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Modern Accounting: How to Ensure Your Business is Staying Current

Technology has improved the way business is done, making it possible to connect with customers and business contacts through the internet. If you want to maximize the success of your business, then you need to be sure that you are using modern accounting tools to support your financial tracking. What resources are used in your business systems? It’s a great time to talk to an outsourced accounting team to learn more about the processes that can be used to improve your business systems.

Whether you are looking for options to improve your tax strategy or you need to systematize payment collection from your customers, a few good accounting tools can go a long way to improve your results. Investing in the right accounting and bookkeeping software will help you tap into the resources that can be used to amp up your financial systems.

What is Modern Accounting?

Before the invention of computers and the internet, business owners tracked their transactions by hand. These accounting ledgers were used to record money/products that moved in and out of the business account, and most of the transactions were paid in cash. If you go back thousands of years in history, it is possible to find ancient records that show accounting and business tracking in the most basic forms.

Now, the business world has changed. Technology is a foundational aspect of supporting the needs of a company. If you don’t accept digital payments, then it means that your customers are likely going to head to your competitors. Not only do you need to integrate technology into your business systems, but you need to be sure that you are using the tools that are the right fit for your industry and individual needs.

Modern accounting means that you are using technology and accounting software programs to systematize your financial tracking. Every transaction that moves in and out of your account needs to be recorded. There’s no need to write these things down by hand. Instead, you can leverage the automation of modern accounting software programs that take care of the tracking for you.

Even the accounting systems that use the most advanced technology available in the accounting industry are designed with double-entry bookkeeping systems. This approach means that there are always two entries for every transaction: debits and credits. Double-entry accounting dates as far back as 1494, but it’s only been in recent years that these systems have been automated through software programs.

Accounting is the Language of Business

The best way to communicate detailed information about your business is to have the option to run financial reports regarding the profitability of the company. These financial details are required if you are looking for investment money or partnering with other businesses. At the same time, these modern accounting reports can also be used to assess the current snapshot, giving you information that will support decisions that are made regarding cash flow, spending, and hiring.

As the accounting industry continues to evolve through technology, it is impossible to know how these business practices will change in the future. We can’t even imagine the possibilities that lie in the future! The most important thing that can be done is to ensure that you are keeping up with current accounting trends so that you are on track with the way systems are changing with time.

Using a modern accounting approach for your business doesn’t mean that you are on the cutting-edge of all payment technologies. Sometimes, being the first to implement new technology might not be the best investment if others aren’t using the new systems yet. So, the best thing you can do is work with an experienced accounting team and payment processing service to ensure that you have the right balance between staying current without leading out too far in the industry.

Digital Accounting: Key to Business Tracking

When the term “digital accounting” is used, it refers to the electronic format of the formation, data, and transmission of financial information for your business. The math is always the same: money coming in will increase your account balance, and payables decrease your account balance. But you don’t need to balance the checkbook in the way that was done 30 years ago. Now these modern accounting systems automate the math and calculations.

This automation is key to free up your time. There’s no reason to spend hours of your day doing manual calculations. Instead, you can lean on the support that comes through the right accounting software. These programs are beneficial for improving accuracy and optimizing productivity for your team. When digital transactions are moving through your account, you can rest assured to know that everything is recorded because you are using a digital accounting system to record the information.

In addition to the basic bookkeeping and tracking required for every business, digital accounting also offers powerful solutions for data analysis. Collecting financial information doesn’t mean anything unless you have reports that showcase the financial health of the company. These digital, modern accounting systems have enhanced the reporting options. For example, the technology can report and interpret data more quickly than ever before. Plus, the information is more effective and efficient, giving you hands-on application that can have a dynamic impact on your business decisions.

Taking it to the Cloud

When digital accounting first started, there were still manual aspects required for calculations. For example, using a 10-key calculator allowed faster computing, but the numbers were still limited because of the possibility of typos or human error.

Then, the digital tracking moved to computers. Software programs could be installed on computer systems, giving business owners the option to enter transactions and track results. This step upgraded the digital accounting industry because the history could be stored digitally. The main weakness was that the accounting system was limited to a single computer, or an elaborate networking system needed to be implemented to share information on multiple devices. If the local hardware malfunctioned, then the accounting information would be lost.

One of the greatest benefits of our current, modern accounting systems is that information can be stored in the cloud. When transactions move through the accounting software, the data can be viewed on your computer. At the same time, all information is stored securely on an off-site computer. This cloud-based accounting solution minimizes the risk of losing all of the accounting data due to a system malfunction.

Another benefit of modern accounting is that multiple devices can access the financial reports from any location. Storing the data and systems in the cloud means that the information can be reviewed from any location, as long as the person has permissions and access to look at the reporting. For example, a business owner can see the business transactions in real-time, even when located in another part of the country or on the other side of the world. The internet allows the information to be shared and distributed, giving full access to anyone on your team. You can decide who is collaborating in the accounting and bookkeeping systems.

One Hub for All Financial Needs

A modern accounting system makes it easier than ever to keep up with financial responsibilities. Since your business records and financial information are stored in one location that is easy to access, you can view your accounts with the touch of a button. You can be on the road for a business meeting, and keep up with invoicing and payments from any location.

Additionally, digital accounting opens up opportunities for you to hire outsourced bookkeeping and accounting teams. There’s no need to have an accountant in your office when an outsourced accounting team can access your business financial information from their own office. Many businesses are moving to outsourced accounting solutions to save money and improve overall results, without the need to have a full-time accountant on the payroll.

As you can see, the internet has opened up many options that can improve your business systems. If you haven’t implemented modern accounting in your business, then it’s time to take action so that you can upgrade your financial tracking and improve overall results for the company.

Talk to Our Team About Modern Accounting Solutions

Are you exploring options to improve your business accounting systems? Our experienced team is here to answer your questions and assist with anything that you need. Working with an experienced, outsourced accounting team means that you can hand over the financial tasks that need to be addressed. Outsourcing bookkeeping and accounting can be an effective way to free up your time so that you can focus on other business responsibilities. There is no reason for you to spend your time on busy work when you can let the pros take responsibility for accounting support instead.

At Easier Accounting, we offer high-quality, personalized business accounting services. Our team specializes in small business solutions. We invite you to call at your convenience to learn more about the support that is available for your company: (888) 620-0770.

The Small Business Owner’s Guide to Self-Employment Taxes

Self-employment taxes are a necessary and unavoidable part of being a business owner. Building the business feels fun and glamorous, but many entrepreneurs agree that taxes can be both stressful and burdensome. The key is to plan ahead for the tax burden you will be carrying, so the costs and paperwork don’t catch you off-guard. The right financial plan can make it easy to keep up with your self-employment taxes, ensuring that you have money set aside when it is time to make the payments.

Do You Fall in the “Self-Employment” Category?

It is important to understand the IRS’s definition of self-employment to see if these taxes apply to your situation. Knowing the federal regulations and guidelines means that you won’t skip past the tax obligations by mistake.

If you have the goal of bringing in money through work that you do for yourself, then you are considered self-employed. The work that you complete falls in the category of self-employment when you are not a shareholder or an employee.

Keep in mind that your business doesn’t need to actually be profitable for you to be considered self-employed. When you have the goal of earning a profit, and you are putting in regular work towards that goal, then the IRS views your efforts as self-employment. Even if you work as an employee for another company (either full-time or part-time), you still fall under the category of self-employment if you do work outside of your regular job to earn money on the side.

