Author: Marie Martin

  • Best Marketing Ideas for Small Business Owners in 2022

    Best Marketing Ideas for Small Business Owners in 2022

    Building a business takes so much from us as entrepreneurs. Our attention is often drawn to many different things at once. But one thing you should never lose focus on is your marketing strategy. Businesses, both large and small, often live or die on the success of their marketing initiatives. 

    Great marketing certainly takes more investment, both in money and in time. But it is an aspect of your business that holds the potential to entirely change the course of your company. Let’s look at a few of the best marketing ideas for small business owners in 2022. 

    Establish Identity: Create Your Brand and Tell the Right Story

    It may sound obvious, but a lot of companies don’t take the time they need to carve out a wholly unique brand story and identity. Especially now, with the prevalence of online commerce, social media, and international connections, establishing a clear and confident picture of your brand is a strong way to connect with people looking to link with companies, products, and creators that mesh with their values or support their needs. 

    Story is important. More and more people aren’t satisfied with good products on their own. They want to understand how and why you’re different from every other choice, and feel a connection to your goals and your brand’s attributes. 

    Work with great marketing specialists, brand developers, content marketing strategists, and trusted partners to create meaningful brands that not only exceed others in quality, but outdo them with better story and stronger identity. 

    business professionals applying their best marketing ideas

    Focus: Niche is Good

    This may seem like a no-brainer to some of you and completely unnecessary to others. You may be tempted to try and be everything to everyone, to solve all problems and provide all solutions in your field. This usually doesn’t pan out well. Instead, focus. Decide who your target audience is, why they need you and why your solution is superior. 

    Of the handful of things you feel good about doing, narrow your focus to the ones, or just one, that rises above all the others, the one your company excels at the most. Instead of spreading your resources and your marketing strategy across too many offerings, pour it all into one or two products or services in which you have the potential to affect great influence in your chosen field. 

    Start a Referral or Rewards Program

    This kind of promotion will certainly look different for every business owner. But providing your clients or customers with the ability to gain a great level of value from their purchases will go a long way to ensuring they come back and talk about you with friends and colleagues. 

    Work with your marketer to create special offers for existing and potential customers, discount clubs, or ongoing memberships that give them solid savings, members-only products, and access to information or events only available to those who sign up.

    For clients, offer perks for referring others to you. It could be a discount on present services or one on a future purchase. It might be a bump up to a higher level service, or something only your business can offer. Special programs like this can give your customers a sense of belonging and exclusivity and inspire them to keep coming back around. 

    social media is one of the best marketing ideas

    Don’t Ignore Social 

    Whether we enjoy social media channels or not, it’s definitely here to stay. And its influence on brands and companies is growing month after month. Superb video ads, humorous and informative YouTube, Facebook, TikTok, and Instagram videos and posts can really connect. 

    Authentic reviews from happy customers and letting your guard down with intimate behind the scenes looks at production, company values, personal story, and the creative process can really inspire and draw in new followers. Continually relevant content helps build dedicated communities, not just customers. 

    Automate

    Some things aren’t good for automation. Some are. Certain aspects of marketing can be automated to help you be more effective with less effort. Marketing specialists have incredible access to a wide range of technologies today. 

    These applications allow creators to write and develop marketing materials, response letters, requests for reviews and feedback, sign-up forms, blog posts, regular emails, newsletters, and social media posts, then input, schedule, and let the program do the rest of the work of posting, emailing, and gathering customer info. This also helps you get to know your audience, build an email list, and learn both better ways to market and solve customer needs.  

    Create Explainer Videos

    Most folks love these, especially if they’re both entertaining and informative. Create high quality, straightforward videos that explain how to use your products and services so users know exactly what they’re doing and gain confidence in your service. It’s also a great chance to build rapport with your audience and keep them thinking about your brand.

    Offer Live Chat

    If you can afford it, live chat can be a game-changer for your customer’s experience. No matter how much info or FAQ’s you offer, most of us prefer or need to speak with a real person. Live chat gives customers and clients a direct connection to a qualified professional who can answer all their questions, help them sign up or make purchases, and solve any issues that may arise.

    Knowing that they can reach a real, attentive person will help to establish you as the better brand and problem-solver in the minds of your customers. No matter how much technology we adopt, nothing will ever replace the comfort and confidence gained by knowing we have direct access to a caring professional. 

    Use Analytics 

    Nearly all social media platforms, online advertising providers and browsers, along with a variety of other tech creators, offer a range of analytical solutions for your marketing efforts, for understanding consumer habits, and current trends driving business today. 

    Take time to familiarize yourself with these tools and hire or contract a professional who understands analytics inside and out. The information within detailed analytical reports allows you to make better decisions for your brand and your finances. You’ll gain the knowledge you need to remain agile, to shift your focus when needed, innovate and create new and better products, reorient your brand message, spot problems early on, solve them more quickly, and connect more effectively with your audience. 

    Hire a Professional

    Whether you establish a dedicated marketing department in-house or outsource your efforts to an experienced marketing experts, there is absolutely no substitute for years of experience, market knowledge, and good education. 

    Professional marketing strategists, content creators, brand developers, and other advertising and marketing specialists pour the full weight of their skills and knowledge into your brand and message. This also allows you to focus on things where you’re often more gifted, like leading your team, managing production, connecting with customers, and refining customer experience. 

    Conclusion

    While this is only a small sampling of marketing tips for the year ahead, it’s a great place to start, especially if you aren’t already expanding your marketing efforts. Marketing is never something you want to ignore. It establishes your brand’s identity and story, helps you connect meaningfully with customers, brings greater attention from possible partners and collaborators, and ups your image within the market. We’ll look at even more marketing tips soon.

    Sound Accounts helps business owners solve all their bookkeeping needs. We offer a range of services that turn your bookkeeping from a burden into an asset. Contact us today to get started. 

    For quick answers to marketing questions, take a look at our frequently asked questions below. 

    FAQ

    Why is marketing important for my business?

    Developing a strong marketing strategy ensures you establish a solid position within your field. It creates strong brands with compelling stories, draws in new customers and helps retain existing ones, helps you build strategic partnerships and create the legacy you want. 

    What are some basics of marketing everyone should remember?

    There are many. But it’s good to start by focusing on a niche, your strongest creations, use social media and video, find ways to connect with your audience, offer top-notch customer service, offer additional perks with memberships and referrals, use analytics and partner with experienced marketing professionals. 

    Should I handle marketing on my own?

    Some business owners can, especially if they have a strong marketing background. But for most of us, even those who do understand it well, it can often take up a great deal of our time and efforts, which takes us away from other management and leadership tasks. Linking up with experienced marketers gives you access to years of experience, a deep well of creativity, brand new technology, better automation, great advice and guidance, and someone always ready to innovate and try new solutions. 

  • 5 Common Bookkeeping Mistakes every Business Owner Should Avoid

    5 Common Bookkeeping Mistakes every Business Owner Should Avoid

    Running a small business is not easy. With access to limited resources, you have to be extra careful, as you cannot afford to make too many mistakes. Chances are that you tackle almost every process on your own, including bookkeeping. While this works alright for some very small businesses, for most small business owners, it is easy to miss things. Let’s look at the value of bookkeeping and then five common bookkeeping mistakes you must avoid..

    The Importance of Quality Bookkeeping For Business Owners

    Now, you must be wondering, “Do small businesses need to worry about bookkeeping?” The truth is that every type of business, from SMEs to Fortune 500 companies, requires a close eye on bookkeeping. As errors can prove harmful, it is often necessary that you hire a bookkeeper to achieve success. Here are a few of the many benefits of a quality bookkeeper. 

    Budget: A major reason why businesses need professional bookkeepers is they help keep income and expenses organized. This information helps you plan strategies and manage both your business expenses and personal expenses.

    Tax Planning: When the year ends, you might struggle to file your tax return, either on time or with accuracy, due to a lack of access to or enough understanding of your business records, financial statements, bank transactions, and business deductions. Bookkeepers help manage tax time so that you file your return before the deadline and do so accurately.

    Organization: Your lenders, investors, customers, employees, and the IRS have an interest in your financial records. Bookkeeping helps keep financial information organized so that you can provide it to the relevant party if the need arises and so that all your financial records are close at hand to inform you during important decisions.

    Analysis and Decision Making: As we just mentioned above, bookkeeping provides financial statements and all the necessary information needed to make business decisions. You can use the information to analyze strengths and weaknesses, track short-term and long-term consumer trends, see how your investments are performing, spot problem areas early, and uncover opportunities for expansion and new development. 

    Expense Tracking: In order to find out how much profit you are making and if you are even breaking even, you need to keep track of your expenses. Expense tracking also gives you a clear view of all your expenditures, enabling you to see which expenses are yielding fruit and which ones are simply a burden. You can use this information to streamline your spending and find deductions during tax season. This is only possible through good bookkeeping.

    Improved Cash Flow: A more in-depth understanding of every aspect of your cash flow is a must for every business, allowing you to see clearly the overall health of your business and the patterns that led to its current state. 

    IRS Audit: If there is an IRS audit, you must have updated financial records. Otherwise, you could be subject to penalties. Not to mention getting yourself on the IRS’s radar, which keeps them “interested” in returning for more audits later on. 

    business owner trying to avoid bookkeeping mistakes

    Now let’s look at those 5 important bookkeeping mistakes that must be avoided. 

    1. Poor Organization

    One of the most common bookkeeping mistakes reported is poor organization. Without a well-organized system, both for physical as well as updated software for records, copies, financial reports, invoices, receipts, and all other important info, you risk inaccurate or late tax filing, missed savings from deductions, inaccurate data during meetings and a sense that you never quite have the information you need at hand to make strong business decisions. 

    It’s important to implement a proper filing system for your physical files, where everything is always exactly where you need it. Be sure to print regular reports from your accounting software programs and backup computer files in the cloud and on external hard drives to keep things secure. You can also take pictures of receipts and invoices so you’ll always have electronic copies if fire, flooding, or theft takes place. 

