services, look for other areas where you can reduce your business expenses. In fact, a good accounting and bookkeeping team can help with your budgeting strategy. Often, business owners find that the tax savings and financial streamlining is well worth the investment that was paid for services from a professional accounting team.

Talk to the Accounting and Bookkeeping Pros

What questions do you have about setting up accounting and bookkeeping systems for your small business? If you are evaluating your options, then we invite you to contact our experienced team for assistance. At Easier Accounting, we specialize in small business solutions. We’d love to have a conversation to help you identify the way our services can support your startup and boost your long-term profitability: (888) 620-0770.

5 Tips to Improve Business Financial Systems

Financial management is key if you want to set your company up for success in the future. Are you using business financial systems that are current in the industry and relevant to your business needs? If your accounting and bookkeeping system is outdated or under-performing, then it might be time for you to invest in an upgrade for your company. Not only can you streamline your financial tracking and reporting, but it gives you peace of mind to know that everything is up-to-date when looking at financial reports.

Modern Solutions to Improve Your Business Results

Too often, business owners are overburdened with many responsibilities, causing them to overlook some of the most basic steps that need to be implemented for financial tracking. One of the biggest problems is that business owners are missing the right financial system to handle the transactions that are moving through. For example, if you are using any systems that require manual entry, then it is a sign that you are missing out on the benefits of automation in the bookkeeping and accounting systems.

Don’t waste your time doing manual calculations or combing through financial reports. Several effective solutions can be used to improve your business financial systems. Today, we are sharing a few of these tips to help with the improvements that are needed to maximize your financial systems.

Tip #1: Automate Whenever Possible

One of the greatest advantages of technology is that it opens up possibilities for automation. Implementing the right accounting and bookkeeping system will allow you to automate transactions as they move through your account. These solutions help to reduce the time that you are spending on accounting tasks throughout the week. What would you do with the extra time if you were able to let go of manual calculations and eliminate stress about the tracking of transactions?

Additionally, automation helps to reduce the risk of error or mistakes. Even if your team is trained to use the system correctly, there is always a risk that a typo or mistake could throw off your financial report. One wrong number can have a domino effect that results in inaccurate reporting and false information. These human errors can be avoided by using an automated system. At the same time, you will have peace of mind knowing that the automation helps to decrease the risk of fraud.

A variety of accounting and bookkeeping software programs can be used for your business. If you are looking for the right program to meet your needs, then our team at Easier Accounting is here to answer your questions. Call us any time to learn about the automated solutions that can improve your financial system.

Tip #2: Choose Effective Software Features

As you start to learn more about the software programs available for business financial systems, you must understand your business goals to identify the right solutions for your company. These are some of the tools, features, and functions that are often included in the best accounting and bookkeeping systems:

  • Report Generation: You need to be able to run financial reports on-demand, which is why it is important to have built-in reporting systems.
  • Data Fetching: Automation is available when the business financial systems have built-in features that fetch data from your bank account. These transactions can be added into your accounting system automatically, without the need for manual data entry.
  • Invoicing: Most accounting systems offer the feature of invoice creation and management. You can view the invoices that are unpaid to know where you need to follow-up to collect payment. It is a huge benefit to automate invoicing so that you can reduce stress and mistakes related to payments and collections.
  • Payroll Processing: It doesn’t matter if you have 2 employees or 200 employees… payroll processing is an essential task that needs to be handled regularly. An automated accounting system makes it easy to track payroll information, including tax withholding, benefits, and more.
  • Expense Management: Set up checks and balances in the system that require management review when certain transactions come through. This process can be valuable to ensure that you are avoiding redundancies or unnecessary costs that are cutting into your profit margins.
  • Tax Forms: When tax season rolls around every year, you are required to provide the right tax forms for your employees and contractors. If you are using the right business financial systems, then it means that these tax forms can be generated automatically.

Tip #3: Avoid Paperwork

While business paperwork is sometimes unavoidable, there are ways that you can improve your systems to reduce the number of pages that are coming across your desk. The problem with physical paperwork is that you not only have to review the information, but it also needs to be filed and managed after you are done with those pages.

Good business financial systems are designed to minimize the dependence on printed paperwork. If you need to look at a report on paper, then you have the option to print out the pages that are needed. But most of the time, the information is stored in the cloud, helping to reduce the clutter and stacks on your desk. It feels good to get out from under the piles of paperwork that tend to stack up in an office. All paperwork can be stored and managed in a digital format: contracts, invoices, receipts, and more.

