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

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

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.

 

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.

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.

5 Book Balancing Tips for Small Business Owners

5 Book Balancing Tips for Small Business Owners

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.

Managing Your Employees After the Pandemic

Managing Your Employees After the Pandemic

Managing Your Employees After the Pandemic 

The COVID-19 crisis led to many changes in how employees work. Employees had to adjust to new routines and organizations had to make adjustments by providing access to work remotely. With normalcy setting in and the return of workers to physical offices, this could be a great time to revisit how to manage your team as they return to their work spaces. Meeting with your human resources and payroll providers to make adjustments that will keep your company and employees safe is advisable. We have a few tips here to consider when it comes to managing your human resources for positive results.

Revisit the Employee Handbook

The employee handbook is to have policies and procedures to help defend you from lawsuits. Ask an attorney to review your handbook to ensure it meets the times and update it as needed. Roll it out through a series of training sessions and have your employees (old and new hires) sign a statement acknowledging their understanding of the updated handbook.  

Revisit the Office Setup

The pandemic led to a new awareness of being extra cautious and safe. Employees will want to feel safe at work and how your office is organized could make a difference. Consider having more space between staff desks and cubes to make everyone feel comfortable. You can also ask your employees for input on what their preferences are and accommodate them based on company policies and resources. 

Be Supportive

Everybody deserves fair and equal treatment at the workplace and supporting your employees in this manner is encouraged. After a tumultuous year, providing the environment and flexibility that supports all manner of employees can make a difference in your business outcomes and in the lives of your staff. Having guidelines and policies that ensure fairness to all your employees should provide them with the peace of mind to carry out their duties effectively. You can also refer to the CDC’s guidelines on general business questions for COVID-19

Summary

As a human resource and payroll company, ensuring our clients are safe with the right information and tools is a main objective. It is important that business owners have the right answers to questions to keep them compliant and that’s where we make a difference. 

Contact one of our Payroll Rockstars at 847-426-2100 to learn how we assist many businesses in the Chicagoland area with their payroll and human resources needs. We’d be happy to assist you and your staff with managing your payroll and keeping you compliant. 

Bookkeeping Tips for a Growing Business

Bookkeeping Tips for a Growing Business

You had a passion to start a business and provide services or products to many customers and fortunately, you are finally there! Your efforts are making your business grow quickly and you are realizing how busy you are becoming to not have time for all the things you used to. One of those could be your bookkeeping and financials. There are more moving parts to a fast growing business and having great financials to help you run and manage the business successfully is of great importance. Great bookkeeping is vital to measuring and understanding your business, so you can manage it as it grows or have the right records for potential investors or lenders. It ultimately helps you monitor your cash flow and make wise business decisions while staying compliant. Here are a few reasons to consider keeping up to date with your bookkeeping if your business is experiencing rapid growth. 

Cash Flow Management

Keeping up with your bookkeeping daily and weekly lets you know how your cash flow is so you can better manage your business operations. Knowing how much is needed to keep the operation going versus what’s currently on hand gives you the opportunity to make smart and quick decisions. With growth comes the possibility for many financial surprises and opportunities and not understanding your cash flow can lead to stressful times for a business owner.

Operations Management

Well organized books let you know where your profits and losses are coming from. By analyzing your books, you’ll have a bird’s-eye view on what’s working or not operationally before it’s too late. This gives you the opportunity to know where to invest in more or where to cut or reduce cost, production or service. This means your accounting books provide opportunities for you to continuously take your business to the next level. 

Business Funding

Many business owners come to realize they need capital at a moments notice and keeping up to date with bookkeeping can be very beneficial in this instance. Cleaning up several months of your books at once can lead to errors, wrong data and be time consuming. Investors and lenders typically ask for information on your books and mostly assist those who have clean books and a good idea on how they spend and receive money.  There are additional reasons as to why daily and weekly monitoring the financials of a fast growing business is important. When to consider an accountant that can help as your business grows is an important yet sometimes daunting decision. We have helped several clients with making the right decisions to grow their business at Motl Accounting. Our accounting practices provide you the information you need to make sound business decisions during the course of your rapid growth. We have accountants, dedicated bookkeepers and payroll specialists on staff to help our clients. We pride ourselves in providing peace of mind accounting practices so our clients can focus on other important demands of growing their business.  Is your business experiencing rapid growth? Contact us at our West Dundee, IL location at 847-426-2100 or via our website. We’d be pleased to let you know how we can assist your business during the fast growing phase and also how we can help you grow
5 Ways Accountants Can Help Businesses Grow

5 Ways Accountants Can Help Businesses Grow

Growing as a business is certainly of importance to most business owners. After all, you will want your company to flourish and continue to experience growth for many years to come. However, in order for your business to head in a positive direction, it helps to utilize proper financial planning and analyzing…that’s where an accountant comes into play!

Are you aware of how accountants can benefit your own business? Many might believe an accountant just helps with the crunching of numbers, but you’ll be surprised that great accounting practices actually help businesses grow and generate more profits in the process.

We understand just how beneficial an accountant can be for a business! We have helped several businesses in the Chicagoland area and provided them with great information that’s helped their businesses. That’s why we have gathered five ways in which accountants can help a business grow by working with an accountant like Motl Accounting in Dundee, Illinois. If you would like to discover what these ways are, be sure to continue reading:

  • Creates Budgets & Forecasts Reporting. It’s important that every business has a plan for their future. Therefore, you will want to set up goals to achieve over the next year, as well as create charts and graphs to keep yourself on track and complete them. By working with an accountant, you can have reports created which will showcase how your fixed and variable costs compare with your sales volume throughout the year, providing you with knowledge of the market conditions that you will need for profitable growth.
  • Discovers Key Performance Indicators. Every business has key performance indicators. If you are in retail, you might use inventory turnover for construction or it might be job costing. Your accountant should assist you with discovering yours, as well as advise on methods to set up reports, allowing you to see how they perform over time so that you can make the best decisions for your business for its future growth.
  • Maintains Cash Flow Projections. If there is one thing you want to understand as a business, it’s your cash flow! After all, without cash your business wouldn’t be able to operate at the level you’d want it to. An accountant will create financial reports right out of your accounting software which will assist you with planning your key performance indicators and properly maintaining your cash flow. It’s important to know how to expand your product lines, increase direct costs and add employees in a way that keeps your cash flowing just as it should.
  • Determines Your Businesses Value. It’s important that you know the value of your business so that you can plan for your future. Seeing as opportunities or life events can present themselves at any time, you will want to know how much your business is worth, given the current market conditions. An accountant can assist you with getting to determine your businesses value, so that you can maximize it and your tax liability. We have professionals we partner with at Molt Accounting that help our clients with business valuations. 
  • Creates Advisory Boards. For your business to remain fiscally strong and healthy, you will want to be advised and know what to expect for the years to come. An accountant will work with you to develop a system so that you can forecast budgets, cash flow management and an overall financial analysis for your business. This way you can monitor your goals and business growth through a dashboard and ensure that it is always headed in a positive direction.

These are just a few ways in which an accountant like us can assist your own business with growing.

Are you ready to work with an accountant in the Northwest Suburbs of Chicago to grow your own business and provide your peace of mind in the process? If so, please get in touch with us one of our accounting therapists at Motl Accounting, as we would be pleased with the opportunity to assist you with doing so!