    2. Improper Record Keeping

    Another common bookkeeping mistake, this problem has the potential to mess up your whole system and put you at risk for audits and penalties. It is absolutely imperative that you record expenses right away, that you keep track of mileage and travel costs, business equipment, outsourced work, employment expenses, and all other expenses in a detailed manner.

    If you keep ledgers and notebooks, save receipts and invoices, and take time each day to record and file everything without fail. While using accounting software will greatly streamline your bookkeeping, you must still enter all information consistently and look over your reports to ensure accuracy. Don’t procrastinate. And if your bookkeeper has concerns, meet with them right away to reconcile all financial data. 

    3. Failing to Reconcile Bank Accounts

    The next bookkeeping mistake that should be avoided is not reconciling your bank accounts. For starters, you must create separate bank accounts for business activities and personal expenses. Otherwise, expenditures will get mixed up, payroll will become a hassle, taxes and possible deductions will be convoluted, and you may risk an audit. Ensure that each bank statement is reconciled each month, or better yet, on a weekly or daily basis, to identify potential issues early on and take action immediately. 

    4. Not Using Accounting Software

    As we live in a world where technology in some form is necessary for just about everyone, especially those running a business. It’s unwise to overlook accounting software. While there are still some of us who seem to excel at using books and ledgers, utilizing a good accounting software program allows for an extra level of accuracy, accountability, and analysis. 

    5. Forgetting Sales Tax

    A common error in bookkeeping is forgetting sales tax. You must account for it and report it to stay on the right side of the law. Failure to report and collect sales tax would result in your business facing fines and penalties. Make sure to calculate it properly, set it up within your registers, accounting software and other financial records, so that you have accurate reports and tax payments. 

    Conclusion

    These, of course, are only a few of the many bookkeeping mistakes common to business owners. While they are easy to make, the resulting consequences are often hard to undo. Avoid the stress, audits, worries, and confusion of poor bookkeeping practices. If you keep your own books, get some training and guidance from an experienced bookkeeper. And if you feel you’d rather not take a chance, reach out to a professional with considerable experience. 

    Sound Accounts has been helping individuals, and businesses organize their books for years. We provide complete support or exactly the level of service you need for continued success. Contact us today to get started. 

    For quick answers to bookkeeping questions, check out our frequently asked questions below.

    FAQ

    Why is good bookkeeping so important for me as a business owner?

    Timely and accurate bookkeeping keeps you organized, prepares you for tax season, helps you spot money-saving deductions, gives you an in-depth understanding of your cash flow and each area of your business, so that you can see what is working , what isn’t and why this is so. Bookkeeping equips you with the knowledge you need to lead better and make stronger business decisions. 

    What are some common mistakes in bookkeeping?

    Poor organization, filing taxes late, not accounting for sales tax, failing to reconcile your bank accounts, not taking advantage of helpful software and other technologies, not recording expenses and many others.

    What are some of the consequences of poor bookkeeping?

    Poor bookkeeping practices lead to IRS penalties, audits, lost financial data, outdated information leading to unfocused business decisions, poor relations with business partners and employees, underperforming departments and investments, and even legal trouble. 

  • Getting Started with QuickBooks as a Small Business Owner

    Getting Started with QuickBooks as a Small Business Owner

    If you are a small business owner, then QuickBooks Online is an excellent financial management tool. Regardless of the type of business or services you provide, QuickBooks accounting software helps you manage your inventory, payroll, track revenue, print important financial documents, and manage other small business functions with ease. It makes managing and tracking company money fast and simple with a range of smart features. But seasoned business owners know that any software management tool is only as good as the data you enter. In this article, we will go over how to set up QuickBooks quickly. 

    How to Set Up QuickBooks

    The first thing you should do before setting up any type of system like QuickBooks is to set up your company file. With this step, you will also be able to tailor the tools to fit the unique needs of your small business.  Click “Settings” and then “Account Settings” and then fill in the following basic information:

    • Company name
    • Company type
    • Contact information
    • Address

    On this page, you will also have the option to set your marketing preferences for communication with Intuit, as well as managing your cookie preferences. You can always come back to this page to adjust your settings at any time. 

    How to Set Up Your Bank and Credit Card Processing

    QuickBooks Online has an efficient feature that allows you to not just connect with your bank and set up credit cards, but it also gives you access to your bank feed. This gives you access to all your banking and credit transactions and your transactions will be automatically downloaded and categorized. This allows you to have high-level insight into your income and expenses without having to manually enter every transaction.

    To get started select “Banking” and then “Add Account”, and then follow the prompts to select your preferred bank and sign in to that account through QuickBooks Online. You’ll start seeing transactions as soon as they come in, though you do also have the option to download past transactions manually. This can be helpful if you switch banks but want to maintain access to old transaction records, or if you simply want to have an easy place to view everything without having to separately log in to your business bank account. 

    If you do want to take this step and manually download a set time frame of bank transactions, QuickBooks Online has a detailed, step-by-step process that can help you do so.

    business owner using QuickBooks for bookkeeping

    How to Set Up Payments and Invoicing

    QuickBooks Online has an easy process that allows customers to pay invoices online, but it does require some set up on your end. You’ll also need to confirm whether you have the old or new version of estimates and invoices, because how you change the payment options on your invoice will depend on which version you have. You do need to take the time to confirm which version you have so that your payments and invoicing will be set up accurately. 

    Steps for the older version:

    • Click “+New”, and then click “Invoice.” 
    • From the dropdown titled “Customer”, select a customer and make sure their information is accurate. Check the invoice date and change it if needed, using the “terms” dropdown.
    • On the “Product/Service” column, select the appropriate product or service, or add a new one from the “+Add new” option.
    • Fill out the cells for quantity, rate, and change amount, and then select the “Tax” checkbox to charge sales tax.
    • If you wish to send the invoice now, select “Save and send” to email the invoice to your customer. You can also choose the “Save and close” option if you are not ready to send the invoice right away. If you need to print a paper invoice, select “save” then “print or preview.” You also have the option to send your customer a link to their invoice through SMS or a messenger tool, using the “Save and share link” option. From there, select “copy link” and paste the link into your customer’s preferred messenger service.
    • To change payment options on an existing invoice, select “Sales” or “Invoicing” and then click on the “Invoices” tab.Click on the invoice you want to update and under “Online Payments” click Edit. You can then select or uncheck the checkboxes until you have the payment options you want. Select “OK” then click “Save.”

    Steps for the newest version:

    • Click on “+New” and select “Invoice.” To make changes, click on “Edit company”, make changes as needed, and click “Save” when finished.
    • Click on “Add customer” and choose the customer from the dropdown. Verify their info and make changes as needed by clicking “Edit customer info” and clicking “Save and close” when finished. You can also review and edit the invoice date, due date, and terms.
    • If you want to add products and services to the invoice, click on “Add product or service” and select desired items from the dropdown. You can create a new product or service by clicking “+Add New”, entering new product or service information, and clicking Save when done.
    • You can calculate the charge amount by flat rate, hour, or item, by entering quantity and rate as desired.
    • For customized information and design, click on “Manage” and choose options from the side panel, and click “Save” when finished. QuickBooks Online will remember your choices and apply them to existing and future invoices.
    • To send an invoice to a customer, click on the “Receive Payment” dropdown and choose your method of communication. The “Email” option allows you to edit and send an invoice via email. The “Print and download” option will provide a paper invoice. And the “Share link” and “Copy link” options allow you to create a link to the invoice and send it to your customer through SMS or messenger service.
    • Because default company settings display on invoices in the new version, changing your options on one invoice will only save to that specific invoice. To change a specific invoice, select “Sales” or “Invoicing”, click on the “Invoices tab” and then the invoice you want to edit, then click “Edit invoice.” From the “Manage” section, click on “Payment methods” to update invoice payment options or turn on or off ACH or credit card options. Click “Save” when you are finished.

    How to Manage Financial Records and Accounting

    QuickBooks has the option for customized reporting, since it gives a high degree of flexibility. You can choose exactly what types of reports you receive by selecting specific fields, making it easy to track business growth, financial statements, overall revenue, and where your money is going. You may find customizing business reports easier than dealing with large amounts of raw data. But again, your reporting is only as good as the data you enter, but QuickBooks makes it easy to find and enter specific financial data.

    Use the general ledger to manage financial data about your business. For example, it allows you to enter each business expense, assets, liabilities, equity, payroll, business taxes, depreciation, capital improvements, and more.

    Purchase orders allow you to track purchases made against specific products. On the product detail page, check boxes allow you to mark orders as shipped, canceled, returned, etc.

    Inventory receipts show where purchased goods were delivered, while the stock level displays the current quantity of inventory available for sale. Sales orders track all transactions related to one purchase order, while purchase receipts show what has been paid out from an open purchase order.

    To Create a sales order, use an existing quote and enter details about your sale, then create it by selecting “Create New” at the bottom right corner of the screen. If no quotes exist yet, select “New Quote”. Otherwise, choose one from the dropdown menu. Choose whether to ship using FedEx, UPS, USPS, DHL, TNT, FEDEX EXPRESS®, or other shipping methods, and enter the freight costs and sales tax associated with the shipment. View tracking information such as when the package left your business or warehouse, what carrier picked up the package, and more.

    After receiving payment, record the transaction in QuickBooks Online. The Reconciliation Report allows you to see all transactions recorded since the last reconciliation report. Adjustment entries allow you to make adjustments to accounts payable as needed. You can also use Memos to write notes related to payments and credits.

    How to Create Vendor and Customer Accounts

    Depending on your business structure, you may want to create vendor accounts, customer accounts, or both.

