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7 Biggest Financial Mistakes Made by Small Business Owners

The financial health of your business is a strong predictor to help you determine potential success in the future. Are you creating the foundation to grow and expand your company? A few simple accounting and bookkeeping mistakes might bring your hard work crumbling down.

Instead of reactively dealing with problems as they arise, right now is a great opportunity to make the commitment to proactively protect the financial interests of yourself and your company. Watch out for common pitfalls at the same time; it is important that you implement good financial systems that are built to last.

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Here at Easier Accounting, our goal is to keep you updated about the financial management of your small business. Here are a few small business accounting tips to help you avoid the common financial mistakes:

Mistake #1: Do-It-Yourself Tax Filing

Tax season can be stressful, and many small business owners make it worse by trying to handle their own taxes without talking to a professional. Even if you have experience with tax filing, you should still consider the benefits of tax services. You are already juggling enough to manage your other responsibilities, and tax paperwork will just pile on the work that needs to be completed.

To make things worse, some small business owners attempt to handle their taxes without any previous experience. Tax law can be confusing, and it changes every year. Instead of wasting your time trying to decipher the newest laws, it is essential that you have a professional who understands the nuances of your paperwork.

In serious situations, you might make a mistake on the paperwork… resulting in an audit or problems later on. Avoid these issues by hiring a small business accountant who can help you maximize your deductions and optimize your profitability for the year.

Hiring someone to help with tax services, such as quarterly and annual paperwork and filing, will reduce your stress levels and help you focus on the activities where you shine. It is worth the investment to enjoy the many benefits that are available.

Mistake #2: Failing to Hire a Bookkeeper

How can you manage the financial health of your company if the books aren’t up-to-date? Ongoing bookkeeping services are essential to help you manage outgoing expenses and income received. This tracking ensures that you are keeping up with important payments and staying ahead of the cash flow so that you can pay your employees each month.

Most of the time, small business owners get behind on their books because they are attempting to handle the bookkeeping on their own. Then, they find it hard to carve time out of their busy schedule to sort through receipts and balance the accounts each month.

Instead of over-committing your daily activities, find an accounting team that can offer the ongoing bookkeeping and tax planning services that will help you stay ahead of these tasks.

Mistake #3: Hiring the Wrong Financial Professional

Once you have made the decision that you want to hire a financial professional to help with bookkeeping and accounting, take your time to assess your options to hire the right person. For example, some business owners choose to hire a secretary-level employee to handle the bookkeeping instead of investing in professional accounting services. Even though the secretary might be able to keep up with some of the busy work, there is a higher possibility of error since that employee doesn’t have any experience with accounting.

Make sure that you choose a financial professional with previous related experience. It makes sense that you should pick someone who knows the ins-and-outs of small business accounting since you have a small business! Tap into their expertise to boost your numbers and maximize company profits each year.

Instead of bringing in an employee, you should think about outsourcing these tasks to an experienced team. Many business owners find that it is cheaper to hire an outsourcer compared to a full-time employee. At the same time, you are tapping into many years of experience that can be used to improve the financial outlook for your company.

Mistake #4: Overspending on Unnecessary Tools and Equipment

When was the last time you audited your spending to cut expenses? Even if you are bringing in a lot of money, you won’t be getting ahead if your expenses are high. These expenses can quickly add up over time, especially if you have ongoing monthly payments or annual overhead costs.

Look at your expenses to determine whether each line item is essential. Then, get rid of anything that isn’t being used or might not be unnecessary. For example, you might be able to get rid of an outdated software and upgrade to a cheaper solution that offers better efficiency.

It might be fun to invest in the latest-and-greatest computer systems or brand new office furniture. But, these expenses aren’t a good choice if your business doesn’t have the cash flow to support the purchases.

On the other hand, the right tax strategy can help you learn when to make these purchases to manage your tax burden in a given year. Sometimes, it might make sense to purchase equipment or furniture that is needed before the end of a calendar year, so that you can use the deductions to manage your tax bracket. These factors vary each year, which is why you need to make sure that you have an experienced accountant who can offer personalized advice for your tax strategy throughout the year.

Mistake #5: Mixing Personal and Business Finances

Even if you have a home based business, you need to be careful about keeping the expenses separate. It is common for small business owners to use the same credit card and checking account to pay for business costs and buy groceries for the family. These co-mingled expenses can muddy up the books and make it difficult to sort through business write-offs when it is tax time.

Set clear boundaries to make sure that you know the line between business and personal spending. This approach will help you to leverage your business write-offs as much as possible while maintaining documentation for all of the business expenses.

The IRS doesn’t like to see the mix of personal and business expenses. If they identify signs that your family vacation was mixed in with your business spending, then they could take an aggressive stance by auditing your company and charging fees for overdue taxes.

