One of the many perks of being a large corporation is that you are eligible for larger tax breaks. They can write off things that normal small businesses just do not have the means to do so. For instance, large corporations can write off research and experimentation. It does not make sense for a small business to spend money on research just to receive a tax break because they have much less revenue.
Great businesses are the most efficient. The great entrepreneurs know how to work efficiently and grow their brand. They know when additional resources are needed and when technology can impact their business for the better. Setting SMART goals and knowing how to use technology to your advantage will increase your business’s efficiency.
One of the greatest pieces of advice that most people often forget is the KISS approach. Keep it simple silly is such good advice, when put into practice can save a lot of headaches in the future. One of the greatest tools you have today, to assist you in running your business efficiently, is your phone. I know that the phones today can seem overwhelming, but the advantages are there. There are many programs, QuickBooks, Expensify, and more, that have mobile apps for your phone. These can help your stay connected to the office even when you’re out. They also have the added benefit of being a cloud backup for your data.
Another way to keep your business efficient and on track is to set up SMART goals. If this is your first time reading about SMART goals, it is an acronym for how to set a goal that is Specific, Measurable, Achievable, Relevant, and Time-Bound. If you want to read more in detail about SMART goals this link provides a deeper understanding. Remember, after setting these goals you should revisit them often, and do not be afraid to failure. Set a goal that you believe you can achieve but will challenge you and your business. Failure is a learning opportunity that will teach you a valuable lesson, that you hopefully will not make again.
How did red nose day help last year you ask?
By strengthening its Early Steps to School Success and Head Start programs in more than 20 counties in 5 states across America, Save the Children is supporting moms like Michaela – a teen mother who, before her son Liam’s birth, was anxious about her baby’s future, as well as her own.
But through Save the Children’s Early Head Start programs in northwestern Arkansas, Michaela is able to give -7-month-old Liam the chance to develop essential early learning and social skills, while affording her the time to further her own education and career aspirations as an early-childhood educator.
If you receive a letter from the IRS remember that this does not mean they are automatically going to audit you. They could be looking for clarification or additional information. Once you receive a formal audit figure out what part of your returns is being audited. Only provide the specific information that the IRS requests to prevent broadening the audit. Make sure you are polite and quick to respond. With that being said, here are 10 red flags for the IRS that are in no particular order.
1. Claiming Business Deductions for Personal Expenses
Keep detailed books on exactly what is business related and what is personal. Higher than average deductions can also be a red flag for the IRS to audit you.
2. Math Errors
Having math errors can cause the IRS to look more closely at your return. Make sure your receipts add up to your 1099-K.
3. Claiming Fair Market Value for Real Estate
Claiming incorrect fair market value on your real estate can pique the interest of the IRS. Especially if you claim lower than normal fair market value.
4. A Sole Proprietorship with a Net Loss
Since there is commingling of funds in a sole proprietorship it is unlikely to have multiple years of net loss. The IRS tends not to audit startups in their first year. Though having the majority of your first 5 years in the red will throw some red flags.
5. Cash Transactions
Since banks will turn into the IRS your credit card transactions the IRS has a hidden algorithm to determine about how much cash sales your business should have had.
6. You’re Self Employed or Work Exclusively in Your Own Business
7. Claiming 100% Business Use of a Vehicle
If you plan to claim the vehicle for business use keep detailed mile logs of when and where the car was used for business means.
8. Shifting Income to Tax Exempt Organizations
Donating large amounts of money to charities to avoid taxes is considered tax abuse.
9. Consistent Late Filing
Consistently filing and paying your taxes late will draw unwanted attention from the IRS. If you will not be able to make a deadline always file for an extension.
10. Taking an Early Payout from Your 401K or IRA
The IRS finds that almost 40% of people who take early payouts file their returns incorrectly. If you take an early payout from your Roth, expect that you may be audited.
When you start your own business, it is common to make mistakes especially when it comes to accounting. Skipping small accounting tasks seems like it would save time, but it ends up costing time and sometimes even money in the future. It is better to get into a habit of taking care of accounting tasks early so they become less of an ordeal towards the end of the fiscal year. The focus should be clean, clear, and accurate accounting that will make your life easier. So, here are a few tips to help with your small business accounting.
Separate your business funds from your personal funds. Even if your business consists of only you. Create a separate account for the business and the business only. This not only allows you to make your reconciliations and end of the year deductions easier, it also lets you keep close accounting of your cash flow.
Many accounting professionals that work with small business owners will tell you that often they see the business owner not applying payments to open receivable accounts. It seems almost too simple to point out but it is easy to forget. Leaving receivable accounts open can cause major headaches down the road.
Reconcile all your accounts as soon as the statement is available. This process will be much easier now since the rest of your records should be accurate. Not reconciling accounts can reduce the amount of deductions you will receive.
Understand the tools and functions of your accounting software. Whether you are using QuickBooks or another software, understanding exactly what it can do and its limitations are important to making good use of your time.
Read the entirety of Terms of Credit agreements. Reading long terms can be monotonous at first but It can save you money in interest and other fees.
When first starting out it is easy to keep track of the small books you will be keeping. It is important to set up in a way that you can grow and scale without exponentially raising the amount of work you must put in to maintaining your books. You can set up automation in some online cloud based accounting that will allow your business to scale without you having to maintain all the accounting records by hand.