Decreasing the paperwork that is used is essential if you are looking for ways to improve productivity among employees and managers. There’s no reason to have people sorting through loose pages when everything can be categorized and accessed quickly online. Filing cabinets can be burdensome and frustrating to work with, which is why many businesses are moving away from paper filing and using cloud-based accounting systems instead. Plus, you will be glad to know that you are doing your part to protect the environment.

What are your options for paperless financial tracking? Talk to our accounting team about cloud-based financial systems that can be used for your small business. These solutions give you access to the reporting and all of the accounting numbers with the touch of a button. For example, you don’t need to print invoices or reports when you can access all of the information through a smartphone or laptop computer.

Tip #4: Make a Plan and Stick to It

You need to have a clear picture of where your business is in the current moment, and where you are heading in the future. The right business financial systems will allow you to use the insights and data to create an actionable plan that will be beneficial for moving your company forward.

As you are setting goals, you should have clarity about your intentions for expansion, business development, inventory management, and more. Focus on your financial goals, then be sure that your systems are designed to move you towards those goals.

Planning can be done on both macro and micro levels. For example, not only do you need to think about the annual goals, but you also need to have plans in place regarding quarterly and monthly budgets. Implementing this level of planning will help you make meaningful progress forward because you will have the resources that can be reinvested into marketing and business development.

Tip #5: Hire Outsourced Accounting Services

Finally, don’t overlook one of the most effective ways to improve business financial systems: hire an outsourced accounting team. These professional services can be used to leverage your financial results and improve your business finances in many ways. Hiring an outsourced accountant or bookkeeper means that you can hand off the responsibility to a team that understands the most effective way to track financial information.

It is incredible to see the productivity improvements that can come by letting the pros take care of these financial services. For example, your accounting team can handle a variety of services, such as payroll processing, tax strategy, account reconciliation, and more. As you are looking for options to improve business financial systems, talk to our team about the personalized services that can be used based on the needs of your company.

Hiring a trusted team to oversee your business finances can be one of the most effective ways to amp up your results. You must have a clear picture of the financial health of your company at all times. We can help with the implementation of the right bookkeeping and accounting system. Then, our team will offer ongoing support to ensure that you are keeping up as things change throughout the year.

Are you looking for support with your business financial systems? Our team is here to help! At Easier Accounting, we provide a variety of small business accounting solutions designed to support your goals. We invite you to contact us for information about the available services. Call our experienced team any time to find answers to your questions and proven solutions that are the right fit for your business needs: (888) 620-0770.

Business Mileage Tracking: Creating a System that Works

One of the benefits of being a business owner is the opportunity to manage your tax burden by leveraging write-offs and deductions that are available. Not only can you write off office supplies and business services, but mileage tracking can be another powerful way to maximize the deductions that are available.

These mileage deductions can be worth a lot since the write-off calculation is based on the number of miles driven in the year. The problem is that many business owners use the vehicle for both personal and business purposes, making it challenging to determine the number of miles that were used for business activities.

Two Options for Mileage Deductions

Working with an experienced small business accountant is the best solution to identify the right method for calculating your tax deductions. Every business is unique, which is why it is always smart to consult with an experienced professional who can offer personalized recommendations.

You’ll find that two methods can be used for mileage deductions:

  1. Standard Mileage Deduction: The IRS sets a certain amount each year that can be used for every mile you drive for business activities. This number changes with time; increasing to accommodate the rising costs of vehicles and maintenance. The calculation is simple because you need to multiply the number of miles driven by the standard rate for the year. You can find the published annual rate on the IRS website.
  2. Actual Expense Method: On the other hand, you can deduct the cost of repairs, gas, insurance, and all other transportation-related costs when you choose the actual expense method. This calculation can be burdensome and time-consuming because of all of the calculations that are required. Not only do you need to focus on business mileage tracking, but you also need to keep track of all applicable expenses.

Recording Business Driving

The IRS requires that your mileage is tracked by recording every mile you drive throughout the year, using a diary or logbook. Every time you get in the car, the trip needs to be recorded. Then, the business miles are pulled out and calculated to determine the write-off for the year. You must record the starting mileage on the odometer, the ending mileage on the odometer, and the reason for the trip.

The problem is that this method can be burdensome and easy to forget when you are working. Most people don’t want to take the time to record the information every time they get behind the wheel! One option is to use the sampling method. This strategy requires that you are consistent about keeping track of your business mileage for a portion of the year. Then, these figures are used to determine the mileage for the whole year by extrapolating the numbers that were calculated when you were recording the business mileage. The sample period needs to be a minimum of 90 days, or you can choose to sample one week per month.

