Small Business Owners – Don’t Believe These Business Tax Myths

Tax code can be complicated, so it’s easy to see how business tax myths spread among small business owners. You are carrying the responsibility of running your company, managing employees and working on product development. Tax regulations are not on your mind and often fall to the bottom of the priority list.

While it is important to focus on all aspects of your business, failing to keep up with the tax code can be disastrous for your company. If you run into issues with the IRS, then you will be facing fines, interest costs, and late fees. Additionally, poor bookkeeping and accounting practices can cost you a lot of money in potential business deductions.

Preparing for the Upcoming Tax Season

While April 15th is still two months away, right now is the time to get started on your tax preparation. Good bookkeeping should be happening year-round, to ensure that your reports are ready when it is time to file your paperwork.

The assistance of an experienced accountant can be invaluable in helping with accurate filing. Not only do you have a pro to guide your decisions, but an experienced accountant can minimize the risk of you getting caught in some of the most common business tax myths.

Business Tax Myths to Avoid

There is a lot of misinformation about tax loopholes, deductions, and write-offs that may or may not apply to small businesses. Just because you read someone’s advice online doesn’t mean that the information lines up with the guidelines set by the IRS. If you want to stay away from trouble with the IRS, then you need to be sure that you are thorough and accurate in your tax filing. Avoiding these common misconceptions will protect yourself and your business. Here are some of the most common business tax myths:

  • Myth #1 – Tax Filing is Optional: This myth might seem blatantly obvious to many people, but it’s surprising to see how many people mistakenly think that tax filing is an optional activity each year. There is a phrase in the instruction book for Form 1040 that uses the word “voluntary” in reference to the tax system, and some people have interpreted it to mean that individuals have no legal obligation to file taxes. The truth is that the voluntary portion is the individual’s responsibility for calculating the amount of taxes that are owed. Tax filing is legally required, and it’s up to you to ensure that your filing information is correct.
  • Myth #2 – All Start-Up Costs Should Be Immediately Deducted: The timing of your business deductions varies depending on the nature of your business and the types of purchases you are making. Certain costs should be deducted upfront, which means that you take the value of the write-off in the year the purchase was completed. But there are instances where is it more effective to take the tax benefits through depreciation, which means the write-off is calculated over a period of time. For example, costs for specific office equipment or machinery might fall into the category of Section 179 expensing. Also, you can deduct up to $5,000 of your organizational costs and $5,000 of the business start-up costs, and remaining costs might need to be amortized. The best solution is to talk to your accountant for personal recommendations to ensure optimal tax savings each year.
  • Myth #3 – I Don’t Have to Pay Taxes on Money Made Online: The internet has opened a whole new world for businesses, with a large portion of retail sales happening online. These numbers continue to grow each year. If you are doing business online, then it means that you haven’t filed a W4 with an employer – so no structure is in place to withhold taxes from your pay. But don’t assume that means you don’t have to pay taxes on the income! If you make $600 or more working as a contractor, then you must report that income to the IRS. You will be required to pay self-employment taxes, so make sure to set aside money every month to be prepared for the upcoming tax bill.
  • Myth #4 – Incorporating is the Best Way to Minimize Tax Burden: Remember that there isn’t a one-size-fits-all solution that works for all types of businesses. While there are undeniable benefits to incorporating, sometimes it makes sense for self-employed individuals to stick with a sole proprietor business setup. The truth is that incorporating too early could have a negative impact on your tax burden. For example, if you don’t make money for the first few years, then you bear the burden of minimum corporate tax payments and not enough income to pay the bill. Work with your accountant and business attorney to determine the right timing of incorporation for your small business.
  • Myth #5 – Home Office Deductions Increase the Risk of an Audit: Are you a small business owner who works from home? You might be nervous about maximizing the deductions for your home office because you are worried about the increasing risk of an audit. Years ago, a home office wasn’t as common as it is in our digital business world. At that point, it might have been true that a home-based business could potentially raise red flags for the IRS. But self-employment at home and remote employment are becoming so popular that home business write-offs are quite common. As long as your deductions are legitimate, there is no reason why you should be worried about increasing the risk of an audit. The most important thing you need to do is ensure that your workspace at home meets the regulations established by the IRS.
  • Myth #6 – Only Large Corporations are Audited: On the other hand, some small businesses assume that they don’t bring in enough profit to be audited by the IRS. The truth is that the amount of income you receive doesn’t have as much to do with the auditing process as other factors. Certain activities can send up red flags. Regardless of the amount of income you receive, it is essential to ensure that you have thorough, detailed business records to track all deductions and income. This paperwork should be kept on file for a few years so you can defend your tax filing if the IRS comes calling.
  • Myth #7 – “Audit Proof” Your Business by Overpaying on Your Taxes: There is no reason why you should send the IRS more many than what is owed. Some people assume that overpaying on their taxes means that they are protected against an audit. The truth is that the IRS doesn’t care if you pay what you owe or overpay, the excess will just be sent back to you in the form of a tax return. Their main concern is to ensure that you aren’t paying less than you owe. Your goal should be to pay what you owe as closely as possible, then all deductions need to be backed-up with solid recordkeeping.
  • Myth #8 – File an Extension if You Don’t Have Cash for the Tax Bill: Filing an extension is an option if you need more time to prepare your tax paperwork. But just because an extension is filed doesn’t mean that you are buying more time to pay your bill. This process extends the date for your filing only. It is still your responsibility to pay the money that is owed by the original due date. Failing to make a timely, accurate payment could result in additional costs for interest and penalties. If you need more time to pay taxes, then you might consider payment plans that can be arranged through the IRS. You will pay more money overall though because of the interest that is accrued on the overdue payment.
  • Myth #9 – My Accountant Holds the Responsibility if Tax Mistakes are Made: Hiring an accountant is an invaluable step for businesses of all sizes. It is important that you have someone to guide you through the tax rules and regulations. While your accountant can help you avoid common missteps in your tax filing, the ultimate responsibility still lies on you. It’s up to you to ensure that you are providing accurate numbers and information, then the accountant uses this information to prepare the tax paperwork. The quality of your tax filing is only as good as the financial details that are provided to your tax accountant.
  • Myth #10 – It’s Good to Get a Big Tax Refund: Whether you are a small business owner or an employee, it might feel like a relief to receive a big tax refund in April. Even though this check might feel like “free money,” it is important to remember that the money was yours in the first place. A big tax refund means that you overpaid on your taxes – you essentially gave the IRS a free loan. If you get a tax refund, then it means that you should talk to your accountant to adjust your withholdings or estimated payments going forward.

The simplest way to avoid common business tax myths is by partnering with an experienced accountant who can guide your financial decisions throughout the year. Easier Accounting is here to help! Call us at (888) 620-0770

What You Need to Know about Accounting and Tax Preparation for Start-Ups

Starting a business means that you are juggling many tasks and responsibilities: setting up bank accounts, creating accounting systems, designing a website, building out customer service platforms, tax preparation strategies, business development, and more. Even though it is a lot of work to launch the business, it is worth the efforts because of the long-term benefits you will enjoy.

The truth is that the solid foundation created right now will have a lasting effect on the success of your company. In the beginning stages, it might be tempting to skip a few steps and rationalize that you will work on those systems or processes after the business is up and running. But you could be hindering growth and opportunities by procrastinating the most important aspects that affect the financial health of your company.

The best thing you can do is get it right the first time. Commit to putting in the time and effort to creating systems that are built to last. A few months or years down the road you will be grateful that you didn’t skip these important elements.

Today, we are going to focus on tax preparation and strategy for small businesses. This topic is one that is often procrastinated. Since tax season only rolls around once a year, it’s easy to assume that you can wait until April to work on taxes. It’s time to change your mindset on this topic. Implementing a good tax strategy right now will save an incredible amount of money due to the decreased tax burden. Plus, you will have the processes in place to support bigger tax responsibilities that will come in the future when your business expands.

