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10 Small Business Liabilities that Every Owner Should Know About

Where is your company at risk because of small business liabilities you are overlooking? Even if you are proactive in business systems and processes, it’s possible that a few holes could be putting your cash flow at risk. Every business owner needs to be proactive in identifying these potential issues before they become more serious financial problems in the future.

What are Small Business Liabilities?

Liabilities are any obligations that you owe money on. Sometimes, liabilities require current payments, such as loan installments or credit card monthly payments. At the same time, these obligations can be owed in the future, depending on your agreement with the lender.

Liabilities are recorded on the right side of your accounting balance sheet – indicating that it’s money that you owe. Examples of small business liabilities might include:

  • Accounts payable
  • Loans
  • Mortgages
  • Bonds
  • Accrued expenses
  • Warranties
  • Mortgages
  • Payable dividends
  • Interest owed
  • Employee wages

Any time you have an agreement with another business or provider, and this contract isn’t paid for yet, it falls in the category of small business liabilities. These liabilities can fall in the short term category (typically less than 12 months), or the long term category (a payment schedule that extends beyond a year).

Another possible form of small business liability you might have is products or services owed to others. For example, if you have promissory agreements for the delivery of certain services or products, then it would be considered a liability since it impacts your cash flow in the future.

Type of Small Business Liabilities

The only time a business might not have liabilities is if the company only pays with cash and only accepts cash payments. Since we live in a digital business environment, it’s nearly impossible for a company to thrive on cash alone. As a result, it is common for small businesses to have liabilities. These liabilities aren’t a bad thing – as long as the liabilities and cash flow are managed correctly.

Small business liabilities fall into three categories:

  • Current Liabilities: Examples include accounts payable, credit lines, loans and salaries. Anything that needs to be paid within a few months (up to a year) is considered a current liability. Since these liabilities need to be paid quickly, they are watched closely to be sure that you are managing your cash flow and current liquidity. Your accounting team can assist in keeping an eye on current liabilities so you always have enough to cover both immediate obligations and upcoming payments.
  • Long Term Liabilities: On the other hand, certain liabilities require ongoing payments over an extended period of time. Examples of long-term liabilities include large equipment purchases, mortgages, or bonds. Long-term liabilities play a role in the solvency of a business in the future. For example, immediate capital can be obtained through financing to purchase equipment or real estate. Eventually, these financial obligations need to be paid, which means that a business could be facing serious financial issues if cash isn’t available when these long-term obligations become due.
  • Contingent Liabilities: Certain costs only need to be paid based on specific outcomes, so these liabilities fall in the contingent category. An example of when a liability depends on a future event is the outcome of a lawsuit or legal case. For example, you could potentially have a liability that needs to be paid out if the ruling is not in your favor at the end of the legal proceedings. From an accounting perspective, contingent liabilities are only recorded in the books if you have a reasonable estimate for the amount and there is a high likelihood that the liability will come through in the future.

Assets and Liabilities – What You Need to Know

Both assets and liabilities affect your business balance sheet, so it’s important that you understand how these two factors work together. When the numbers are accurate and up-to-date, you can run accounting reports to see the overall financial health of your business.

Assets are things that your business owns that bring value to the company. Examples of assets include real estate, equipment, cars, accounts receivable, etc. Assets can fall into several categories:

  • Current Assets: These assets are things that you could turn into cash quickly if needed. For example, if cash flow was tight, then you could sell more inventory to bring in the money that is needed. Another example of a current asset is your accounts receivable – the outstanding invoices that will be paid by your customers.
  • Fixed Assets: Anything that you will own for a long time falls in the category of fixed assets. Examples include computer equipment, construction equipment, vehicles, tools, real estate, etc.
  • Intangible Assets: You don’t have to receive a physical item or service to consider something an asset for your business. Intangible assets are resources that have financial value without a physical form, such as brand recognition or a copyright held by the business.

If you want a clear picture of the financial standing of your company, then it’s important to calculate the assets and subtract the liabilities. Additionally, consider how ongoing expenses will affect your cash flow right now and in the future.

How are Liabilities Different than Expenses?

It’s easy to assume that “liabilities” and “expenses” are synonyms. But there are distinct differences between the ways these costs are recorded and managed in your accounting system. An expense is a category used for anything that is required for the cost of operations. If you need to spend money to generate revenue, then it would be considered an expense (not a liability).

Examples of expenses include office supplies, rent, utilities, employee payroll, or anything else that needs to be paid so your company can stay in business. These expenses are typically paid quickly in cash. If any of these payments are delayed because you are offered credit from a provider, then the line item shifts from an expense to a liability. The simplest way to see the difference between these categories is by looking at how you pay for something that is needed for your business. If you are paying the bill from the cash in your checking account, then it is an expense. If you need to borrow money or use credit for the purchase, then it creates a liability.

Revenue and expenses are shown on your income statement, but they aren’t listed on a balance sheet that compares your liabilities and assets.

Accounting Formula for Your Balance Sheet

Do you want to know how much your business is worth? Whether you are looking to bring on investors or you might be selling the business in the future, you need to have a clear idea of the value of your company. This value can be calculated by looking at your small business liabilities and assets. The calculations show the current financial strength of your company.

The “basic accounting equation” (also known as an accounting formula) can be used to calculate the net worth of your company. You can figure out this amount by using this formula:

  • Assets – Liabilities = Equity

First, you need to calculate total assets and total liabilities. Then, subtract the liabilities from the assets to see how much equity is left. If you have more liabilities than assets, then this equity number will be negative. If you have more assets than liabilities, it shows that your business has good financial health because you are in the black.

While business debt is sometimes required, the goal is to maintain positive equity. The higher your equity number, the better financial health your business is experiencing. If you do this calculation and see that you have a negative number on your balance sheet, then it is an indication that your company is in trouble that you need to be proactive about turning things around. The principles are the same, regardless of your industry: increase assets and pay off liabilities whenever possible.

Professional Accounting Services for Reviewing Your Balance Sheet

It’s smart to review this balance sheet regularly so you have a clear understanding of the current health of your business. You need to know your financial standing before making bigger decisions related to hiring, inventory management, and more.

The best thing you can do is hire an experienced accounting team to review your balance sheet periodically. We can make sure your small business liabilities aren’t growing faster than your assets. Watching the trends over time can be an important step in catching potential cash flow issues in the earlier stages – then you can make changes right now to improve your balance sheet in the future.

Trusted Accounting Services for Small Businesses

If you need accounting support for your small business, then Easier Accounting is available to assist. We focus on small business services, giving you the peace of mind to know that you are working with a team that understands your business needs. We offer more than balance sheet calculations – our team can also help with tax strategy and preparation, payroll processing, and more. You can learn about these services by calling us for a consultation: (888) 620-0770.

6 Qualities that Make a Small Business a Success

Success leaves clues. If you want to build a thriving small business, then the best approach is to look at other successful businesses in your industry – and start doing what they are doing. As you study other small business owners, you will see that many of them have certain things in common.

Even though every industry is unique, you can find trends and traits that build a foundation of success for every business. Here are some of the most important qualities that will impact whether your small business takes off, or sputters to a stop in just a few years:

#1: Customer-Focused Approach

Are you so focused on the profitability of your company that you overlook the needs of your customers? If you want to keep people coming back to buy again and again, then you need to create a crowd of raving fans. These are customers who love your products and services so much that they are happy to share your website with friends and family.

Prioritizing customer satisfaction is an effective way to be sure you are delivering the products your customers want to buy. When your goal is to deliver high-quality results for every customer, then you can be confident that your products will keep selling in the future. On the other hand, your business will struggle if you don’t have a list of loyal customers.

It’s important to understand that customers have higher expectations when it comes to customer service. A personalized touch can go a long way t creating the “wow factor” that keeps people coming back. Here are a few details to consider to ensure that you are building life-long relationships with satisfied customers:

  • Ease of communication
  • Highly trained customer service representatives
  • Efficient service
  • Fast shipping
  • User-friendly website
  • Product development and improvements
  • Listening to customer feedback

Start by creating a strong culture with the customers in the center of all initiatives. Is there anything you can do to improve products or processes to better serve the needs of your target demographic? Fostering customer satisfaction is an important step that fertilizes the soil for business growth.