Mistake #6: Skipping Tax Payments

It might be surprising to learn that you need to make quarterly tax payments or bi-weekly employment tax deposits. Most people without a financial background mistakenly assume that they only need to address tax payments and paperwork once a year.

Missed payments could result in penalties and problems later on. Talk to your accountant to learn about the ongoing payments that need to be made. Your accounting team can handle the paperwork and simplify the process so that you don’t have to stress about anything.

The goal with these tax payments is to estimate the amount of money that will be due for the year, then break it into smaller payments. The right accounting system can help you track current numbers so that you always know how much needs to be paid when it is time to send a quarterly tax payment.

Mistake #7: Misunderstanding Credit Agreements

If you have a small business loan or company credit card, then you need to make sure that you understand the agreements for each line of credit. Even though you are making payments on time, your credit position might not be optimized if you don’t understand the interest costs and fees that you are paying. Look at the agreements and read the fine print to know what to expect if you carry a balance on that card.

There are situations where you might already be tied into high-interest rate cards or unreasonable fees for the money that has been borrowed. In these scenarios, consider contacting the credit company to find out about payment options or interest-lowering steps that can be used. Sometimes a simple phone call can go a long way to help you save money by reducing credit-related costs.

Remember, there is a wide range of financial services that are available. So, if you aren’t satisfied with your current credit card or business account, then you might make the switch to something that is a better fit for your company.

Hire the Best Small Business Accounting Team

Here at Easier Accounting, we offer the services that you need to help your company succeed. We know that small business owners are juggling many responsibilities, and our goal is to help by simplifying the financial strategy so that you can maximize profits.

Accounting services are more than just basic tax filing and income reports. We will strategize with you to show solutions that will improve the financial health of your company. Our services can be catered to match your needs.

Learn more about how you can benefit from small business accounting services by contacting us to schedule a consultation: (888) 620-0770

What to Look for When Hiring an Accountant

Hiring a small business accountant is an important step to prepare your company for future growth and development. There are many benefits to having an experienced financial professional who can offer advice to manage the finances of your business.

When you are ready to hire an accounting team, take some time to evaluate your options and find the services that are the right match for your needs. Here are a few qualifications that you should consider:

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  • Online Bookkeeping Management: We live in a digital world, which means that you should take advantage of the online tools that are available for bookkeeping management. Ask your accountant about the software programs that will be implemented for your company.
  • Proactive Business Strategy: If you are going to spend the money on an accountant, then you deserve to work with someone who is proactive to help by improving the profitability and financial health of your company. Look for an accounting team that will assist with managing business deductions and tax strategy to maximize profits as much as possible.
  • Consistent Financial Reporting: One of the biggest advantages of working with an accountant is that you have up-to-date financial information about your company at all times. Talk to your accountant about the frequency of financial reports such as Profit and Loss, payroll, and more.
  • Accessibility and Communication: It can be frustrating to send a message to your accountant and have to wait for weeks before hearing a response. A good accountant will be available to answer your questions when they arise, and the accountant will manage phone calls and email inquiries in an efficient way. Ask about anticipated response time and the best form of communication.
  • Reconciliation to Protect Your Company: Ongoing reconciliation helps to avoid theft and fraud. Look for accounting services that will reconcile the books on a regular basis. Set up a schedule for reconciliation and auditing if necessary.
  • Trustworthy and Reliable: When you are handing over the financial details for your company, it is essential to be sure that you are working with a reliable and trustworthy accountant. Look for information about the accountant before you provide financial information about your business.

If you are looking for all of these requirements in an accounting team, then you have come to the right place! Here at Easier Accounting we offer high-quality services to every customer that we work with. Contact us today to learn more about the way your company can benefit by working with our team: (888) 620-0770

Compliance Tips when Hiring Independent Contractors

Many small businesses see the benefit of hiring independent contractors. In this situation, the business gets access to high-quality skills without paying for a full-time employee. The freelancing industry is booming, which has caused the IRS to take a closer look at how small businesses are managing their independent contractors.

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Whether you have one independent contractor or a whole team of contractors, it is essential to be sure that you are following the rules. Here are a few tips to help you maintain compliance with payments and paperwork:

Accurate Information for the Contractor

Before the contractor starts working for you, make sure that you request information about the individual. You will need their full legal name, their Social Security Number or Tax ID number, and contact information. Ensuring the accuracy of this information will save you the headache of problems in the future.

This information will be useful when you are putting together the 1099 tax forms at the end of the year. You can save yourself a lot of time by gathering the information in the beginning and keeping up-to-date files.

Should the Contractor be an Employee?

Don’t push the line of employee vs. independent contractor, because it could potentially get you in the trouble with the IRS. Some businesses try to classify employees as independent contractors to save money on payroll taxes.

