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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.

7 Effective Tips for Designing a Good Accounts Payable System

One of the most important things you can do as a small business owner is to design a good, organized system for managing your books. Do you feel like you have a handle on your accounts receivable and accounts payable system? Today, we are sharing a few tips to help if you are looking for ways to improve your bookkeeping and accounting practices.

While there are tons of resources online about small business finances, sometimes it can be a trick to know where the actionable points are that need to be implemented into your system. Our team at Easier Accounting has put together some of the “best practices” that will keep your systems running smoothly, giving you a good foundation to help your business grow.

Accounts Payable System: What is it?

It can be hard to understand the lingo if you aren’t familiar with the accounting industry. Your accounts payable system is the tracking method that you are using to see the outstanding bills and handle payments that need to go out to your external vendors.

There are many times when your business receives products or services, but the payment isn’t issued upfront. Instead, you are billed for the amount due; then payment is sent within a specified timeframe. For example, a vendor that provides office supplies for your office will send an invoice that shows the due date for the payment that needs to be remitted. These accounts payable invoices are basically short-term debt liabilities that need to be paid right away.

Accounts Payable vs. Accounts Receivable

Don’t be confused by the two terms used in the accounting and bookkeeping industries: accounts payable and accounts receivable. As mentioned above, accounts payable is the tracking of balances that you owe to other vendors. On the other hand, accounts receivable shows the invoices that you can collect on: the balances owed to your company from your customers.

A good bookkeeping and accounting system will include systems for both accounts payable and accounts receivable tracking. This information needs to be managed so that you can be sure that money is always in the bank when it is time to pay the bills that are due.

Why Accounts Payable Matters

It can be hard to keep track of all of the payments that are due if you don’t have a good filing and tracking system for the invoices that are coming through. Not having a good accounts payable system in place means that you could miss payment due dates, often resulting in late fees and interest charges. If payments are missed altogether, then your services could be disrupted, or the balance might be sent to a collections department.

Without the right bookkeeping and accounting system, your vendors will lose patience, and your reputation will suffer. It’s hard to keep your business running if you don’t have control over your cash flow.

7 Tips to Improve Your Accounts Payable System

As you can see, you must have a good system in place to manage your accounts payable system. Here are a few tips and benefits if you are looking for ways to implement a new system or upgrade your current system:

  1. Leverage Automation: Technology has transformed the way you can do business. It makes sense to leverage automation whenever these features are available. There’s no reason for you to spend time on busy work (like manual financial calculations). With manual calculations, you need to not only receive the invoice that comes through, but also record the information, track the payment date, and ensure that the payment is processed at the right time. This process can be tedious and time-consuming.
  2. Minimize Human Error: Unfortunately, there is always the risk of human error at every step of this process. This busy work can be skipped by using a system that uses automation to track everything. Not only will your system be streamlined, but you can avoid common problems that occur if mistakes are made. A good accounting system has built-in checks and balances, helping you catch potential errors if they occur. This proactive approach is essential for minimizing the risk of on-going fraud within your organization. We live in a time where fraud is a potential risk in any business, so you need to be diligent about protecting the interests of your company.
  3. Save Money: It might seem counterintuitive that paying bills will save you money. But, remember that staying current with those outstanding bills makes it possible for you to avoid additional costs, such as interest charges and late fees. If you are trying to manage your cash flow, then you need to be sure that you are proactive in avoiding unnecessary expenses for interest and fees. A good accounts payable system reduces the likelihood of late payments because you are always staying ahead of the balances that are due.
  4. Improve Communication: When you are using the right accounting and bookkeeping system, you can utilize built-in communication features that keep your vendors and clients updated on the status of invoices. One thing to consider: sometimes early payment discounts are offered if payment is received in a certain timeframe. Improved communication through your accounts payable system means that you might be able to leverage these discounts by paying the invoices early when money is available.
  5. Simple Financial Reports: Centralizing your accounts receivable and accounts payable systems is an effective way to have access to important financial reports. When you are making business decisions, both big and small, it is smart to have a clear picture regarding the financial health of your company. These reports can be accessed quickly and easily, giving you the information necessary to make educated decisions regarding the money that is spent.
  6. Eliminate the Paperwork: Do you feel like it’s a hassle to deal with paperwork that is always moving across your desk? In addition to the immediate management of the papers, you also need to have a filing system in place so that you can reference the documents whenever they are needed in the future. This mess of paperwork can be avoided by going digital. Choose an accounting system that offers cloud storage solutions. As a result, you can see your bookkeeping and accounting information at any time, even if you are away from the office.
  7. Built-In System for Following Up: Cash flow is an ongoing battle for many small business owners, so you need to be diligent about keeping track of the payments that clear your bank account. For example, you could potentially run into issues in the future if one of your vendors is late with the deposit of your check. As a result, the transaction might clear months later, which could throw off your cash flow if you don’t have a good system for tracking. Double down on your tracking system by using an accounting system that not only tracks the outgoing payments, but also automates the follow-up to track when the balance cleared the bank account.