#2: Leverage Business Resources

When a small business is high-performing, it means that you are using tools and resources to your advantage. Even the smallest decisions can add up to big profits or losses in the future. If you are getting sloppy with expenses or you are leaving money on the table in the sales process, then you could be losing out on thousands of dollars every week.

Yes, it’s important to invest money in your business. But consider your current resources before you start burying money into new projects. Ultimately, you can maintain operational efficiency that creates lean systems for long-term results.

At the same time, you need to make sure that all departments and business systems are aligned. If there are any areas of redundancy, then it’s time to implement a new system that puts a stop to the repetitive activities.

#3: Create Accountability

You can lead from the top with good management, but your efforts are limited to the tasks that you can complete personally in a single day. Instead of trying to do everything yourself, it’s more effective to pass responsibilities to other team members and employees. This process of creating accountability means that your business systems will keep running, regardless of whether you show up at the office each day.

Creating small business systems won’t be effective if your employees aren’t trained and held accountable for following those systems. This process starts by sharing your vision and maintaining strong communication with the team. Implement a good training structure and be clear about who holds the responsibility for specific actions that need to be happening regularly.

Finally, have a system of accountability so you can measure results through performance and consistency. You can’t improve a system that isn’t being measured. Checking in on the responsibilities of all team members can build a company culture of accountability – which improves productivity, and has a significant impact on overall results. The success of your business starts with the productivity and motivation of your team members.

#4: Design Business Objectives

How are you going to get to the finish line if you don’t know where you are going? If you want to achieve small business success, then you need to have a clear vision about the results you want to create. Setting a goal to “make more money” isn’t good enough – it’s too vague and doesn’t include action points that will lead to the results you desire.

Successful business owners have systems in place that include big goals, as well as stepping-stone goals that need to be met along the way. Here is an example of how you might break it down for your business:

  • Design a 5 Year Plan: How do you want your business to be performing in 5 years? If you are working out of your garage and doing it all yourself, then you might have a goal to hire 20 people and have a certain amount of annual revenue by the 5-year anniversary of launching your business. Take time to dial in your 5-year goal, because this plan is the foundation that affects other smaller goals.
  • Break it Down to Annual Milestones: Now that you can see where you are heading in five years, it’s time to look at specific milestones that need to be met annually. Remember that business growth doesn’t happen equally over five years. Often, things start slow… then you build momentum over time. Consider the most effective steps that need to be followed that will lead to your longer-term results. It’s smart to map out these annual goals right now. But be ready to re-evaluate and change annual goals at the beginning of each year, based on the progress and performance of the previous year.
  • Identify Quarterly Actions: Focusing on your annual goals is important, but you may miss the ongoing actions if you are always looking ahead on the calendar. How often have you set New Year’s resolutions, only to find that you have minimal progress when Thanksgiving rolls around? Instead of procrastinating your annual approach, treat each quarter as if the end of the year was happening at the end of the quarter. This method gives you four smaller chunks of 90-days. Then, you can re-evaluate each quarter to identify how things need to change so you can improve your results.
  • Look at Monthly Initiatives: Once you know where you want to be at the end of the quarter, now it’s time to look at the monthly milestones that will help you meet quarterly goals. It’s amazing how much you can get done in a month if you focus your efforts!
  • Refine to Weekly and Daily Activities: The real foundation that sets the stage for future business growth is in the activities you are following on a daily and weekly basis. These small actions might seem trivial, but the smallest steps snowball into huge results down the road. The best way to set your small business up for success is by understanding how your daily and weekly goals lead to results that are achieved months and years down the road.

The approach listed above shows how you can reverse-engineer the steps and goals that need to happen to reach higher levels of success. But remember that each business is different, which is why you need to identify the action steps that are most effective for your business and industry.

#5: Solid Marketing Strategy

While the goal is to have a great list of customers that continue purchasing products from your company, this won’t happen without bringing in new customers. It doesn’t matter if you have the best product in the world – people won’t buy if they don’t know about the products you are offering.

A good marketing campaign doesn’t mean that you are spamming the internet with ads. Instead, hire an experienced marketing team that can refine your strategy. The best way to leverage your marketing budget is by prioritizing your funds on the platforms where your target demographic spends the most time. For example, if your ideal customers are over the age of 65, then SnapChat or Instagram ads probably aren’t the most effective marketing method. Instead, you might focus on search engine optimization or Facebook ads that allow you to choose age groups and demographics.

Adapt your marketing plan when you find strategies that work. Also, focus on creating valuable content online if you are going to have real, engaging interactions with your customers.

#6: Solid Financial Plan

You can apply all of the above strategies, and still fail at your business efforts if you aren’t focusing on profits and losses. Creating a solid financial plan starts with common bookkeeping and accounting, then you can implement new financial strategies that boost the bottom line.

At Easier Accounting, we provide the small business accounting and bookkeeping services you need. As you are looking to build the future success of your company, we are here to help you achieve your goals. Call to learn more about the ways that we can help your small business: (888) 620-0770.

How to Catch Accounting Mistakes

Even if you are careful with data entry and tracking your business transactions, it’s inevitable that mistakes will happen in your bookkeeping. The problem is that these seemingly small accounting mistakes might seem trivial right now… but the long-term effects can be disastrous on your company.

Accounting mistakes throw off your reports and balances, which means that you are looking at inaccurate information when evaluating the current standing of your company. When you are making important business decisions, you need to be confident in knowing your current cash situation and how your decision will affect things in a few months or years. The only way you can have confidence in these critical financial decisions is by ensuring that your bookkeeping is accurate… which comes down to minimizing and correcting accounting mistakes whenever possible.

The truth is that mistakes are unavoidable. But they don’t have to be the downfall of your small business. The following tips will help you minimize the likelihood of mistakes, help you correct the issues when they arise, and save you the headache of inaccurate financial reports.

Tip #: Update Your Accounting System

Any time you are working with manual calculations, you can know that there is a high risk of accounting mistakes. Small businesses often start with DIY financial tracking, such as spreadsheets or handwritten notes. We live in a modern world with great accounting tools, which means that you are missing out on a variety of features if you haven’t already implemented a good accounting system.

The first step to reducing mistakes is to reduce the manual data entry and calculations that are occurring. Modern accounting software programs simplify the bookkeeping process by automating the transactions as they move through your bank accounts.

When you are using a proven accounting and bookkeeping system, then you can have confidence knowing that the software is carefully designed and proven to improve overall results. Plus, you have the benefit of being able to access your financial information from any location since many of these programs are hosted in the cloud.

Tip #: Separate Business and Personal Spending

One reason you might be overlooking accounting mistakes is because of the mix-up of transactions between personal and business spending. If you are mixing these transactions, then you are setting yourself up for problems in the future. Even if you are just getting a new business off the ground, make it a priority to set up a new business account as soon as possible. The goal is to keep the funds separated so you don’t have crossover between your business and personal spending.

When personal and business transactions are mixed, it is the perfect environment for confusion and disorganization… which inevitably leads to accounting mistakes. These small mistakes can be costly to your company if you file your taxes incorrectly or miss out on potential deductions.

Creating a separate business account offers a long list of benefits you will enjoy in the future. You always know how much money is in your business account, making it easier to avoid overspending. Plus, you won’t be tempted to spend the extra business money on personal costs. Instead, keep the money separate so you have money set aside to reinvest in the future of your business.

Tip #: Save Printed Documents

We understand why you are looking for ways to move to a paperless accounting system. But don’t throw out the paperwork and receipts until you have verified that the transactions are correct. These transactions can be digitized, but you also need to maintain the records in case of an audit in the future.

The best way to protect your business is to hang onto these records for at least three years. Design an effective filing system so you can refer to the records if needed. For example, if questions come up about potential accounting mistakes, then it can be helpful to refer to your documentation to clear up the issues.

Tip #: Always Reconcile Your Accounts

One of the biggest mistakes you can make is assuming that your reports and records are always accurate. Mistakes happen, which is why you need to build in checks and balances to identify and correct these issues as soon as possible. The chances are high that you’ll make a few accounting mistakes here and there, and your accountant can help you catch these mistakes before they turn into serious issues.

Small accounting mistakes are easy to find through account reconciliation. This process requires that you compare external records to the numbers in your books. For example, you might compare bank statements with the numbers showing in your accounting software.