If you set a specific schedule for the contractor, and they are required to work certain hours, then that person should be classified as an employee. On the other hand, if you have a project that needs to be completed sometime next week, and the individual can choose their schedule, then they can be classified as an independent contractor.

For more information about the differences between an independent contractor and an employee, the best thing that you can do is talk with an accountant to learn more. You can also find information on the IRS website to find updates about current laws and regulations for payroll taxes.

Issuing 1099 Paperwork

Every January, you are required to provide a 1099 tax form to each independent contractor that earned $600 or more within the previous calendar year. These tax forms can be a burden to deal with, which is why you need to make sure that you have an experienced accountant who can handle the paperwork for you.

Here at Easier Accounting, we are here to help with managing the payments and paperwork for independent contractors and employees. Contact our experienced team to learn more about the services that we offer: (888) 620-0770

3 Tips for Preparing a Budget for Your Business

Are you missing out on potential business profits because you don’t have a budgeting system in place? Budgeting seems like a tedious task, but it is essential to stay proactive with the financials of your company. Implementing a budget and sticking to the budget can make a difference in the long-term success of the business. Here are a few tips to help you prepare a budget plan:

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Add Up Income and Expenses

How much money are you bringing in each month? This number matters because it has a direct impact on the amount of money that is available to spend. Take a look at the top-line numbers to assess all of the cash that is coming into the company.

Next, take a tally of the monthly expenses to see where the money is going. Put together a list of recurring costs as well as one-time bills that you have paid over the past few months. It is essential that you account for every penny that is spent so that you know the total expenses for the business.

Find Ways to Reduce Costs

Once you have gathered information about income and expenses, now it is time to evaluate the way the money is spent. Go through the line items to determine if the costs are necessary. Find areas where you can decrease the costs or even eliminate the bill altogether. It is also a good idea to look for ways to quickly increase revenue, which will provide more cash flow to help you pay off debts or any other balances that need to be addressed.

Put together a plan for the amount of money that you will be spending on an ongoing basis. The best thing that you can do is put this schedule together and then continue tracking your spending each month to be sure that you are sticking to the plan.

Hire a Financial Professional to Help

There are many benefits to hiring an accountant to help with your budgeting goals. It is beneficial to get an outside perspective, especially from someone with a financial background. These accounting services can be invaluable to improve the long-term results that you can achieve.

At Easier Accounting, our goal is to help your small business by improving your financial systems. We know that it is important to implement a good business budget, and we are here to help. Contact us to learn more about financial advice for small business owners, as well as the other services that are available from our company: (888) 620-0770

How to Make the Best Financial Decisions for Your Small Business

It can be overwhelming to be a small business owner, especially when you need to make important financial decisions. Do you find it hard to be decisive, because you are unsure about the way the decision will impact the future of your company? Here are a few strategies that you can use to improve the decision making process:

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Understand the Facts

It is difficult to make a good decision if you don’t have all of the information. Learn more about the facts that will impact the situation, and make sure that you thoroughly understand these details. It is important that you have a good financial tracking system in place, because you will be able to easily run reports and look at the facts whenever you need to make a big or small decision.

Don’t Make the Same Mistake Twice

Take a look at the past to understand how previous decisions impacted the company. Don’t stress if a mistake was made, because it is simply information to help you learn from the past. Observe the situation and commit to change the trajectory of the company so that you can avoid making the same mistake twice.

Look at All Options

Some business owners find themselves in the rut of always making the same decision, resulting in a situation where they have a hard time breaking through self-imposed barriers that may be in place. As you are considering the decision that you will be making, consider all of the options that are available. Just because the situation has been handled the same way in the past, doesn’t mean that you need to make the same decision again right now. By exploring other options, you might be able to increase the business success in the future.

Hire a Professional to Help

Let’s face it… if you don’t have a financial background, then it is likely that you don’t have the necessary experience to make the right decision for your company. Instead of making an amateur decision, consider hiring a professional accountant or bookkeeper to help. The experience they add can be invaluable to help you crunch the numbers and understand the situation, making it easier for you to make the right decision.

If you are stressed about making the financial decisions for your company, then we invite you to contact us right away. At Easier Accounting, we offer all types of accounting and bookkeeping services, and we are here to help. Call our office at: (888) 620-0770

Small Business Accounting: What You Need to Know

Every small business owner needs to understand the basics of accounting, because the financial tracking system is the foundation to help the company succeed. If you own a small business or you are putting together a start-up, then it is essential that you talk with a small business accountant to learn more about the financial systems that need to be in place. These are some of the most common topics that you need to consider:

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Use a Trusted Accounting System

It is essential that you use a high quality accounting system, because the software provides the framework that you need to stay ahead of the financial tracking for your company. Don’t make the mistake of using Excel or an outdated system that requires manual tracking and calculations.

