Archive for December, 2010

Minimize the Tax Filing Ordeal

December 27th, 2010

I know from speaking to other small business owners that virtually all of them are concerned about taxes. But the real issue is typically about all of the filing requirements, the things you have to do to keep in compliance with the revenue collection practices of various governmental entities.

There are so many tax related activities required for small business that the IRS publishes a small business tax calendar every year. It’s a really useful tool that is normally released during the fourth quarter of the year. If you want to make sure you don’t miss any deadlines, you can subscribe to the tax calendar in your Outlook calendar.

So here are some of the key tax related obstacles facing small business owners, where they go wrong, and what they should do about it.

Key Obstacles for Small Business
The biggest obstacles for small business owners are knowledge and understanding, because tax law is constantly changing. Most small business owners have no time or desire to keep up with these changes.

The variety of taxes a small business faces often is a shock to start-ups. In addition to the well-known federal income tax, businesses also face various types of state and local taxes, including income, franchise and/or sales taxes. If you have employees, you must deal with payroll taxes, including not just payments but information filings to the government and your employees. Many businesses also face specific excise taxes. And even the type of business entity you’ve chosen, such as sole proprietor, partnership, LLC, or corporation, affects your taxes. Too often a small business overlooks or misfiles some of these tax responsibilities.

That’s why so many small business owners take the wrong steps when it comes to taxes.

Common Tax Mistakes Small Business Owners Make
The most common mistakes are not keeping good records, not planning for the payment of taxes, and not setting aside the funds to pay the taxes owed.

They also need to be conscious about classifying workers properly. Classifying workers as independent contractors when they should be employees could get you in serious trouble. Make sure you follow the IRS guidelines fully to save potential fines and penalties.

Do-It-Yourself or Hire a Professional?
There are plenty of software packages that will help walk you through the steps, so it’s very tempting to be a “do it yourselfer” when it comes to filing taxes. However, you would serve your business better by focusing on what you do best and hiring a professional who specializes in small business to have them do what they do best, prepare your taxes.

A professional knows the ins and outs of applying allowable deductions and can help you not only file properly, but will make sure you get the deductions you deserve along with identifying things you can do to reduce your taxes for the following year.

And remember, small business taxes aren’t just a do it once, set it and forget it activity. A tax professional can help you manage all the changes in tax compliance, and to meet the ever-present deadlines.

Why Outsource Your Accounting

December 7th, 2010

Accounting is a core business function. Without , a business is sure to fail. With , a business might survive. With managed by a Profit Center Expert, a business is certain to succeed.

You’re probably already familiar with the bleak forecast for new small businesses. While failure rates have decreased considerably in the last few years, recent studies from the Small Business Administration (SBA) indicate that one third of new employer establishments fail within the first two years, and 56% fail within four years.

Poor financial management is often cited as the reason for most small business failures. Often the business owner or a member of the business team manages this crucial function because they want to maintain complete control of their business, they’re afraid that outsourcing the would be too expensive, or a combination of the two. What they don’t realize is that outsourcing is a useful management tool that can save a business both time and money while preventing potential failure. And when you outsource to the right accountant, it can be the difference between base survival and profitable success.

The Benefits

There are countless benefits you enjoy when outsourcing your . Here are just a few:

Save Yourself Time. You’re in business because you’re good at what you do. Your expertise involves the product and/or service you offer. And we’re guessing your expertise is not . So if you, or anyone on your team, spend time managing your business’s finances, that’s time that could be better spent building your business.

In order to be competitive you must constantly be looking for ways to improve and expand your products and/or services, better market your business, and stay ahead of your competition. When you and your team focus time and attention on the , that’s time not spent on these crucial tasks. When you outsource the to a trusted professional, you can use that time to make your business the best it can be.

Save Yourself Money. We all know time is money. The average small business owner spends over 10 hours personally, each month, for the business. If your average billing rate is $50 per hour, you may be spending more than five hundred dollars’ worth of your time! Chances are you easily can pay for a good accountant and then some with all that money.

Gain Access to Valuable Accounting Expertise, Equipment, and Technology. Reputable accountants have the expertise to not only save you money, but to make your business more profitable. In addition to that, they have access to equipment and technology that most small businesses can’t afford. They will use their resources to your advantage and save you the time and headache of doing it yourself.

Gain Access to Profit-Building Information. A truly valuable accountant is also a Profit Center Expert. They analyze financial data in order to assist you in making profitable decisions for your business. A Profit Center Expert can inform you which products and/or services to expand, which to eliminate, whether your marketing attempts are successful, where you’re loosing money, and where to cut back in order to save and redirect funds in order to become more profitable.