This reconciliation should happen regularly. It’s common for businesses to have reconciliation schedules for monthly, quarterly, and annual checks. Large corporations might have reconciliations happening more frequently, while small businesses can have semi-regular reconciliations since there are fewer transactions to evaluate.

Don’t stress because accounting mistakes are identified on the account reconciliation. Instead, use this opportunity to identify the issue. Then, you correct the problem right away to minimize the long-term effects. Additionally, look for ways that you can improve your systems if needed, helping to reduce the likelihood of the same mistake being made again in the future.

Tip #: Double Check Everything

When you are inputting information in your books, dedicate a little extra time to double check the work you are completing. A few extra minutes can go a long way to catch typos and small accounting mistakes. You need to be sure that what you enter into the software program matches the records you have for each transaction.

Watch out for these common mistakes:

  • Categorizing the transaction under the wrong spending code
  • Recording the transaction to a different account
  • Transposing numbers or misplacing a decimal point
  • Entering the wrong numbers
  • Flip-flopping entries
  • Marketing accounts payable as accounts receivable
  • Forgetting to record an invoice

Remember that a few small accounting mistakes lead to disastrous results in the future. Even if you are short on time, it’s worth the investment to spend a few extra minutes double-checking your entries.

Tip #: Maintain Consistency with Your Schedule

Mistakes are more likely if you are crunched with time at the end of the month – trying to get your books caught up from all of the transactions that came through in recent weeks. Instead of procrastinating until the last minute, you need to implement a consistent process to ensure that you are staying on top of everything that is moving through your business.

If you don’t already have a system in place, now is the time to create a new accounting process. The development of solid financial and accounting systems is a valuable addition to protect your business in the future. These systems make it easier to stay ahead of ongoing financial responsibilities, which means that you will be more effective in avoiding accounting mistakes.

Tip #: Get an Outside Perspective

Getting a second set of eyes on your books is an important step to catching accounting mistakes when they pop up. Even if you’ve looked over the numbers 10 times, it’s possible that you might be overlooking details that can be spotted by someone else.

Not only does an outside service provide valuable insights into your financial systems, but outsourced accounting support builds in the checks and balances that are needed to catch potential mistakes. You have the benefit of tapping into professional resources, while also ensuring that you are avoiding common accounting errors.

Let the Pros Catch Your Accounting Mistakes

You are a busy small business owner, which is why it can be a challenge to stay current with your books. As you are juggling all of the daily responsibilities of running your company, it’s important to consider how much you can benefit from hiring an outsourced team of accounting experts for assistance. You don’t have to carry the responsibility by yourself. Let our team do the heavy lifting so you can focus on other daily activities related to running your company.

Investing in outsourced accounting not only reduces the risk of accounting mistakes, but it also relieves the stress you are experiencing. It’s worth the investment! Instead of bringing on a full-time accountant, save money by bringing on an outsourced accounting team – then you can put your time and money back into activities that build your business.

Easier Accounting provides the trusted accounting services you need. Our team focuses on the ongoing financial tasks that keep you ahead of reporting, taxes, payroll, and more. This personalized approach is always catered to the needs of your company, ensuring that you have a solid financial foundation to help your company grow.

If you are interested in learning more about the ways we can reduce accounting mistakes and improve your business financial systems, then reach out to us for a consultation. We are happy to answer your questions and help you find the accounting and bookkeeping services that are a good fit for your unique needs. Call Easier Accounting at (888) 620-0770.

Outsource Bookkeeping to Avoid Unnecessary Stress

Running a business can be stressful, especially with the recent economic events that are impacting all industries. If you are looking for ways to reduce your stress during these unprecedented economic times, then you might consider the option to outsource bookkeeping services so you can decrease your busy work.

Running a business requires a lot of paperwork and busy work that needs to happen behind the scenes. The glamorous part of being a business owner is having the flexibility of being your own boss. But you can’t enjoy this process if you are tied to the desk because of never-ending paperwork. Not only do you oversee the marketing campaigns and product development, but it can be a burden to keep up with expenses and invoices.

It’s common for entrepreneurs to feel like they are being stretched – with limited time in the day to get everything done. If you can’t squeeze in the most important tasks, then it might be time to hire outsourced services for assistance. Delegation is a great way to take your time back, giving you more control over your schedule.

Bookkeeping and COVID-19

Bookkeeping is more important than ever with all of the changes happening in the business world. Some businesses are facing serious cashflow problems after their stores were closed for a few weeks with the quarantine lockdowns. Other businesses have been booming as consumers have been changing their shopping habits in this pandemic.

No matter what is happening in your business right now, it is a great time to outsource bookkeeping if you are looking for a way to manage your finances more effectively. Here are some of the reasons why bookkeeping is a necessary service for all business owners during this pandemic:

  • Business Relief Loans: Many business owners accepted federal loans through the stimulus packages offered for COVID-19 economic relief. This money was made available through the Small Business Administration, but it comes with certain requirements that need to be met by business owners. If you want to receive forgiveness for any part of the loan, then you need to document spending requirements for the money you received. A bookkeeping service can help with the transaction tracking and details that will be required for your loan forgiveness. Up to $100,000 of these loans can be forgiven, depending on the situation of each business.
  • Managing Unexpected Growth: Some companies, such as online grocery ordering and other digital services, have experienced a huge surge in growth because of the pandemic. Since people aren’t visiting brick and mortar stores, shoppers are turning to digital options for the products and services that are needed. If your business has seen an increase in sales, then it’s a good idea to outsource bookkeeping services so you can accommodate the financial changes. Managing these profits right now will set your business up for higher levels of growth in the future.

Bookkeeping and accounting were important business services before the pandemic started. As the business climate has changed, it is easy to see that these services are continuing to be essential for managing the finances of companies – both small startups and big corporations.

Outsource Bookkeeping: How it Will Reduce Your Stress

Hiring outsourced services might be the best thing you can do during these changing times. Many business owners can see that they need additional support and staffing. But they are worried about bringing on more employees because of the overhead costs and potential cost burdens they will be facing in the future.

If you need help with financial tracking and ongoing cash management, then it’s smart to outsource bookkeeping services. Here are a few ways that your bookkeeper will reduce your stress:

  1. Tracking Profit Margins: Do you know how much your business is profiting after you calculate in the cost of expenses? Profit margins can be thin, especially in the first years of running a small business. Professional bookkeeping services help you stay ahead of all of these transactions, so you know exactly how much money you have leftover to reinvest in the business again.
  2. Full-Service Solutions: One of the benefits of hiring an outsourced bookkeeping team is that you can get assistance with a variety of financial tasks. For example, your bookkeeper can help with everything from monitoring your monthly transactions, to handling payroll, paying the bills, and keeping up with invoicing.
  3. Free Up Your Time: What would you do with an extra 5 or 10 hours a week? Handing off the responsibility is a great way to increase your free time, giving you an opportunity to focus on the projects that are sitting on the backburner. For example, when you decide to outsource bookkeeping, you might find that you are able to turn your attention to the development of a new product or a new marketing campaign to bring in more sales.
  4. Manage Tax Burden: Paying taxes is an unavoidable part of running a business. But just because you need to pay taxes, doesn’t mean you shouldn’t have an aggressive strategy for reducing your tax burden as much as possible. The combination of outsourced bookkeeping and accounting services can be a powerful way to keep track of every penny that can be calculated as a write-off. Even the small transactions can add up over time, helping you save a bunch on your taxes in the future. DIY bookkeeping often results in overlooked write-offs because some of these transactions slip through the cracks.
  5. Flexibility of Services: Hiring a full-time employee means that you need to have enough work to keep that person busy throughout the month. Often, bookkeeping tasks don’t require daily attention, so it doesn’t make sense to bring another employee onto your team. When you outsource bookkeeping service, it means that you have access o these services on-demand – only paying for the exact services you need. Many business owners find it more affordable to hire an outsourced team instead of a full-time employee.
  6. Peace of Mind: You can’t put a price tag on the peace of mind that comes from professional financial services. When you know the reports and you can have confidence that these numbers are on track, then you don’t need to wake up at night wondering if your business is going to succeed. Outsourced bookkeeping services offer a great solution to stay ahead of business financial tracking, so you can enjoy the benefit of improved good health.
  7. Updated Information: It can be a lot of work to keep up with the changing laws and regulations that impact your business. Instead of spending your free time reading the small print of the tax laws, outsource these services so you can maintain accuracy in the forms and paperwork. Outsourced bookkeeping and accounting are important for keeping up with the rules that are constantly changing. Plus, you can keep your books current with the latest trends in the accounting industry, such as cloud-based systems and optimal reporting.
  8. Accurate Financial Information: How many times have you run a financial report, only to realize that the report is worthless because the transactions aren’t current? If you can’t rely on the accuracy of your financial reports, then it’s a surefire sign that you should outsource bookkeeping services. Having a dedicated team to keep up with these transactions is a great way to give you the ability to make sound financial decisions when opportunities arise.