You will find a number of cloud-based software programs that can be accessed from anywhere, making it easier than ever to keep up with the financial details for your company. Using a cloud-based accounting system is beneficial, especially if you decide to hire a small business bookkeeper to help with payroll, accounts payable, accounts receivable, and any other accounting support that your business needs.

Stay Current with Invoicing and Payments

Even though it can be a lot of work to keep up with the transactions, it is essential that you stay up-to-date with essential tasks such as invoicing, payroll, and payments. These tasks can easily be outsourced to an online bookkeeper, which is a great way that you can keep up with the financial tracking without dedicating your time to the tasks.

Most small business owners don’t have the time to manage financial transactions, but they don’t want to hire a full-time employee either. Instead of putting money into another employee, consider the benefits of hiring an online bookkeeping service that can help you keep up with invoicing and payments.

Monitor Financial Performance

Once you have a good financial tracking system in place, your small business accountant can help you run reports and decipher the information that is coming through. These reports are critical to help you assess the health of your company, so that you can make informed decisions about the management of the business. Run these reports regularly, so that you can stay current with the cash flow and profitability of the business.

Here at Easier Accounting, our team is ready to help you manage the financial details for your small business. We invite you to contact us anytime to learn more about the accounting and bookkeeping services that are available: (888) 620-0770

Hiring Independent Contractors? Don’t Forget These Important Steps

It is easy to see why business owners frequently hire independent contractors instead of hiring an employee, because a contractor can be beneficial to reduce costs and provide a temporary relationship when the skills are needed. You can pay for specific projects and tasks, instead of having the hassle of bringing on a full time employee.

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If you are hiring independent contractors to help with your business, then there are a few things that you need to keep in mind. These important steps will ensure that you are following the laws and staying compliant with your workforce:

Ask for a Signed W9

You need to be sure that the person can work in the United States, so you should ask for a copy of their W9. This form will verify that they are a US citizen or resident, and you will have the peace of mind to know that you aren’t hiring an illegal. This form will provide the tax information needed that will be used when filling out the 1099 at the end of the year.

Submit a 1099

At the end of the year, you need to send a 1099-MISC form to any contractor who earned more than $600 during the calendar year. This form needs to be provided to the contractor, and you also need to send a copy of the form to the IRS. It is essential that the contractor receives their copy by January 31st, or the next Monday if the 31st happens to be on a weekend. The IRS copy needs to be sent by the last day in February.

Maintain Good Records

Make sure that you keep up with records throughout the year, so that you have information about the work that was performed and how much was paid to each contractor. For example, keep copies of the invoices that were provided, as well as information about the payments that are sent. The easiest way to handle these details is by hiring a small business bookkeeper to help with ongoing accounting and record keeping.

Have a Signed Agreement

Before the contractor starts working on the project, it is best to have a signed contract in place. This contract will keep you protected, and it ensures that all parties are on the same page with the work that will be delivered.

Do you need help with the financial side of running a business? We are here to help! We offer a number of bookkeeping services and other accounting services, and we invite you to contact us anytime to learn more about how your business will benefit: (888) 620-0770

Simple Strategies to Reduce Stress during Tax Season

Tax season can be a stressful time for small business owners, especially if you haven’t been consistent with financial tracking throughout the year. As we are approaching tax deadlines, it is important to consider the financial standing of your company. Don’t get stressed out by the process though! Here are a few things that you should do to minimize the stress during this time of year:

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Gather Information about Expenses and Profits

Your accountant will need help with the financial details for the year, so you need to make sure that you are ready to provide the necessary reports and numbers for the tax filing. Make sure that you have an effective system in place which will help you to stay on top of the books, making it easy to gather the information that is needed when it is tax time. Many people find it beneficial to hire the services of a small business bookkeeper to manage these details on a weekly or monthly basis.

Double Check Employee and Contractor Info

As you are preparing W2s and 1099-MISC forms, it is a good idea to double check employee information before sending out the forms. Having an old mailing address or incorrect information can result in a situation where the employee doesn’t receive the necessary tax forms, so they will contact your company requesting to have the forms re-sent.

Save your company time and money by double checking the employee information in advance, to ensure that the form is sent to the right place. It is a good idea to have each employee verify the mailing address, name, and social security number.

Evaluate Employee Benefits

How effective are the benefits that you are offering to employees? Many small business owners get the benefits setup and then they forget to maintain these details on an ongoing basis. Look at details such as paid time off, flexible spending accounts, retirement accounts, and bonuses that were paid during the year. Make sure that the benefits were administered correctly and that the benefits are entered correctly on the tax forms.

Are you looking for someone to help with your company during tax season? One of the best ways that you can lower your stress levels is by hiring the right team to assist every step of the way. Here at Easier Accounting we offer both bookkeeping and accounting services for your small business, and we would love to help with anything that you need. Call us today for more information: (888) 620-0770