Use this tips for your benefit to learn from the mistakes that others have made in the past. Professionals are always ready to help with high level expert advice for small business owners.
Brain Peccarelli's TED Talk about the growing ability of tax software and how it fits into the accounting profession. His point; "it is not enough to serve up information and data anymore, more and more, tax professionals will be called upon to deliver true insight." No matter how great the computer, being able to relate and provide insight will always be in the hands of human professionals.
Business owners make mistakes, both large and small. Poor cash flow management is one of the most frequent reasons why small businesses will fail. Here are some ways to improve your cash flow management.
It is important to know at any given time the financial health of your business. Keeping good records and tracking cash flow make this a much easier task. If the stress of doing it all yourself becomes too much you can outsource to the professionals. Many small businesses will have accounting firms help because of the demand and time required.
Plan for the worst. Since we do not live in a perfect world, your sales cycle will probably see cash leaving before it comes in. Having a cash buffer for times where you need cash but the money has not come in yet will allow you to have access to capital.
Try to keep a handle on your spending decisions. Whenever cash leaves there should be a good reason and a clear purpose. Having capital tied up in unneeded expenses at the wrong time could prove fatal for a small business. As always it is important to use your cash to grow your business and monitor your bottom line.
Do you wish you were faster on QuickBooks so that you can spend more time on other important aspects of your business? We decided to compile a small list that will allow you to get the most out of your QuickBooks.
The Basics - Getting to know the basics of QuickBooks is a good place to start. This video provides a good foundation for what follows in this blog.
Customize Reports – Making a template for a report that goes out often will save time as QuickBooks will fill in the report for you.
Keep A Clean Accounts Receivable – It’s good to know where your cash flow is coming from. Keeping your AR clean will give your business a healthy cash flow position.
Class Tracking – QuickBooks allows you to organize data into classes that are meaningful to your business. Classes can be departments, locations, or source of income.
Find Function – The find function is helpful when you know limited information about a transaction you want to find.
Merge Accounts – If accounts become over complicated for whatever reason. It is helpful to merge accounts, vendors, items, employees, or customers that have become redundant or unnecessary.
Link your Email – Linking your email to QuickBooks allows you to easily send invoices and reports directly from QuickBooks.
Set Up Invoice for Online Payment – Not only will this make it easier for your customers to pay you. It will also help you in quickly sending and tracking your invoices. In addition, it helps to clean up your Accounts Receivable.
Online Banking – QuickBooks has online banking you can connect to your bank and you can easily download transaction from your bank. This makes any future bank reconciliations faster.
Memorized Transaction – With memorized transactions you can easily enter a bill, check payment, invoice, or journal entry that occurs often.
Customize Your Toolbar – The toolbar is there to fit your needs. Customize it so it contains your most frequently used functions.
Print Checks from QuickBooks – This makes monthly reconciliations much smoother.
Reconcile Accounts – If you receive a statement for an account and it has a start and end balance is can and should be reconciled. This includes bank accounts, credit cards, loans, and lines of credit.
Back-Up QuickBooks – This is important. If your QuickBooks is not backed up, then catastrophe and many hours of extra work can be headed your way. If you are using QuickBooks Online then it is backed up online already. If not, you can have QuickBooks schedule automatic backups on a schedule.
We hope this helps you get the most out of QuickBooks. If you would like additional help we offer QuickBooks seminars, just follow this link to reserve your seat. If you found this blog helpful leave us a like and a comment below and be sure to check back here for new blogs every month.
Hain Celestial Group is a maker of natural and organic foods and beverages. In the most recent fiscal year Hain did $2.7 billion in sales. Hain is certainly a large and successful company, but that does not mean you do not make mistakes. In a recent disclosure, Hain reported that due to an accounting error they would have to delay their financial report. They were vague on how large the error was, but they reassured shareholders that it would not affect the total amount of revenue this year. Hain did disclose that the company had added to revenue products that were shipped out but not yet sold to customers. In essence jumping the gun on revenue that Hain assumes they will make once all of the shipped items are sold. This further pushed already wavering shareholder relations.
The shareholders have been in opposition to the amount of monetary compensation many of the executives of the company take home each year. The head of the ship Irwin D. Simon cleared $18.1 million in yearly compensation. Hain tried to correct the issue by changing some policies to, according to the Hain spokeswoman, “align pay with performance.” After the changes one third of the shareholders are still voting to withhold support. Gretchen Morgenson from The New York Times describes this amount of “dissent rare in the boardroom.” Hain has not released when the full financial statements will be ready but is trying to put together somewhat or a report for their annual shareholders meeting this fall.
If you enjoy our blog leave us like and a comment below and be sure to check back here for new blog content every month.
The IRS can be scary sometimes, and not following their rules can land you in some big trouble. That is why there are several scams that revolve around using the IRS to scare you into giving up money to an impersonator. Were here to make sure that you know when this may be happening to you. The IRS will never initiate contact with a taxpayer by email or social media. This may seem like common sense that the IRS is not going to tweet at you that your taxes are late, but this happens to some people. The emails can seem convincing and real, but again to emphasize, the IRS will never initiate contact with a taxpayer by email. The same goes for anything that is from the IRS that wants you to go the irs.org or irs.com. The offcial site is irs.gov and any other link to a .com or .org site is a scam. There are also telephone scams that have become a problem, so the IRS has a few tips as what to look out for if a potential scammer calls you, you can read those here on their website.