Outsourcing vs. Staff Bookkeeping

Each business is unique, which is why outsourcing isn’t always the best answer. But it is common for business owners to find that outsourced services are much more affordable and effective compared to hiring a part-time or full-time staff member.

Consider the amount of money you will spend on an employee. Not only do you need to cover the costs of the person’s salary and benefits, but a variety of other expenses are incurred for recruiting, onboarding, training, and turnover. It can be a burden on a small business to keep up with these required expenses.

Instead of adding to your stress by going through the hiring process to bring in another employee, look at the benefits of outsourcing. For example, when you outsource bookkeeping, you can have confidence knowing that the bookkeeping team is already trained and ready to implement the most effective strategies for your small business. You don’t need to worry about ongoing training and management of an employee.

Plus, outsourced bookkeeping services are often a fraction of the price that you would pay for an in-house employee. The cost savings alone often make it worth it to outsource instead of hiring an employee.

Professional Bookkeeping Services You Can Trust

At Easier Accounting, our team understands the challenges you are facing in running a small business. Often, financial management and bookkeeping can be difficult to keep up with among your other business responsibilities. If you are looking for ways to get the support that you need, then our team is just a phone call away.

We specialize in bookkeeping and accounting services for small businesses. Contact us right away if you are ready to outsource bookkeeping tasks to the professionals: (888) 620-0770.

Why is Inventory Management Important for Your Small Business?

If you are running a small business, then inventory management is an important factor that affects everything from cash flow to product availability. You want to have products on hand to meet the demands of your customers. But too much inventory can cut into your bank account and make it hard to keep up with ongoing costs. There is a fine balance to decide on the right amount of inventory you should have on hand.

Thinking Ahead: Inventory Tips

Problems with inventory management can result in a variety of avoidable issues. Here are some of the potential issues you might face if you don’t have a good inventory management system in place:

  • Cost Increases: Some business owners need to increase the pricing of the product to cover the overhead expenses of too much inventory. Your per-unit pricing might change depending on availability from your suppliers and the timing that you need these products. For example, if you run short on inventory and need to rush an order, then you can expect to pay more per-unit for this last-minute request.
  • Product Depreciation: Even though you might get a price break on a bulk order, it’s possible you will encounter price depreciation if the items sit on the shelves for too long. This depreciation is especially true in industries where new products and versions are released frequently. Are you selling electronics? Then there will be a significant product depreciation when the upgraded model is released in the future.
  • Insurance Costs: The amount of inventory on-site will impact the level of insurance needed. Holding a lot of expensive inventory in your warehouse means that you need more insurance coverage to pay for the losses if something goes wrong. Your insurance provider will need details about the value of products on-site, and you can expect your monthly premiums to go up the more inventory you need covered on the policy.
  • Storage Space: Also consider the amount of storage space needed for your inventory. When the shipment arrives, do you have a place to put a few pallets of 50-pound boxes? Consider the placement of this storage and how it will affect day-to-day logistics. You will lose money if employees need to work extra hours for inventory management or if the inventory storage interferes with daily productivity.
  • Organization: Bringing in a bunch of inventory is just the first step. Do you have a system in place to find the right products when they are needed? If you are going to keep inventory on-site, then it’s critical that you have a solid system to organize the products for easy access.

Ideally, you should have just enough inventory on hand to meet customer needs, with scheduled shipments to restock at the perfect time.

How Much Extra Inventory is Costing You

Did you know that costs increase by as much as 35% for small businesses carrying extra inventory? The extra expenses might seem small, but they really add up over time – and cut into your profit margins. Carrying too much inventory might be one of the costliest mistakes you can make in your company.

Instead of buying inventory based on good intentions to sell everything as quickly as possible, you need to be deliberate in anticipating inventory needs and matching customer demand.

Looking Ahead to Anticipate Needs

Figure out the best timeline for ordering based on anticipated busy seasons and slower times of the year. For example, if you often sell a lot of product during 4th quarter (the holiday season), then make sure your inventory comes in before the sales start to increase. It doesn’t make sense to buy a lot of inventory in January if sales tend to be slow at the beginning of the year.

Every business is different, so it can be helpful to look at your annual trends in past years. Also, keep notes about your inventory management. When you find best practices, it’s smart to record your preferences so you can remember the most effective solutions for the future.

Accounting and Cash Flow Management

The most important reason you need to manage inventory is because of the way these purchases will affect your financial situation. Every business needs to reinvest profits to help the company grow. But if you reinvest too much in inventory that doesn’t sell, then you will be faced with cash flow challenges. When your money is tied up in too many boxes sitting the warehouse, then you might not have enough to pay for expected costs such as payroll, rent, utilities, and taxes.

Most business owners don’t have formal accounting or bookkeeping training. So, it’s a good idea to invest in professional accounting services to tap into advice from a team that understands how to manage business finances. Small systems can go a long way to help you stay in control of your financial situation and minimize the impact of cash flow issues that often affect business owners.

Just because you have extra cash in the bank, doesn’t mean that you should buy more inventory. Talk to your accountant to look at upcoming expenses, then decide on the best ways to reinvest a certain amount of profits. For example, if you have a lot of inventory sitting in your warehouse right now, then it might be better to spend money on marketing and promotions before you buy more products.

Tips for Improving Inventory Management

Here are a few things to consider if you are looking for ways to manage your cash flow by improving inventory management:

  1. Define Par Levels: The term “par level” references the least amount of product you need at any given time. When you have clarity about these par levels, then you can improve efficiency by knowing when it is time to restock the inventory shelves. A good strategy with par levels reduces the likelihood of reactive inventory purchases, helping to reduce unit costs and optimize your profits. Set a benchmark so your ordering practices are automatic. When inventory reaches a certain par level, then it’s a cue that you need to order the next shipment. Par levels can be set by comparing anticipated sales with shipment schedules. For example, if you sell an average of 800 widgets in the month of July and inventory is shipped weekly, then set a par level of 300.
  2. Anticipate Potential Issues: Always have a backup plan in place in case you experience issues with inventory access. Common inventory problems include selling out a certain product, a big delivery showing up early, or not having enough cash on hand to pay for the next shipment. Pay attention to your history and see if you notice patterns of the same issues coming up over and over again. Find the areas where you have the highest risk so you can create a plan to avoid these possible issues.
  3. Inventory Management Software: Consider investing in a good inventory management software so you always know how much product is on hand. Keeping track of inventory in real-time is important for preventing product shortages. The right software program can be integrated into your digital financial system, including your point-of-sale system and even financial tracking and accounting programs.
  4. First In, First Out (FIFO): As you are designing your inventory management system, be deliberate in implementing a FIFO system: first in, first out. FIFO is critical if you are selling perishable items, such as food, beauty products, or anything else with an expiration date on the package. Even nonperishable goods should be moved out with the FIFO strategy to avoid having stock that is unsellable because it is out of date. When new shipments come into the warehouse, it’s best to keep the new items in the back with the older items placed in the front.
  5. Inventory Auditing: Set specific times during the year to audit your inventory. Counting the actual number of items on-site is important to make sure the inventory matches up with the reports in your inventory management software. Additionally, pay attention to the products that aren’t selling. If you have a lot of inventory that’s been sitting on the shelf for 6 – 12 months, then it’s a good sign that you should clear the stock and minimize orders of that item in the future.

Accounting Advice to Manage Your Cash Flow

When it’s time to reorder inventory, you need to be sure that enough cash is available for the purchase. Working with an experienced accounting team is an essential step to look ahead and see how the money will flow based on your unique needs.

At Easier Accounting, we understand the financial challenges you are facing as a small business owner. If you are looking for strategies to improve cash flow and support your inventory management goals, then our team is just a phone call away! Reach out to us to schedule a consultation and learn more about these quality accounting services that can be used to support your small business needs: (888) 620-0770.

