Posts

8 Bookkeeping Rules to Live By for Entrepreneurs and Independent Contractors

Have you finally decided to take the leap by starting your own business? Whether you are working as a contractor for other businesses or you are focused on getting a start-up off the ground, it is important that you are deliberate with the financial tracking and paperwork. These steps will set you up for success, increasing the likelihood that you will be able to stay in business for many years.

Living on Dreams, Preparing for the Future

Unfortunately, too often people start with big dreams. Then, they quickly run into problems because they weren’t willing to do the boring or difficult work, like tracking expenses, keeping up with tax payments, and saving for a rainy day.

Your big ideas will only last for so long until reality sets in. If you are going to put in the effort to start a company, then you need to be willing to take on the responsibility that comes with the American Dream. It is important that you make it a priority to keep up with accounting and bookkeeping business tasks so that you always have a clear picture about the profitably of your company.

The best thing that you can do is put together a system that will last into the future. These efforts will bring exponential benefits to your business. Not only will you rest assured to understand the financial health of your company, but you will also be preparing for future growth and expansion when you see a good opportunity.

Finding the Support that You Need

Don’t worry… you don’t have to navigate these things by yourself. The biggest mistake made by entrepreneurs or independent contractors is trying to juggle too many things at the same time. Even though you feel like you are bootstrapping to get the business off the ground, you can’t carry all the responsibility without support from others.

For example, it might be easy to think that you should handle all the invoicing and financial management in your free time. But, when does an entrepreneur have several hours to put into paperwork and transaction auditing? Your time is a valuable commodity, and you shouldn’t be spending your hours focusing on work that could be outsourced easily.

Plus, remember that you don’t have an educated background in accounting. Instead of trying to navigate the numbers and making mistakes along the way, you will be grateful that you hired the bookkeeping and accounting help that was needed to keep your company on track.

Benefits of Working as an Independent Contractor

If you must take on the bookkeeping and accounting responsibility, is it worth the effort to start a freelancing business? As you learn more about the benefits that are available from self-employment, it is easy to see why these additional responsibilities are worth their weight in gold.

These are some of the benefits that you can expect if you skip the traditional employment and choose to be an entrepreneur or independent contractor instead:

  • Manage your time, so you can choose the days and hours that you want to work
  • Shape your workload to focus on your strengths, rather than completing tasks because they are expected from your boss
  • Potential for higher income, especially when you are paid on a project basis instead of an hourly basis
  • You are your own boss, so you don’t have to report to anyone about your activities each day
  • Leverage tax breaks by writing off expenses that are related to running a business

Even though there are many benefits to self-employment, you will also experience a few disadvantages as well. For example, you don’t get employer-subsidized health insurance, paid time off, retirement matching, and other common employee benefits. Also, you will need to take on more tax and legal issues, but these things can be outsourced to a trusted team.

Bookkeeping Rules for Entrepreneurs or Independent Contractors

Whether you are already underway with your business efforts, or you are just getting started, there are a few bookkeeping rules that should be implemented into your financial system:

  • Rule #1 – Separate Personal and Business Finances: Even though you are fronting the money to get the business off the ground, you need to be careful about the way the money flows through your company. Set up a separate checking account and use a dedicated credit card for your business expenses. Some contractors find it helpful to have multiple business accounts so that they can manage overhead expenses, vendor payments, employee payroll, and more.
  • Rule #2 – Track All Expenses: Whether you are buying a new computer system or a cheap notebook, you need to keep track of every expense related to running your business. These expenses can be used as tax deductions, but you must provide the documentation showing the transaction. Keep a digital record of transactions throughout the month, and hold onto the receipts and invoices that you receive.
  • Rule #3 – Follow the Rules: Understand the laws and restrictions that impact your business activities, and make sure that you stay in compliance with these rules. For example, your accountant will provide information about quarterly tax payments, tax break strategies, and more. You should tap into their expertise and make sure that you are keeping your nose clean with the IRS.
  • Rule #4 – Keep a Backup of Your Financial Records: You never know when a hard drive will crash or paperwork will be lost. Even if you are careful about keeping records, it is a good idea to store backup information about your financial transactions. If the main records are lost, then you always have a copy as a reference in case there are questions about your business activities.
  • Rule #5 – Save for a Rainy Day: Business might be good right now, but it doesn’t mean that you can spend the money on unnecessary expenses. There is a real temptation to splurge on a new computer or office furniture when the money hits the bank account. But, you need to be prepared for future expenses, such as tax payments, payroll, inventory restocking, and more. Also, remember that many companies go through slow seasons at times. Even though you are enjoying the benefits of the busy season right now, you need to set aside some running money to keep the company going when things slow down in the future.
  • Rule #6 – Be Ready for Growth and New Opportunities: Creating a good bookkeeping system will ensure that you have the resources and systems in place to support future growth. If the right opportunity comes along, then you want to be ready to act so that you can expand your business. But, the only way to grow is to ensure that you have control over the finances at your current levels of business.
  • Rule #7 – Use a Cloud-Based Accounting Software: Ditch the paper ledger and spreadsheets. Instead of spending your time on manual accounting and bookkeeping calculations, leverage the benefits of a cloud-based accounting software. Not only will your accountant have access to the data in their office, but you can view reports and information from any location in the world. All you need is a good internet connection to check in on the financial health of your company.
  • Rule #8 – Don’t Be Afraid to Ask for Help: You don’t need to re-invent the wheel by trying to figure it out from the ground up. Instead, there is a lot of benefit to talking to other people who have gone before you. Find a mentor in the industry to learn from their experiences. Also, be open to hiring contractors and outsourced services that can support your efforts.

