Running a business is hard, anyone can acknowledge that. Today, one of the biggest downfalls of any company is its bookkeeping. Simple mistakes and errors can not only make the running of the business difficult but it can also be its downfall. Try and avoid these easy bookkeeping mistakes to make your business run smoothly.
Bookkeeping is something that all businesses, big or small, have to do. The pen to paper bookkeeping for many is a thing of the past thanks to amazing online programs and applications, like Quickbooks, that do a lot of the hard work for you. For some, making and keeping a note of everything by pen and paper is still preferred. But your bookkeeping and how you handle it is just as uniquely personal as your business model and strategy. But the biggest factor, however you decide to do your bookkeeping, is to avoid some of the most simple and common mistakes out there. Today we will be discussing how to avoid these common mistakes to keep your small business working smoothly no matter what!
The First Steps
When it comes to the point where your small business can grow and expand, that is so exciting! But it's so easy to overlook the important steps of your full bookkeeping to successfully make those steps. Many new business owners will just do the bookkeeping themselves. They rush the process, they don't account enough time or attention to the process, and completely mess up a good chunk of all of it by doing so. Our first recommendation is to work with a professional. If you don't want one full time or on staff, at least learn from them how to properly do everything that needs to be done. Take more classes, attend seminars, or even bend the ear of professional bookkeepers. Or hire someone like us at Hoods, who can help you understand Quickbooks and how to properly use it for your company! Most importantly when you sit down to do your bookkeeping, take your time and breathe.
This might be obvious, but it still needs to be said. You have to budget for your small business or the outcome could be a disaster! You raised and created the fund to create the company in the first place. So you know that your bank account doesn't have unlimited spending for the year or years to come. You need to plan how the money of the company will be spent, or in other words, what will your budget be. A budget will help you track your accounts and records, any issues can be corrected quickly, you can plan for any emergencies, keep the company running, and pay your employees. In 2018 alone, 61% of small businesses didn't create a budget. How scary is that? A lot of young companies don't have a full appreciation of what a budget can do for the company itself. Without one there is no way to evaluate the performance or even the goals for the company. You also can't continue to develop the business without one, and you can't see any growth either.
One of the most important steps in bookkeeping is the reconciliation of your books. This is making sure all of the bank accounts, credit cards, and all the reports match and you have proof to show that they do. This is a huge step when it comes to paying your taxes based on how much the company made, how much was spent, and how much was paid to the employees. These factors will all factor in how much you owe the IRS come tax season. Not doing this properly can lead to over or underpaying your taxes. This might have you re-doing your taxes, owing more, and possibly accruing late fees. Not to mention the hours spent on the phone and in front of your computer to fix these issues. You can also become a victim of fraud, have bank withdrawals that were not authorized, several other bank errors, and the disappearance of money you can't account for.
It Doesn't Mix
Many small businesses start in garages or home offices. Some of the greatest companies of all time have started this way. But don't make the mistake of mixing your home and business bills, expenses, or taxes. Make sure you know exactly how to write off business expense items and what they are before doing so. The IRS is very well versed in what you can and cannot call business expenses from your home, so don't try and fool them. Even if you make an honest mistake, it can still hurt you come tax time. Separate your credit cards, your living space from your workspace, your landlines, and cell phones. Keep meticulous records of expenses and receipts, mileage, and time. Don't muddy or blur the lines between home expenses and business expenses. This will make your life and dealing with the IRS much simpler!
There are a lot of small moving parts to bookkeeping, but all of them have to be well oiled to keep the machine running. Don't rush, make sure you know what you're doing, and never be afraid to ask for help. We are here to offer you the best tax services for your business and to help you do your bookkeeping with Quickbooks. Don't let your small business become prey to these easy mistakes. Take the time to educate yourself and keep your bookkeeping focused and accounted for.
You can research ways to save money, make more money, support your employees, and help your business grow. But did you know one of the best tools to help your business grow and flourish are blogs?