Is it Time to Upgrade Your Accounting System?

Are you enjoying all of the benefits listed above? If your accounts payable system isn’t working to improve your business systems, then it is time to re-evaluate your options. There’s no reason why you should be scraping by with a poor system or limited financial tracking. Businesses with problematic accounting systems can expect to encounter serious problems in the future. In fact, a bad accounting system typically leads to cash flow issues… which might be the cause of business failure.

You can avoid these issues by staying proactive with your accounting systems. Make sure that financial tracking is a priority within your company. Be diligent about keeping these systems current and accurate, giving you the peace of mind to know that financial reports are always correct when you are looking at the numbers.

Tapping into Expert Advice

The great thing about implementing a new accounts payable system is that you don’t have to “reinvent the wheel.” Instead of wasting your time and money on unproven systems, it’s more effective to tap into the expertise offered by a team that knows the best solutions in the industry.

Your job as a small business owner is to focus on business growth, employee management, and the many other responsibilities that pop up on a daily basis. Don’t waste your limited time on busy work and bookkeeping tasks! Instead, you can use technology, expert services, and a good accounting software to optimize your processes and improve overall results for your company.

For more information, Easier Accounting is always here to help. We are working hard to offer affordable, effective accounting and bookkeeping solutions for small business owners. Our team has worked with small businesses in a variety of industries. We understand the nuances of financial management, and we’re here to help you implement an accounting system that works for your needs.

You are welcome to call us at Easier Accounting to learn about the services that are available. Reach out at your convenience to have a conversation with one of our helpful team members: (888) 620-0770.

Signs it’s Time to Invest in New Accounting Software

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

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

What is Accounting Software?

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

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

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

Why Accounting Software Matters

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

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

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

Minimizing Labor Intensive Tasks

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

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

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

Benefits of Accounting Software

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

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

Upgrading Your Accounting Systems

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

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

Learn More About the Right Accounting Services for Your Company

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

Why Should You Choose Outsourced Accounting Services?

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

Strategic Alignment for Your Financial Goals

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

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

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

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

Consequences of Poor Accounting and Bookkeeping Practices

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

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

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

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

Are Poor Accounting Practices Hurting Your Company?

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

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

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

In-House Employee vs. Outsourced Accounting Services

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

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

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

Industry Experience from a Knowledgeable Team

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

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

Hiring Small Business Accounting Services

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

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

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

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

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

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

Focusing on Revenue vs. Take Home Pay

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

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

Personal Vehicle Deduction

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

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

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

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

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

How Much is Your Mileage Worth?

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

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

IRS Rules for Tracking Your Miles

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

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

Creating a Log to Track Your Miles

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

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

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

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

Mileage Tracking App

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

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

Taking Your Mileage Deduction at Tax Time

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

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

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

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

Consult with an Accountant

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

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

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

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

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

Strain of Accounting and Bookkeeping on a Business Owner

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

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

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

Hiring an Outsourced Accountant or Bookkeeper

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

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

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

Warning Signs that You Need Accounting and Bookkeeping Help

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

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

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

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

How the Right Cash Flow Strategy Can Save Your Business

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

Profitability and Cash Flow

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

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

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

Lack of Cash Flow Strategy Could Bring Your Company Down

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

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

Be Honest about Your Current Situation

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

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

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

Anticipate Upcoming Costs

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

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

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

Decrease Your Spending

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

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

Follow Up on Receivables

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

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

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

Evaluate Your Credit Options

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

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

Talk to a Pro

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

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

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