It’s one thing to be paid for a one-off day of work helping a friend with manual labor. A one-time opportunity to earn a bit of extra cash isn’t regular enough to fall in the category of self-employment. But, if you are consistently putting in the effort to engage in activities that bring in a profit, then you are self-employed.

Overview of Self-Employment Taxes

The tax rates can change from one year to the next, which is why it is best to work with a financial professional who will ensure that you are paying the correct rates. Self-employment taxes are calculated by combining your requirements for both Medicare and Social Security taxes.

Both self-employed workers and employees need to pay Social Security and Medicare. When you are working as an employee, your employer pays 50% of the tax burden, and the other half is deducted from your paycheck. On the other hand, self-employed workers need to pay the full 100%.

These self-employment taxes are calculated based on the profits of your business efforts. This is the calculation that is used:

  • Gross (total) revenue – qualifying tax deductions = profit that can be taxed

Since the taxable amount is calculated without the deductions, many business owners look for ways to leverage the deductions as much as possible. It is important to stay within the legal guidelines, and your small business accountant can offer guidelines and recommendations that apply to your situation.

Classifications: When Self-Employment Taxes are Required

You tax classification plays a role in whether you are obligated to pay self-employment tax. If one or more of these classifications apply to your tax filing, then it is smart to talk to a tax accountant for information about self-employment taxes:

  • Independent contractor (freelancer)
  • Sole proprietor
  • Member of a partnership
  • Member or partner of an LLC (single, or multi-member organization) and you haven’t changed your default tax classification

Income Tax vs. Self-Employment Taxes

Don’t mistakenly think that income taxes and self-employment taxes are the same time. Even though there is a difference in the way self-employment taxes are calculated, income tax works the same for everyone.

This income tax rate is also based on the taxable profits, using the calculation listed above. Once the taxable income is determined, then tax credits and personal deductions are calculated in to determine the amount that needs to be paid.

50% of your self-employment tax can be used as a deduction, which helps to reduce the total taxable income for the income tax calculations.

The filing status and tax rates vary, depending on the tax bracket in which you fall. These federal brackets can change each year. In 2019, the progressive range of income tax rates falls between 10 – 37%.

Why You Shouldn’t Kick Taxes to the Backburner

W-2 employees don’t have much to worry about regarding ongoing tax calculations and payments, because these amounts are automatically deducted from their paychecks by their employers. On the other hand, self-employed individuals don’t have the convenience of automatic tax calculations and deductions. It’s your responsibility to ensure that you are keeping track of what you owe and staying current with paying these amounts on time.

You already have a lot to worry about with business-building efforts, marketing, employee management, and more. It might be tempting to push self-employment taxes to the back-burner. But don’t be fooled into thinking that you can deal with taxes at a later date. If you want to avoid a stressful and costly audit by the IRS, then you need to be sure that Uncle Sam is getting his share of your profitable income.

Also, consider the consequences of incorrect tax filings. If you don’t have experience with tax calculations and paperwork, there is a high risk that you might make a mistake. In the case where that mistake is discovered by the IRS in the future, it means that you could be facing expensive fines, interest costs, and penalties. Save yourself time, money, and stress by ensuring that your taxes are calculated, filed, and paid correctly the first time around.

How Often Do Self-Employment Taxes Need to Be Paid?

Most people only think about taxes once a year: in April when the tax filing deadline happens each year. But, if you owe more than $1,000 on the tax return filing, then you will be required to make quarterly tax payments. So, you need to be prepared to pay taxes four times per year.

These payments are calculated by looking at your previous year’s taxable income, then calculating the amount that will need to be paid each quarter. Of course, you can’t predict the exact amount you will earn in a given year, which is why these quarterly payments are called estimated tax payments.

This is the payment schedule for estimated tax payments. You will need to send the payment before or by the end of the day on:

  • Jan 15th
  • April 15th
  • June 15th
  • Sept 15th

Sometimes, these calendar dates fall on a weekend or federal holiday. In that situation, the due date for estimated taxes is pushed to the next day that is not a weekend or holiday. Small business accounting services makes it easy to keep up with these tax deadlines because you will receive estimated tax payment vouchers that list the specific dates for each calendar year.

Other Taxes for Business Owners, Entrepreneurs, and Start-ups

Keep in mind that the IRS only oversees the enforcement of federal taxes. It is possible that you will need to pay state and/or income tax depending on where you live. A few of the states don’t charge personal income tax, so you might consider moving your business efforts to those locations if you have the flexibility of an online income.

Other tax burdens need to be considered as well. For example, if you have employees, then you will need to pay and manage the paperwork for employer payroll taxes. Also, sales tax might need to be calculated on the products and services that are sold, depending on your location.

Be Prepared for Future Payments

With self-employment, it’s easy to make the mistake of confusing take-home pay with the gross revenue. Even though the money is coming into your bank account, it doesn’t mean that it is all yours to pocket. Too often, self-employed business owners spend the cash, then face big cash flow issues in the future when it is time to pay the IRS.

Never make the mistake of making big business decisions based on the money sitting in your bank account, without considering upcoming tax obligations. A good small business accounting software can help you stay current with financial reports and upcoming costs. Use this information to gain a clear picture of the true profits of your business efforts, helping you avoid the pitfalls of not having enough to pay the bills when tax time rolls around.

One of the best things that you can do is set aside a percentage of your money for future tax bills. Since self-employment income is often variable, you can create a system that automatically saves your tax money in a separate account.

Find an Outsourced Accounting Team to Help

Not only is it stressful to keep up with the deadlines for tax payments, but the government forms can be intimidating. Most self-employed business owners choose to hire the help of a local accountant or outsourced accounting services through a reputable provider. Our experienced team at Easier Accounting is always here to assist. If you need help designing the right financial system to keep up with your self-employment taxes and business reports, then we invite you to contact us right away: (888) 620-0770.

Answers to Your 7 Most Common Bookkeeping Concerns

It’s no surprise that questions come up when you are trying to figure out the ins-and-outs of running a business. Whether you are facing bookkeeping concerns or questions about marketing strategies, it is essential that you tap into an experienced team that can guide your planning. As a small business owner, you don’t have to figure it all out by yourself. Instead, you can focus on your strengths and bring in the assistance that is required to keep your business moving forward.

It is common for small business owners to face questions and issues regarding their financial tracking systems. Where should you turn to find answers to these questions? A Google search can be overwhelming because of the vast amounts of information that comes up. Plus, it’s hard to know which resources are accurate and reliable.

The best solution is to look to a trusted expert in the industry. Our team here at Easier Accounting is just a phone call away if you need answers, advice, or information. Here are some guidelines that will help with some of the most common bookkeeping concerns that we hear from small business owners:

1. My financial reports are always inaccurate.

It can be frustrating to look at a financial report and know that the numbers don’t match up with the reality that is happening in your bank account. These financial reports aren’t worth anything if the information is incorrect. If you are going to benefit from your bookkeeping and accounting system, then you need to be sure that the transactions are correct and everything is up to date.

Two things need to be addressed to ensure that the information is accurate: use a reputable accounting software, and tap into the services of an experienced accounting team. You will have checks and balances in place with the software and the ongoing reconciliation services to ensure that your reports are always accurate.