Does My Small Business Need an Accountant or a Bookkeeper?

New business owners who don’t know a lot about financial services often make the same mistake: thinking that bookkeeping and accounting services are the same. Before you hire a financial expert to assist with your business needs, it’s important to understand the distinct differences so you know whether to hire an accountant or bookkeeper.

Managing Your Business Financial Operations

In the earliest stages of getting a business off the ground, it’s common for business owners to handle financial details such as invoicing, payments, payroll, and other financial activities. Usually, the motivation is to reduce expenses so more money is available to reinvest in the areas where the business needs extra support.

The problem is that most business owners don’t know the specific strategies for business financial management. Even if you are doing your best to keep up with financial tracking and invoicing, you might be making mistakes that cause long-term issues with your reporting. Seemingly small mistakes, like overlooking an expense or entering the wrong invoice amount, can cause a domino effect. For example, if you run a financial report and the numbers are incorrect, then it could result in cash flow issues because you are making business decisions based on false information.

Invest in an Accountant or Bookkeeper

You are already carrying a lot of responsibility as you oversee the ongoing activities within your company. There is no reason why you should be caught up in the day-to-day busywork, such as data entry and report generation. Instead, hiring an accountant or bookkeeper is a great investment that can help your company grow.

The more you resist delegating busy work to others, the more YOU will be the bottleneck that slows your business growth. Handing off certain responsibilities, such as accounting and bookkeeping, gives you more time during the week. Use this extra time to focus on activities that help your company grow in the future.

In fact, outsourcing might be one of the best investments you can make for your business. If you want to maximize your time, then it’s essential that you have quality systems in place – and a good support team to keep up with the ongoing work to manage and maintain those systems. Accounting and bookkeeping are the foundation that ensures you have the cash to keep everything else running in the company.

What is the Difference: Accountant or Bookkeeper?

Here is an overview to help you understand the difference between an accountant or bookkeeper:

  • Bookkeeper Role: Hiring a bookkeeper means that you are bringing on a team member who is responsible for managing data in your books. Not only does a bookkeeper stay current with the ongoing transactions, but these tasks are completed often to keep the records up to date. Bookkeeping services are focused on transactions, including all expenses and income. Additionally, bookkeepers help with ongoing financial tasks, such as payroll, invoicing, and more. The foundation of bookkeeping services is based on ensuring that the accounting system is populated with accurate data at all times. These services support the overall financial system so reports can be pulled and bills are paid at the right time.
  • Accountant Role: Sometimes, small business accountants handle some of the bookkeeping duties listed above. Or, an accountant often oversees the bookkeeper to ensure transactional data is correct. Other accounting responsibilities might include general ledger entries, billing, payroll reconciliation, and a review of accounts payable activity. While a bookkeeper is focused mostly on the transactions moving through the accounts, an accountant works more on the side of cash flow management, tax preparation, and other details needed for managing the financial health of a business.

If you need all of the services listed above, then you might be better hiring a team that offers financial management – including both bookkeeping and accounting in the same service.

If you require services to look at the longer “big picture” financial perspective of your company, then you might benefit from the services of a Chief Financial Officer (CFO). Outsourced CFO services can be helpful in helping the business thrive based on in-depth financial management and strategy implementation. CFOs also oversee other financial responsibilities, like capital structure, investments, equity, and debt.

Education Requirements for an Accountant or Bookkeeper

It’s also important to note that there is a difference in training for an accountant or bookkeeper. Anyone can become a bookkeeper with on-the-job training and no formal college degree. On the other hand, accountants are required to have a minimum of a four-year college degree. These education requirements mean that an accountant has a higher level of both experience and expertise compared to the services you receive from a bookkeeper.

An additional credential can be earned after the four-year degree is complete. If you hire a Certified Public Accountant (CPA), then it means that the person has met requirements for additional education and testing to earn this certification.

Separating Duties and Hiring the Right Team

While all of the duties listed above fall into the “financial management” category, it’s essential that you have a clear separation of duties and an understanding of where the responsibilities lie. Building the right team gives you access the skills that are needed. Additionally, this separation of duties minimizes the risk of fraud in your company.

For example, if you have a bookkeeper paying the bills, then they should not be the same person reconciling the accounts every month. When at least two people are involved, it reduces the likelihood that someone will be able to steal money or adjust the accounts for financial gain. Always have solid checks and balances in place when you have an accountant or bookkeeper helping with financial tracking and responsibilities.

Here’s a quick example of how you might separate the duties to build checks and balances into your financial system:

  • The bookkeeper is responsible for entering the data.
  • The accountant is responsible for reconciling the work completed by the bookkeeper.
  • A business owner, CFO, or controller is responsible for supervising the work of both the accountant or bookkeeper.

Changing Business Needs as Your Company Grows

In the earliest stages of launching a business, your accounting and bookkeeping needs are basic. It’s still valuable to hire an accountant or bookkeeper at this point so you can build a solid financial foundation to support potential growth in the future. Having good systems in place increases the likelihood that you will be able to minimize growing pains when you are ready to expand.

But don’t get stuck in the rut of assuming that your current services are always right for your changing business needs. It is common for accounting and bookkeeping systems to shift as the company expands. When you bring on new employees, increase your business offerings, or expand to another location, then make sure you have the financial support to track all related expenses through these growth stages.

In the beginning, you might benefit from an outsourced accountant who takes care of tax strategy and filing throughout the year. As your business grows, it can be helpful to hire a bookkeeper who takes over more of the financial responsibilities. A growing business means that you only have so much time during the day to keep up with expanding responsibilities – so it’s critical that you invest in the right services to support your needs over time.

Outsourcing vs. In-House Hiring

When you can see that you require services from an accountant or bookkeeper, you might consider the option to hire another employee so these duties are handled in-house. Before you bring on an employee, consider the salary requirements and overhead costs that will be incurred. Most of the time, small businesses don’t have the budget for a full-time financial employee.

But just because you are in the early stages of growth, doesn’t mean that you don’t have access to professional accounting or bookkeeping services. Outsourcing can be a great way to manage your monthly costs while still tapping into the financial support needed for your business.

Outsourced accounting is a fraction of the price you would pay for a full-time employee. You can benefit from these professional services without carrying the financial burden of paying a full-time salary.

Easier Accounting Specializes in Small Business Accounting

Our team at Easier Accounting offers the outsourced accounting services you need. If you are a small business owner and you are considering your options to hire an accountant or bookkeeper, then we invite you to reach out and learn more about the full range of services we offer.

By specializing in small business accounting, we are confident that our services are a good fit for startups and entrepreneurs. Contact us to learn more about the available services to see if our team is the right solution to meet your business needs. We offer a proactive approach to managing small business finances, including accounting and bookkeeping services custom-designed to your requests. Learn more by calling us to talk to a financial pro about your options: (888) 620-0770.

Cash Flow Risk Management in Small Business

Even the greatest business ideas fail at times because entrepreneurs fail to account for cash flow risk management. You can launch a new business and connect with potential customers, but you need to be proactive in identifying possible areas of risk.

The truth is that money is flowing in and out of your company daily. As the cash ebbs and flows, you need to be sure that there is always a reserve for whatever might be needed in the future. Sometimes, future costs are anticipated, such as tax payments or payroll expenses. Other times, these costs fall into an emergency line-item, such as repairs after a natural disaster or inventory loss.

You can’t predict the future and avoid all risk. At the same time, you can be proactive right now to ensure that your business will withstand whatever might happen to your business. Being smart with your cash flow is essential for keeping your small business running through the good times and bad. This is where cash flow risk management comes in.

Cash Flow: What You Need to Know

Do you feel overwhelmed at the idea of taking control of your cash flow? Even though it seems like a daunting task, it doesn’t have to be hard. The simplest solution is to work with a team of accounting professionals to identify areas of risk and opportunity for your company. Then, you can create a plan for cash flow risk management and optimize systems to ensure that you have a little saved for a rainy day,

Keep in mind there is a big difference between cash flow and profits. Just because money comes into your bank account, doesn’t mean that you have the freedom to spend it on whatever you feel like buying in that moment. Instead, the funds are often marked for a specific purpose – upcoming expenses that need to be paid. Cash flow means that you always have the money available when it is needed.

