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

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

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

Spotting Red Flag Accounting Practices

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

Bookkeeping Basics: Determining Your Accounting Method

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.

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5 Strategies to Help Small Businesses Cope with Inflation

5 Strategies to Help Small Businesses Cope with Inflation

Small businesses are the lifeblood of the American economy. They create jobs and drive innovation, however, inflation hitting a 40-year record high in June is having a significant impact on them. Prices for goods and services have been going up, while profits have been staying flat or even declining, making it increasingly difficult for small businesses to stay afloat. A recent survey by the National Federation of Independent Businesses (NFIB) found that 37% of small business owners reported that inflation was their single most important problem in operating their business. The good news is that there are steps business owners can take that may help your company weather the storm. Consider using these strategies to ease the effect of inflation on your small business. With inflation on the rise, small businesses need to take steps to protect their bottom line. Discover five strategies that can help ease the effect of inflation on your small business. 

1. Cut Expenses Where Possible

Take a close look at your business and see where you can reduce costs. There may be unnecessary products or services that you are paying for that aren’t being used or alternative options that are less expensive. Consider switching to a hybrid or fully remote office model to reduce costs on office space. You can also try and negotiate better deals with suppliers by preordering materials or buying in bulk. 

2. Diversify Your Revenue Streams

Look into other avenues to generate revenue for your business. Diversifying your revenue streams helps keep your cash flow moving. When one part of your business takes a hit, another part can pick up the slack. Consider entering the ecommerce space or offering a subscription service. 

3. Automate and Streamline Processes

With climbing labor costs, one of the best ways to cut expenses is to automate as much of your everyday labor as possible. From customer service to social media, there are many software tools that can help automate tedious tasks. Automation enhances your efficiency while cutting down on mistakes, saving time for everyone involved.

4. Rework Your Pricing

Raising prices is never an ideal situation, however, it may be helpful in tackling the effect inflation is having on your business. Avoid a dramatic across-the-board price increase. Instead, analyze specific problem areas and raise prices accordingly. Transparency is key. Customers will accept a higher price on your goods or services and remain loyal customers if you are up-front with them about what’s going on. 

5. Revisit Product Offerings

To make your business more profitable, you need to focus on products and services with strong demand and healthy margins. Consider eliminating poor performing products from your portfolio so you can put more time towards goods and services that make your business money.

Inflation can be a challenge for any business, but especially small businesses. However, there are steps you can take to help mitigate the effects of inflation and maintain your profitability.

Don’t let inflation get you down. Motl Accounting can help you develop a plan to manage inflation and keep your business thriving. Contact us today for help staying ahead of the curve.

Hiring an Accountant vs. Using Accounting Software

Hiring an Accountant vs. Using Accounting Software

There are many different options for accounting and it can be difficult to decide which is the best for you or your business. You can hire an accountant to do your books or you can use accounting software. Each has its own pros and cons, and it helps to understand them before making a decision. In this blog post, we will discuss the pros and cons of hiring an accountant vs. using accounting software. Hopefully it will help you decide which option is right for you!

Hiring An Accountant

Hiring an accountant is a good option for businesses that don’t have the time or resources to do their own accounting. An accountant can help you with everything from bookkeeping to tax preparation. They will keep your books in order and make sure you are compliant with all applicable laws. Hiring an accountant also gives you someone to rely on for advice and support. A main benefit of hiring an accountant is the time it saves. You can focus on other aspects of your business and personal life instead of working on your finances for hours on end. 

However, It can also be difficult to find an experienced accountant who is knowledgeable about your specific industry. Additionally, you are limited to the services that the accountant offers. If you need help with something that the accountant does not offer, you will have to find someone else to help you.

Using Accounting Software

Using accounting software is a good option for businesses that want to do their own books but don’t have the time or resources to hire an accountant. The software gives you access to all of your financial information in one place, which makes it easier for you to keep track of what’s going on with your business and make decisions based on that information. 

However, using accounting software can be very time consuming and difficult to learn. You need to be able to understand financial statements in order to use the software effectively. If you don’t have any experience with accounting, it will take some time to learn how to use the software and understand what the statements mean. Additionally, you are responsible for entering all of your financial information into the software, which can be a time-consuming process. If you find yourself struggling with the software, it is wise to consider hiring an accountant.

In conclusion, both hiring an accountant and using accounting software have their own pros and cons. It is important to weigh the pros and cons of each option before making a decision. If you use accounting software, make sure that the software is easy to learn and use before purchasing it. This will help ensure success! 

If you hire an accountant, make sure that you hire someone who is knowledgeable about your industry and has experience working with businesses like yours. We pride ourselves at Motl Accounting on helping various types of businesses and individuals with their taxes. Whether you need accounting or payroll services, we can help. The most important factor when it comes to your finances is peace of mind and we offer that to our clients. 

Need help with your business finances or personal taxes? Contact one of our experienced professionals at our West Dundee location to get the help you need.