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.

Budget Time
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.

The Paperwork
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.

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! 

1. A New Type of Advertisement 

What are you doing for your company's advertisements and what kind of budget are you looking at? Have you thought about new and different ways to reach a larger audience at a more cost-effective rate? What about TV? It might sound expensive, but you might be surprised. Your local TV and local cable companies very often have very reasonable and affordable advertising rates that they can offer throughout the day and into the early evening. The slots you might end up paying for may not be prime time hours, which are of course the most expensive peak hours to pay for, but you will still be paying to advertise to clients where it can make the biggest impression. They will be in the comfort of their own homes and your commercial will be a consistent message to the audience you want to attract. You could potentially save even more money and turn this form of advertisement into your main form of advertising. Depending on the age of your clientele, this might be all the advertising your company needs! 

     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.

• Gifts to your customers. This is such an important business practice to show your appreciation to your clients or future clients. You can still deduct a partial amount of gifts for your clients, but it is limited. The IRS has a $25 limit on gifts that you can give throughout the fiscal year.
• Business Clothing.  The only time that you can write off clothing items is if they are uniform pieces or protective equipment items that you need to stay safe and aren't provided for you. Clothing items that you can wear outside of work or that you choose to wear outside of work cannot be written off.
• Commuting Cost. You can only write off mileage if you are traveling for business, not for your commute to your place of business every day. If you're traveling off-site to go meet or work with clients, that can be written off.
• Meals. Some food costs can be written off - but there are some parameters. You can only write off 50% of what you treat your clients to, and it must be properly documented to receive that deduction.
• Fines or Penalties. Any type of fine (including parking or speeding tickets) or law that is broken during work hours or when you're traveling for work, is never tax-deductible. This does include tax-related expenses, if you get a fine for not estimated your previous taxes, you cant write that off.
• Life Insurance Premiums. If you pay the premiums and your business is not the beneficiary of the plan, you cannot deduct this payment.
• Political Donations. You cannot deduct donations made to a political organization or a political candidate. Any expenses you rack up to lobby the government or pay to a group to lobby on your companies behalf you cannot write off either.
• Cellphone Expenses. This can be very tempting, especially if you don't have a separate cellphone for doing business. You can only write off the bossiness portion of these expenses. So, you need to calculate what percentage of calls were made for your business and only deduct the percentage of the expense.

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.

• You cannot write off payment to sole proprietors, partners or LLC members. They are owners of a business, not employees.
• If you claim a home office deduction and have a landline, the cost of the first landline to your home is not a deductible. Only the second line is deductible.
• Half of your self-employment tax is not a deduction. It is an adjustment to gross income on your personal income tax return.
• Owners of pass-through entities cannot treat their state and local income taxes on business income as a business write off.
• The cost of health coverage for self-employed individuals and more than 2% of S Corporation shareholders is not a business deduction. The premiums are deducted on the owner's personal taxes.
• Commissions paid in connection with buying realty are not deductible.
• For those who are self-employed, contributions to your own qualified retirement plans are personal deductions and not business deductions.

When knowing what you can and what you cannot write off your taxes - there is a lot of grey area. The IRS keeps a strict eye on both categories - so make sure you know exactly what you can write off, especially when there are certain items that you can only partially write off. It's so easy to make a simple deduction that won't be recognized so don't get caught. When planning out the fiscal year in front of you and your company,  make sure you plan on the extra expense of what you cannot write off. Use Quickbooks to your advantage and keep track of everything. You're nine months away from paying your taxes, but we are already halfway through the fiscal year. Be diligent in paying attention to your expenses!

For new business owners and sole proprietors, it's so easy to forget or not even known about all of the best deductibles and write-offs for your future tax season. So here are some of the best tips and hints and what you can look forward to writing off come April 15th!

April 15th. It's a day that goes down in infamy once you're proudly bringing home your first paycheck or have opened your own business or have become a sole proprietor. Even though it's still 9 months away from when we all have to open our wallets for Uncle Sam, taxes don't have to be as painful or as costly to you or your business as you think. We get it - taxes aren't your favorite thing. So to ease the pain between now and April 15 let's talk about something a little less painful - your tax write-offs and deductibles!

Those glorious write-offs can cut your taxable income and cut down on what you end up paying for your taxes come tax season. But are you writing off everything that you can? Do you know just how much you can track and write off every year to make sure you're getting the financial break you and your company deserves? Let's break down what exactly you can write off - and how you should be keeping track. Federal tax laws can be a bother and can get in the way of what you think you can write off and what you actually can. Tax code and Tax law does change a little every year, so there are loopholes and certain things that will affect how, how much, and when you can write off certain things. When tax season does come around, make sure you, your tax advisor, or your Quickbooks extraordinaire takes the time to research the new tax code for the year. This list covers the big write-offs - and a handful of others that you might not know about. A lot of the time the more unknown or forgotten write-offs can be some of the most lifesaving and profitable at the end of the day. Make sure you're keeping track - and reading the small print.

Our first recommendation is to keep track of everything for your company. Quickbooks is a simple and easy tool that can help you track all of your project probability, manage bills, track your mileage, keep track of your income and expenses, help you manage your invoicing and payments, manage your contractors, and of course - pay your workers. It's simple, efficient, and can take the headache out of tax time. You will also be a star employer if you get your taxes finished sooner than the cut off date. The faster you do, the faster that tax return can get back into your pockets and the pockets of your employees.  

The first general idea to keep in mind when you're just beginning and making plans of what you're going to be writing off this year, your write-offs HAVE to be something that is always used in your business industry. Once this is established, don't forget to keep and track your records. There are TONS of amazing apps and programs that can help you stay organized. Did I mention how amazing  Quickbooks is and how they can do all of that for you?