In comparison, business profits are the funds that are left over after expenses have been paid. Just because the cash is flowing through your business, it doesn’t necessarily mean that you have healthy profit margins. Improving cash flow can be beneficial for boosting profit margins because cash flow management can be an integral part of budgeting and spending. As a result, you might find it easier to decrease your spending, which in turn can boost your profits if there is more money coming in than going out.

Negative Cash Flow vs. Positive Cash Flow

Cash flow is the process of how money is moving through your company. At any given point, you likely have money coming in and money going out for necessary expenses. The trick is to learn how to balance the flow so that you can control what is happening in your bank account.

If you have a positive cash flow, then it means that more cash is coming into your accounts than the expenses that are flowing out. On the other hand, negative cash flow means that you are spending more money than what is coming in.

Remember that it is natural for businesses to fluctuate between positive and negative cash flow. For example, retailers often have a positive cash flow during the holiday season when everyone is shopping for holiday gifts. Then, cash flow will drop in January after the holiday rush comes to an end.

Just because the cash flow fluctuates from one month to the next, doesn’t mean that you can’t keep your business running. Cash flow risk management means that you are proactive in managing your immediate cash, while also preparing for these anticipated fluctuations in the future. In the accounting industry, separate financial documentation is used for cash flow (known as your cash flow statement). This report summarized all financing activities, including investments, operations, and costs.

Why Cash Flow Risk Management Matters for Investors

One of the reasons why cash flow risk management is an important thing to consider in your business is because these numbers can have an influence on whether others are willing to invest in your business. When you are consistent with your accounting records and you can show a positive long-term cash flow, then it is an indicator of the health of the company. Additionally, positive cash flow speaks volumes about your stability, creditworthiness, and the overall value offered through your business efforts.

New business owners might feel that investors are still far in the future. But you never know when your business will hit a new opportunity and need more investment capital. Start managing your cash flow right now so you are ready to tap into new potential by bringing in investors in the future.

Cash Flow Risk Management Tips

Where should you start if you need to improve your cash flow risk management? Here are a few tips to help you get on track with these goals:

  1. Identify Your Plan: You can’t take a passive approach when it comes to financial reporting and ongoing tracking. It’s important to not only identify your plan, but work with financial experts to determine the right steps needed for your business. Creating a strong financial plan guides your decisions, and also helps you maintain a clear vision of the possibilities in the future. This business plan works as the guiding star for your budgeting and strategy.
  2. Control Your Debt: While credit is often unavoidable for both new and established businesses, you need to be deliberate and careful in the way you are managing this debt. Whenever possible, it’s best to pay for expenses upfront instead of financing unnecessary costs. At the same time, it can be helpful to have credit available in case you encounter an emergency situation. Even if you don’t need credit right now, consider applying for a business line of credit or another type of business loan, giving you access to funds if/when they are needed in the future. Then, be careful to keep those balances low so you don’t have a heavy debt load. Whenever possible, make sure that you are paying the credit lines in full each month to avoid carrying balances from one month to the next.
  3. Choose the Right Insurance: Even though insurance premiums might seem like a heavy cost right now, they are an essential part of protecting your business. One accident or natural disaster could be the end of your business! Investing in the right insurance coverage means that you have a back-up plan in place in case the unexpected happens. Insurance should be an integral part of your cash flow risk management because it means that you have support available to get through the hard times.
  4. Diversify Your Business Efforts: Having all your “eggs in one basket” can be risky in business. Make sure that your money is coming from multiple sources, so you aren’t left in a difficult situation if one of the income sources runs dry. If you have an established business, then you might look for ways to expand your offerings so you have multiple streams of income.
  5. Watch the Market: Economic changes and various market conditions can play a role in the success of your company. It’s important to identify potential areas of risk within your business, then stay proactive in watching the changes that are happening in your specific industry – as well as the market as a whole. Instead of putting all of your cash into investments, it’s smart to have strategies for liquidity when needed.
  6. Hire Professional Services: Sometimes, you don’t know what you are missing because of a lack of experience in certain aspects of running a business. As a business owner, you are carrying a lot of responsibility at the same time: product development, marketing, accounting, employee management, and more. Instead of trying to handle everything by yourself, it’s important to hire professional services where it makes sense. For example, these pros can help you uncover potential areas of risk, then identify strategies that will mitigate that risk.

Accounting Services for Minimizing Cash Flow Risk

A solid accounting plan is an important step to take care of the financial health of your business. When you have consistency with the reporting and a clear plan for the future, then it’s easier to make the difficult cash decisions when they arise. Instead of hoping for the best, now is the time to take control of your cash flow to ensure that you are poised to help your business grow.

If you are looking for ways to improve your cash flow, then it can be helpful to talk to an experienced accounting team. At Easier Accounting, we provide outsourced accounting and offer personalized services for small businesses. Our team specializes in the strategy and care needed for startups, entrepreneurs, and small business owners like you. We invite you to reach out for a consultation to see how we can help with cash flow risk management and other necessary accounting services: (888) 620-0770.

Keeping a Great Work-Life Balance While Working from Home

Whether working from home is your normal routine, or you recently started working from home because of the COVID-19 pandemic, it’s essential to be proactive in maintaining a good work-life balance. There are definitely benefits from commuting from the bedroom to an office just a few doors down the hallway. But you are likely facing common drawbacks as well. It can be hard to maintain work boundaries when there isn’t much distance between your home life and workplace.

If you are a small business owner or entrepreneur, then you likely have a lot of experience working from home. Additionally, many corporate businesses have been shifting to offer more work from home positions for their employees. We live in a time where the internet keeps us connected from any location, creating more flexibility and creativity for the way the workday is structured.

The Perks of Working from Home

Working from home is a dream for many people. The idea of schedule flexibility and staying in sweatpants all day sounds dreamy, and there are notable benefits you can enjoy when working from home:

  • More Time: How much time do you usually spend getting ready for work and commuting to the office? Some people have a short 10- or 15-minute commute, while big-city workers sometimes face a commute of 1 – 2 hours each way. Eliminating the hours you spend in the car or on public transportation means that you have extra time to spend on activities you enjoy. You literally add more hours to your personal time by skipping the commute.
  • Family Support: Depending on the ages of your children, working from home might enable you to cut childcare costs. If your children are old enough to be self-sufficient during portions of the day, then you might have the option to keep them home with you while you are working. Not only will you save a significant amount of money on childcare expenses, but it’s nice to have family bonding time when you have a moment to step away from the computer.
  • Flexibility: Lunch breaks can be much more productive when you aren’t tied to a cubicle. Working from home means that lunch is easy to grab from the fridge, leaving you with the rest of a work break to use as you wish. Even half an hour can make a big difference when you need to clean up the kitchen or fold the laundry. Many people working from home also find that they have more flexibility with the start/finish time of their workdays. This flexibility is a valuable benefit that can help tremendously with work-life balance.
  • Exercise: Have you found that working from home is playing a positive role in your health? It’s easier to fit in a quick workout when you are at home. For example, when the commute is eliminated, some people use the extra time in the morning to exercise before sitting down at the computer.
  • Nutrition: Another notable benefit is how much easier it is to manage your menu when you don’t have tempting foods near your desk. Many office workers find it challenging to stay on track with their dietary goals because coworkers bring treats and extend lunch invitations. When you stop eating fast food every day and instead choose healthy meals at home, it’s easy to cut calories and choose the menus that best fit your health goals.

Setting Boundaries While Working from Home

While there are great benefits that come from working at home, it’s also important to recognize potential drawbacks that can occur. Being aware of these issues and setting clear boundaries is key to optimizing your work-life balance.