Talk to the Experts about a Financial Plan for Your Business

One of the best things that you can do is to stay focused on your business growth and management, instead of wasting your time with busy work and numbers crunching. When you understand the value of your time, then you will see the benefit of bringing in an outsourced accounting and bookkeeping team to help.

These services will free up your day and reduce your stress because you don’t have to worry about tracking individual transactions or figuring out how to run payroll. Plus, the experienced advice is a great way to maximize your results and prepare for future growth. We want to help you implement the best financial systems, based on years of experience helping other people who experienced the same challenges as you. By specializing in small business accounting, we can optimize our services to help entrepreneurs and independent contractors.

There are many benefits of self-employment, and you can take advantage of these benefits by tapping into the experts who can support your efforts. Here at Easier Accounting, we know the best accounting methods to support small businesses and entrepreneurs. Contact our team to learn more about the services that we offer. You can schedule a consultation to start the conversation, allowing us to cater these services to match your needs. We are here to help with all of the accounting and bookkeeping services that will support your business efforts: (888) 620-0770

A Few Important Things to Consider Before Starting a Small Business

Have you decided that it is finally time to move forward with your business idea? Many people love the possibilities of self-employment, but they are worried about the potential risks that can occur from these efforts. Right now is a great time to start chasing your dreams and get the business off the ground. But, there are a few things that you need to consider before you undertake a business venture.

Here at Easier Accounting, we have worked with many small companies in every stage of business building. We have seen the successes and failures of startups and seasoned entrepreneurs, and we are working hard to pass this experience to our customers so that they can be ready to succeed. Regardless of the industry, the same business management and accounting principles apply. So, it makes sense that you should tap into our expertise instead of trying to re-invent the wheel by starting everything from scratch.

If you are getting ready to start a new company, then we suggest that you consider these factors before you launch your efforts:

Keep Your Eye on the Prize

Entrepreneurs usually start with big dreams, but then they become disillusioned because of problems or roadblocks that are encountered along the way. Maintaining clarity about the reason you wanted to start a business is an important factor to help you keep the motivation that is needed to push forward, even when things get hard.

Start by asking yourself one question: Why do I want to start a business? Consider your goals, the things that you want to accomplish, and the lifestyle that you are trying to create. Be specific about the details, and make sure that you write down these reasons. If you have a difficult day, then you can always refer to these notes to keep you going.

Whether you are starting a business to boost your income and gain more freedom, or you are tired of having a job and reporting to a boss, it is important that you keep this focus in the front and center of your mind. As a business owner, you can’t coast through the afternoon surfing the internet like many low-paid employees. Instead, you need to be willing to look at the issues and take action to support the needs of the company.

Identifying a clear “why” can also motivate the people that you hire. Many businesses have mission statements that are shared with their staff and customers, helping everyone to capture the vision of the owner.

Set Goals and Stay Accountable

Once you identify your reason “why,” the next step is to outline the short-term and long-term goals that you have for yourself and your business. These goals need to be in writing, and you should align your attitude and thought patterns with the goals on a daily basis.

Instead of beginning the day by browsing on your favorite social media website, dedicate the first hour of the day to things that will build your attitude, mindset, and determination. This time is a great opportunity to review your goals so that you can be sure that your actions are in alignment with the things that you are trying to accomplish.

Put together a list of things that are working, as well as the things that are getting in the way of reaching your goals. Then, look for solutions so that you can overcome the problems that are hindering your success. Evaluating your progress will help you avoid some of the day-to-day tasks that might distract you from bigger efforts.

Focus on Marketing Your Product and Asking for the Sale

Regardless of your industry, all businesses are focused on sales. If you want to grow a company, then you need to be willing to put in the effort to connect with new customers, showcase the benefits that you can offer, and ask for the opportunity to provide your product or services for a fee.

Yes, it is important to keep up with back-office work and product development. But, none of these efforts will be worthwhile if you don’t have new sales coming through the door. So, be careful to avoid the trap of spending too much time behind the desk when you should be out there connecting with your network.