Tax Preparation Can Feel Like a Chore

Most small business owners will agree that taxes can feel like a chore. Do you get a headache just thinking about the stacks of paperwork and accounting calculations that need to be done? Not only do you need to crunch the numbers, but you also need to stay current with the latest changes in tax laws and other applicable industry regulations.

It is common to feel stressed or worried about the requirements that need to be met for tax preparation. As a small business owner, you don’t need to carry this responsibility without support. You are already focused on product development, marketing, and more. Instead of spending your free time with your head buried in numbers, it makes sense to outsource these services to the pros. A good accounting team is key to help you develop the right tax strategy and transform the results that are available in the future.

Your accounting team will make start-up and small business taxes transparent and clear. Tax preparation doesn’t have to be difficult when you are working with the right team. You’ll find that our staff at Easier Accounting understands the best practices for every industry, helping to take the stress out of tax time. We’ve worked with many small businesses over the years, giving us the hands-on experience to know the optimal way to structure your tax preparation, paperwork, and filing.

Assessing your Current Situation

If you are going to improve your tax strategy, it is important first to assess your current situation. Are you preparing to launch a new company? Are you structured as a sole proprietorship? Did you form a corporation for your business efforts? Do you have a partnership that needs to be included?

These details might seem simple, but they will impact the way the tax strategy is designed. It is essential that you offer as much information as possible to your accounting team, ensuring that nothing is overlooked in your tax preparation.

Basic Steps for Tax Preparation

Whether you are just getting started with your business efforts or you are looking for ways to improve the financial health of your existing company, there are a few basic steps that should always be followed for tax preparation:

  1. Choose a Tax Preparation Provider: The best solution is to choose an accounting team that will work with your company throughout the year. You can find financial experts that offer one-time tax services. But these short-term services don’t create a long-term mindset that is necessary to maximize tax strategy. Pick an accounting team, such as Easier Accounting, that offers ongoing support to ensure your company is on track during every season of the year.
  2. Gather Records and Information: Maintaining documentation of all transactions that move through your company is essential so that you can track every penny that is earned and spent for business purposes. Exact records vary depending on the type of company that you are running. Examples of income records include sales transactions, gross receipts, allowances, cost of sold goods, tax refunds or credits, interest earned from bank accounts, and more. Expense information should include costs for vehicles, marketing, employee payroll, contract labor, office expenses, utilities and rent, maintenance and repairs, depletion, professional services, insurance, inventory purchases, fees and commissions, and anything else that required you to spend money for business purposes.
  3. Organizing the System: It can be a hassle to sort through a year’s worth of receipts when it is time to do your taxes each spring. Instead of spending hours on the paperwork once a year, it is better to have a proven system in place that makes it easy to track and categorize expenses throughout the year. When these transactions are organized and managed on an ongoing basis, then you can simply run a report that shows the information that is necessary for tax preparation.
  4. Filling Out Tax Paperwork: The IRS has paperwork for everything, so you need to make sure that you are filling out the right forms that apply to your company. Most companies don’t need to use the majority of the forms that are out there. Depending on the structure of your company, you may need Form 1040, Form 1040-ES, Form W-2 and W-3 for employees, Form 1099 for contractors, Form 941, Form 943, Form 944, Form 1120S, Form 1065, and more. Do you feel like your head is spinning just reading through all of those options? You don’t need to get into the fine print to figure out which forms apply to your situation. Instead, lean on the knowledge offered by your accounting team. Not only will your accountant provide guidelines regarding the forms that are required for tax preparation. But your accounting team can also handle the information that is entered on these forms.
  5. Submitting Tax Forms: Now that all of the work has gone into the information needed for income and expense categorization and filling out the applicable tax forms, it’s time to submit the paperwork. These submissions need to be sent to the IRS. Additionally, there are deadlines to send specific tax forms to employees and contractors each year. Not only are you responsible for annual tax filings, but other deadlines need to be met throughout the year for employment taxes, estimated tax payments, and more. Your accountant can help you keep track of these deadlines and oversee submission through an e-filing process. The documents can be filed on printed paper as well, although the e-filing is becoming more popular due to the immediacy of the filing results.