2. I’m scared that the IRS will audit me.

While there is always a risk of auditing, a few proactive strategies can be used to reduce the risk of auditing. Too often, business owners put themselves at risk because they attempt a DIY bookkeeping and accounting system. It’s not worth the little bit of money that will be saved on tax preparation fees when you are facing expensive fines and penalties due to bookkeeping inaccuracies.

We can’t promise that bookkeeping and accounting services will eliminate your audit risk. But we can help you create a clear-cut, accurate system that ensures you are sticking with the guidelines and regulations established by the IRS. Our goal is to help you minimize your tax burden while staying within the laws that apply to your business.

3. Payroll is taking up so much time; I can’t keep up!

Managing payroll is one task that never goes away. As long as you have a business and employees coming to work, you need to be consistent with payroll processing. Timely and accurate payroll calculations support the needs of your employees because they know that they can depend on the paycheck coming through every month.

If your business is growing and you don’t have enough time to manage payroll, then it might be appropriate to enlist the services of an experienced accounting and bookkeeping team. In addition to regular payroll processing, we can also help with the common bookkeeping concerns regarding payroll tax calculations and payments. You need to be sure that you are staying consistent with the paperwork and payments required by the IRS throughout the year.

4. I don’t have the time or energy to hire and train a new bookkeeper.

Are you encountering the common bookkeeping concern that it feels like there is a revolving door on your office? Employee turnover is not only inconvenient, but it is expensive to hire someone new and get them up-to-speed on the accounting systems that are used in your business

Luckily you can avoid the responsibility of training and hiring. Instead of carrying this burden in-house, it is cheaper and more effective to enlist the services of an outsourced accounting team. When our team is on the job, you can rest assured that there will never be gaps in the services that are needed for your business financial tracking systems.

5. I know I need a new bookkeeping system, but I don’t know where to start.

What is your current bookkeeping system? Some business owners might be outdated, using manual tracking either in handwritten notebooks or with excel spreadsheets. Other business owners might have an accounting software program that is 10+ years old, missing some of the key features that are now available in the industry.

If you haven’t upgraded your bookkeeping and accounting system in a while, then it’s time to talk to an experienced team to learn about your options. Instead of fumbling your way through the software setup, let the pros handle everything for you.

6. Cash flow is a mess, making it hard to pay the bills.

Even if you have money coming in from products and services that are sold, you are still running the risk of cash flow problems if you don’t have a good accounting system. You must be tracking every transaction that moves in and out of your financial accounts. You need to know the money that will be coming in from your customers. At the same time, you need to have a clear picture of the expenses that will be coming up in the future.

The right software and ongoing accounting services ensure that you are current with transaction auditing and account reconciliation. As a result, you always know how much is in the bank and how much money you will owe in the future. This information will support you when it is time to make the difficult decisions that impact the profitability and cash flow each month.

7. We need bookkeeping help, but I can’t afford to hire a full-time bookkeeper!

Just because you need bookkeeping support, doesn’t mean that you have to hire another person to be on your payroll. The cost that comes with an employee adds up! In addition to the person’s salary, you also need to bear the burden of benefits, overhead costs, and more.

One effective way to reduce your spending without sacrificing the quality of bookkeeping services that are available is to lean on the support from an outsourced accounting and bookkeeping company. You’ll see that our full-service solutions are a fraction of the price that you would pay for an in-house employee. You can lean on the advice and information from our experienced accounting team and save money at the same time.

Choosing the Best Accounting Team

As you can see, there are many ways that your business will benefit when you enlist the services of an experienced accounting and bookkeeping team. You don’t need to carry the financial responsibility without tapping into the services and expertise offered by the pros.

Some business owners look to their local networks to find payroll and bookkeeping services in the geographical area. There’s nothing wrong with hiring a team that is close to home, but you also need to consider the cost of these services. In many situations, it is more affordable to hire a reputable online accounting service.

Outsourced accounting is becoming more popular with all business owners. Look at the numbers: there’s no question that you will save both time and money by hiring the pros to manage your small business accounting needs. As you learn about the services that are available, you’ll see that it is possible to outsource all of the stressful tasks: payroll processing, tax strategy, financial reporting, tax calculations and filing, and more.

Simply research your options and then choose the accounting and bookkeeping team that will be a good fit for your needs. You’ll see that Easier Accounting has an excellent reputation in the industry. We’ll gladly answer your questions and help you determine if our services are right for your business requirements.

Accounting Services You Can Trust

When it comes to your business finances, it is essential that you hire a team that you can trust. You are leaning on the support of an accounting team, which includes the way you manage your money and set up your tax strategy. Many business owners have said that good accounting services were the key factor in ensuring the long-term success of the company.

If you aren’t already enjoying these benefits for your small business, then our team is here to assist. The simplest way to get started is to open up a conversation to learn about the options that are available. We’d love to talk with you about the ways that we can support your business needs. We specialize in small business accounting services and can help you overcome some of the most common bookkeeping concerns faced by business owners. You can reach our team at Easier Accounting by calling us at (888) 620-0770. Call today to see how our services can improve your business financial systems.

Choosing Business Accounting Services: Firm vs. Freelance Bookkeeper

One of the best stress-reducing decisions you can make for yourself is hiring an expert to help with business accounting services. You are already carrying enough stress as you are working through the details of employee management, marketing plans, and product development. Add the details of bookkeeping and accounting on top of your daily responsibilities, and it can be a lot to keep up with on an ongoing basis.

It’s understandable that the decision to outsource business accounting services can be a challenge. Not only do you need to hand over the keys to someone you don’t know, but some business owners aren’t sure if it is worth taking on another monthly cost. The truth is that you will receive countless benefits when you finally make the decision to work with an experienced financial pro. This one decision might be the turning point to help your business grow to higher levels of success.

Why Do You Need Business Accounting Services?

If you are getting your company off the ground, then it might seem like an unnecessary expense to hire a financial professional. Is it worth the cost when cash flow is tight? Yes! As you learn more about the benefits of working with an accountant and/or bookkeeper, you’ll see that this expense should be at the top of your priority list.

Many entrepreneurs thrive on DIY, especially when they are just getting started. While there are certain things that you can do for yourself, there are also appropriate times to bring in an expert who can assist with your needs. It can be a challenge to find the time required to keep up with ongoing bookkeeping and accounting responsibilities.

Plus, there is a good chance that you are making avoidable mistakes if you don’t have experience in the financial industry. You wouldn’t try to fill a cavity without visiting a dentist, so why would you try to analyze financial reports if you don’t have an accounting background? Failing to engage the services of a trusted accounting team means that you will be missing out on critical insights that are needed to help your business grow.

In fact, when business owners finally make the decision to hire someone to help with accounting and bookkeeping, these business owners often find that they weren’t doing nearly as well as they expected. Just because you are staying consistent with your DIY system, doesn’t mean you are covering all of the essential aspects required for your financial reporting.

It is common for a financial professional to uncover problems with transactional errors, poorly structured systems for paying bills, and even gross errors in the financial reports. If you want to make quality decisions for your business, then you need to lean on the services offered by an accounting professional.

Considerations: Bookkeeper vs. Accountant

The most important thing that should be considered as you are making this decision is regarding the type of services that are required for your company. Are you looking for someone to help with only tax strategy? Or, do you prefer a full-service approach that includes ongoing support with account reconciliation, financial report analysis, and more?