    To create vendors, click New/Add vendor. Then select whether you want to add an existing customer, supplier, employee, contractor, or other type of vendor. Enter the name of your business into the field provided and use the dropdown menu to specify the address location, phone number, email address, social media links. When you click Save, you’ll be able to view this new vendor on the Vendor List page. You can easily Edit to make changes to their information or Delete a vendor that you no longer work with.

    To list customers in QuickBooks Online, first log in to QBOP. Enter the first and last names of the new customer, their contact information, and credit card and associated billing address if you have them. If so, you can also specify shipping methods (pickup, delivery, mailbox key, etc.) You also have the option to assign sales reps to customers.

    How to Manage Employees

    You’ll start by creating a user account for each company employee. Enter employees’ personal info including their names, phone numbers, addresses, emails, social security numbers, birthdays, etc. Assign time sheets to each individual employee. Set hours worked per week, number of work days per month, vacation dates, sick leave policy, and holiday schedule. Payroll reports provide detailed information regarding wages earned, deductions taken, overtime earnings, tips, commissions, etc.

    When setting up your employee payroll, you can set pay rates based on hourly rate, salary, commission, bonuses, etc., and calculate taxes owed. Select which tax types are applicable to your business: Federal Income Tax, State Income Tax, Social Security, Medicare, Unemployment Insurance, Worker’s Compensation, and others. Having this set up correctly from the beginning makes it much easier for your, your employees, and your accountant during tax season. And even if you are the sole owner and employee, knowing how you are going to file ahead of time can make the process easier and give you peace of mind.

    For example, if you are a self-employed business owner or have a sole proprietorship, you need to file Form 1040 Schedule SE, Self Employment Tax Return. If you hire contractors, they will receive W2 forms instead of 1099 forms. They should complete these forms and send them back to you via fax or mail. In addition, they must sign IRS Forms 941, Employer’s Quarterly Federal Tax Returns, every quarter. These forms include gross revenue figures, total expenses, taxable income, federal withholding amount, state withholding amounts, and estimated quarterly tax liability.

    If you love what QuickBooks has to offer but are interested in seeing what else you can get out of it with support from an experienced bookkeeper, contact us for a free assessment. 

  • How to Make Your Business Run Smoother with the Right Bookkeeping Strategy

    How to Make Your Business Run Smoother with the Right Bookkeeping Strategy

    One of the most important aspects of running a successful business is having a strong bookkeeping strategy in place. There are many ways to keep books, but it can be difficult to decide which method or combination of methods will work best for your company.

    Approaching your bookkeeping deliberately and objectively is key to your success. No matter what methods or tools you use, the choice to consistently manage your books, keep detailed records, and plan for taxes and important financial decisions, helps you to not only protect yourself against stress, financial losses, and penalties, it gives you a greater understanding of the mechanisms that drive your success in each area of your company. Let’s look at some important options for keeping your books and help you develop a bookkeeping strategy that’s perfect for your business.

    Why a strong bookkeeping strategy is vital for your success

    A strong bookkeeping strategy is vital for any business. Why? Because it establishes a foundation of knowledge that can’t come from anywhere else. The information you gain from keeping your books consistently brings a level of clarity to your decision-making you wouldn’t have otherwise been able to attain.

    It sets a precedent for smart spending, better resource management, and long-term decisions based on hard facts and historical data instead of feeling and guesswork. The right strategy also helps you file your taxes accurately and avoid costly errors and multiple audits. Bookkeeping is far too important to your success to ignore or procrastinate on. You deserve the best for your business and so do your customers and professional partners. Better bookkeeping means better business and greater control of your future.

    bookkeeper working to develop the best bookkeeping strategy

    Bookkeeping Options

    There are many options when it comes to managing your books. Some business owners prefer to do it all themselves, either the classic way with ledgers and notebooks or with excellent software like QuickBooks Online, Xero, or FreshBooks. Others prefer or simply need, because of the size and complexity of their business, to have a full-time bookkeeper in-house. Still, others like to outsource to a professional team or individual, to ensure thorough bookkeeping that doesn’t miss a single detail. And for many, a hybrid approach, combining a mix of these is best.

    Each one carries its own advantages and disadvantages, allowing you to custom-fit the right approach to meet the unique needs of your business. Let’s look now at each one.

    The right bookkeeping strategy for me

    As we’d mentioned above, there’s no one-size-fits all approach to bookkeeping, to your method of accounting. It depends partially on your business model, your available time and resources, and how you want to organize your staff in the best way possible so you can lead and manage better. There are a variety of methods and tools that can be used, and there are benefits and drawbacks for each. The best choice is the one that works best with your business.

    Handling it on Your Own

    If you’re hoping to take care of your books completely on your own, there are some things to be aware of. Handling your own bookkeeping forces you to learn a new skill, a very important one at that. You get to tackle the ins and outs of basic accounting, budgeting, resource management, and financial projections. These are all things every good business owner should master.

    Taking time yourself to go over financial statements, enter financial data and check on other reports from your accounting software develops a sense of ownership in the financial health of your business. You can go old-school and keep a ledger, logs and notebooks, recording everything in well-organized books. Or, for a more comprehensive and helpful solution, getting familiar with online or software-based programs is a great move.

    Still, taking this responsibility upon yourself is often daunting. It means a lot of time spent on accounting tasks and organizing records and less time for other vital management activities. Additionally, because it often isn’t a manager’s primary skill set, they may miss important details, forget to account for something, or lose out on valuable money-saving techniques that professional bookkeepers are trained to spot.

    Taking on all the bookkeeping yourself helps you learn new things and get focused on your finances. But it also might tire you out, cause greater stress, and steal from your time and energy. You’ll also need to learn how to navigate your chosen bookkeeping programs. Software takes time to master and you may need to take a few training courses or get some one-on-one coaching to ensure you understand it completely.

    Resident Bookkeeper

    Keeping an in-house bookkeeper is often an excellent choice for many businesses. With their training, education, and experience, they’ll be solely focused on making sure every aspect of your books are exactly where they need to be. They will organize your finances, keep track of your balance sheet, verify bank statements, prepare you for tax time, create better systems for data and records, and help you make sense of complex or lengthy financial reports to help you make better decisions surrounding budget and resources.

    The upsides of a bookkeeper are many. But this option comes with several costs. You’ll have to pay a salary and benefits to a full or part-time employee, along with establishing a dedicated office for this person with the need for furniture, computer hardware and additional tools like copiers, printers, and more.

    Outsourcing

    One of the best solutions to bookkeeping is outsourcing your needs to an individual or team. This affords you complete bookkeeping support, accurate records, and the knowledge you need to manage your finances more strategically. Professional bookkeeping services bring top-notch industry practices with them, ensuring a consistent level of work day in and day out.

    Also, this is precisely what they do: focus on your books. With in-house bookkeepers, there is often a tendency to take on additional responsibilities, from answering phones and dealing with customer concerns, to placing orders and fielding certain employee matters. With an outside contracted bookkeeper, you’ll get someone entirely dedicated to the work of keeping your finances in order.

    Outsourcing gives you a complete bookkeeping solution without having to pay additional benefits or putting together an office for an in-house department. Outsourced bookkeepers will also work with you to improve your level of organization, preparedness and financial knowledge, which helps you avoid penalties, save money on taxes, and give you the tools needed for better budgeting.

    Hybrid

    Often, companies find that a combination of methods works best for them. A business owner may take care of some things themselves, while keeping an in-house employee part-time, to take care of basic bookkeeping, data entry, and organization. Then, they may contract an outsourced bookkeeper to help with larger, more complex projects, taxes, and making sense of financial reports.

    business owner and bookkeeper working on bookkeeping strategy

    How to leverage your bookkeeping strategy toward greater success

    One of the best things about consistent bookkeeping isn’t merely its tendency toward greater organization and records-keeping, but its ability to enable you to make more strategic financial decisions. Better bookkeeping means a greater understanding of your resources, of each department’s expenses and performance. It gives you not only a micro but a macro view of performance over months and years. This kind of information doesn’t simply help you stay current and save on taxes, it provides you with the information needed to make more specific, more informed choices about the direction of your company. Better bookkeeping lays the foundation for innovation and growth to flourish.

    Too many companies don’t get deliberate enough about their bookkeeping. They’re constantly playing catch-up, entering financial data late, procrastinating on updates and financial reviews, not tracking their expenses consistently, and leaving one of the most important parts of their business to an afterthought.

    Great bookkeeping isn’t simply a maintenance practice. It is a key component of your ability to manage with clarity, and to move your business into its next stages of growth. It should be one of your top priorities. The companies that budget well, stay organized, keep great records and study their financials inside and out, have a much easier time spotting problems, discovering strengths that could be capitalized on,  seeing opportunities that might be available to them, and simply managing their overall business financials with greater success. 

    The right bookkeeping strategy allows you to worry less and spend that energy on core principles of management, like leading, innovating, product development, and customer experience.

    Conclusion

    A strong bookkeeping strategy can help your business run smoother. It can also help you identify important trends so you can make better decisions. But with so many options, how do you know which bookkeeping strategy is for you?

    The key to finding the right bookkeeping strategy for your business is understanding your needs. A good place to start is in talking with an experienced bookkeeper and with business owners you trust who have implemented a strong bookkeeping strategy that is yielding positive results for them. This can help you identify gaps in your current strategy and find the right solution for your business.

    Think about what matters most to you, whether handling some aspects yourself is ideal or perhaps contracting someone to take over to free up your time for other aspects of business. No matter what you choose, it’s important that you take bookkeeping seriously, that your finances become one of your top priorities. After a short while, you’ll see the evidence piling up that confirms how valuable an asset great financial management can be.

    Sound Accounts is your ideal small business bookkeeping partner. For years, we’ve been helping businesses of all kinds find their way out of confusion and into clarity by managing their books so they can manage their business. Contact us today to make a positive change in your company’s bookkeeping strategy.

    Check out our frequently asked questions and answers below for quick information about bookkeeping strategies.

    FAQ

    Why is having a focused bookkeeping strategy important?