Using a Professional for Small Business Tax Services

One of the biggest mistakes you can make is attempting a DIY tax filing when you don’t know much about accounting processes for the IRS paperwork. If you want to set your company up for success, then you need to be sure that you are working with a small business accountant who will oversee every step of this process.

Certified tax preparers help by working through the calculations and information needed for the paperwork. Additionally, your accountant will ensure that the paperwork is filed with the IRS before the deadline.

Keep in mind that scammers try to take advantage of unknowing individuals and small businesses owners. Make sure that you choose a reputable accounting company. Your tax preparer should have a preparer tax identification number (PTIN) that is issued by the IRS. Always research the accounting company before handing over sensitive financial information and business details.

Quality Tax Preparation Services for Your Business

You deserve quality tax preparation services, including ongoing accounting support throughout the year. If you are searching for the right services for your small business, then we invite you to talk to our experienced team at Easier Accounting. We understand the best systems for tax strategy and preparation, and our team is just a phone call away.

Choosing our team means that you have access to a group of knowledgeable tax accountants that will offer personalized recommendations to improve the results for your company. Our goal is to streamline your financial systems while reducing the tax burden and improving overall results for your company. For details about the services that are available, you are invited to contact us at Easier Accounting. We’re just a phone call away: (888) 620-0770.

Accounting Trends that Need to be Incorporated into Your Small Business

Our business world is constantly changing, so it is essential that small business owners take a proactive approach to keeping up with the trends. Have you integrated modern practices into your business, or are you still stuck in the past?

The digital world is always progressing, making it possible for businesses to innovate faster than before. You can reshape your company to set up for future success. The foundation of these efforts should be focused on financial and business systems. By implementing these systems, you create an environment that is conducive to growth and prosperity in the future.

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How do you keep up with the trends? The easiest solution is to have a trusted accounting team that stays up-to-date in the industry. These advisors can make recommendations about how you can improve your business practices. Here are a few suggestions that we would like to share, helping you to stay current with the trends in the accounting industry:

Implement Cloud-Based Accounting Software

Whether you are still working in physical ledgers, Excel spreadsheets, or a single-computer software, you are behind the times! These systems might have worked in past years, but better solutions are available to automate and improve your accounting system.

The problem with these outdated accounting practices is that everything needs to be managed by hand. Without the advantage of cloud storage and data syncing, you are stuck with manual updates every day. In comparison, cloud-based accounting software is always current. You will see accurate numbers across the board, no matter where you are accessing the information. As an added bonus you can view your accounting details from anywhere in the world!

If you aren’t already using a cloud-based accounting software, then right now is the time to make the change. An experienced accounting team can support with the transition, making it easier than ever to improve your financial system.

Accountants Offer More than Just Tax Preparation

Too often, business owners get stuck in the thinking that they only need to talk to their accountant once a year: when it is time to file their taxes. It is important to have the support of an accounting team for tax preparation, but you should also use the services of your accountant during other times of the year as well.

For example, your accountant can help with ongoing payroll processing, estimated tax payments, financial advising, and more. By outsourcing the financial details to an experienced accounting team, you will have full access to detailed information that will help your business grow. As a result, you can focus on making the management decisions instead of spending your valuable time crunching numbers.

Take control of your time by hiring a great accounting team to help. By using an experienced accountant in conjunction with cloud-based software, you can outsource the busy work and still have real-time access to financial reports and other information throughout the year.

Outsourced Accounting Instead of an In-House Employee

How much does it cost to hire an employee to manage your financial details? Tally the expenses of office space, equipment, salary, benefits, taxes, and more. You will see that the cost of these accounting services can really add up!