Have you spent time reading some of the most popular blogs for small businesses? Can you name three? Don't laugh, but the world of blogging isn't going anywhere. If anything, it's coming back stronger than ever. Newspapers and magazines have been slowly disappearing in paper form and reappearing online. Just like any website, you do need to dig to find credible sources, BUT when you do find them - you are being handed some of the best in the moment 'need to know' information that can help your business grow.
Blogs can help you stay up to date and in the know for your industry. It can help you stay educated (for free!) on new trends, and it can even help you stay creative as you are being inspired by others in your industry. Take the time to research some of the most popular and influential blogs in the world of your business and make time to read them. Use this blossoming tool to help your company grow. Maybe even use this inspirational too to help create your own blog! Having a blog of your own helps those magical SEO (Search Engine Optimization) numbers grow. Blogs make you and your company look more attractive on search engines. Blogs can help you become an online traffic target and they can further push the idea that you are an expert in your industry.
If you're still a little skeptical, here are some of the most popular business blogs out there today. Some of them might even sound familiar!
Harvard Business Review
Google Small Business
This is a very very very small number compared to the number of business blogs out there. We would recommend starting with these three, just to get your feet wet. Then see what happens next! You just might find the exact blog you're looking for with these recommendations or with a number of others waiting for you. You have a lot of material to catch up on, so get to reading!
You know a lot about the taxes for your company, but there still might be some unknown surprises along the way.
There are black and white things you know about taxes, preparing them, and paying them. But as a new or experienced small business owner, there might be some things you didn't know about your taxes. As we enter the fourth fiscal quarter of this year, keep these possible unknown facts in the back of your mind. This might prepare you for possible painful surprises or surprise you with some relief.
So, what did you think? Were any of these a shock or a surprise? With an unknown future and a lot of changes that are a possibility, is your small business prepared? Do you have someone helping you with your taxes, or have you been using Quickbooks to help you prepare for whatever might come your way? With the knowledge of these facts, always know that Pathways is here for you with any question you might have. We are here to help you come tax season and in any season.
Quickbooks is the amazing software that we recommend to all of our clients and what we use ourselves to do taxes and keep all of our finances in line. But for those who are still new to the program, here are five of the most commonly asked questions answered for you to get started!
We can't say enough how amazing Quickbooks is, and the reviews alone and it's personal success speaks very highly for the product. The installation of the software does take a little time but it is worth it. The software is proven to very stable and reliable. It is also a huge time saver for you and your business. It saves time on bookkeeping and paperwork because a lot of this work will now be done automatically thanks to this incredible software and all that it can do for you and your company!
It should also be a relief to you that you can constantly find out where your company stands if you are making or losing money and if you are in a healthy place or not with this software. Also, when it comes to all the financial software that's available for you to use for your small business, it is incredibly affordable. You can run your company on this amazing software for only a few hundred dollars. It is also totally customizable for what you want and how you want to use it for your business. It is very flexible and adapts to small businesses of all kinds.
We could go on and on about why we support Quickbooks so much. But don't just take our word for it. Here are five of the most commonly asked questions answered for you, so you can really see how incredible this software can be for you!
1. Is the Cost of Quickbooks Tax Deductible?
Yes it is! It is tax-deductible according to IRS publication 946 which says "off the shelf computer software is qualifying property for the purposes of the section 179 deduction." So don't be afraid to buy this for you or your small business, you can write it off at the end of the year. And who doesn't love a program that will help your busy grow and it will save you money?
2. Can I add my Accountant, Bookkeeper, or Tax Pro?
You sure can! You can invite an accountant or any of your bookkeepers or Taxpros to collaborate with you for free with Quickbooks online. Once they accept your invitation to collaborate, they can work in their accounts on their own time. If you part ways with any of these persons, you can also deactivate their access at any time as well.
3. Is Phone Support Included?
Phone Support is offered to you during the free 30-day trial Quickbooks offers you when you first sign up and is included with your paid subscription to Quickbooks online. For you to have Phone Support for Quickbooks online, your account must be current. If you are more interested in the Quickbooks Desktop Pro version, phone support is offered for an additional $89 for 90 days after you purchase the software.