Call us for a free, no-obligation consultation. We can customize a package of services that is competitively priced and designed to save you time, energy, and headache. We offer the following services:

Accounts Payable

  • Input vendor invoices to payable system
  • Classify invoices to the proper G/L account
  • Request and maintain vendor W-9 information
  • Maintain vendor master files
  • Respond to vendor inquiries about payment status
  • Retrieve copies of payments as necessary
  • Prepare and file required 1099 forms
  • Process requests for stop payments when necessary
  • Cut checks to vendors based on due dates or client instruction
  • Reconcile vendor statements to accounts payable ledger
  • Reporting to organization on detailed aged payables and cash requirements
  • Process year-end 1099 forms

Accounts Receivable

  • Prepare and mail billings as needed (all billings provided to client for approval prior to mailing)
  • Record and account for revenue
  • Input receivable transactions into the system
  • Prepare and deliver periodic statements
  • Issue client-approved credit memos and refund checks
  • Maintain subsidiary receivables ledger
  • Process client-approved adjustments
  • Apply cash received to customer accounts and resolve “short pays”
  • Perform low-level phone collections as needed by client

Cash management

  • Process daily sales and deposit reports
  • Verify daily deposits and report variances
  • Reconcile and verify credit card deposits
  • Reconcile monthly bank statements

Journal entry and general ledger

Account reconciliations

Payroll

  • Time cards, after approval, will be scanned and uploaded prior to payday
  • Complete payroll while client prints, signs and distributes paychecks
  • Prepare employee earnings statements complete with current pay period and year-to-date wages, taxes, and adjustments
  • Prepare department summaries of month-to-date payroll data in addition to customized reports specific to client
  • Prepares timely and accurate notifications of tax liabilities and deposits
  • Completes year-end W-2 forms
  • Respond to requests for employee verifications
  • Process and submit garnishment payments
  • Respond to employee payroll inquiries
  • Prepare and file new hire reporting to state
  • Prepare, file, and pay all federal, state, and local payroll taxes
  • Reconcile health insurance payments and make payroll deductions when required
  • Prepare necessary HR reports such as turnover
  • Allocate payroll expenses for multi-store employees
  • Prepare and process payroll accruals when necessary

Monthly Closing

Fixed assets & depreciation

Monthly financial analysis and reports

Yearly Business Assessments

Don’t wait another day to partner with a Profit Center Expert (PCE) and make your business more successful. Do what you love to do more; let your PCE take care of the rest. Call now for a free, no-obligation consultation.

10 Important Small Biz New Year’s Resolutions

December 1st, 2010

The approaching new year provides small business owners with an opportunity to reflect back on the previous year and make an objective evaluation of the state of their business. Everyone should conduct this exercise, but however it turns out, what’s done is done, and the only thing to do is to move forward and onto greater success and/or to make the appropriate course corrections to improve their operations and change their fortunes. Here are ten improvement projects every entrepreneur should undertake.

1. Develop a Strategic Plan
An extension of your original new company business plan, the strategic plan is it’s annual revision based on the realities and discoveries that have occurred over the past year. You won’t be able to get where you want to go unless you know where you want to be. Be sure to let your employees know as well.

2. Constantly Promote Your Business
You can’t execute just one marketing effort each year and expect your business to grow. Plan marketing efforts quarterly or even monthly and plan time for follow through and tracking of results. 

3. Survey Your Employees
Sometimes the biggest employee dissatisfactions are the easiest things to fix. Know what changes your employees would like to make in their work lives, and do your best to improve the quality of their work life, as this will usually have a positive impact their productivity as well.

4. Create action plans for each person in your organization
Make sure every employee knows how his or her job relates to the company’s overall vision, and that each has individual objectives and goals with measurable standards and timetables.

5. Survey your customers and your suppliers
Maybe the way you are doing business is costing you relationships with suppliers and customers. Know what will make it easier for them to do business with your company.

6. Produce only the key indicator reports from your business performance measurements that you need to run your business
Don’t waste your time and staff time compiling reports you never use. Know what you need to know to run a successful business, study those reports every month, and use them to take action.

7. Determine your level of compliance to all applicable human resource laws
Unless you have an HR department, you are likely unaware of all of the compliance laws regarding employees that can put you in serious legal trouble. Have an audit done by an outside professional and prevent problems that could result in million dollar lawsuits by unhappy ex-employees.

8. Know your top 10 customers well
List your top ten customers by sales and let everyone in your organization know who they are. Are they in a particular geographic region, of a particular type, and what is similar about them? What more can you do for them? Where can you find more just like them? Do everything you can to build on those relationships.

9. Get a coach or mentor, or join a business support group
Build accountability into your own personal planning by asking others to help you turn your dreams into reality. Enlist people who you can trust to give you objective feedback and create deadlines for your planned successes.

10. Make a list of the year’s accomplishments and celebrate your successes with your employees
Don’t forget to acknowledge and celebrate each of your milestones as they are achieved throughout the year. The best part of creating a plan is to know when you’ve reach your goals, allowing some time to pause and appreciate the accomplishment, and begin to create your next set of goals.