Many small business owners and employees find it challenging in the beginning to set healthy boundaries. But creating a few rules is just what you need to ensure that you stay at the top of your game. Here are a few suggestions to help:

  1. Designate a Workspace: Without a dedicated work area, then you will find your work and home life mixing together in every room of the house. Instead of turning the house upside down because you can’t remember where you set down the contractor paperwork, be deliberate in confining your work activities to a specific part of the house. Ideally, this workspace is separate from your family life, such as an office where you can close the door. If you like the flexibility to work on the couch, then use the desk as your home-base with a change of scenery when you need something different.
  2. Look for Other Working Spaces: Do you feel cooped up when you are spending the whole day at home? You might consider the benefit of locating an office nearby. For example, co-working spaces offer plenty of room for social distancing, giving you a quiet place to focus away from the house. Working from home doesn’t mean that you must stay home all the time. Instead, it opens up a variety of options for working anywhere you desire – away from the office.
  3. Respect Your Work Hours: While flexibility is a notable benefit of working from home, there is something to be said about maintaining boundaries with your work hours. Even if you don’t want to stick with the traditional 9-5 schedule, decide on the hours that are best for your family and your ideal focus time. Whatever your preference, mark it on the calendar and treat those hours as sacred – as if you weren’t home during that time. When it is time for work to end, be proactive in stepping away from the computer and turning your attention back to the family again.
  4. Walk Away from the Computer: Once surprising report from the mass work-from-home transition that occurred due to the pandemic is that many companies found that productivity increased. Since employees always had their work equipment on hand, it was easy for work to fit in along with other daily activities. Yes, it’s good to stay connected. But you should also be deliberate in creating time when you are away from the computer. Block out your lunch break to give yourself a mental rest during the day. Also, be serious about respecting your days off so that you can recharge your mental health before a new week begins.
  5. Communication with Others: Daily social interaction is one thing that many people miss when stepping away from the office. Even though you aren’t talking with your coworkers face-to-face, be deliberate in reaching out regularly. A quick email, text, or Slack message can go a long way to maintain those relationships and help the team feel connected.
  6. Get Dressed for the Day: It might seem blissful to spend the entire workday in sweat pants, but there is something to be said about getting dressed for the day. If you are looking for ways to separate your work life and home life, then your clothing can play a role. Put on your work clothes before sitting down at the computer. Don’t assume that you need to wear a tie, put on makeup, or button up a power suit. Instead, make sure you are changing into something different from what you slept in.
  7. Create daily routines: What are the common rituals you enjoyed when working in an office? Some people have their favorite coffee mug, turn on a specific playlist in the morning, or love to start the day with an empty inbox. Find the routines that work best for you so you can start the workday with the right mindset. Building in rituals can help your brain distinguish the difference between work hours and home hours.
  8. Know When to Say No: If you are working from home, then it’s likely that your family, friends, and neighbors assume that you have unlimited time on your hands. If you have people often asking for favors or help during your work hours, then it’s important that you learn to say “no.” Yes, there are times when it makes sense to take a break and lend a hand. But you treat your daytime hours the same as if you were at an office building all day. One easy way to respond is by telling someone: “No, I’m not available during business hours. But I’m available to help when my work ends at 5pm.”

Finding Your Preferred Work Routine

Ultimately, the best way to succeed when working from home is to find the perfect balance between your work responsibilities and your family life. Every person is unique, which is why there isn’t a right or wrong way to structure your work-from-home schedule. Instead, create a vision for your routine and goals, then find the best way to optimize your daily habits so you can create the ideal lifestyle.

At Easier Accounting, we’re here to offer the accounting and bookkeeping support you need. If you are a small business owner who is working from home, then tap into these important resources to stay ahead of payroll, invoicing, tax strategy, and more. Call our team to learn more about outsourced accounting services: (888) 620-0770.

Accounting Tips to Prevent Fraud in Your Small Business

While you want to believe the best in everyone you meet, at some point it is likely that your small business could be vulnerable to fraud. The truth is that scammers often target small- and medium-sized businesses more frequently than large corporations because these small companies don’t have the same security measures in place. Unfortunately, the effects could be disastrous to your company – which is why it is essential to be proactive to prevent fraud.

Fraud: Will it Bring Down Your Company?

Too often, small businesses are running on thin profit margins and tight cash flow. Whether you are trying to get the company off the ground, or you are working through growing pains to expand, every penny matters in the long-term success of your efforts.

Regardless of the size of your company, fraud could be the final straw that breaks the camel’s back. Losing money due to theft or scams might bring down your company. As such, you need to have a solid system in place to not only detect potential fraud cases, but also prevent fraud whenever possible.

A shocking report from the Association of Certified Fraud Examiners (ACFE) shared that most businesses lose around 5% of annual revenue due to fraud that is committed by managers, employees, executives, and owners. Even if you think that you have a good relationship with every member on your team, you can’t make assumptions that your company is immune from fraud. Smart business owners develop policies and stay up-to-date to ensure they are protecting their livelihood from theft.

Common Types of Business Fraud

The term “fraud” covers a range of dishonest activities that could occur within a company. Business fraud means that one or more people are committing illegal acts for financial gain. Often, these activities are hidden in daily activities or legitimate business transactions.

Here is an overview of some of the most common types of business fraud:

  • Personal Purchases: Using business funds to purchase services or products for personal use. For example, an individual might add personal spending on a corporate credit card, or approve his own expense reports to cover up the transactions.
  • Asset Theft: Employees can steal office equipment, inventory, or any other assets from the business. Often, these items are stolen, then sold for cash.
  • Fake Payments: The creation of fake invoices can be one way to move money out of the company. Another common practice is to use “ghost employees” on the payroll, fake people so someone can collect the paychecks.
  • Skimming: Collecting a little off the top can go unnoticed for a long time, especially if you don’t have a good accounting system in place. For example, a person might take a portion of the funds before the transaction is listed in the accounting records.
  • Identity Theft: Sometimes employees access the personal information of other employees or customers, then use the identity to access credit lines. If someone gets their hands on bank statements, tax ID numbers, or financial reports, then they might be able to steal enough money to commit identity theft.
  • Fake Bills: There is quite a bit of fake cash circulating around the United States, and it’s possible that these bills could come through the doors of your business. Most counterfeit bills are high-valued, such as $100 bills. Accepting fake money means that you will lose out on the cash, which cuts into your profit margins. If you want to prevent fraud, then it is important to have systems in place to check these bills at the register.
  • Return Fraud: Customers can also commit fraud against a business using various return fraud strategies. Common issues include customers who buy an item, use it, and then return it. Or, sometimes people steal products from the business, then attempt to make a profit by “returning” these items to the store.
  • Digital Fraud: Someone doesn’t need to be in your office or workplace to commit fraud. Scammers can hack into different computer and software systems to steal valuable information, such as customer details, credit card numbers, bank account info, and more.
  • Workers’ Compensation Fraud: While it is important for employees and customers to be protected on your property, some people take advantage of the system by claiming injury or illness to get money through Workers’ Compensation insurance. For example, a person might be injured outside of work, then claim it is the result of work activities. Some employees are even bold to the point where they make up an injury or illness.

Since fraud is so prevalent among businesses of all sizes, it is impossible to list all of the potential fraud situations that might occur. The above list gives you an idea of the many ways someone might take advantage of your company. Your responsibility is to be proactive to prevent fraud, helping to reduce the likelihood that these issues will happen to you.

Tips to Prevent Fraud

Where should you start if you need to implement new fraud prevention systems? Here are a few main categories that need to be addressed:

  1. Digital Security: Scammers have more access than ever to private information because they can hack in through internet connections. Don’t leave your company exposed digitally! Choose software programs that have built-in security features, such as encryption and two-step verification. Also, talk to your tech team about proactive digital security on all servers, computers, cell phones, and internet connection points.
  2. Accounting Services: Don’t make the mistake of having only one person managing your accounting and bookkeeping. Often, small businesses only need a single person to keep up with client payments, receivables, invoicing, managing cash, and other accounting-related tasks. When one person is handling the finances, it increases the likelihood of fraud to go unnoticed. You can prevent fraud by assigning multiple people to oversee the financial reports. Or, consider hiring a trusted outsourced accounting team to implement checks-and-balances, as well as regular accounting audits.
  3. Background Checks: A formal hiring process can be a valuable step in knowing the people you are bringing into your company. Even though a background check is an extra cost when hiring a new employee, it is essential to know the history of every person you entrust with financial records or cash. The more an employee interacts with finances and sensitive information, the more scrutiny you should put in regards to their background check. Personality isn’t enough to prevent fraud – the truth is that most employees committing fraud are well-liked by their managers and coworkers. These fraudsters are proactive in endearing themselves to others so they can gain trust.
  4. Internal Audits and Controls: Setting up systems can be a critical step to prevent fraud. For example, it’s appropriate to restrict access for employees who don’t need information about inventory or financial details. Design multi-person checkpoints for payroll processing, check writing, and reimbursements. Have a solid plan in place for regular accounting audits to review bank account statements and activity.
  5. Lock Up the Files: Not only do you need to password protect digital files, but it is also important to be sure that paper records are kept under lock and key if needed. Invoices, customer information, bank records, and other sensitive documents can be used for fraud. If a paper is sitting out, an employee could easily snap a picture on their cell phone to collect the information undetected.
  6. Employee Training: Not only do you need fraud prevention training when onboarding new employees, but it is also important to offer ongoing fraud training. Your employees should be taught how to identify the warning signs of fraud. If an employee suspects suspicious behavior among customers or coworkers, then they need to feel comfortable to report the situation without worrying about their job. Create a code of ethics and maintain open communication so employees can share information safely.
  7. Take it Seriously: One of the fastest ways to discredit your fraud prevention efforts is by dismissing reports of fraudulent activity. When there are suspicions about things that are happening in the office, then you need to be proactive in researching the situation to see if it is a valid claim. Regardless of the size, each case should be given its due based on your no-tolerance fraud policy.