    Being deliberate about bookkeeping is one of the strongest things you’ll ever do for your business. It keeps your budget in view, helps you understand how each department is performing and where they can improve, lets you spot possible weak spots early on, gives you a deeper view of profitability and expenses, and equips you with the information you need to make decisions that have the potential to drive your business forward.

    How do I know which strategy is best for me?

    Whether it’s handling all your own bookkeeping yourself, keeping a full or part-time in-house bookkeeper, outsourcing to a great individual or team, or mixing these for a hybrid approach, make sure to choose a method that removes, instead of adds, stress to your life. Choose a strategy that gives you a clear interpretation of your financial data continually, so you can make business decisions with greater confidence. Choose a strategy that provides the maximum level of tangible benefits while remaining affordable enough to justify any costs involved. Other factors that go into this decision are the type of business involved, number of employees, and your available time and resources. You can discuss bookkeeping possibilities with an experienced bookkeeper, accountant, and other business owners. 

    What happens if I don’t have a clear bookkeeping strategy?

    Leaving your bookkeeping to an afterthought, full of procrastination, disorganization, and inconsistency leaves you vulnerable to poor performance, waste, tax penalties, audits, miss opportunities and investments, and the eventual failure of your business. Missing this key step can take a great business idea and give it over to a bad business plan. It’s not something you ever want to ignore, but one of the most vital components of your business. 

  • How to prepare for a small business tax audit

    How to prepare for a small business tax audit

    A small business tax audit is a common and unwelcome surprise for many business owners. Preparing for one can be difficult, stressful, and time-consuming. But, it shouldn’t be. If, as business owners, we are completely honest in our reporting, keep meticulous records, detailed expense reports, organize all receipts and payment slips, and log all related activities thoroughly, we can avoid most of the headache.

    It’s important to stay in compliance with the Internal Revenue Service (IRS). If you don’t comply, you may end up paying more in taxes or even owe additional penalties and open yourself up to future audits. No one likes an audit. But with these tips, you’ll be prepared for the possibility and ready to navigate your audit with confidence.

    Why am I being audited?

    The reasons that might trigger an audit for your business can vary. The IRS looks at several factors when making sure your business is accurately filing and paying taxes. Here are some of the most common reasons:

    • Claiming excessive deductions for things like meals and entertainment or other questionable expenses.
    • Filing and paying your taxes late repeatedly.
    • Sizeable reimbursed business expenses.
    • Abnormally large charitable contributions
    • Claiming 100% use of a company vehicle
    • Running a cash-intensive business
    • Claiming losses for several years in a row

    Remember, auditors can look back as many as six years into your business records. Keep records for each year organized by year and category and stored in secure waterproof and preferably fireproof containers. Back up computer files on the cloud and external hard drives so no information ever gets lost.

    business owner and bookkeeper preparing for a small business tax audit

    Be honest

    The first and most important step in preparing for a small business tax audit is to be honest. Just like with your personal income, honesty is indeed the best policy. Many people try to fudge numbers, exaggerate expenses, under-report income, or rely on guesswork for certain items. This sends up red flags for the IRS to come looking and sets a terrible precedent for inaccuracy and falsehood in your business dealings, something that has far-reaching consequences in many areas of life, not only your finances and reputation, but in your relationships as well.

    What items should I bring to a small business tax audit?

    When you receive notice of an upcoming tax audit, it is important to put together all necessary documentation. This includes all receipts, billing records, documents on purchases, income statements, payroll records, expense reports, and all other related documentation. Here is a short list of items to bring to a small business tax audit.

    Bank Statements, Receipts and Canceled Checks

    Your auditor will want access to all bank statements, for both personal and business accounts, all receipts related to every kind of payment or expense, and any canceled checks, invoices, or sales slips. If you pay cash for some expenses, save all paperwork, including notes, receipts, and cash vouchers.

    Books and other Physical Records

    If you keep formal bookkeeping and accounting records like ledgers and notebooks, your auditor will request these. This isn’t required by the IRS, but it can save you time and help keep you organized. If your systems are a bit less formal, like boxes of register tape and a checkbook, make sure these are on-hand, complete and in chronological order beforehand.

    Electronic Records

    If you do your bookkeeping primarily on a computer, either with software or cloud-based applications, you will need to provide the auditor with full access to all information through printed reports for anything they request. Make sure you’re doing everything you need every single day to keep your electronic records accurate and up-to-date.

    Appointment Books, Schedules, Diaries, and Logs

    These items will provide verification of your business appointments, meetings, travel, and other professional activities for which you might incur business-related expenses. Most of the time, business owners plan on claiming certain deductions based on expenses like travel, meals, lodging, auto, and more. Keeping as much information as you can, which verifies your expense claims, will help you both save money during tax season and move through the audit process with greater ease.

    Keep Detailed Records & Stay Organized

    We’ve discussed keeping all documentation and having it ready. However, in addition to having ready access to these, it is important that the information is complete and detailed. Document all income and expenses daily so you can easily account for them.

    For example, try to be as specific as possible with your logging activities. If your business accepts cash, include the date, time, location, and who the transaction was with on your log sheet. If you accept credit or debit cards, then keep records of these transactions as well.

    Keep invoices with every purchase made. This includes any furniture bought for your office space or supplies purchased for your factory. These receipts should be filed away neatly in order by date with corresponding details listed on them (i.e., vendor name, total cost of item/purchase, additional notes or arrangements).

    Make sure to keep detailed records of both personal and business-related items. For instance, if you use your business credit card (with its company logo) for personal purchases like clothes or gasoline; keep those receipts. You will need to report this expenditure during the audit process because it’s considered a “double deduction.”

    Be sure to carefully log all mileage driven by employees who are using their car for work-related purposes. Mileage logs must account for every mile claimed and should include dates and destinations. Consider keeping a log or book of appointments and schedules and notes about each one. This will let you link certain travel times and expenses with their corresponding events and meetings, allowing you to account for each mile or travel expenditure.

    Report All of Your Income

    No matter what kind of business you run, it is vital that you are reporting all income, both your own income/salary/bonuses, along with all employees and partners. Also, make sure records are precise when reporting revenue and profit figures for your business. Mistakes in these areas can cost you money, time, and credibility. Concealing any income will only come back to haunt you later, and may interfere with your ability to continue conducting business.

    If you are self-employed, don’t forget about income from other sources, too. If you sell items on eBay or work gigs for friends, for example, list these on your tax return. The IRS has a multi-step process they ask people to follow in order to report all income accurately. These steps include:

    1) Collecting all of your receipts and organizing them by category

    2) Deciding what needs to be reported on the calendar year or fiscal year

    3) Adding up the total amount of expenses incurred

    4) Determining what type of business you are conducting (sole proprietorship, partnership, corporation)

    5) Figuring out if you have any special considerations like depreciation or itemized deductions

    6) Reporting all of this information correctly on your tax form

    Review your Expenses

    Expenses are a major part of a small business tax audit. In order to pass an audit, you should review your expenses to ensure that they are all accounted for and that you have the right documentation. The IRS will want records for every expense throughout the year. Make sure you label each receipt with the date, type of expense, and how much was spent.

    You can use a spreadsheet or an online expense tracker to keep track of your expenses throughout the year. You might also find it valuable to keep a paper copy in your office as well as a digital copy on your computer or phone. You can never be too prepared when it comes to both business accounting and taxes. If you’ve been keeping receipts in a shoe box for years, now is a good time to organize them so they’re easy to find when it comes time for an audit.

    Documentation is key to passing an audit, so make sure you save all receipts and documentation related to these expenses for at least six years after the date of purchase or last activity. That way, if there’s ever any question about what’s deductible, you will have everything you need on hand.

    Understand Your Tax Code

    One of the best things to do before a tax audit is to gain an understanding of your tax code. You can visit the IRS website or ask your accountant to help you identify which tax code category your business falls under.

    There are four categories of business tax codes: Sole proprietor, partnerships, corporations, and S-corps. Sole proprietorships are taxed as if the owner is running their personal finances through their business. Partnerships are taxed as if there were two entities with one entity providing services and one entity receiving services. Corporations are taxed on the corporate level before any distributions are made to shareholders. And S-corps pay taxes on both the corporate level and at individual shareholder level after money is distributed to them by the corporation.

    It is always wise to consult with a professional when needed, especially when preparing for an audit, or when you simply want greater organization and more control of your own bookkeeping. They can save you from costly mistakes and penalties and further headaches down the road.

    Plan for the Unexpected

    It is good advice for any area of life. We often only plan for trials when they are thrust upon us. It is far better to stay organized and prepare for eventualities ahead of time. This is why we purchase insurance for our homes, our cars, our businesses and ourselves. 

    This is why we put up fences for security and a better roof for weather protection. Planning ahead when it comes to taxes and audits is a smart move. It will not only prepare you for your interactions with the IRS, but ensure that your bookkeeping is done with precision every single day.

    Conclusion

    There are many things to think about before your audit, but the most important are honesty, staying organized, keeping detailed records, and knowing your tax code. Audits may not be comfortable, but they don’t have to be something that completely throws us off track. The key is to think ahead, plan long-term, and operate your business and finances transparently and honestly. And never hesitate to connect with an experienced professional for help with your regular business bookkeeping needs, along with special help before and during an audit.

    Sound Accounts is your all-in-one bookkeeping and payroll tax partner. We’ve helped businesses of all kinds manage their books successfully and make better decisions with increased awareness of their finances. Contact us today to get the help you need right when you need it most. 

    For answers to questions about small business tax audits, check out our frequently asked questions below. 

    FAQ

    Why is my business being audited?

    Reasons for an audit vary widely from business to business. Yet, the most common include Claiming excessive deductions for things like meals and entertainment or other questionable expenses, filing and paying taxes late, sizeable reimbursed business expenses, large charitable contributions, claiming 100% use of a company vehicle, running a cash-intensive business, claiming losses for several years in a row, and other reasons. 