4. There is no contract, correct?
This should be a sigh of relief for you. No, there is no commitment or contract. You can switch between plans whenever you would like to and you can also cancel any of your subscriptions at any time. The online version of Quickbooks even offers a free 30-day trial for you to try out the program and see if its a fit for you. If you end up buying the desktop version, there is a 60-day money-back guarantee.
5. Is it easy to get started? If you have five minutes, then you have enough time to get started. Five minutes is all it takes to get up and running with Quickbooks once you sync all of your bank or credit card transactions to Quickbooks online. It will take a little longer to download the desktop version, but as mentioned above it is worth the time it takes to do so.
We hope that if you have been considering using Quickbooks, that this will finally convince you of its potential. If you have any questions or would like more tutelage for this software, please feel free to contact us!
There are so many ways to cut corners and save a little extra for your company this year, but if you think a little more on the creative side - you might end up saving more money than you expected!
Saving money for your company is something that I am sure is always on the back of your mind or is your main focus every time you hit a new fiscal quarter. There are so many options out there that can help you save a few dollars every month and sometimes a little bit every day. But here are five unique and interesting tips that could seriously help you save money consistently for the rest of 2019 and into 2020!
2. Spring Cleaning Comes All Year Round
Have you noticed the huge trend in personal sellers on eBay and a huge slew of apps and websites that have been created specifically for the need of a personal seller? Well, there is a huge reason for that! A little extra cash goes a long way, especially when it comes to your bottom line at the end of the fiscal year. Has your office become cluttered with unused equipment, office supplies, and even gifted items that are just not being used? Take the time to do a big office clean and get rid of everything you don't need! Sell these items on eBay, the Facebook Marketplace, or any number of personal seller apps. You will end up putting a few extra dollars back into your company's pocket and giving your office a much needed deep clean. You can also save time and productivity and give this task to your interns instead of one of your full-time employees. You aren't taking away from your employee's workload, your interns are gaining experience, and you are getting money back from inexpensive labor!
3. Change Up That Work Week
Have you been dreaming of working a three or four day week? Do you think this option might make your employees excited too? Without cutting down the productivity or work that needs to get done at your company, use this idea as inspiration. Giving yourself and your staff a few extra days off during the month or giving them more opportunities to work from home is not only a great perk, but it's also a huge cost saver. You're cutting back on daily business operation costs by closing down the office, and this creates a natural productivity increase. The promise of getting a few extra days off by working a little harder during the early part of the week will help get tasks done and keep employees very happy with the promise of a three or four day weekend.
4. Make a Difference When Printing
Printing and toner cartridges can easily cost $50 a piece if not more every single time you buy one. If you're choosing to print all business materials in your office and allow your employees to have full use of your printing services, constantly buying new cartridges can get very costly very quickly. So, using recycled materials can become an excellent cost-saving option. Shop around for retailers that sell recycled cartridges and make the switch. These used cartridges aren't just cheaper, but a lot of companies that sell recycled cartridges also offer additional rewards for using them. This could turn into another money-saving opportunity for you in more ways than you could expect! Also, not only are you saving money you are also helping save the earth with this excellent green option.
5. Use Those Powerstrips
Did you know that most of the electricity that is powering your office equipment, almost 75% of it, is used when all of your electronics are turned off? That gets pretty costly at the end of the month when that bill is due. Invest in some high-quality power strips to plug in all of your appliances and electronics into. When you and your employees leave at the end of the day just switch them all off as you walk out the door. Just leaving a computer on overnight, depending on how many computers you have in your office, can add an addition $200 a year in unnecessary energy consumption.
Saving money can be easy if you just take the time to think about it. And sometimes you can earn rewards AND help save the planet while saving money too. As you start to think about the end of the year budget and what your 2020 budget is going to look like - keep these unique and interesting options in mind.
Our latest blog focused on the importance of knowing what things you can look forward to writing off on your taxes this year. But just as important, you need to know all the things your business cannot write off as tax day draws closer. Battle this grey area, and be prepared before tax day.
