Archive for the ‘Uncategorized’ category

Reduce Payroll Tax Expenses with an S-Corp

May 17th, 2017

Payroll taxes are a large reoccurring expense for most employers. How can they be reduced? Setting up your company as an S-Corp may be your best solution.

As an S-Corp, the owners can take an additional percentage of their payroll-based income as straight disbursements. These disbursement allow you to avoid the employer side of the federal payroll taxes on the disbursed amounts. Speak with your CPA about determining the maximum percentage amount you can legally take.

Other than that, you are stuck with whatever payroll taxes your employees generate. But remember the total payroll tax expenses include each employee’s tax as well as the employer contributions. That number may look large to you, but realized that these employee tax amounts are not your expense, they are part of the compensation to your employees, who are the ones actually paying it. Only the employer side of taxes are a tax expense to your company.

Banking Mistakes to Avoid

October 4th, 2016

Business owners are so busy working on their business rather than in their business–as they should be–that sometimes your friendly neighborhood banker can end up robbing you blind! The following are four common banking mistakes made by busy small business owners.

Only Banking at One Bank: As a small business owner with 100 things to do, it is easy to settle in with one bank and do all of your banking activity through that one institution. This can have a number of ill side effects. When it comes time for a loan and your bank denies you, if you don’t have a relationship with another bank, you may be out of luck. Secondly, you should make banks compete for your business. Don’t simply give all of your business to one bank by default. Shop around for the best deals.

Failing to Focus on Collateral in Loan Application: When you are submitting a loan application, you may be asked for an executive summary. Make sure that your executive summary focuses on why you are a good risk for the bank. Don’t talk about your exponential growth or potential. Bankers want to know about the facts of your financial situation: your assets, liabilities, and what you can offer as collateral.

Relying Too Much on Line of Credit: If you run your business on a line of credit, as many entrepreneurs do, you may be setting yourself up for disaster if your bank decides to reduce or eliminate your credit line. This happened to many small business owners during the last recession. Try to wean yourself off your line of credit if at all possible.

Carelessness With Bank Fees: Small business owners remember: Cash is king. You must avoid bank fees at all costs. What a careless way to let your money literally vanish into thin air. Don’t get too lax with your banking, even during those busy weeks and months, because when you look back at your bank fees you will realize what a hindrance they can become to your business if they are a recurring issue.

Don’t fall victim to these common banking mistakes. This may mean you need to hire a part-time bookkeeper. Of course there are many, many good reasons to have an expert handle your books, financial reporting and analysis, but at least be prudent in how you use banks.

Solid Growth Accounting Services Wins Another Award!

March 15th, 2016

Thumbtack Award 2016Solid Growth Accounting Services wins another Best of Award from Thumbtack based on customer reviews. This makes two years in a row. Thanks for the recognition, Thumbtack!

5 Ways to Improve Your Biz in 2016

November 25th, 2015

5 Ways to Improve Ur BizThere’s a new year coming, representing a new cycle and a new beginning. And that means it’s a good time to put into place the strategies, techniques and tactics that will move your company’s position forward to that next level of success. You know you want to make it happen, so get ready to make some changes. Here are five good ways to make 2016 the best year ever.

1. Stop multitasking

The fact is that multitasking causes you to be less productive, not more. Your brain can only do one thing really well at a time, and being good at multitasking is really only just being good at switching back and forth quickly. Focus all your attention on the one task at hand and only switch to the next when it’s completed.  Try turning off everything that distracts you in your office for at least part of the day, and then don’t just get busy, get working.

2. Stop doing everything yourself

Change your organizational structure from a wheel to a hierarchy. Your business can’t grow if everyone works for you, and all decisions need to come through you.  Create an organizational chart with you at the top and your employees, contractors and consultants below you in a tree-structured hierarchy. Who are your “captains” and who are your “soldiers”? But remember, no matter what title you bestow, everyone is “hands-on”, because after all this is small-business.

3. Improve your team

Once your business has grown to the point of needing employees, you will want to continue to grow it by establishing a superior team. Only hire the best people, and pay them well. This is your best place for leverage so plan on paying more. If you want to get the best people, typically, you need to pay in the top 10%. And to keep them you’ll have to challenge them, motivate them and demonstrate your appreciation. Yes, you will be a manager.

Take your time hiring the best person for the job. If an employee is not working out, fire them in the first month. With proper training, few people’s general effectiveness changes after a month. Remember the old adage, “Be slow to hire and fast to fire”.

4. Stop trying to use social media to sell your products or services

Use social media for customer service and to build prospect relationships by answering questions in your company’s area of expertise. Use your social media properties to establish yourself as the go-to authority in your niche. The business will search you out. Then put on your salesperson-hat and close the deal. Don’t expect anything more.