Even though the term “bookkeeper” and “accountant” are sometimes used as synonyms, there are distinct differences in the services that you will receive from these providers. You should never assume that a bookkeeper can provide all of the services available from a business accounting firm. As a result, you might be missing out on a few key services that are required to support your business needs.

A bookkeeper and accountant share common goals, and their roles often overlap. Here are a few details to help you distinguish the different types of services available:

  • Bookkeeping Services: A bookkeeper is responsible for overseeing the ongoing financial transactions, such as invoice payments, payroll, sales tracking, and more. These transactions need to be recorded, categorized, and reconciled to ensure that details aren’t overlooked in the bigger financial picture. Bookkeepers help with accurate recordkeeping, but the services don’t typically include analysis of financial reports.
  • Accounting Services: When a bookkeeper ensures the business is maintaining accurate record keeping, then the accountant can step in and build on the information that has been recorded by the bookkeeper. Accountants often help with financial statement reviews. The data is taken to the next level with detailed analysis, interpretation, and advice. The goal is to use reportable data in a way that helps with cash flow and business strategy.

So, do you need a bookkeeper or an accountant? In most cases, small business owners can benefit from both services. The benefit of choosing a bookkeeper is that the services are often less expensive, but you will be missing out on the financial analysis available from an experienced accountant. In fact, it often makes sense to spend the extra money on accounting services, because you will be able to recover those costs by reducing your tax load and maximizing your business strategy. Many business owners find the best solution is to choose a team that offers both bookkeeping and accounting services, such as the all-inclusive packages offered here at Easier Accounting.

Comparing Your Options: Firm vs. Freelancer

There’s no question that every business owner needs to tap into financial support. Most people begin with a startup idea, but they have no experience or knowledge regarding the business side of things. Just because you have a product that people are interested in buying, doesn’t mean you have the smarts to handle the books that support your business.

It is important that you understand a few distinctions between the services offered by an accounting firm vs. a freelance accountant:

  • Cost: If you are looking for the lowest price, you will often find the best value for your money by hiring a virtual team. Local accountants need to carry the expensive overhead costs of maintaining a building and other expenses. In comparison, an online team can keep prices low since these costs can be avoided.
  • Timeline: When you are working with a team, such as the services offered here at Easier Accounting, you don’t have to stress about deadlines being missed. Certain deadlines need to be met, such as payroll processing, account reconciliation, and tax payments. A single accountant will go out of town at times, which means that your deadlines might be overlooked since only one person is overseeing your financial needs. In comparison, a financial team ensures you will never miss a deadline, regardless of the personal schedules of the individuals on a team.
  • Experience: There’s no question that you are tapping into a broader range of experience when you choose to work with an accounting team. A local accountant will have knowledge about small businesses in your area, but that experience will be limited since the person is tied to a geographic location. In comparison, an online team has experience working with a full range of companies in many different locations. This spectrum of hands-on experience means they have more to bring to the table regarding the financial services needed for your company.
  • Access: One of the benefits of our digital age is the access to cloud-based software programs. Instead of the need to visit with your accountant in person, you now have the option to work with a team located anywhere in the world. Even if you are on the other side of the country, our team can offer high-quality services through digital access to your financial books. Your business can go paperless, and approved managers and financial pros can access your financial information at any time.

When to Hire Business Accounting Services

The truth is that it is never too early to bring in the experience of an accounting professional. Even if you are just getting started with your new business or you are in the early stages of growth, it is essential you have the support of a financial team that will help you get things off the ground. Business owners who make the decision to hire an accountant early in the game rarely regret their choice.

These services help to build a solid foundation that makes it easy to help your business grow in the future. When you have a solid financial system, then you can avoid common growing pains that occur when other business owners aren’t prepared.

A financial professional can help as you create a plan based on the needs of your company. This system will help you save time, which means that you will also be saving money in the process. You can hand the responsibility to an experienced business accounting service, allowing you to turn your focus to other responsibilities that are required to help your business grow.

If you are considering the option to hire business accounting services, then our team is here to assist. Easier Accounting knows what it takes to ensure financial clarity for your small business. We invite you to reach out to us any time to learn about the services that are provided by our team. We’re here to help with both bookkeeping and accounting services needed for your small business: (888) 620-0770.

Accounts Receivable Tips for Business Owners

As a small business owner, how many responsibilities are you juggling throughout the day? Some people find it hard to stay current with accounts receivable invoices when they are busy working on product development, marketing, employee management, and more. Even though you are working on many important details in your business, it is important that you are proactive with your AR strategy.

Why Your Accounts Receivable Strategy is Important

Do you find that your sales are strong, and yet you are always facing a difficult cash crunch? It can be a challenge to keep the money flowing if you don’t have a good AR system in place. Even if the numbers show that your business is prospering, you could be facing serious cash flow issues if you aren’t diligent with collecting payments from your customers.

It’s often easy to stay current with your account payable invoices, because the vendors expect payment by a certain date to avoid fees and interest costs. Do you maintain these same standards with accounts receivable? You need to be sure that money is in the bank so you can pay your bills, which means that you must be diligent about collecting the cash that is owed.

In fact, it’s easy to see that establishing an effective AR strategy should be a foundational practice for every small business. Unfortunately, too many small business owners neglect AR and face avoidable problems as a result. When you optimize your Accounts Receivable systems, you can reduce your stress and optimize the financial success of your company. As a result, healthy cash flow will have a positive impact on your sales, marketing, and all other business operations.

As you can see, it is essential to create a good AR system and also stay consistent with maintaining the system in the future. It’s worth the time to structure these processes within your company. Always look for opportunities to improve these systems if needed. Even if you don’t see the immediate benefits of optimizing your Accounts Receivable processes, these efforts will undoubtedly have a powerful effect on your future business efforts. You can reduce the possibilities of wasting existing capital, giving you the cash flow to pay down debt, fund growth, and reduce costs.

Common AR Problems Faced By Small Business Owners

There is no reason to “reinvent the wheel” when other business owners have already forged the pathway forward with good AR systems. Here are some of the common pitfalls encountered when business owners don’t have a good Accounts Receivable system:

  • Time: You might feel you don’t have time to work on AR right now. But, procrastinating this process can result in a huge time requirement in the future when you are trying to clean up the mess. It is best to be consistent and diligent with your billing in real-time. This process minimizes the work that you need to put in later on when the information is no longer fresh on your mind.
  • Cashflow: A lack of money in the bank will have a ripple effect to impact all aspects of your business. For example, if you aren’t collecting on the invoices that are due, then it means you won’t have the cash needed to invest in your marketing strategy. As a result, your business growth will slow.
  • Cash Allocation: Another issue with poor AR systems is that you will find it difficult to stay consistent with the allocation of your cash resources. When cash is tight, it means that you will always be putting out the fires instead of building your business proactively.

