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.
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…)
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.
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 31st.
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.
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.
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.
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.
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.
Accountant, Accounting, Small Business
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.
Accounting, Bookkeeping, expenses, Small Business
Are you a small business owner who struggles to keep your books balanced? Do you feel like you’re too busy juggling all the other responsibilities of managing the day-to-day operations? If so, you’re not alone. Bookkeeping can be tedious and intimidating, but with the right tips and tricks, it doesn’t have to be a struggle. We share some of our favorite bookkeeping tips for small businesses, so read on and start getting your books in order!
1. Separate Your Personal and Business Expenses
Mixing your personal accounts and business accounts is asking for trouble. Skip any confusion and create separate bank accounts. Having a dedicated business account provides a clearer picture of your business cash flow allowing you to track expenses more easily. Solely using credit cards for all business transactions is a great way to stay on top of expenses as cash payments can easily be overlooked.
2. Pay Attention to Receivables
Every business likes to get paid but managing those payments isn’t as much fun. Marking an invoice as paid when payment is received seems easy, but all too often customer payments are left to reconcile at a later date. It’s important to keep track of your transactions as they happen. Applying customer payments weekly will save you time and money – and a big headache come tax time.
3. Pay Yourself a Salary
While paying yourself may not be the first thing that comes to mind as you’re building a business, if your business earns enough money, it should be. Paying yourself a salary is an excellent way to keep your business and personal life separate and keep your books in order. Rather than having business pay your personal expenses, have them write you a check that is deposited into an account just for those payments.
4. Log Expense Receipts
The importance of keeping business receipts cannot be overstated, as they help you keep accurate records for your taxes and lend credibility to any tax reporting. Whether it’s buying dinner for a client or paying to create a new logo for your company, all purchases should have some type of receipt with them so you can keep an accurate record of all business expenses.
5. Hire a Professional
Too many small businesses struggle with the day-to-day tasks of keeping their books, and it’s a problem that can be easily avoided. Your business requires your full attention as you grow it into something amazing—outsource these tedious jobs so you have more time to focus on what really matters, making money!
As a small business owner, you have to be mindful of your accounting and finances. These tips will help make bookkeeping less daunting and ensure that your business is on the right track financially.