TOP WRITE OFFS FOR SMALL BUSINESSES!

• Equipment and Supplies: Any office equipment or supplies. This includes printers, computers, software, desks, paper, pens, and phones. This can also include cleaning supplies for a cleaning service and postage. You can also write off the rent or cost of any machinery or equipment you use for your company.
  • When writing off large ticket tangible items like tables, chairs, or vacuum, look into their depreciation values. Will it be better for your company to write off all of these big-ticket items now, or wait until later? If you don't depreciate them, they are treated as non-incidental materials and supplies (under a de minimis safe harbor). These items then become deductible when purchased or furnished to customers.
• Business Costs: This is the cost of doing business for the current fiscal year for services like attorneys, accountants, and consultants. This also includes your utilities; electricity, your mobile phone, and your second land line at your home (if you work from home). Ordinary repairs and maintenance of your building, office, or workspace. This also includes contract labor for freelancers and independent contractors.
  • Remember if your freelancers and independent contractors are making $600 or more from you, deliver the correct tax papers for them to fill out at the end of the year!
  • When writing off mobile phones - you can only write off the time you're using it STRICTLY for business.   
• Promotional Investments: All of your ordinary and common ways of advertising are fully deductible. This includes your business cards, phone book ads, sponsorship, Facebook ads, social media campaigns, and so on.
• Bad Debts: Surprising right? As long as the product that was sold as a tangible good NOT a service, bad debt from that fiscal year can be written off, as well as interest on business indebtedness. This also includes penalties or fines for late performance or nonperformance of a contract!
• Selected Taxes: This includes employment taxes, licenses, regulatory fees, taxes on real estate and personal property, employer taxes, the employer share of FICA, FUTA, and state unemployment taxes.
• Labor Costs: This includes employee compensation, wages, gifts, bonuses, and benefits such as health insurance and vacation pay. If your business helps with adoption assistance, and group team life insurance. This also includes commissions and taxable fringe benefits. You can also write off plan admission fees. This write-off also includes education assistance, dependent care assistance, and contributions to qualified retirement plans.
• Insurance: This write-off includes your business owners policy, malpractice coverage, flood insurance, cyber liability coverage, and business consultation insurance.
• The Office: You can write off the rent for the current year as long as the owners don't have and won't receive equity in a title to the space. You can also write off mortgage interest if you own realty.
  • If you work from home, you can still write off a part of your mortgage and the household expenses. BUT there are some important rules you need to follow. The space you choose must only be used for work and NOTHING else. To write of this space, measure the workplace you've chosen and divide that by the square footage of your home. The percentage you come up with is the amount of housing payment and utility cost you can deduct.
• Commission Fees: Fully deductible!
• Travel: If you travel for work, your transportation and lodging can be written off. Meals can be - but there is a limit to how much. If you're taking yourself out for a meal, this can't be written off. But if you're taking a client or employee out for a meal, 50% of that meal can be written off. You must substantiate the expense if you choose to do so.
• Car & Truck Expenses: The cost of operating any vehicle is only deductible if there are required records (receipts) to prove business usage. This practice can be eliminated if you rely on the IRS standard mileage rate of 58 cents per mile, instead of deducting your actual outlays. You can write off these expenses if you own the vehicle or you're leasing it.

EXTRA WRITE OFFS YOU MAY NOT KNOW ABOUT!

• Books, audiotapes, CDs, videotapes, software, and other similar items that grow your business skills.
• Bank Service Charges
• If you join a chamber of commerce and attend trade shows, you can write off dues and registration fees.
• Coffee and Beverages for your employees.
• Business Licenses
• Regulatory Costs
• Outplacement services for employees

How much did you know? Did you find anything surprising and helpful? I hope so! Hopefully, this has shone a light into some confusing or unknown waters that now makes more sense and will save you a few extra dollars this next tax season.

Next up: Things you think you can write off, but actually, you cant!

2019 is almost here, and that means so is tax season. While we usually take a moment to discuss taxes and your business, we want to change it up and say just how thankful we are of each and every one of you. As a local business, we are appreciative of every person who walks through our doors in need of tax preparation or understanding. We enjoy working with local business professionals who seek our services. 

In the new year, we hope that you continue to look to Pathways as a company you can trust and call on. You can keep up to date on our company, local events, and other fun topics through our social media, so be sure to give us a follow!

Facebook: Pathways Consulting, LLC
Twitter: @PathwaysConsul
LinkedIn: Nanette Slappey West

Thank you, and Happy New Year from all of us at Pathways!

When it comes to filing taxes for your business, you don’t want to end up with mistakes and money lost. To ensure a proper filing process, using a professional tax service is recommended. At Pathways, instead of just filing your taxes for you, we try our best to help you understand your taxes thoroughly. So, how do you file taxes for a small business, and why is it important to use a professional?

Keep All Records
Record keeping is the most important step in the tax filing process for businesses. If there is no record, it never happened, and therefore makes it much more difficult to get correct information. In the process of keeping data, we suggest using a bookkeeping service like Quickbooks to store information used within the filing process.

Use The Correct Form
It is important to know the differences between the tax forms and which is appropriate for a business. The form most used for small businesses is a Schedule C or Form 1120. Schedule C is a simple form that is easier to calculate and input information.

Deadlines are Real
To make the filing process the easiest, be aware of the filing deadline for taxes on small businesses. We are very serious when it comes to this because of the repercussions that may occur due to late filing. 

Pathways is here to help your business breeze through tax season, so why not make your appointment today?