    What should I remember when preparing for an audit?

    First, be honest about everything, your income, expenses, profits, contributions, wages, and every other financial matter. This will keep your business above board and ensure you don’t run into trouble with the IRS. 

    Throughout the year, keep detailed records of everything, if possible, both in hard copy as well as on the computer or in the cloud. Make sure to have full access to electronic accounting files, receipts, expense reports, invoices, payroll, checkbooks, ledgers, notebooks, bank accounts and any other financial reports or pieces of accounting evidence for up to six years back from the current year. 

    Can bookkeepers help me with an audit?

    Yes, definitely. Bookkeepers and accountants are not only helpful when preparing you for your audit, since they are deeply involved with your bookkeeping from day to day, but they are able to get you organized and up-to-date on everything so you have a much better chance of not being audited in the first place. 

  • 7 Hidden Costs of In-House Small Business Bookkeeping

    7 Hidden Costs of In-House Small Business Bookkeeping

    If you are like many small business owners that do their own bookkeeping, then you may never have considered the hidden costs that come with it. Bookkeeping is often seen as a “necessary evil” and something that can be easily outsourced to an expert.

    Certainly, there are times when handling your own books or having a dedicated staff member to do so makes sense, especially if you only have a few employees, if it’s just you or you have plenty of time to focus on it and feel comfortable with accounting software and financial analysis. However, if your business is growing or you have several factors to consider, like more employees, several departments, or you need greater clarity and understanding from your financial reports so you can make more informed decisions, you may want to consider outsourcing to an experienced accountant. Here are 7 costs business owners sometimes forget to factor in when deciding to keep their small business bookkeeping in-house. 

    business owner handling his own small business bookkeeping

    4 Costs of Handling it Yourself

    Time & Freedom

    These two go hand in hand, time and freedom. One leads to the other. If you’re taking care of your business bookkeeping on your own, this is especially true. You work hard to manage your resources, your people, and your products and services, and of course, your customer interactions.

    This often throws accounting to the back burner, the end of the day, or pieced out here and there between other things. This means that one of the most vital processes to your long-term success is never given the attention it deserves. Active, consistent accounting not only keeps your finances in order, but helps you make better decisions for the future of your company. And don’t forget, more time spent on accounting for you means less time for every other part of your business.

    Also, if you are pouring a lot of time into it, that not only means less time for other management activities, but less personal freedom. Having to fit in accounting on top of everything else can cut into meal times, take you away from family gatherings and events, and steal opportunities for engaging in the activities you love.

    Accuracy

    Accuracy is important in every aspect of your business, but especially in your finances. Maintaining proper records of all expenses, handling payroll, and paying your taxes on time and properly, is something that can’t be taken lightly.

    If you’re new to bookkeeping, aren’t comfortable with it, or too tired to fully engage with it, mistakes become more common. Errors in finances lead to missed tax savings, audits, missed opportunities for growth and investment, and poor resource management.

    Software

    Accounting software is phenomenal these days. With time-tested favorites like QuickBooks or newer ones like Xero, there are several programs offering comprehensive accounting management and a range of tools that cater to every kind of business. These programs enable you to manage cash flow, business expenses, payroll taxes, balance sheets, and other accounting tasks required of you as the business owner. 

    It’s important, though, that you take both your business finances and learning your accounting software seriously. Make time to learn your program completely and familiarize yourself with every feature that might save you time and money, and allow you greater organization. Accounting programs make life a lot easier, but only if you dedicate yourself to becoming a pro with them. Software can help you run your business better, but it takes time to learn and money to purchase.

    Stress

    If you’re incredibly busy already, or don’t possess a natural affinity for bookkeeping, the next ingredient in the pot may be more stress, a lot more. Managing your finances and reports can be frustrating and confusing, especially when it’s just you taking it on.

    Added stress means more accounting mistakes, less patience with employees, customers and family members. Stress bleeds into home life, decreases overall health, disrupts sleep and diminishes creative thought.

    professional accountant handling small business bookkeeping

    3 Costs of Hiring an Employee to Handle Bookkeeping

    Wages & Benefits

    Hiring a full-time staff member to manage your bookkeeping can bring you peace of mind as they can solve many problems for you. Still, this means that you must consider the cost of wages, either full or part-time and benefits.

    Keeping a staff member, or a few of them, to take care of accounting often means offering a solid annual salary and benefits for them and their family. As you know, the cost of benefits adds up quickly.

    Overhead: Equipment & Space

    Keeping a bookkeeper in-house means dedicating a space for them. This means either carving out space in an existing room, renovating, or adding onto your structures. Your accountant needs a quiet, solitary space, where they can focus on making sense of your finances, organizing and analyzing reports, and keep vital documents and data safe from intrusion and theft. Creating this space is a must. But it will take an investment of both money and proper planning.

    Whether you’re doing the books on your own or hiring an employee for it, you’ll need equipment like fast computers, network hardware, copiers, fax machines, phones, printers, and software and cloud-based applications to manage everything with relative ease. All these items take a financial investment, sometimes a considerable one.

    Training

    Bookkeeping is not a simple task, especially for small business owners. After all, most of us didn’t go to school to learn how. That’s why it’s important to train your staff, yourself, or hire someone who is familiar with the process. One hidden cost of doing your own bookkeeping is this training.

    If you’re new to bookkeeping, you’ll need to learn the basics of accounting and keep up on changes in tax laws. You or your bookkeeper needs to take advantage of continuing education courses to stay updated on current developments in the field. Education courses and in-house training can be expensive and take time away from other business matters.

    Conclusion

    Doing your own accounting might be a good idea for tiny businesses, those needing to save money up front, and those who enjoy learning new skills and are fully committed to remaining consistent with their financial management. But handling these things yourself or hiring an employee means a considerable investment of time, money, and focus. This can steal from other leadership and personal opportunities and cost more than you might think.

    Often, a great solution to this is outsourcing your accounting and bookkeeping work to an outside accountant or bookkeeping service. Professional accountants have years of experience, know tax code inside and out, can navigate and decipher complex reports, and work with you to make more strategic financial decisions.

    Outsourcing your bookkeeping is an investment. But you won’t have to carve out space in your building, purchase new equipment, or pay for training and benefits. You’ll get a top-notch financial professional to watch over your books so you can relax and focus on everything else that matters to you.

    Sound Accounts is your one-stop small business bookkeeping shop. We help business owners from every sector succeed by managing their books, making sense of their budget and reports, and presenting them with ways to improve their already strong business. Contact us today to get started.

    For answers to bookkeeping questions, see our FAQs below.

    FAQ

    Is handling my bookkeeping in-house a good idea?

    It is sometimes. If it’s just you or you only have a couple of employees, taking care of the books yourself can save you time and help you learn a valuable skill. It also forces you to focus on key financial drivers you may have been missing. However, it is an investment that is often remedied by contracting a professional accountant.

    What are some costs of in-house bookkeeping?

    Depending on whether you do it yourself or hire an employee, these costs include the time it takes to learn accounting programs, employee training, renovations or building a dedicated office, new equipment and software, employee wages and benefits and the sacrifice of your personal time and freedom.

    When is it a good idea to outsource my bookkeeping?

    If your business is growing or you have more than enough in your budget to pay for the service, outsourcing your bookkeeping work gives you a dedicated professional with years of experience, who will manage every aspect of your books, taxes, and help you make sense of your financial reports.

    It is a good idea anytime you want to free up your time to focus on other aspects of business management, find that your business and finances are becoming more complex, or simply want someone who knows accounting inside and out to handle things for you so you don’t have to worry.

  • Small Business Tax Deductions: Which Expenses can I Write Off?

    Small Business Tax Deductions: Which Expenses can I Write Off?

    When you’re a small business owner, it’s natural to want to know all the ins and outs of the tax code. But sometimes you have so many expenses that it’s hard to keep track of which ones can be written off. As a result, you may miss out on deductions that could add up over time. In this article, we’ll go through several of the most common expenses for small businesses and help you decide which ones are worth taking a closer look at.

    Which expenses can a business owner deduct?

    With such a staggering array of expenses, it isn’t easy to know which of them can be deducted, what you should focus on to save the most money, and how to do it correctly. Here are 14 expenses you can deduct from your taxes.

    Utilities: Unlike the rules governing personal taxes, which do not allow deductions for these personal expenses, utilities such as electricity, gas, oil, water, trash and telephone bills, can usually be deducted for businesses. With the amount most businesses pay annually on these resources, it pays to keep track of your numbers and look for this deduction.

    Insurance: The majority of businesses take out some form of insurance, if not several. The cost of health coverage for the business owner, as well as business continuation insurance are deductible. Other types of deductible insurance policies include liability coverage, property insurance, malpractice, worker’s compensation, auto insurance on company vehicles, and employee life insurance paid for by the company. When it comes to health insurance, a small business may qualify for up to a 50% tax credit under the qualified small employer health reimbursement arrangement (QSEHRA).

    Rent on Business Property: If you rent your business property, you may deduct your rental payments or lease from taxes. If you run your business from home, you can do an eligibility test with the IRS to see if you are entitled to any deductions based upon home use. Certain types of deductible home business expenses include insurance, utilities, mortgage interest, repairs, and depreciation. There are specific rules to abide by and limitations that apply when calculating expenses and deductions as it pertains to the use of your home for business purposes. To learn more, see IRS Publication 587. And whenever questions arise, consult with a qualified accountant for answers.

    Auto Expenses: If you have a car specifically for business, you can usually deduct anything considered a car expense such as payments, fuel, repairs and insurance. You must keep records that prove business usage and record mileage. You can rely on the IRS standard mileage rate, which is $0.58 cents per mile.

    It is important, though, to keep in mind that if you use your car for both business and personal purposes, you need to divide your expenses based upon actual mileage used for each purpose. You may refer to IRS Publication 463 for more information regarding travel, entertainment, gift, and car expenses.

