admin, Author at Motl Accounting

4 Financial Tips for Small Business Owners

401K, Accounting, Bookkeeping, Business Expenses, Employee, expenses, IRS, Payroll, Small Business, Taxes, Uncategorized

As a small business owner, managing your finances can be overwhelming and intimidating. There are so many things to consider, from taxes to cash flow to budgeting. Luckily, there are some simple tips you can follow to help make the process easier. Let’s look at four financial tips every small business owner should know.

1. Create A Budget and Track Your Expenses:

Creating a budget is essential for any successful business. With a budget, you can easily manage your finances and plan for the future. Plus, tracking your expenses will help you identify areas where you can save money. Make sure to track all of your income and expenses (including taxes!) on a regular basis. This will ensure that everything is accounted for and that you have an accurate picture of your overall financial health.

2. Secure Financing Early On

If you don’t have access to capital or don’t want to use your own funds, securing financing early on is key. Whether it’s taking out a loan, talking to an accountant, applying for grants or even crowdfunding, having the right funding can make all the difference in getting your business off the ground. Make sure that you research all of your options before making any decisions – this will help ensure that you get the best deal possible!

3. Keep An Eye on Cash Flow

Cash flow is one of the most important aspects of running a successful business. Keeping an eye on cash flow means staying on top of invoices and payments from customers as well as keeping track of bills and other expenses that need to be paid in order to keep operations running smoothly. Setting up automated reminders or using an accounting software solution can help make this process easier – but ultimately it’s up to you as the business owner to monitor cash flow closely and stay ahead of any potential issues with payments or collections from customers.

4. Hire Professional Help When Needed

When it comes to managing finances, sometimes it pays (literally!) to hire professional help when needed. Hiring an accountant or bookkeeper can save time and money by ensuring that all paperwork is filed correctly, and all necessary tax documents are in order each year. Additionally, hiring professionals may also provide valuable advice related to cash flow management or other financial matters that can help keep your business on track financially over time!

With these four simple tips in mind, managing your finances as a small business owner doesn’t have to be so daunting! By creating a budget and tracking expenses regularly, securing financing early on if needed, monitoring cash flow closely, and hiring professional help when necessary- you’ll be well on your way towards a successful small business with healthy financials.

Overcome Upcoming Economic Obstacles: How Inflation Affects Millennials & Gen Z

Accountant, Accounting

The current state of the US economy has Millennials and Gen Z dealing with rising prices comparable to the days of Pearl Harbor, the Korean war and Watergate. Inflation has divided generations, giving each a different quality of life. In 1968, the U.S Federal Government had a minimum wage set at $1.60 which is the equivalent of $11.53 in 2019 dollars when it comes to purchasing power. In 2022, some states are still paying just $9 minimum wage which doesn’t give the current generations much flexibility, especially in the vehicle and housing market industry. In order to amount to the standard of living baby boomers experienced, millennials and Gen Z will need to make a minimum of $25 hourly if they plan on being homeowners without carrying major debt around. Although, with smart spending and saving, as well as keeping an eye on the economy, the younger generations have a chance to achieve the lives they desire.

Consider Not Ordering Take-Out Food.

Cooking from home and planning your meals will save you an immense amount of cash. Using apps such as DoorDash and UberEATS adds up quickly – start budgeting for groceries and stick to your list.

Look Into Receiving Help When Filing Your Taxes.

With professional assistance, you could be saving yourself tons of money this upcoming tax season. Organizing your income with an accountant can assist you in finding strategies you may be unaware of on your own. Tax laws change yearly and it is hard for the average person to stay up to date. An accountant can help identify new deductions that may be available to you. This could potentially reduce your tax liability and increase possible refunds from the IRS.

Spend Wisely.

Avoid using credit cards if possible. This is another top reason why Americans remain in debt. There are other ways to build your credit such as asking a family member to add your name onto the electric bill for a few months or using your credit cards for specific things such as gas and then paying it off immediately. Consider buying used cars locally rather than a dealership.

Have a Cushion Built for Yourself Before Making Big Purchases.

If your security deposit is $1,200, and your rent is $1,200, then you need to pay $2,400 upfront and if that’s all you have in your account, you’re setting yourself up for failure. Having nothing in your account will make it remarkably difficult to cover emergencies or basic life needs. Creating a nest for yourself will likely lead to a more permanent comfortable lifestyle and you won’t have to constantly be catching up with expenses.