Instead of spending your business profits on a full-time employee, consider the benefits of outsourced accounting services. As a result, you will have access to a full team of accounting professionals. This choice gives you the ability to tap into real-world experience since the accountants are also working with other small businesses.

What types of tasks should be outsourced? The possibilities are endless! Don’t overlook the benefits of hiring a business bookkeeping service, a team to help with tax planning, and small business accounting and financial advice.

By outsourcing your accounting needs, you can save money and have access to better knowledge and experience compared to hiring a single employee. The digital world has removed the barrier of location, giving you access to the best talent located anywhere in the country.

Take Advantage of the Millennial Mindset

As you are transforming your accounting system or any other aspects of your business, consider the benefits of taking advantage of the millennial mindset. What does that mean? Hire employees and outsourced teams that are approaching business in a modern, unique way. The millennial generation has radically changed the business industry, creating an environment where the possibilities are limitless.

If you choose to only work with the older generations, then you might be missing out on some of the technology trends that could be incorporated into your company. Make sure that every team is staying connected with the digital world so that you can use these tools as much as possible to promote the future growth of your company.

Working with an accounting team that has a millennial mindset can be beneficial so that you can see the financial future of your company in a different way. As a result, you can make better decisions about the spending and investments of your small business.

Focus on Specialization

Instead of trying to offer something for everyone, consider the advantages of specialization in your company. You can hire specialized outsourcers who offer unique perspectives and experience to add to your company. At that same time, consider your own products and services to see how you can specialize your offerings.

In the past, companies would often hire one employee who would manage a variety of tasks throughout the day. For example, a general employee might be handling payroll, product ordering, office logistics, and a variety of other duties. This lack of specialization often has a negative impact on overall results. Instead of asking individuals to be proficient in 10 different things you can boost performance by hiring specialists that are experts in one skill.

Outsourcing makes it possible for you to build a team of specialists. For example, you might have an accounting team that handles the financials for your company, a customer service team to work on client relationships, a product management team that focused on production, etc. By creating a system, these specializations can work together to create better results compared to a handful of employees trying to handle everything.

A one-size-fits-all approach doesn’t work anymore. If you are stuck in the cookie-cutter way of building your business, then you will be missing out on innovative options that can help with the transformation of your company.

Prepare Your Exit Plan

Building a business seems like an option to create a long-term income for your family. After the hard work and sweat equity, many small business owners have an emotional attachment to the company they have built.

While it is important to stay involved in your company, you also need to look for options to build in an exit plan. In many situations, the most profitable solution is to build a company that can be sold. Technology and web-based companies have made it easier than ever to connect with a potential buyer. Timing the sale of your company can be the best way to maximize your investment.

After the company is sold, you might choose to invest the money into other business opportunities. Or, the money could be invested into retirement funds or other options to plan for the future.

Having a trusted accounting team by your side is one of the most effective ways to build an exit plan. Your accountant can offer logical advice based on the numbers. Since your accountant doesn’t have the same emotional attachment to the company, you can tap into their perspective to improve the results from your efforts.

Talk to an Experienced Accounting Team

Here at Easier Accounting, we work hard to keep you ahead of the trends in the business, accounting, and financial industries. Our team specializes in small business accounting services, so we know the best practices to help your company prepare for the future.

As these changes happen in the accounting industry and the business world, you need to be sure that you are prepared to keep up with the trends. Failing to take a proactive approach could potentially leave you in the dust, with your competitors thriving as they made the necessary changes to adapt.

Our team at Easier Accounting wants to help you stay relevant in your industry. We are always working to stay ahead of financial and accounting trends, giving you access to the best solutions and tools that are available in the industry.

These services can be catered to match your individual needs. If you are looking for help with the financial management of your company, then we invite you to contact us right away to learn more about how we can help. You will see that we have a wide range of services for your company. When you contact our team, we will discuss your individual needs to help you identify the best solutions to move your business forward.