    Office Supplies: Boxes, paper, pens, pencils, paper clips, staplers and staples, copier and printer ink, you name it. All these costs may be deducted from taxes.

    Office Furniture: Furniture is generally considered an office supply, so can therefore be deducted as a qualified expense. 

    Travel Expenses: If, as a business owner, you are frequently on the move, it is worth researching this deduction. Types of deductible expenses include airfare, lodging, tolls and taxis (UBER & Lyft). Certain limitations apply: You must be away from the area or city where you regularly conduct business and you must be away from your tax home for more than a full workday.

    Employee Salaries: Usually, your employee salaries are tax deductible, including bonuses and commissions. These deductions, however, do not apply to sole proprietors, LLC members and partners, as these members are not considered employees.

    Advertising & Marketing: If you can prove it is directly related to your business, you may deduct regular advertising and marketing costs, including business cards, billboards, print and digital ads and more. It also includes contracting individuals to design logos, write copy for content marketing, write scripts for video ads, or design and implement any other marketing or advertising tool.

    Interest: If you have one or more business loans, you’re making interest payments. Those payments are usually tax deductible as long as you’re using the entire loan strictly for business purposes. To qualify, it must be a traditional loan through a lender, like a bank or credit union. It can’t be a personal loan from a friend or family member. The business owner must also be legally liable for the debt.

    Contracted Labor: If you use independent contractors as part of your workforce, you can deduct compensation made to these individuals. To do so, you must issue a form MISC-1099 to any contracted worker making over $600 (cumulative annually), and a 1099-K if they are paid by credit card or with PayPal or similar apps.

    Legal and Professional Fees: Whether it’s an attorney, a team of lawyers, or a professional accountant, you can deduct 100% of these fees.

    Rent and Depreciation on Equipment and Machinery: If you lease equipment for your business, you can deduct these costs. Whether it be office machines like fax, phone, computers, monitors, copiers and printers, transport vehicles like trucks and vans, or heavy machinery for production or farming, you can take advantage of this deduction. You must deduct it over the course of several years. You need to claim a Section 179 deduction. This allows business owners to deduct up to the limit of $1,050,000 and a maximum value of $2,620,000 for property during a single tax year. For many businesses, this can be a significant deduction, given the volume of equipment many companies use.

    Start-up and Organizational Costs: To be honest, this one isn’t actually a deduction. The IRS sees start-up costs as a capital expense. They are viewed simply as an investment since the money invested hasn’t left the business; it has merely been transformed into an asset. Capital expense deductions are usually calculated over several years. This is called amortization. This enables businesses to accurately assess their profitability. For specific information on this process and your possible savings, see IRS publication 535.

    This is not an exhaustive list. There are many more deductions available to business owners. Take time to study your options. Seek information from the IRS and meet with an accountant to discuss all your options. It is important that you file correctly when claiming deductions and that you don’t miss out on additional savings. A qualified accountant can make sure you’re covered.

    business owner working on small business tax deductions

    What are some things you can’t deduct from your taxes?

    Gifts: This one is mixed. You can deduct the first $25 of gifts to clients. After that point, there is no deduction.

    Regular Commute: Mileage incurred while driving to and from your regular place of business cannot be deducted. However, there are a few exceptions. You must have a qualifying home office and be forced to commute each day to a temporary mobile workstation/location outside of your metropolitan area. This exception is decided upon on a case by case basis by the IRS. You must consult a tax professional for more information.

    Penalties and Fines: You cannot deduct the cost of fines and penalties, even if you incurred them during business activities. Sorry, no breaks for parking and speeding tickets, or other similar penalties.

    The importance of documenting everything and keeping receipts

    When it comes to your business expenses, it’s important to keep thorough records. This will help you if you ever have to dispute your deductions for any reason, whether it be during an audit or in hopes of getting approved for a loan. Plus, maintaining complete records ensures you have the best chance of tax savings. Keeping meticulous records can seem like a hassle at first, but it will actually make things easier down the line because you’ll know exactly what the IRS needs from you.

    These days, there are so many programs that help us keep track of our expenses much easier than we used to. From QuickBooks Online and Xero, to apps like Evernote and others, many programs allow you not only to enter your figures manually, but even take photos of receipts and categorize them. Whether you box up your receipts or take photos of each one, make sure you have a visual record of them all.

    The importance of quality accounting professionals during tax time

    When it comes to finding and understanding every possible tax deduction, one of the most important investments is to hire a great accountant. When you hire an accountant, they’ll be able to keep track of your income and expenses, but they’ll also be able to save you money by catching mistakes and helping you reduce your tax bill.

    They also help you spot patterns and make better, more strategic decisions about the direction of your business. It’s vitally important for small businesses to have a quality bookkeeper or accountant who can handle the complicated process of filing taxes correctly and helping the owner manage their finances with confidence.

    Conclusion

    Business tax deductions can save you a lot of money. And there are a lot of them to make use of. Study up, consult with a tax professional and hire an experienced accountant to get the most out of your deductions.

    Sound Accounts can help you get the most out of your business tax deductions. We help business owners from every market sector understand all their tax options, save money, manage their accounting, and make the most of their resources. Reach out to us today for the accounting and tax support you need.  

    For quick info about small business tax deductions, check out our frequently asked questions and answers below. 

    FAQ

    Why is it important to understand business tax deductions? 

    There are countless expenses involved in running a business. Many of them provide you with the possibility of tax savings, sometimes significantly. It is important to have a firm understanding of these, both so you can save the most money possible, and so that you file everything correctly to avoid costly errors. 

    What expenses can I write off?

    There are too many to list here. But they include rent, utilities, equipment and machinery, travel expenses, interest payments on loans, office supplies, salaries, contracted work, legal fees and much more. Both the IRS and a qualified accountant will help you better understand how to navigate the world of business tax deductions. 

    How do I make sure I’m filing my taxes correctly?

    The best way to ensure accuracy is by hiring a qualified accountant. They will help you make sense of your expenses, find every possible deduction that might save you money, and educate you on what to do in the future to stay organized. 

  • Should I Hire an Accountant or Do My Own Books?

    Should I Hire an Accountant or Do My Own Books?

    Many business owners are choosing to hire an accountant instead of doing their own books. This can be for several reasons. But should you hire someone or handle it on your own? The answer often depends on what kind of business you’re in and how much work you’re willing to put into it. Factors like the size of your business, the number of employees, and the complexity of internal logistics might all affect your decision to either take on bookkeeping yourself or hire it out to a professional. Let’s look more closely at the pros and cons of each one and equip you with the information you need to make the right choice. 

    Should you hire an accountant or do your own books?

    This decision is unique to each individual and involves several factors. How big is your business? How many employees do you have? Are you already finding it difficult to keep track of your books or does it come naturally? Are you comfortable with accounting software or do you feel that a real set of trained eyes would help you make better financial decisions? Is spending time on accounting worth it to you, if you even have the time? Or would you rather use that time to focus on other parts of your business?

    Why people hire accountants

    The main reason companies hire accountants is because they want to avoid doing their own books. Some business owners are too busy with other tasks like marketing, sales, and operations to do their own bookkeeping, so they hire someone else to take care of it for them—promoting efficiency and accuracy in the process.

    Another reason many owners hire an accountant is that the accountant will make sure that your books are up-to-date and account for all the financial aspects of your business. They’ll help reduce errors by working closely with you throughout the bookkeeping process—helping you develop a better understanding of your company’s finances and accounting systems. Accountants keep your taxes clean and up to date, spot opportunities for better resource management, and free you up to focus on expansion, customer satisfaction, and product development.

    If you’re a business with a growing number of employees, or you’re managing a lot of resources, hiring an accountant can help you keep your finances organized. Still, there is sometimes a fine line here. If you have less than 10 employees, there may not be much work for your accountant to do. However, even if you are a smaller company, you may not enjoy handling your own books, feel overwhelmed, or simply want to focus that energy on something else. In this case, why not hire a professional if you can afford it?

    business owner working with her accountant

    Pros and cons of hiring an accountant

    Partnering with an accountant is often a great option for many businesses. They will handle all the books for your company, uncover problems early on, and help you pursue new opportunities. Their expertise includes taxes, regulatory reporting, financial statements, internal ledgers, and more. Bookkeeping programs help you with some of this, but having a fully engaged individual to watch over these key financial areas can often make the difference between consistent success and just getting by.

    Another benefit of hiring an expert is that they’ll likely have a broader scope of knowledge to explore. Accountants have years of experience dealing with a multitude of businesses. They understand the hidden rules of taxes, know how to pick out seemingly insignificant details buried within financial reports, and help you put together a more focused plan for the weeks and months to come.

    The primary drawback is that hiring someone requires a financial investment. Professional services like those offered by CPAs are worth it, but can sometimes be more than small business owners can afford early on.

    Why some people choose to do their own books

    Doing your own books is a great way to save money. It’s also a wonderful opportunity to learn a new skill, gain a better understanding of your business and get used to using accounting programs. If your business consists only of you or perhaps a couple of employees, learning how to maintain your books can be a significant step toward taking more control over your success.

    Some people just like having the control within their own hands. Certain business owners simply prefer to manage most of what they do, including their bookkeeping. This is fine as long as you do your research, get the right tools, keep up with it daily, study your reports, keep detailed records, and ensure you are complying thoroughly with all tax laws and business fees.

    Why sole proprietors often do their own books

    Many sole proprietors agree that it’s worth it to do their own books and deal with the hassle simply because they have the time and want the control.

    If they are diligent, sole proprietors can keep track of every dollar they make and spend and know exactly what’s going on in their business. When your business model is relatively straight-forward, and doesn’t involve complicated financial management, multiple overlapping departments, or employee payroll and benefits, doing the books yourself makes sense. Plus, this will allow you to see how much time it takes to handle your own books. This will help you better determine whether continuing on this path or pursuing professional accounting help is the best choice going forward. 