With the sampling method, the assumption is that you are driving about the same amount for business all year long. Even though you aren’t tracking your mileage all the time, you will still need to maintain an appointment book showing the consistency of appointments throughout the year.

IRS Requirements for Business Mileage Tracking

What needs to be included if you choose business mileage tracking to leverage the available deduction? This write-off is offered to 1099 workers, such as small business owners, self-employed people, and freelancers.

W2 workers cannot deduct mileage for tax write-offs. But if a person is working a W2 job and has a business on the side, mileage can be tracked and used as a deduction when driving for the side business.

Qualifying trips include anything related to business activities. For example, you should record your mileage when driving to the bank, picking up office supplies, meeting clients, or driving between offices. Your commute can’t be deducted, but you can track your mileage if you are in the car to run business errands or attend meetings.

The IRS requires that your mileage log includes the following information:

  • Mileage details – the number of miles driven
  • Date of the trip
  • Places you drove
  • The purpose of the trip

At the end of the year, you will need to calculate the total number of miles driven, broken down into three categories: business, commuting, and personal trips. The most effective way to keep these records is by recording the information daily.

Paper or Digital Business Mileage Tracking?

You can keep a dedicated notebook and pen handy and write down the details every time you get in the car. This manual method of tracking is legitimate, but it can be a bit tedious… especially when you need to pull all the numbers together at the end of the year.

Another option is to use a mileage app. A variety of smartphone apps provide the information that the IRS needs, giving you an automated way to log, track, and calculate the mileage details for each trip. The IRS will accept either paper or digital tracking logs, as long as all of the required information (listed above) is included.

One benefit of choosing a digital tracking system is that you can keep a back-up of your records. A physical mileage book could be easily lost or damaged, resulting in problems later on if you need to show the documentation. On the other hand, a digital business mileage log can be saved to the cloud and backed up. The right digital filing system is a powerful way to ensure that your information is never lost along the way.

Tracking your mileage for a business write off is different than a gas logbook to calculate mileage efficiency. If you are keeping a gas logbook, it is still necessary to have a separate tracker for business mileage tracking.

Features of Mileage Tracking Apps

The technology and app access changes so quickly that it can be hard to stay current with the latest recommendations. If you are looking for an app that tracks your mileage, then the best solution is to ask your small business accountant for current recommendations. An online search can also be a great resource to help you compare features and options.

These are some of the features that should be considered when choosing a mileage tracking app:

  • Automated tracking using GPS to detect when and where you are driving
  • Organization of business and personal trips to calculate mileage for the year
  • Minimal drain on your phone battery
  • Documentation for all IRS requirements
  • Option to add a manual trip as needed
  • Easy data exporting to provide information to your accountant

Here are a few mileage tracking apps that you might consider, you can search for them in the app store on your cell phone (such as iTunes or Google Play):

  • MileIQ
  • Everlance
  • Hurdlr
  • Mile Expense Log
  • Stride Drive
  • TripLog

You’ll see that most of these apps are either free or require a minimal monthly fee. It’s worth a few bucks a month to have the right tool that simplifies your life by helping with mileage tracking!

Documentation for Business Deductions

Even though it is important to keep track of mileage logs and other documentation for business deductions, these documents don’t need to be provided to the IRS when it is time to file your taxes. Your business accountant can help with tax preparation and filing based on the records that were kept throughout the year. Keeping accurate and detailed records ensures that you can maximize the potential write-offs, helping to decrease the tax burden you will be carrying.

After the tax return is filed, you still need to hold onto this information in case the IRS requests documentation in the future. If you are selected for an audit, then you will need to provide full information to back up the deductions that were claimed on your tax returns. You may need this information for up to seven years after the taxes are filed.

Leveraging Deductions for Your Small Business

It is easy to let the deductions fall through the cracks when it seems like all of the expenses are small. But a few dollars here and there can add up over the year, resulting in significant tax savings. Why pay more for your taxes when you have the option to write off some of your spending?

Small business tax deductions vary depending on your business model. An experienced, outsourced accountant can offer recommendations and advice about the best ways to leverage your spending and use the deductions to your advantage. Any time you are driving your car or spending money related to business efforts and activities, it is smart to record the details so that you can use them for your taxes.

If you are looking for help with your tax preparation and deductions, then Easier Accounting is at your service. Call our team to learn more about the small business accounting services that are available: (888) 620-0770.