Tips for Improve AR Systems

Now that you can see the importance of a good AR system, it’s time to commit to the changes that will improve your business practices. What are the best tips that need to be implemented? Here are a few proven strategies that can help your business thrive:

  1. Invoice Timing: Don’t fall into the trap of procrastinating the timing of when the invoices are sent out. If your customers aren’t invoiced, then you can expect payments will not come through. Invoicing consistently means that you can receive the payments as soon as possible, helping to keep the cash coming into your bank account. The best practice is to send the invoice at the time of delivery, giving the customers an immediate reminder that the payment needs to be sent.
  2. Invoice Follow Up: Just because you send the initial invoice, doesn’t mean that the payment will be remitted automatically from your customers. Build in a follow-up system for invoices that are due. The process can be built into your accounting software with reminders that you need to reach out to customers who are past-due with their payments.
  3. Ask for Payment: You should never feel bad about following up on an overdue invoice. If you don’t ask for the payment, then it will result in invoices that are months old. The longer the invoice sits unpaid, the more likely you will never receive payment on the invoice. If your digital reminders aren’t enough to encourage the customer to send payment, then you shouldn’t hesitate to have a conversation with the person. This discussion can help you understand more about the payment delay, giving you the opportunity to find a solution that meets the needs of all parties. For example, if the payment is late because of the customer’s cash flow concerns, then you might be able to set up a payment schedule with smaller milestones.
  4. Clear Payment Terms: Make sure you are clear about payment expectations from the beginning. These terms will give your customers information about the expected timeline for the payments, helping you avoid confusion when it is time for the payment to be collected. Communicating this information gives you the structure so that you can build in late fees or interest costs as needed.
  5. Milestone Invoicing: If you are working on a big project with a client, it isn’t necessary to wait until the completion of the project to be paid. When larger projects cover a long period of time, it is best to bill based on milestones instead of completion. This milestone billing strategy ensures you have money for supplies and payroll as the project progresses, helping you avoid cash flow issues. Plus, you reduce the risk of missing out on the full amount if the customer doesn’t pay for some reason in the future.
  6. Itemizing Invoices: Don’t send a generic invoice with an unexplained amount due. Each invoice should show the breakdown of the products and services that were provided. If customers have questions or disagree with the amount, then it means that they will likely delay payment on the invoice. You can reduce the risk of this delay by showing the full amount due as well as the breakdown, helping to avoid questions about the money that is due.
  7. Provide Various Payment Options: While it’s true that “cash is king,” you will lose out on business if you don’t accept credit card payments. It is smart to accept a variety of payment options, including cash, direct deposit, credit cards, Paypal, and even checks. Giving customers several payment options increases the likelihood that they will be able to come up with a payment solution that fits their cash flow needs.

Start This Process Early

Regardless of the stage of business development you are experiencing, it is essential you are proactive with implementing a good AR system as soon as possible. Even if your business is in the start-up mode and you aren’t collecting money for products and services yet, you need to be sure that the system is in place when you are ready to move forward.

Too often, business owners are so focused on product development and marketing strategies that the important financial details get overlooked. Make the smart decision by starting this process early, so you have a good system in place when the time comes. Your AR system should include details such as the accepted forms of payment, establishing payment terms, and follow-up communication for unpaid invoices. When you are proactive with these details, it makes your business launch smooth and seamless.

Tapping into Industry Expert Knowledge

Are you running into challenges with your accounts receivable system? It can be hard to create a new system if you don’t have experience with financial tracking or accounting. Luckily, you can hire industry experts who will help you structure the right financial software to systematize your invoicing and payments. This process is invaluable to create the structure that is needed, so you don’t have to stress over your small business accounting.

You’ll find it is worth the investment to tap into the services offered by an experienced team. If you are interested in more information about how you can improve your accounts receivable and accounts payable systems, then our team is here to assist. Call Easier Accounting for information about the services that are available for your small business: (888) 620-0770.

7 Effective Business Strategies for Reducing Bookkeeping Costs

When you are running a business, it seems like the bills are always piling up and making it hard to maximize profitability. If you want to have extra cash on hand after the expenses are paid, then you need to be looking at options to reduce your spending and increase your income at the same time. Today, we are sharing tips that you can use to reduce bookkeeping costs, which will help your profitability goals.

Tip #1: Organize Your Finances

Staying organized is the foundation for financial success. If your receipts are scattered and you can’t keep up with the payments that are due, then you will be wasting time trying to find the right paperwork. Plus, missed payments result in late fees and interest charges, which increase the overall amount that is paid each month. There’s no question that good organization can save you both time and money.

When your bookkeeper is working on your transactions and financial reports, they can only work on the documents that are provided. It doesn’t matter if you have an in-house bookkeeper or outsourced bookkeeping services… you are paying more than necessary for their time if they are spending hours sorting through a mess of paperwork.

The key is to implement a system right now so that the bookkeeper is provided with all of the necessary information for each transaction. For example, if you buy something and receive a receipt, take 10 seconds to make a note on the receipt to document the purpose of the purchase. Invoices that are paid online should be noted with the date of payment and the method that was used for payment.

If you are looking for ways to cut bookkeeping costs, then talk to your bookkeeper about the way the information should be presented. As a financial expert, your bookkeeper will offer suggestions and advice that will streamline the workflow and allow the bookkeeper to maximize the time spent on the project. The goal is to have a system in place that provides the bookkeeper with the information necessary to keep your books up to date, which requires organization at every step.

Tip #2: Use Proven Computer Software

Leveraging technology can be an effective way to organize your finances and avoid unnecessary busy work. For example, a document management system can be used to keep track of your receipts so that you no longer need to keep a shoebox full of random paperwork. Simply snap a picture of the receipt, then store the image in a cloud-based folder. This file can be shared with your bookkeeper for tracking purposes.

One other benefit of a document management system is that you can always find your receipts if needed in the future. Sometimes, it can be helpful to refer back to transactions that happened in the past to compare costs or evaluate overall spending for the day. This information is just a click away and can be accessed online, without the need to dig through piles of paperwork in the filing cabinet.

An accounting software should also be used if you are looking for ways to reduce bookkeeping costs. For example, this cloud-based software system can pull in the transactions that move through your credit cards and bank accounts. You can create categories that automatically file recurring transactions. Your bookkeeper will spend time evaluating the transactions that are coming through and auditing the system to ensure that nothing is missing.

A good accounting program saves you money because you don’t have to pay for the hours of manpower required for manual data entry. Even though you will pay a fee for the software program, it is a fraction of the cost compared to the time and money required to calculate the financial reports by hand.

Tip #3: Separate Your Business and Personal Spending

Mixing business and personal spending complicates your financial tracking, making it difficult for the bookkeeper to sort through the transactions. One way you can save money on bookkeeping costs is by creating a separate account for your business transactions.

A clear-cut system to define business spending and personal spending will simplify the reconciliation of the accounts. Additionally, it takes less time to determine the right deductions that can be tallied when it is time to do your taxes each year.

Tip #4: Build in Options to Scale in the Future

Cutting corners on your bookkeeping systems might seem like an effective way to save money right now. But you shouldn’t overlook the potential costs that will be accrued if you need to change accounting systems to scale your business in the future.

For example, it might seem like a good idea to select the cheapest accounting and bookkeeping system that will cover the basic necessities for your financial reporting. Even though this software might cover your bases right now, you will be facing bigger issues in the future if the software can’t accommodate the future growth of your company.

As a result, spending a little bit more right now could save you the cost of transitioning bookkeeping systems in the future. Instead of attempting a DIY system, bring in a team of financial experts who can offer advice about the right system designed to support your business growth in the years to come.

Tip #5: Use Technology to Improve Accuracy

Every time a mistake is made on your tracking and accounting, it costs time and money to fix the error. Even though errors are unavoidable, there are a few things you can do to reduce the potential mistakes that happen with your bookkeeping and accounting systems.

One effective solution is to leverage technology for the calculations and report generation. You can skip manual calculations and have peace of mind knowing your numbers are accurate and clear. Choose a system that delivers both financial intelligence and greater efficiency for your business systems.