    Some difficulties with handling your own books

    Mistakes: If your bookkeeping isn’t handled correctly, it could cause a financial blow to your business.

    Time and Confusion: It could be more of a hassle than you originally thought, eating up time you could be using on other tasks. You may also not enjoy it enough to take it seriously and begin to miss key details within your reports. 

    Tax Penalties: You could miss paying taxes on time or do so incorrectly.

    Energy and Focus: With everything on your plate, you may not have the energy left to spot mistakes or glean vital information from financial reports to make more strategic decisions about the growth of your business.

    If you are going to manage your own accounting, make sure you have the right tools in place. Subscribe to a quality program like QuickBooks Online or Xero, or one of several others. Learn all its features and study your reports daily. Even if you;re doing it yourself, if problems arise or things get too confusing, reach out for professional help. 

    Conclusion

    There are pros and cons to each choice. Learning how to do your own books is an important skill to master. It helps you be a more engaged and focused business owner, with an eye on the details and a better handle on what goes on behind the scenes and beneath the surface.

    Hiring an accountant, whether they be in-house or outsourced, can free you up to focus on other things. They can spot errors early on, help you understand trends and patterns that either affect you negatively, or open doors toward growth, help you pay your taxes, keep you accountable to your own budget, and give you peace of mind knowing you have a partner who is looking out for you and your business.

    Sound Accounts helps business owners manage their books with confidence and ease. We offer a range of accounting services to meet the varying needs of any business, letting you relax, breathe deep, and focus your attention on everything else.

    For answers to accounting questions, see our frequently asked questions below. 

    FAQ

    Why is doing the books important for me as a business owner?

    Keeping up with your accounting each day is the only way for you to be successful in the long run. You’ll see where your resources are going, where you’re realizing the most profit, and which areas are leaking money. You’ll spot trends and have a clear view of where to go next. Not to mention paying your taxes correctly and on time. 

    Should I hire a professional or do my own books

    This decision is different for each business owner. It depends on the size and complexity of your business, the number of employees you have, how comfortable you are with accounting software and spreadsheets, whether you have or can make the time each day to update financial data and study your reports, and other reasons. If you understand the importance of keeping up with your books, can navigate the software, have few employees, and are fully committed, you can manage your own books. 

    However, if you have a more complex business model, more employees, several accounts or departments, each with their own resources and expenditures, deal with a lot of vendors or partners, or simply don’t have the time, energy or patience to do your books, hiring a bookkeeper or accountant is the right choice. They will take the stress and worry off your plate, handle all accounting matters, spot troubled areas and trends and help you make more informed and strategic financial decisions.

    As a sole proprietor, should I hire an accountant?

    It isn’t always necessary to hire someone. You may well be able to handle your own bookkeeping if you have the time and desire to learn how to do it well. If your business is relatively straight-forward and you want to oversee your accounting, you can use quality software to help you manage it effectively. However, even if you are a sole proprietor, professional accounting services can often be a great choice for you. If it is an expenditure that you can afford and it saves you time and helps you stay current and make better choices, it may be worth outsourcing part-time for monthly help keeping your books. 

    What accounting program should I use?

    QuickBooks Online is often the right choice for any business. With robust options, a range of features, well-organized reports, and solid customer support, they’ve been doing this for years and continue to improve.  Other great options include Xero, Freshbooks, Netsuite, Sage and countless others. Each carries different features and varying levels of support. It is important to do your research first, and find the program that you’re comfortable with and provides everything you need.

  • Business Accounting: Why small businesses need to know their numbers

    Business Accounting: Why small businesses need to know their numbers

    There’s a lot to learn when it comes to running your own business. One of the most important things you’ll need to know is the numbers. In order to gauge how well your business is doing, it’s important that you have a good understanding of what makes a business successful, especially the finer points of business accounting. From analyzing your expenses and profits to determining which accounts are performing the best, knowing the numbers is a key component to being a successful entrepreneur. You’ll be able to pay your taxes accurately and on time, and use your understanding of financial reports to make informed decisions about your business. Here are some helpful hints for understanding your numbers and how these impact your business.

    Understanding your numbers and your business

    The numbers, more specifically, your financials, are what help determine how successful your business is and what needs to be changed to improve its performance.

    Without a clear understanding of this, you risk losing money, and nobody wants that. Afterall, I imagine you got into this game to make a profit while offering quality products and services. To understand your numbers, you’ll need to do some digging, but just remember: Numbers don’t lie. Be ready to look at things dispassionately, unflinchingly, so that you remain honest with yourself about how things are going and where you can make changes. To get a better grasp of your financial position, use these tips for getting a handle on what’s really going on in your business:

    1. Look at the expenses and payments from different accounts. The first thing you should do is make sure all of your accounts are balanced and that everything has been paid for before making any decisions about cutting back on spending. Determine what expenses are truly adding to your business and which ones are dead weight. If there are redundancies or expenditures that aren’t leading to measurable growth or at the very least, increased efficiency in workflow, faze them out to free up cash for more beneficial endeavors.

    2. Estimate how much profit you will make each month. This number can help you determine if you’re making enough money or if there’s room for improvement. Keep in mind that this number will change as time goes on, so don’t base any major decisions off of it too soon. It’s important to know your priorities and your personal schedule for success. Some businesses plan ahead for several months of losses or a break-even period, where the focus is more on building infrastructure and establishing market influence. If executed skillfully and other seen and unforeseen things fall into place, this should begin to shift toward profitability within a certain period.

    Other businesses expect to turn a profit from the first quarter. Certain brands and markets deal in products and services that are more tangible, more easily managed and offer an earlier look at profitability.. It’s key that you know your market inside and out, that you understand where your business fits and how to determine what a realistic expectation of profitability is for your specific field and business type.  

    Why is ROI important?

    In a business, it’s not enough to simply make money. You need to have a way of measuring the return on investment (ROI) for all of your time and effort. In order to do this, you’ll need access to information about how well your company is performing. This includes things like your monthly sales, net profit margin and monthly expenses, including payroll. By analyzing these numbers, you can get an idea of how much value you’re providing for your customers. 

    You can also use ROI to focus on improving certain aspects of your business. For example, if you know that the average net profit margin for your company is 3 percent, you could use that knowledge to focus on lowering costs or offering a selection of higher-tier, higher priced products in order to increase the average profit margin, as long as any cost-cutting methods don’t damage your service or negatively impact your brand in the market. This will help improve the overall performance of the business and make it easier for you to reach expected goals. 

    ROI helps you see the often-hidden mechanisms that lead toward profitability or losses. Beyond all the excitement of a few good months, or the worry of a few bad ones, a detailed look at ROI and all the factors that led you to those figures, allows you to get a wider, more macro view of things, so that business decisions are made with long-term growth in mind, not just immediate gains. 

    business owner working on her business accounting

    Business Accounting: Making sense of reports

    The first step to getting what you need from your numbers is knowing what reports to look for. There are many different reports that will give you an idea of how your business is coming along, from a financial perspective, and it can be overwhelming to pick which reports you should focus on and why.

    To simplify this process, here are some integral reports to consider when trying to make sense of your numbers. 

    – Financial Reports: There are four main types of financial reports that you’ll want to use for analyzing your business’s performance. They are accounts receivable (AR), fixed assets, inventory, and payroll.

    – Profit & Loss Statements: Profit & Loss statements have three sections: income statement, balance sheet and cash flow statement.

    – Expense Report: This report will list all the expenses incurred by your company in a given time period. It includes all necessary information like expenses paid out and expense categories broken down by function or department (i.e., administrative costs).

    – Account Analysis report: This report provides detailed information about individual transactions (line items) that have been posted to the general ledger from other areas such as Accounts Payable, or invoiced expenditures, Payroll and Accounts Receivable (sales invoices and income received). An account analysis can help identify trends and give an indication of how a specific account is performing.

    Tracking cash flow, income, and expenses

    You’ll need to make sure you have a good grasp on how much money comes into your business and how much goes out. Tracking cash flow allows you to know whether your expenses are exceeding income. 

    You can then use these numbers to determine what accounts are performing well and which ones aren’t. For example, let’s say that you have a website that costs $25 a month to maintain. If your website is bringing in $125 a month, then it is generating $100 in profit per month (minus quarterly or annual taxes, of course). Simply put, this means that the income is greater than the expenses of running the website. 

    Of course, this is a simplified example. Your business is far more complex than this, involving a range of expenses, investments, financial relationships, and future goals. Keeping a focused eye on your financial reports, planning ahead, being honest with yourself, and communicating your goals are a few of the ways you can use your numbers to add to your success. 

    Using the numbers to make strategic decisions

    As we hinted at before, knowing your numbers isn’t simply about understanding what your business is doing now, but what it might be capable of in the future. All of us want growth. We want to expand and innovate, to better meet the needs of our market and increase profitability in the process. But to do so, we need the right information. 

    You will never be able to plan ahead effectively or create confidently if you aren’t already managing your business finances closely. Great ideas will get lost beneath peripheral expenses and daily worries. Expansion will give way to debt. That’s why having the right people and programs in place to help you understand the numbers and what they mean for your business is key to building the future you envision.

    Creators and CEOs that are constantly innovating and dominating their respective fields all understand the impact that numbers have on strategy. They spend a great deal of time studying to know where they can cut back, where they can bulk up, where they can shuffle money to better meet their goals, and ultimately, how to lead responsibly with both people and their numbers in mind. A successful future only happens with good grasp on the present.

    Using the numbers to Identify trends

    Another aspect of using the numbers to make strategic decisions is in identifying trends. In order to identify trends, you need to know what those numbers are. Financial statements don’t just present you with raw data about your profits and expenses. When viewed over time, quarterly, bi-annually, annually, then over several years, patterns emerge from the sea of figures. 