There is plenty of time between now and April 15th to get prepared for paying Uncle Sam, but there is nothing wrong with being prepared. The last blog we posted was about knowing what items, some often unknown, that you can write off your taxes. We all love that extra break at the end of the year and it can be a huge burden lifted off your companies' bank account. But are you just as familiar with all the items you cannot write off your taxes? If not, you could be in for a lot of frustration when you start preparing your taxes and getting prepared to pay for them. Don't get caught in that trap, be prepared before you even begin your fiscal year. Know what receipts you need to save and where you can help your business save money - and know what to avoid spending money on before you get ready to sign the dotted line on April 15th.
Let's start with some of the basic nondeductible recommended by Quickbooks. After Quckbooks help you track your project probability, manage your bills, track your business mileage, track your income and expenses, helps you prepare invoices and payments, manage your contractors, and pay your employees, it also offers this fantastic reminder of what you cannot write off and deduct from your upcoming taxes.
How does this sound so far? Are any of these nondeductibles surprising or frustrating? Or were you already aware of these items? Well - the list continues. This one is a little more detailed and focused towards small business owners.
When teenagers start to have interest in earning their own money, it’s best to start them off on the right foot. Here are some tips to help you get started:
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.
In this quick 3-minute video, Dave Ramsey explains how you can save your business time and money by spending a little extra time in the interview process:
Click here to watch!
I remember it like it was yesterday.
After the recession hit and some bad real estate investments sapped our emergency fund, my wife Holly and I had to start rebuilding our finances from scratch. That meant coming up with some cash, fast.
I sold my beloved golf clubs at a garage sale. That hurt . . . a lot! I also took some part-time jobs: delivering phone books, driving semi-trucks during the summer, and doing interior painting until midnight before waking up and going to work the next day.
It was a rough time for our family, but God sustained us and blessed our effort.We’re on the other side now, and we’re actually closer as a couple because of the experience. Praise Jesus.
Maybe you’re there now. If you are, I promise it’s possible to claw your way out. Like Holly and I did, the first step to taking control of your money is quickly establishing a starter emergency fund of $1,000 (or $500 if you make less than $20,000 a year).
I know. When you’re just beginning, the very first Baby Step can feel more like a giant leap. But it’s an important leap! That $1,000 will allow you to rely on cash when minor emergencies pop up rather than going further into debt by borrowing more money.
The Bible encourages this sort of behavior. Proverbs 21:20 says, “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has” (NIV).
So take your wisdom from Proverbs. Establish your starter emergency fund now. Here are three great methods I used myself to do just that.
1. Get a Second JobA short-term, part-time job never killed anybody. Sure, you may be working 12-hour days seven days a week, but it’s only temporary. You’ll survive! Besides just bringing home more cash, the extra effort also generates a healthy sense of accomplishment that propels you toward your goals faster.
2. Have a Garage SaleI’m going to take a wild guess and say you have some junk lying around that you don’t need or use anymore. Get rid of it all by selling it at a garage sale or through online classifieds. Bonus: Eliminating all that clutter from your life will be freeing all on its own. (Unless they’re your beloved golf clubs. Man, getting rid of them still kills me.)
3. Cut ExpensesLittle changes can make a big difference. Consider canceling subscriptions, adjusting your thermostat, and eliminating activities that require lots of gas money. Maybe you can even sacrifice some luxuries like your weekly car washes or lawn service. You might be able to do some of these yourself or hire a neighborhood kid to do the work for less than you were paying the pro.
A $1,000 starter emergency fund isn’t out of reach for anyone. It may take some hard work to fund it quickly, but you’ll be amazed how much better you sleep at night when you know that you’re prepared for those curveballs life is bound to throw your way.
Chris Brown is a nationally syndicated radio talk show host, pastor, and dynamic speaker carrying the message of stewardship and intentional living nationwide. Available on radio stations across the country, Chris Brown’s True Stewardshipprovides biblical solutions and sound advice for questions on life and money. You can follow Chris online at www.stewardship.com, on Twitter at @ChrisBrownOnAir, or at www.facebook.com/ChrisBrownOnAir.
The Pathways Team