Tip #6: Control Costs by Eliminating Waste

How much money is wasted each month and year due to payments and transactions that slip through unnoticed? You can offset the costs of accounting and bookkeeping services by leveraging the team’s skill set to reduce waste and unnecessary financial burden.

For example, your bookkeeper might be able to offer advice about reducing overhead expenses and improving the collection of Accounts Receivable. As a result, your income will go up and you can cut out expenses that are no longer necessary for your business systems.

Not only will you have the option to reduce the amount of money that is spent, but these in-house changes can also affect employee productivity. Your employees will understand the importance of streamlining business systems and sticking to spending goals. So, the daily decisions of the employees will support your overall business efforts.

Tip #7: Hire Outsourced Bookkeepers and Accountants

There’s no question that you need bookkeeping and accounting services. Most business owners assume that the simplest way to bring these skills into the company is by hiring an employee. But you need to think about the fact that you aren’t only bringing on the burden of paying the person’s salary, but you also need to carry additional costs of having another employee in the office.

The fully loaded costs will add up over time! Here is a quick overview of some of the expenses you will pay for a full-time accountant or bookkeeper:

  • Salary or wage
  • Benefits
  • PTO
  • IT and equipment
  • Office space and utilities
  • Overtime pay

Many businesses are choosing to outsource accounting services to avoid the fully-loaded costs of bringing on another employee. Do the math, and you might be surprised to learn that it is easy to save thousands of dollars a month by hiring an outsourced accountant as an alternative to a full-time employee.

This method is not only more cost-effective, but many business owners also find it less stressful to tap into the expertise of an outsourced team. It feels good knowing that the service provider has relevant experience working on the financial reports for other small and medium-sized businesses. Outsourced accounting services means that you don’t have to worry about employee management or training. Instead, you can hand off the financial details with confidence knowing your accounting team is taking care of the necessary tasks to track your accounts and reports.

Questions about Reducing Bookkeeping Costs?

Are you enjoying the benefits of outsourced accounting and bookkeeping services? If you don’t have a good system in place, then right now is a good time to make the changes that are needed to boost your financial strategy.

A variety of financial tracking and reporting aspects can be outsourced to our team, helping to free up your time so you can focus on business-building efforts. Common outsourced services include:

  • Accounts Payable and Receivable
  • Payroll Processing
  • Financial Reporting and Statements
  • Tax Calculations and Filings
  • Monthly Reconciliations
  • Credit Card and Bank Statement Audits

Our team of experts at Easier Accounting is here to assist with all of the bookkeeping and accounting services needed for your company. We specialize in small business accounting and would love to have a conversation with you about the options that are available: (888) 620-0770

Are You Building a Scalable Small Business?

Most small businesses start with a simple idea and hours of work in the basement or garage. It doesn’t take much to identify a potential opportunity in an industry of your interest. Some of the best inventions were born out of necessity with individuals looking for solutions to solve their problems. If you are in the position of designing a startup or running a small business, it is important that you are not only looking at your current responsibilities… but also evaluating your options for the future. A few things can be done right now to ensure that you have a scalable small business.

What Does it Mean to Be Scalable?

When investors can see that your business idea has potential, then they will be ready to offer money to help the company grow. A scalable small business is designed so you can multiply revenue for future business growth with minimal costs to expand.

If you have a scalable small business, then it means you have a proven business model and a proven product that consumers love. Once the systems are in place, the next step is to expand the business efforts to other markets and geographies. You don’t have to re-invent the wheel when you want to move to new markets. Instead, it is a “lather, rinse, and repeat” process to implement the same business systems over and over again to new customers.

For example, most business owners have significant upfront costs to develop the product or service that will be offered to the ideal demographic. You will spend time and money on the iterations to ensure that everything is perfect to meet the needs of your customers. Once these systems are designed and in place, then it requires minimal expenses to make additional products that can be sold to others.

How to Build a Scalable Small Business

Here are simple tips that can be implemented into your business plan to ensure that you have options to scale your company in the future:

  1. Attract Investors: When you are ready for business growth, you might run into the roadblock of not having enough cash to pay for the expansion. Just because you and your friends think that it is a great idea, doesn’t mean that investors will be ready to jump on board. As you are building your business plan, consider strategies that will make the opportunity attractive to investors. For example, use market research from outside experts and build documentation showing your profit margins and customer satisfaction.
  2. Continuous Improvement: Just because your business is going well right now, doesn’t mean that you are set up for success in the future. Too often, people run as far as they can with one business idea, only to find that the market fizzles out when the next trend moves in. It is essential to look for ways that you can implement continuous innovation. Instead of offering a single product, you can identify complementary services and products that will continue to solve your customer’s needs in the future.
  3. Work “On” Your Business: As the business owner, you are the point that is directing all actions and decisions made within the company. In the beginning, the business won’t continue with daily progress without the integral role that you play in the system. Ask yourself: how much time are you spending working “in” your business? If all systems come to a standstill when you are on vacation, then it might be time to rethink the way you are building the system. Instead of working “in” your business each day, look for ways you can work “on” your business to create a plan that can be scaled. You only have 24 hours in a day, which means you will be limiting your business growth depends on your involvement.
  4. Build a Good Team: Over time, you can build a team that will keep the system running, regardless of your involvement in the day-to-day responsibilities. One strategy is to bring in the right employees to oversee all aspects of business management. For example, you need front-line customer service representatives, salespeople, managers, product testers, and more. If you are worried about the overhead costs that will be accrued for in-house staffing, then you might consider the option to outsource these services instead. Outsourcing offers an effective way to reduce your spending while tapping into the experience and resources required for your business systems.
  5. Leverage Technology: Tech plays an important role in business management, so it makes sense to take advantage of every benefit available by using technology. If you are stuck using outdated systems and manual processing, then it is time to revamp your company to implement as much automation as possible. For example, it is a waste of time if you are paying employees to handle manual data entry for every transaction that moves through your company. Instead, find the right accounting and bookkeeping software that automatically pulls in the transactions that move through your credit card and bank accounts. This automation frees up your employee’s time, giving them the ability to work on other business-building activities.
  6. Always Automate When Possible: One way that technology can be used is by automating systems and redundancies. If your startup is staff intensive and labor intensive, then it is hard to scale because of the number of people that will need to be hired. The best thing that you can do is start early to identify ways that your systems can be automated. Documentation and processing can be organized and streamlined using technology. You should also evaluate ways that training can be shared to all through online videos instead of training new employees one-on-one. These systems will allow you to bring in new people consistently and quickly as needed to support your business efforts.
  7. Hire Marketing Experts: You can offer the best product in the industry, but have minimal sales if your customers don’t know about your company. Too often, business owners get stuck because they pour money into business development without leaving anything left over for marketing and advertising. As a business owner, you shouldn’t be spending your valuable time reading online internet marketing forums and testing shady marking strategies. Instead, find a marketing expert that understands your industry and can help you connect to the customers who are looking for the product or service you are offering.
  8. Accept Funding When Needed: You can only get so far with organic growth. This process means that you are reinvesting profits to help your company grow, but you will find that your progress is limited without a bigger infusion of cash. Investors can add the fuel needed to boost your rocket to higher altitudes. Even though you will give up a bit of control by accepting money from investors, you’ll find that many benefits come from the experience and expertise offered by these people. Do your due-diligence to ensure you are selecting investors that are a good match for your company. Then, find a win-win solution to leverage their money and your business ideas to bring in profits for everyone involved.
  9. Explore Options for Franchising: If you have a proven business model, then franchising is one solution that might help you expand to other markets. Instead of trying to out-market the competitors, look for ways you can bring them on-board by showing the documentation and profitability that they need to get on board with your business plan.