Do you have any questions? Feel free to contact us anytime for more information about the small business accounting services that we offer: (888) 620-0770

My Business Books are a Mess! How to Get Back on Track

Every small business owner starts out with the best of intentions, but heavy responsibilities and busy schedules often cause important tasks to fall to the backburner. Do you feel like you are drowning in paperwork and emails that need your attention? If you are unable to keep up with everything, then you need to make sure that you find the right business professionals to help.

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Big Business Mistake: Procrastinating Bookkeeping and Accounting

One area that is often neglected is the financial tracking of a company. You might be paying a monthly or annual fee for a high-quality accounting software program. But, that system isn’t effective unless you are using it right.

The most common reason these tasks are procrastinated is that there are other responsibilities that are more demanding of your time. You only have so many hours in a day, which means that the highest priority tasks will take over your focus. If you are dealing with product management and immediate customer service needs, then the data entry and busy work will naturally fall to the backburner.

But, failing to keep up with these important tasks is a big mistake! Letting your financial tracking slip can cause compounding problems in the future. Without detailed information about the financial health of your company, you won’t be able to make informed decisions for your company.

These are a few signs that it might be time for you to hire a small business accounting team to help:

  • Your monthly reconciliations aren’t happening
  • You have a big folder or box of unsorted receipts that need to be entered and filed
  • You never know the exact standing of your bank accounts
  • You have a hard time paying bills because of cash flow issues
  • You are scrambling at tax time to prepare all of the necessary information for tax filing
  • You have a backlog of data entry for expenses and income received
  • You don’t bother running financial reports because you know the numbers will be off

Can you relate to any of these issues? If these things apply to your current situation, then it is time for you to be proactive in hiring an experienced accounting team to help!

Where to Start: Reclaiming Control of Your Accounting System

You can spend a few hours sorting through paperwork and line items, but your progress will be limited if you aren’t tapping into the experience of an accounting professional. Without an accounting background, you won’t have the knowledge to effectively implement a system that is built to last.

Instead of wasting your time trying to reinvent the wheel, why not hire someone who knows what they are doing? Their experience can bring a system that will be transformative for your small business. It is much more effective to implement a proven accounting system, rather than trying to build it from scratch.

So, the first place to start is by hiring an accounting team to help with your business. Here at Easier Accounting, we focus specifically on small business accounting services. We have worked with many clients, giving us the hands-on experience to know what works. So, we can make suggestions about the best solutions to get your company back on track again.

Employee vs. Outsourced Accountant

Now that you know that you need to hire someone to help, does it make sense to hire an employee or to choose outsourced accounting services? If you aren’t familiar with outsourcing, then you might be tempted to go with what you know and hire an employee. But, you need to understand the financial burden that you could be facing with a full-time employee. Outsourced accounting can help you save money and maximize the experience of your new team at the same time.

Most accounting software programs are cloud-based systems. So, you are no longer limited by geographical location. Regardless of your business location, you can work with an accounting team located anywhere in the world. Without the barrier of in-office support, you can choose the team that is the perfect fit for your company.

Dedicating Time and Resources to Get Back on Track

Once you have hired an outsourced accounting team, you will need to spend a little time to provide the necessary information for your company. Your accountant will request details about your bank accounts, credit cards, transactions, and more. This information needs to be sorted into an organized system, and your new accountant won’t be able to get it done without your help.

So, make it a point to spend a little time gathering the requested information. After you have handed off the details, then you can focus on other responsibilities within your company.

Prioritize Your Business Financials

Going forward, it is essential that you make bookkeeping and accounting a big priority for your small business. Failing to hold these tasks as priorities means that you could quickly fall behind again and end up in the same mess in the future.

Most business owners have too much to do, making it difficult for them to prioritize financial tracking on their own. So, the best solution is to have ongoing accounting and bookkeeping services that can help you stay current at all times. These experts will make it possible for you to always have accurate financial information without the need for you to find time for the busy work on your own schedule.