Spotting Red Flag Accounting Practices

Accountant, Bookkeeping, Business Expenses, CPA, expenses, Small Business

If you’ve ever attempted a quick Google search for CPAs in your area, you’ve probably learned there’s no such thing as a quick search for an accountant. Accounting is all about the details, and when you’re trying to find someone to handle your finances, it pays to be thorough. Your money is at stake, and you should only choose someone who has your best interests in mind. A small amount of accountants have questionable (to say the least) practices, and knowing the warning signs makes a big difference:

Outdated CPA Certificate

There’s a reason many people prefer to work with a CPA rather than a general financial planner: the title requires a higher level of expertise. In addition to years of schooling, CPAs complete exams to ensure a high-level understanding of auditing, business concepts, financial rules and reporting. It’s worth asking for credentials to ensure your accountant has retained their license. (more…)

Bookkeeping Basics: Determining Your Accounting Method

Accountant, Accounting, Bookkeeping, Business Expenses, CPA, Small Business, Taxes

When you start a new business, you have to make a decision regarding how you will approach your financial management. Two basic methods are available to you: cash basis or accrual basis. Although the two methods clash, there are also see some similarities.

Cash basis is an accounting method that counts income only after cash or a check is received and expenses are not counted until they have been paid. This method is the most popular accounting method among entrepreneurs and small businesses.

Accrual basis is an accounting method that counts income when orders are placed or services are requested, regardless of payment being received. Expenses are counted when your request for good or services is fulfilled.

(more…)

6 Year-End Tax Tips That Will Save Your Small Business Money

401K, Business Expenses, Small Business, Taxes

As the end of the year draws near, it’s time to start thinking about your tax strategy. If you’re a small business owner, there are a few things you can do to reduce your tax bill and maximize your deductions. Planning ahead and doing some year-end housekeeping can help you make the most of any tax break that your business qualifies for. We have identified six smart tax moves to consider before the clock strikes midnight on December 31^st.

Write Off Bad Debt

The IRS allows you to write off bad (un-collectible) debts before the end of the year and deduct those that are unpaid from your taxable business income. By writing off this debt, you can reduce your company’s tax burden for the current tax year.

Note, that if the customer ends up paying their invoice in the future, you will need to reverse the write-off and declare the payment as income. It’s best to discuss this with your tax advisor to ensure the process is handled properly.

Stock Up

At the end of the fiscal year, businesses can reduce their taxable income by purchasing business equipment, supplies and other assets that will be used in the coming year. If your business is in a good financial position, replenishing office supplies or stocking up on inventory, could give you a larger deduction.

Prepay Expenses

Businesses can choose to prepay for services they will use in the coming year. For example, insurance coverage, subscription services, business rent, association dues and other fixed expenses can be paid in advance, reducing your businesses taxable income for the year.

Defer Income

Small businesses typically use the cash method of accounting, meaning a company recognizes income when cash actually changes hands. This method allows for the option of taking income this year or next year. If you anticipate being in a lower tax bracket next year, you might want to defer income to take advantage of the lower tax rate. Waiting until close to the end of the year to invoice clients will defer income to the next year and lower your current tax bill.

401(k) Plan for Employees

Setting up or contributing to an employee retirement account can reduce your business’s taxable income. Business owners can claim a tax credit for the cost of setting up and administering a 401(k) plan. The potential tax savings are usually more than enough to cover the cost of setting up and funding the plan.

Employee Bonuses

Many businesses give end of the year bonuses to their employees. These not only serve as extra incentive for employees, but they are also commonly tax-deductible for businesses that operate as corporations. You can deduct the cost of any bonuses paid to employees, if the bonus was given as additional compensation for services, not as a business gift – decreasing your overall tax obligation.

Now is the time to start planning your end of the year tax strategy. Don’t miss out on the opportunity to reduce your business’s taxable income and keep more of your hard-earned profits. Taking advantage of these year-end tax planning strategies will aid in minimizing your taxes and help make next tax season a little less taxing.

The small business tax professionals at Motl Accounting are here to ensure that your business is taking full advantage of deductions, write-offs and other tax benefits to end the year right.

« Older Entries