Prevent Fraud with Good Accounting

A solid accounting system provides a good foundation to help you prevent fraud and avoid issues in the future. When you are tracking the transactions and you have systems in place to reduce the risk of skimming, you can rest assured to know that there is a low likelihood of losing money due to fraud.

How are you protecting your company? If you need assistance with general accounting services and fraud prevention, then Easier Accounting is here for your business. We offer the support you need for everything from payroll processing to tax strategy: Call to learn more about why accounting is an important service to compliment your other efforts to prevent fraud: (888) 620-0770.

How Your Bookkeeping Should Look Different During This Time of Pandemic

It’s no surprise that Coronavirus has changed many aspects of the way business is done. Not only has this pandemic been a global health concern, but an economic crisis has been triggered since people are unable to interact in the same ways as before. As a business owner, you’ve been facing new challenges relating to the way you are handling safety for employees and customers. At the same time, you still need to keep up with regular responsibilities, including bookkeeping, inventory management, hiring, taxes, and more.

Most likely, your stress as a business owner has increased during this time. For some small business owners, they are busy trying to keep up with the ongoing safety and regulation changes to keep the business doors open. In other situations, businesses have been closed because of limitations and social distancing challenges.

Now is a time to adapt and change to match the new circumstances. If you want to maintain a thriving business in the future, then you need to be looking at the ways you need to adjust your systems and practices.

Service Providers are Out of the Office

Previously, you could find many local service providers available to help through face-to-face interactions. For example, if you needed a bookkeeper, you could have a local accounting team come to your office if needed.

Now, these services have moved online more than ever before. Since most bookkeeping software programs are cloud-based, it means that you no longer need an in-house bookkeeper or local services. Outsourced bookkeeping and accounting give you access to these important skills, without the potential risk of spending time together in the office.

The COVID-19 pandemic created the perfect conditions for many businesses to move online. Additionally, companies previously using computer-based bookkeeping software are now moving to cloud-based programs so the books can be handled remotely. This health and economic crisis have brought about a necessity of changes – many of which will likely improve your business for the future. Business owners who are unable to adapt will be left behind.

Cloud vs. Traditional Bookkeeping Software

If you haven’t already made the move to a cloud-based accounting software, then it is the perfect time to make this change. Traditionally, accounting and bookkeeping software was installed on one computer. Or, there were options for networked computers within the same business to have access to the files. Since the software was only installed on local computers, it meant that businesses needed in-office support to manage the finances. The options were to either hire an employee to take care of these responsibilities, or bring in an accountant or bookkeeper as a consultant. This solution worked for years, especially in the early days of the internet.

Now, technology has transformed the way bookkeeping and accounting can be done. Bookkeeping and accounting software can be hosted online securely, giving you and your team access from any location. Cloud-based software means that all of your financial data is kept on a remote service, giving you access to the information through an online interface. The highest levels of digital security are used to keep your information protected. This means that you no longer need to have a full-time bookkeeper on staff. As you look at the costs of outsourced bookkeeping vs. hiring a new employee, you’ll see that it is much more affordable to bring in the outside services that you need.

One of the main benefits of cloud-based bookkeeping is that you are no longer limited to a single computer. So, access to your financing information doesn’t stop after hours. Plus, having cloud-based information is a better solution in case of a local disaster. If something happens to your computer or office, you can still tap into the information that is needed from another location.

Finally, cloud-based bookkeeping is beneficial because it gives you real-time information regarding the financial circumstances of your company. Your accountants, bookkeepers, managers, and customers can be located anywhere – and the bookkeeping system can continue as-normal, regardless of the lack of in-person interactions.

Setting Up the Right Systems to Help Your Business Grow

The truth is that a good bookkeeping system is one of the foundational pieces you need to ensure that your company can grow to higher levels of success in the future. Growing a business can be challenging and expensive if you aren’t proactive in implementing tools that are designed to expand with the company.

Cloud bookkeeping and accounting software give you the option to scale and adapt as needed, so you can adjust your business practices to whatever might happen in the future. Invest the time, energy, and resources right now to create a solid system, which will eliminate potential roadblocks in the future.

Coronavirus-Specific Bookkeeping Tips

There are a few things that might need to be implemented in your bookkeeping system because of the COVID-19 pandemic:

  1. Move to Cloud-Based Systems: As mentioned above, it is more important than ever to have your business information stored in cloud-based systems. If you haven’t already made this move, then it should be high on your priority list. Cloud-based bookkeeping and accounting will allow your managers and employees to access the information if the team needs to work from home.
  2. Maintain Communication with Bookkeepers and Accountants: Even though your bookkeeping team might not be physically located in a nearby office, they are still offering the quality services that are required. Many of these providers are working from home now, and you can continue to use the skilled services that will support your business. Look for ways to maintain optimal communication, even though you aren’t having face-to-face meetings. Email, phone calls, and Zoom meetings can be great to ensure that you are staying in touch with your business support team.
  3. Paycheck Protection Program Documentation: Many businesses have accepted funds through the federally-funded Paycheck Protection Program. This stimulus package was designed to help cover business costs through the shutdowns and immediate economic crisis. If you are a business owner who accepted money through a loan program, then you need to be sure that you are maintaining the proper documentation regarding how the money was spent. Certain guidelines and regulations need to be met if you are going to qualify for loan forgiveness. These rules are constantly changing, so the best solution is to talk to your accountant to ensure that you are keeping up with the documentation requirements.
  4. Tax Strategies for the Year: Different tax strategies might be used for your business finances this year. For example, many people took advantage of the option to delay their tax payments since the filing and payment deadlines were pushed from April 15 to July 15. Additionally, there might be other ways that you can leverage write-offs and deductions for 2020. For example, if you spent money on health and safety equipment, such as cash register shields or online business tools, then these costs could qualify as business expenses. Every situation is unique, which is why you can’t find the ideal tax strategy online. Instead, schedule a consultation with an experienced accounting and bookkeeping team to see how you can tap into the available tax breaks for small businesses.
  5. Cash Flow Management: Since we are living in uncertain times, it’s hard to say what your business cash flow might look like in the future. Every company needs to be proactive in maintaining an emergency fund of cash whenever possible. Having a rainy-day fund can help you get through the slower times, so you are ready to bounce back when the timing is right. Your accountant can offer personal recommendations to determine how to restructure your business assets, as well as how much money you should set aside for emergency situations.

Good Accounting and Bookkeeping will Keep Your Company Afloat

Without a solid financial strategy, your business could struggle more than necessary during this time. If you want to stay ahead of the competition and maintain a strong company, then you need to be sure to have good bookkeeping and accounting systems in place. These reports show you the current financial health of your company. Additionally, you can identify potential weak points in your business practices that will lead to undesired results in the future.

You are already carrying a lot of responsibility as a business owner, so it makes sense that you might be experiencing challenges in keeping up with the current situation. You won’t regret the decision to invest in a good accounting and bookkeeping team.

If you are looking for information about bookkeeping services for small businesses, then we invite you to schedule a consultation with us at Easier Accounting. We specialize in quality bookkeeping services that can be done remotely – giving your company the ongoing support needed through anything that might happen during this pandemic. Learn more about the benefits of bookkeeping and accounting services for your company by calling us to discuss your unique needs. We’re here to help: (888) 620-0770.