Having the right maintenance system in place is essential for the long-term success of your company. It is important that your books are maintained on a weekly, monthly, quarterly, and annual basis. If you have a lot of transactions moving through, then you might need to manage your accounting system on a daily basis. Once the system is in place, then these ongoing services will be easier to manage going forward, helping you to avoid falling behind on the books again.

Why are these tasks so important to the success if your company? Cash flow is critical to keep your business running so that you can stay ahead of payroll, expenses, and other requirements. Without a good accounting system, you won’t know the current cash flow of your company. As a result, you might be facing big issues in the future!

Expanding Business Success with Accounting Services

Not only will an experienced accounting team help you clean up your books and offer ongoing services, but you can also tap into their experience to expand the success of your company in the future. You will begin to see the value in consistent accounting management, helping you to make better decisions based on the financial projects for your company.

A financial forecast can be worth its weight in gold. By staying ahead of the bookkeeping busy work, you can move from “reactive” mode to being “proactive” to help your business grow. Messy books will put you in a situation where you are always working to put out the fires that come up. On the other hand, an organized accounting system will help you proactively plan for the future. When the current financial details are handled, then you can focus your efforts on the forward movement of your company.

How much of a financial forecast do you need? The requirements change depending on your individual situation. These reports will allow you to identify potential cash flow pitfalls in the future. At the same time, you can also make adjustments that will fast-track the success of your business. A solid accounting team can help you reach your goals and plan for big investments that will be needed in the future.

Easier Accounting: The Best Accounting Team for Your Small Business

Here at Easier Accounting, our team works hard to stay ahead of the trends in the industry. We specialize in small business accounting services, giving you access to the financial experience that you need to help your business succeed.

We are more than just a basic team of number crunchers. Instead, we are looking for ways that will support the growth of your company, offering advice and suggestions along the way. Our goal is to design an effective system that is catered to your individual needs. Then, we can implement ongoing accounting services that will keep you ahead of the financial stress related to owning a small business.

Instead of spending your valuable time on bookkeeping and accounting busy work, consider the benefits of the services that we offer. We will gladly offer that support that you need so that you can focus on growing your business without the stress of daily busy work. Our full-service accounting and bookkeeping team is a great solution to help you get back on track and stay ahead of the financial management for your small business.

Whether you are behind on your books or you are ready to improve the financial success of your company, we are here to help! Contact us at Easier Accounting for more information about the services that are available for you: (888) 620-0770

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

Why You Need to Worry about Business Taxes in July

July isn’t tax season, so why do you need to think about your tax strategy during this time of year? It is common for business owners to make the mistake of ignoring their taxes until tax season rolls around. At that point, it is too late to change tax strategy to minimize tax burden. So, if you want to maximize cash flow and take advantage of all of the deductions that are available, then you need to be sure that you are looking at your tax strategy throughout the year.

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Tax Strategy All Year Long

The way your business is structured and the decisions that you make throughout the year can impact the amount of taxes that you will pay when it is tax season. If you want to improve your tax return, then it is essential that you are working with a small business accountant all year long.

When you understand more about your tax strategy, then you can adjust your ongoing financial decisions to be sure that they match up with your long-term goals for the company. Even small decisions can have a bigger impact long term because these small decisions can add up over time.

Leveraging Deductions that are Available

An experienced accountant will have a thorough knowledge of tax law, helping you to understand more about the types of write-offs that can be used for your company. It is inevitable that you will have ongoing expenses and costs to keep the business running, and these costs can be used as write-offs and deductions to reduce tax liability.

In some situations, it might make sense for you to invest in equipment and software at certain times. For example, your accountant might make the suggestion to purchase these items before the end of the year to increase spending a little more for this year.

The advantage of working with an experienced tax accountant is that you will have the peace of mind to know that they are familiar with the tax laws. You don’t have to waste your time learning about how tax laws impact your company. Let the professional handle these details for you, so that you can focus on the management tasks that are needed to help your business grow.

Here at Easier Accounting, we offer a wide range of accounting services to help your company. Contact our experienced team today to learn more about the services that are available. We are here to help! (888) 620-0770