For example, sometimes new business owners get so caught up in the tax deductions and financial projections, that the business is only based on theory instead of action. One of the best things that you can do is find an experienced outsourced accounting team to pass off these responsibilities. Then, your time will be freed up so that you can focus on the activities that will generate more revenue for your company.

Identify the methods that can be used to build relationships with your team. Then, focus time and resources on those efforts. You might consider the benefit of activities such as:

  • Building the right company culture with employees
  • Lead generation online or at events
  • Creating the right team to support your efforts
  • Reaching out to current and past customers to invite them to come back again
  • Writing procedures that improve productivity and efficiency
  • Developing customer service and other skills that are needed for customer outreach

Remember, you won’t be in business for very long if you don’t have a strong sales strategy. So, don’t overlook the importance of sales at all points in your business efforts.

Be Willing to Get Your Hands Dirty

Starting a new business is exciting and rewarding, but it isn’t right for everyone. Be prepared to put in a lot of work and effort to get things off the ground. You need to be willing to do the difficult things that other people don’t want to do. Many new business owners agree that their weekly time commitment goes up when they transition from being an employee to an entrepreneur. But, these initial efforts will set the right foundation for future success.

There are times when business owners need to “be in the trenches” with their employees. Whether it is a busy day and someone is home sick, or you are launching a new marketing campaign to previous customers, you might find yourself in the showroom or working alongside the customer service team.

Being willing to do all types of tasks will show your employees and customers that you are committed to the effort. Your example can show great work ethic and commitment to quality, helping to raise the results of everyone around you.

Tap Into the Experience of Other People

Building a business can be a lonely experience, but you don’t have to navigate the difficulties without learning from the experiences of other people. Yes, you will carry many responsibilities while you are overseeing the daily activities of the company. But, don’t be fooled into thinking that you have to do it all by yourself without the support of other people.

There are two ways that you can get the support that is needed in your company: hire people to take care of the busy work and look to industry experts who can offer professional advice.

If you feel like you have to do everything, then your business won’t get very far. Be willing to delegate and hire the help that you need. Building the right team is a valuable way to set yourself up for success. Having employees and contractors that you can lean on when you need assistance will reduce your stress and allow you to focus on other important aspects of running a business.

Bringing in employees means that you need to train your team and take on the overhead cost burdens. On the other hand, you might consider using professional contractors who can bring the experience that you need. Look for areas where you struggle, and don’t be afraid to pay for the services that will help you overcome these weak points. Recognizing that you need help is a valuable trait in a leader, and you will set your business up for success if you are willing to look to others for the education and resources that you need.

Learn More about Small Business Accounting Services

Here at Easier Accounting, we know that you are carrying a lot of responsibilities when building a new company. Our team is focused on the financial tasks that will help you succeed. We have worked with many other small business owners, allowing us to develop the experience necessary to implement a proven system.

There is no doubt that a solid accounting and bookkeeping system will be the foundation for your business success. Whether you need help with the busy work or you are looking for someone to assist with tax preparation, we are here to offer the assistance that you need.

One of the benefits of the services that we offer is that you have the opportunity to customize the plan to match your needs. Talk to us at Easier Accounting to see how we can help: (888) 620-0770

What Happens if Your Company is Audited?

The mention of an audit strikes fear in the hearts of small business owners, even if they are proactive to be compliant with the laws and regulations. As a business owner, there is no reason to worry about an audit if you have the right team of bookkeepers and accountants in place to help.

New Call-to-action

Do you know what is involved with an audit? Most small business owners don’t know a lot about the auditing process, which means that they fear the unknown. Here is a little information to educate you about potential audits that might occur:

Potential Types of Audits

Being audited doesn’t necessarily mean that someone from the IRS will be knocking on your door. There are several types of audits that can occur, and your accounting team can help with all of these scenarios. Potential audits might include:

  • Mail Audit: If the IRS needs more details about your tax return, then they might send a letter in the mail requesting specific documentation.
  • Correspondence Audit: This type is similar to a mail audit, except the communication could happen through an electronic channel of communication. Typically, a correspondence audit happens when the IRS is collecting unpaid taxes or needs supporting documentation to back up claims made on the business tax filing.
  • Field Audit: The type of audit that has given the name a bad reputation. In this situation, an IRS employee will come in person to view your business records.
  • Examination/Interview Audit: In this situation, you might be asked to visit the IRS office to provide documentation or receipts to back up claims.

Just because an audit is happening, doesn’t mean that your stress levels need to go through the roof. You can relax if you know that your records are in order. The best way to stay on top of the financial tracking required to protect you in an audit is to have a professional accountant helping with your business management.

Accounting Services to Prevent an Audit

Instead of waiting for an audit to happen, there are a few things that you can do to reduce the likelihood of an audit. An experienced accountant will be able to offer specific recommendations catered to your personal situation. So, it is important that you have an experienced accounting team by your side throughout the year.

At Easier Accounting, we are experienced with small business accounting. If you are interested in more information, then you are invited to contact us right away: (888) 620-0770