    You’ll see things you didn’t know were even there, odd expenditures, under-performing resources that need updating, over-performing departments that deserve more resources to maximize on their upward trajectory, different biases toward certain aspects of the business which can imbalance the foundation of your work. Trends allow you to spot opportunities, places where outside investment or partnerships might bring a lot to the table and help you see where additional cash flow can be utilized to create something new.

    The right tools to keep track of your numbers

    There are several ways to track your numbers. Using the right tools can make your life easier and your business more successful. The best tools involve both human and physical resource capital. It is important that you get the best software or cloud-based programs to manage your finances well. Programs like QuickBooks Online and Xero are perfect examples of these. Both have different plan options to meet the varying needs of businesses of all sizes and types. You can also use common programs like Excel and Google Sheets to create spreadsheets and databases.

    The human component is probably even more important. Whether you hire a full-time accountant or bookkeeper, or outsource to a professional for part-time work, having someone around that you can trust implicitly with understanding and tracking your numbers is one of the most important things you will ever do for your business. Don’t underestimate the power of a good financial professional to help you balance your budget and spot opportunities for future growth.

    Conclusion

    The only way to be successful as a business owner is by knowing your numbers completely. This helps you keep a healthy budget, remain profitable, innovate and plan for future expansion. Be sure to put the right resources and people in place to help you do this. Purchase or subscribe to quality accounting software, get a financial professional to watch over your numbers, communicate often, study and understand what your numbers mean, and act upon discrepancies quickly, before they grow into larger problems. Knowing your business means knowing your numbers. And knowing your numbers means the difference between a business that merely survives, and one that thrives.

    Sound Accounts offers dedicated accounting services to businesses of all sizes. We help new and established business owners manage their finances with skill and ease, so they can make smart choices for their brand, their customers and their long-term growth.

    For quick answers about knowing your numbers, check out our frequently asked questions below. 

    FAQ

    Why is it important to know my numbers as a business owner?

    Knowing your numbers not only gives you a clear picture of how your business is performing, but helps you spot patterns within past performance and opportunities for growth. WIthout a solid handle on your finances, you will never be able to consistently succeed or measure this success in a way that allows you to build upon what you’ve established. Business owners that understand their financial reports and use them to plan ahead, are always more successful than those who ignore their numbers.  

    What kinds of reports should I understand?

    Though there are others, it is important you understand Financial Reports, including accounts receivable (AR), fixed assets, inventory, and payroll, Profit and Loss Statements, Expense Reports and an Account Analysis Report.

    What are the most important tools for managing my numbers?

    These include both programs and people. Excellent software or cloud-based programs like QuickBooks Online and Xero are perfect, feature-rich tools. Also, don’t overlook the most important thing, hiring or contracting an experienced accountant or bookkeeper to watch over and help you manage your business finances. They can help you better understand your numbers and spot opportunities while saving you money by cutting costs where redundancies or inefficiencies exist. 

  • How can I expand my business without taking out a loan?

    How can I expand my business without taking out a loan?

    Creating a new business is an incredible undertaking in its own right. But expanding on your success involves new ways of thinking, new approaches to funding, partnerships, and innovation. 

    The most obvious way to begin your expansion with the resources you need is to take out a loan. While this is a great solution for those who can do so at affordable interest rates, there remains a handful of possible downsides to taking on more debt. Thankfully, when asking “How can I expand my business without taking out a loan?” you have plenty of solutions that don’t include additional loans, with countless opportunities for freelancers and entrepreneurs alike. We’ll take a look at a few of these in this article.

    Understanding the pros and cons of borrowing money

    The decision to borrow money to grow your company is a big one. While borrowing money can be beneficial, there are also risks involved. The most obvious upside of borrowing money is that you’ll be able to access the resources, staff and technology you need most to expand your current vision. If you have a good credit history, securing loans with more reasonable rates may be possible. Loans allow you to expand without taking on equity partners, dividing your profits, or worrying about paying friends or relatives back, something that can often negatively impact relationships. Still, there are also many cons to borrowing money for your business.

    – You will likely have to pay high interest rates on the loan

    – You may not be able to repay the loan by the deadline

    – Your business may fail and you’ll need a new job while still having to pay back the loan

    -Defaulting on your loan or having too many late payments will damage your credit, making it more difficult to access the credit you need in the future. 

    Find low cost or no-cost ways to expand your business

    Taking out a loan is usually the most straightforward way to expand your company. However, there are several low cost and even no-cost ways to grow your business. When we’re in the thick of things trying to keep our business going strong, it’s easy to get tunnel vision and think that we don’t have many options. But this just isn’t so. A more creative and less-costly approach may be exactly what you and your business need. 

    If you’re looking for more creative solutions, consider applying for grants, crowdfunding, franchising, partnering with other companies or taking on an equity partner. These methods can help you grow and increase your brand’s footprint without taking out a loan.

    business owner asking himself the question "How do I expand my business?"

    Explore your options for grants

    There’s no shortage of grants available to support small businesses. For example, the Small Business Administration offers a variety of grants for entrepreneurs. The SBA is a good resource for grants and can be found on their website: 

    https://www.sba.gov/content/for-entrepreneurs-and-small-businesses

    We recommend checking out their programs and determining which grant fits your needs best.

    Additionally, individual states, counties and cities offer unique programs for small businesses, many of them featuring grants for a range of business types. That’s money you don’t have to pay back. While some grants may not be as large as the loan you wanted, these funds can take a large bite out of your need, get the ball rolling on the initial steps of expansion, and allow you more freedom with less financial strain. Check out the primary business resource websites for your city and state for more information on grants. 

    Explore your options for crowdfunding

    Another superb option for financing your business is crowdfunding. It’s an effective way to raise money without having to take out a traditional loan from a bank. You can crowdfund for general business expansion. However, crowdfunding works best when applied to a specific project, product, or tangible growth strategy. Think about what specific projects or product and service launches you would like to accomplish and create a crowdfunding campaign for these. Here are some tips for using crowdfunding:

    Think about what kind of project you want to launch — it could be anything from a new product or service to an invention, or a new and creative way of doing something you’ve done for a while. Be precise.

    Keep your breakdown and pitch short, sweet, and simple. This can make things easier when you’re trying to raise money, as it’s less intimidating for people who are unfamiliar with the topic. Trust in your audience’s intelligence and desire to help. But don’t tax their patience with unnecessarily long explanations and complicated charts. Spend some time thinking about the core of your project. Distill it to its essence, map it out in simple, bold terms, and present it with confidence and ease. 

    Make sure you have a clear goal in mind before going live on Kickstarter or Indiegogo. Know the dollar amount you need to achieve your goals. Be realistic but be careful not to be too conservative with your estimate, simply hoping to not scare people away. If you present your ideas well and justify clearly why you need the amount you are asking for, people will respond. 

    Use social media platforms like Facebook and Twitter to help spread the word about your campaign and how much has been raised so far. The more people you get talking, the more people will want to partner with you on your journey and benefit from your expansion when it happens. 

    Communicate often! If people don’t know what they’re getting in return, they might not donate money. And if they do donate, they might not give enough because they’re not being updated regularly. Keep them in the know. Make sure your donors feel like partners in a creative or meaningful endeavor, not like strangers throwing money to other strangers. Communication and excitement are key. 

    business partners working on an answer to the question "How do I expand my business?"

    Explore your options for partnerships

    If your business is just starting out, there are a number of ways to partner with other companies. For example, you can partner with a company that helps support your audience, markets to a similar customer, or offers products and services that complement many of the things you do without being in direct competition. 

    Partnering with another company can provide a wide range of benefits, such as exposure for the other company’s products and services and the opportunity for cross-promotion. You should also consider how much control you will have over the partnership if it goes well.

    If you’re looking to expand without taking on debt, partnerships are a great way to help grow your business with no startup costs.

    Franchising can be a great way to grow a business

    One of the best ways to grow your business is to franchise it. Franchising allows you to expand your company into a larger market while keeping control of your brand and not having to take on additional debt.

    There are different types of franchisors: Direct franchisors offer complete support for the franchises, which includes training, marketing, resource vendor partnerships, and more. These types of agreements usually allow the franchisee to operate a single storefront or location with the possibility of purchasing additional locations in the future. 

    Other types of arrangements, like area development or master franchising, offer franchisees the ability to develop a presence in a larger geographical area, essentially giving them business and expansion rights within a region.

    In many cases, expanding your business through franchising, if your business model allows, is a less expensive option than partnering with an outside company or taking on additional loans. Oftentimes, offering franchises allows you to widen your influence and the impact of your organization and brand without leveraging yourself too heavily. 

    Exploring Equity Partnerships

    One more road you can take when thinking about expansion is securing equity partnerships. In simple terms, these are like the agreements reached by two parties on the show “The Shark Tank,” where a company offers a future percentage of profit or revenue in exchange for up front cash investments into their business. 

    This allows you to skip high interest rates and additional credit debt. However, remember that you will probably have a partner for life unless the contract is written otherwise. This means that your new partner will often have a partial say in how and what you do in your business and will continue to collect their profit points as the years roll on. This means less debt and a cash injection for you, but less autonomy and a loss of profits. 

    Conclusion

    You can’t always borrow money to expand your business. Other methods can help you grow and avoid taking out a loan. Find low-cost or no-cost ways to increase your revenue by exploring your options for grants and crowdfunding. Consider different types of partnerships and see if franchising might work as a business growth strategy. 

    Business expansion is exciting. It can mean greater impact within your market and in society as a whole. It can also translate to a growing income for you, your family and your employees and partners. Still, it is important to do your research, know your finances inside and out, compare your options for funding and use those that offer you the greatest benefit while maintaining a reasonable level of risk. It’s time to get growing. And there are more ways to do so than most business owners might think. 

    Sound Accounts offers dedicated accounting services to new and growing businesses, helping business owners like you achieve the expansion they desire by helping them manage their budgets successfully.