Do You Want a Scalable Small Business?

Not everyone wants to build a multimillion-dollar company. If you are creating a home-based business to bring in a little extra spending money each month, then you might not have the desire to get involved with investors and large-scale systems.

The most important thing you can do is evaluate your long-term goals and determine the incremental progress that will help you achieve those goals. What are your revenue goals? Are you interested in developing more products and services in the future? Asking these questions can help you decide if you want to put in the effort to scale your business efforts and help your company grow.

Whether you are happy with the current size of your company or you are looking at growth opportunities in the coming years, it can be beneficial to have the support of an experienced outsourced accounting team. Managing the financial details of your business can be both stressful and burdensome. Luckily, you can hand off these responsibilities to an accounting and bookkeeping team. These outsourced services will allow you to focus your efforts on the things that you enjoy most, giving you more time and freedom to build the type of business that you desire.

For more information about small business accounting and bookkeeping services, you are welcome to contact our team at Easier Accounting. We specialize in all the services required to keep your small business running each month. Not only can our team help with payroll processing, but we can also offer the assistance you need for tax strategy, ongoing bookkeeping, and more. Call today to see how we can help: (888) 620-0770

To-Do List for Successful Relationships with Independent Contractors

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

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

Benefits of Hiring Independent Contractors

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

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

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

Tips for Getting Started with a Contractor

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

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

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

Services to Outsource

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

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

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

Clearing Up Confusion about Common Jargon in the Bookkeeping and Accounting Industry

Hiring bookkeeping and accounting services might be one of the best decisions you will make for the financial success of your company. It is essential that you have an experienced team to guide your financial tracking and decisions that will affect the well-being of your business. But, do you feel like you are in over your head trying to understand the jargon in the financial industry?

It can be confusing for a new business owner to decipher terms that are standard in the bookkeeping and accounting world. Instead of bringing in a translator to explain these things in layman terms, you can use this guide to break down some of the common topics of conversation that come up with your bookkeeper or accountant.

At Easier Accounting, our name says it all: we are striving to make accounting as easy and as simple as possible. We are proud of the quality services and simplicity offered to our clients. Our expert team can help with the financial tasks that need to be handled. At the same time, we want you to understand what is going on with your business accounts so that you are clear about the benefits your business is receiving from these services.

Common Terms and Jargon in the Bookkeeping and Accounting Industry

These are some of the common terms that you might hear as you are working to gain a greater understanding of your business finances and reports:

  • Accounting Method: Your accountant might talk to you about the accounting method that is used. This process is the strategy that is implemented in reporting expenses and income. Two methods can be used for proper reporting to the IRS: either accrual accounting or cash accounting.
  • Accounts Payable: These numbers can be accessed in a report that shows the total amount of money the business needs to pay in bills. When your vendors submit invoices or payment requests, then they are categorized as Accounts Payable. These amounts are liabilities since you need to have the cash to pay for the products or services.
  • Accounts Receivable: On the other hand, the money that is collected from your customers or clients falls into the Accounts Receivable category. If a customer owes money but hasn’t paid yet, then it is an asset that will hopefully be collected in the future.
  • Accrual Accounting: This form of accounting maintains reports based on when expenses are incurred, and income is earned. Businesses have a bit of flexibility in determining when the expenses and income are recognized, as long as the management of these numbers matches IRS regulations.
  • Assets: Does your company own anything that has value? A variety of things can fall in your assets category, such as inventory, real estate owned by the business, vehicles, equipment, and more. Even your outstanding Accounts Receivable falls into the category of business assets.
  • Balance Sheet: One important financial report is called your business balance sheet. This statement shows the changes in your liabilities and assets in a given accounting period. Understanding the difference between these two numbers is critical to determining the current success and trajectory of your business.
  • Cash Basis Accounting: An alternative to Accrual Accounting, this method records the expenses and revenues when the payments are sent or received. It is a straightforward method of accounting that is often used for small businesses or new startups, especially when the company is running on a cash basis or doesn’t have an inventory to manage.
  • Cash Flow: The order in which money flows in and out is critical so that you can manage your expenses and profits. Revenue and expenses should be coming in regularly, but it doesn’t always mean that there is money in the bank to meet your Accounts Payable needs. Even if your business is profitable in a given accounting period, you will face cash flow issues if the expenses need to be paid before receipt of the revenues. For example, some companies need to pay suppliers upfront before the customers send payment for products or services.
  • Depreciation: Some assets are purchased, and they lose their value over time. For example, equipment or vehicles can wear out due to regular use. Your accountant might recommend that depreciation is used to reduce the listed value of the asset each year on the balance statement. This strategy spreads out the loss over multiple years, which helps to manage taxable income in some cases.
  • Double Entry Bookkeeping: It is common for businesses to use a double entry system for bookkeeping. This process requires each transaction to be listed twice in the accounts since two effects are happening. If you buy $10,000 in inventory, then an entry needs to show a reduction of cash reserves. At the same time, a second entry shows that assets are increased by $10,000.
  • Expenses: Your business will require a variety of costs to keep the company running. Any time these costs are accrued, they fall into the expense category. Expenses that result from revenue-generating activities might include business development, marketing campaigns, inventory purchasing, payroll, and more.
  • Financial Statements: This broad term can cover a variety of reports that might be run through your bookkeeping system. These documents show the activities of your business in a given period. Common reports that fall in the Financial Statements category include Profit and Loss Reports, Balance Sheets, General Ledger, Equity Statements, and Income Statements.
  • Financial Year: Depending on the way your business is structured; your financial year might not run according to the calendar year. There are times when reports are run from January to December, but there are many instances where the 12-month period for a company doesn’t align with the calendar year. These dates need to be recorded and tracked for reporting and tax purposes.
  • General Ledger: The master sheet that shows every transaction is known as your General Ledger. Data for all other reports are pulled from this ledger.
  • Income Statement: Commonly known as a “Profit and Loss Report,” an income statement shows the profits for your business in a specific timeframe. Both revenue and expenses need to be calculated to determine the profitability of your company.
  • Liabilities: Money that your business owes to another company or vendor falls in the liability category. These balances need to be tracked so that you have the cash flow necessary to pay the expenses.
  • Revenue: A revenue report shows the amount of money your business receives for products or services sold in a given time frame. This total might include the exchange of assets, net sales, interest received, and any other transaction that brings money or value into the business. Revenue is usually calculated before expenses are factored in to determine profitability.

If you encounter any other terms that you don’t understand, then your bookkeeper or accountant can help with a definition of the jargon. It is helpful to ensure that you understand these concepts so that you know what your financial team is talking about in conversations about the financial reports and tracking for your company.

Enlisting the Services of an Experienced Accounting Pro

Business owners have a lot of stress and responsibility in keeping the company running. Are you feeling overwhelmed trying to keep up with everything that needs to be addressed? Not only do you need to oversee product development, employee management, marketing campaigns, overhead expenses, and more… but you also need to consider the financial health of your company.