5. Do not outsource the math

Commit to understanding every number in your three key financial reports; the profit and loss statement, balance sheet and cash flow statement. Insist that your accountant explain and review them with you every month. If you do not understand where your business has been, you can’t forecast where it is going. It’s better to make all your business decisions based on the hard facts of your company’s performance, not a hunch or your “feel” for where you are.

Controlling Overhead Costs

May 22nd, 2015

Overhead CostsThe cost of overhead can put your company in an uncompetitive situation due to the buildup of excessive expenses incurred in the running of your company. Without a breakdown of costs into production and overhead categories, you might not realize how much you’re actually spending on the operations side of running your company. Regular financial reporting and budget variance analyses will help to maintain the appropriate cost structure in a sustained fashion.


The costs you incur to run your business and sell your product make up overhead. These are expenses you have even when you aren’t making your product. They include expenses such as rent, marketing, phones, insurance, administrative staff, office equipment, interest, office supplies, etc.

Identify All Overhead

The first step in determining your overhead is to identify it. If you don’t record every expense you have on a budget sheet or other financial report, do so. Start by creating production and overhead reports. Production expenses are costs that apply directly to making your product, such as materials and labor. Next, break down your overhead by function, such as marketing, human resources, information technology, office administration and sales.

Create a Purchasing Process

Assign one person to review and approve purchases so that they can see all expenses that are planned to be made before they are paid. Set policies for spending, such as requiring competitive bids for purchases over a certain dollar amount. Have your purchasing manager shop for better deals on common items you buy. Consider offering a bonus if your purchasing agent meets specific savings targets without sacrificing quality.

Review Contracts

If you outsource functions or sign leases, rebid your contracts annually, even if you end up using the same vendors and suppliers each year. Rebidding contracts prevents longtime contractors from inflating their fees, or encourages them to offer more services to keep your business. Frequently this will result in lower costs. A multi-year contract will usually favor the vendor. So, if you haven’t shopped your insurance in the past two years, do so, and discuss with your current provider how to reduce your premiums. Ask your utilities providers to visit your workplace to perform an audit and recommend how you can cut your monthly water, gas and electric bills. This annual process is a lot of work, but it sure pays off.

Improve your bookkeeping and accounting practices

From the start of the business, ensure that your accounting reports keep you aware of spending and revenue. This will help you analyze where you have over spent and where you can cut down on unnecessary expenditures. Well organized and up-to-date books have benefits beyond tax issues.

Technology will help improve productivity

There are many cloud-based tools now that will help your business save money, such as online invoicing, project management and others. Most vendors will offer a free trial period. The resulting efficiencies will reduce overhead costs.

Keep the head count constant

Efficiency is gained when revenue per employee grows. Technology, lean techniques, process engineering, etc. all are ways to free up time so employees can become more productive without having to add new headcount to grow. What if you could replace your lowest 10% of performers with new people that matched your top 10%? This would result in a huge productivity boost at virtually no incremental cost. There are a lot of techniques to improve productivity, but the point is that constantly growing headcount certainly will result in overhead growth that won’t necessarily result in profitable revenue growth.

Contemplate hiring freelancers or contract employees

There are certain functions in almost any business that can be outsourced to reduce the cost of space and other overhead. If you are hiring a full time employee, there are payroll expenses, health insurance and other costs that may be associated; this will slowly eat into profit.

Keep an eye on energy consumption

Switch off lights and other equipment when not in use. This might reduce energy consumption by 20%. If possible, use laptop computers instead of a standard desktops. Laptops consume approximately 80% less energy.

Reduce your phone bills

Use Skype, Google Chat or other chat services to get in touch with your employees or freelancers. You can also use web conferencing tools, such as GoToMeeting, to meet with clients online or make a presentation. It will significantly reduce your travel cost.

Ask vendors to own “their” inventory

Have vendors keep title to their inventory until sold. Normally inventory acquired from a vendor is held in your warehouse for use in manufacturing or resale to your customers. But why think of it as your inventory? It hasn’t been used yet so why can’t it still be their inventory? Best planning results in “just-in-time” delivery so there is no inventory. But this isn’t always possible, for instance, in industries like retail where a certain amount of inventory is necessary for your customers to by when they walk into your store. But again, why are you paying them and then sitting on their inventory? They need to own the inventory until time of sale.

A dollar gained in revenue is a very good thing assuming it leverages the current cost structure. But remember, only a small portion reaches earnings. A dollar saved from cost, however, goes directly to the bottom line. So while focusing on the top-line, don’t forget to engage in a systematic approach to controlling costs as a way to ensure long-term value creation.