The most important thing that you can remember is that you don’t have to do it all by yourself. If you don’t have training or experience with bookkeeping and accounting, then it makes sense that you should hire an experienced team to assist with these tasks. Ongoing services can go a long way to improving the financial health of your company and ensuring success in the future.

Choosing a Bookkeeping and Accounting Service

Understanding the jargon is just the first step in determining the right financial plan for your company. It is also essential that you hire an accounting and bookkeeping team that you can trust. A little bit of research in the beginning can go a long way to ensuring the financial success that you desire.

It is smart to hire an outsourced accounting service instead of attempting a DIY approach. The best solution is to choose a team that specializes in small business services. You need to work with an accounting pro that will understand unique challenges and situations that might apply to your business.

Also, consider the reputation of the company. As you look online, you can find information about the accounting service to determine whether the company is reliable and reputable. Make sure that the team holds the right accounting certifications.

Take time to learn about the services that are offered to ensure that these services are a good fit for your business needs. If you need guidance or assistance in choosing the right accounting services, then Easier Accounting is here to help. We’re here to assist with everything from explaining industry jargon to providing the ongoing financial support required for your business efforts: (888) 620-0770.

Effective Budgeting and Accounting Strategies for Businesses Owners

Startups and small businesses shouldn’t overlook the necessity of setting up the right budgeting and accounting strategies to organize financial information. Too often, business owners see budgeting as a practice that adds little value in the beginning. It’s easy to get caught up in the details relating to product development, marketing, and client acquisition. As a result, budgeting and accounting practices are pushed to the backburner.

Don’t make the incorrect assumption that you will put these financial strategies in place when it is convenient. Instead, you need to prioritize your time and activities and understand that budgeting and accounting should be at the top of your list. Creating an effective and reliable budgeting process might be the difference between success and failure in the future.

These systems will help you avoid common problems that pop up in business management. An effective budget will help you oversee the financial health of your company. At the same time, you will have the tools in place to reach your financial goals more quickly.

Assessing Your Current Situation

It might seem overwhelming to look at the books and assess your current situation. Understanding your starting point is key if you want to achieve improved financial results in the future. If you don’t know where you are starting, then you won’t be able to identify the most effective budgeting and accounting strategies that will have a positive impact on your business efforts in the future.

You need a real-time snapshot of your accounts, as well as historical financial data to identify any trends that have been experienced over the years. Reviewing this information will help you recognize positive and negative things that impacted your budget and profitability. Then, you can use the information to create a custom game plan that will support your financial goals going forward.

Gathering the information and doing a self-assessment is just the first step. It is critical that you also get an opinion and recommendations from a financial professional. Talk to your accountant so that you can use their expertise in creating a budget that will work for your company going forward.

Creating Budgeting Goals for Your Business

Now that you have a clear picture of your current financial situation, it is time to determine your goals and strategies. In most situations, these budgets are created by looking at margin targets as well as net income. How much money is coming in that you can work with? What are your anticipated and unanticipated expenses that need to be addressed?

Profitability is desired by all business owners. But you can’t reach the profitable point without understanding the path that should be followed to get there. As you are setting goals, you need to determine action points that will be followed to help you achieve the specific goals.

Here are a few things to consider when you are choosing goals for your company:

  • Business Revenue Goals: You need to have a clear picture of the amount of money that is available for you to use. Look at revenue based on both price and volume to determine the feasibility of your goals. Be realistic about the numbers, giving you some wiggle room if you have a slow month or two. Don’t overlook other investments and resources that might impact your budgeting as well.
  • Business Spending and Expenses: High revenue won’t cut it if your expenses increase faster than the money coming in. You can bring in millions of dollars a year and still have cash flow issues if your expenses aren’t under control. When you are creating a budget for your company, you should consider the ongoing business spending, overhead costs, and any other expenses that could be cutting into your profit margins. You might be surprised to see how many line items can be reduced or eliminated, helping to decrease the out-of-pocket expenses you are carrying each month. A little bit adds up over time, so don’t overlook the small changes that will offer long-term benefits.

Make sure that you are realistic in the way these goals are set and managed. If you don’t achieve the goal, then you need to identify a real explanation to identify what happened to stop the progress. Then, action steps can be identified to overcome those issues, helping you achieve higher levels of success in the future.

Ongoing Adaptation and Strategy

In many situations, especially with new businesses, it is likely that your first budget is going to be off. There are costs and industry trends that you didn’t anticipate, making it difficult to stay on track with the outlined budget. Instead of creating your budget and setting it in stone for the year, it is best to have ongoing analysis and evaluation to help you dial in the process.

Draft your first budget and do the best you can to stick to your goals. Then reevaluate and identify ways that actions and processes can be improved to boost profitability in the future. Reporting needs to be happening every month. At the same time, it is a good idea to assess real results every month to identify discrepancies between the results and the ideal budget practices.

Finding these gaps improves your understanding. Just because you don’t match your first budget draft, doesn’t mean that you have failed. Instead, this budgeting and accounting information can be used to improve the system. Learn from the mistakes, identify the points of success. Then shape a financial system that is catered to the needs of your business efforts.

There are always costs that are infrequent or variable, which means that it can sometimes take as long as a year to identify budgeting details. Ongoing tracking gives you more and more information that will help you identify the things to watch for in the coming years.

Making the Hard Financial Decisions

One of the most beneficial aspects of creating a budget is the opportunity to use the information when you are addressing decisions that will affect the health of your company. For example, if you want to buy new equipment for your employees, it might be tempting to spend a large sum of money on the best products in the industry. But if you look at the numbers and see that your budget is tight this month, then you can change your approach by searching for used equipment. The budgeting and accounting reports can help you time the big purchases so your cash flow is not negatively impacted.

Financial decisions don’t have to be difficult when you have a good accounting plan in place. Instead of feeling emotional about the situation, you can look at things from a logical perspective. The financial reports are just giving feedback about the current status and trajectory of your company. Then, the information should be used to make incremental changes that will help you overcome ongoing issues that are hurting your budget.

Small Changes Make a Big Difference

Just because you want to improve your budget, doesn’t mean that you need to lay off staff members or cut inventory to save money. Instead, look for small ways that you can improve your spending without hurting the long-term profitability of your company.

These strategies vary depending on the type of company you own and your industry. Looking at the trends will help you identify the lean times of the year. Then, you can build a strategy to help you carry through even when things are slow.

For example, if you are busiest during the holiday season because of the many retail sales moving through your company, then it might make sense to bring in temporary employees to assist during this time. Even though your workforce costs will go up, you won’t be locked into long-term payroll expenses that you won’t be able to afford in the slower months.

Evaluate the small costs that are chipping away at your profitability. Are you paying for services or products that aren’t producing the results that you anticipated? Ask questions about every line item to determine the value that is being offered to your company.

Also, ask yourself: “What’s another way?” Looking at alternative options might open up ideas about ways that you can tap into the skills and services that are needed to improve your financial future. One example is hiring an outsourced accounting team instead of carrying the expensive burden of a full-time accountant in the office. Your accounting team will offer the financial advice needed to improve budgeting systems, tax strategy, and more. At the same time, you can reduce overall expenses compared with the burdened cost of an in-house employee.

Financial Services for Your Small Business

If you are ready to improve your budgeting and accounting systems, then our team is here to help. We specialize in small business accounting and would like to help you create the right budgeting systems to meet the needs of your company. Contact us at Easier Accounting by calling for more information about the available services: (888) 620-0770.