Author: Marie Martin

5 Business Budgeting Questions Every Small Business Owner Should Ask
As a small business owner, one of the most important things you can do is ensure that you have a good budget for your company. Many people start businesses because they have a dream of what their service or product can give to the world. But in order to provide these services, you have to ensure the financial health of your business. This requires attention to your business budgeting.

How much money do you need to run your business successfully? How much money does your business require to survive? What does a good budgeting process look like? How do you determine a budget period? A successful business requires a well-planned budget. If you don’t have a budget, then you won’t know if you are spending too much or too little. A well-planned budget should also keep both short-term expenses and long-term goals in mind.

Here are the top budgeting questions that every small business should have:

1. Do you have a budget for your small business?

This might seem like a silly question, but it really is the most important one to start with. If you don’t have a budget and aren’t keeping track of what is coming in and going out of your business, then you have no clear picture of the financial health of your company. This could make for some uncomfortable surprises when you start digging into the numbers.

A budget is a roadmap for your company, so whether you are just thinking about starting a business, you’ve got some side hustles going, or you have a full-time business, you need to figure out a budget so that you know where your company is headed financially. You can’t effectively plan for business growth without knowing where your money is going.

2. What should be included in your small business budget?

When you are starting out as a small business, it can be hard to know how to make a reasonable and realistic budget. You may have significant start-up costs, or you may be able to hit the ground running with just your laptop. Remember that a budget is your plan to understand and control your finances, ensure that you have enough cash flow to pay your bills, and plan ahead for the future of your small business so that you can make confident financial decisions.

Regardless of industry or how you set up your business, you need to have a solid budgeting process in place. A standard budget should include the following:
- Cash flow projections: your cash budget allows you to project your cash position on a month-by-month basis.
- Costs: for a typical business, your costs can be broken down further into three different categories:
  - Fixed costs: these can include salary, rent, and financing costs
  - Variable costs: these can be inconsistent but should be accounted for, and could include things like overtime pay for staff
  - One-time capital costs: This could include the purchase of computers, equipment, a business location, or other one-time capital expenses.
- Revenue: these are current sales or other income and can also include a forecast based on sales history and how you expect your small business to perform in the future.
3.What are your regular expenditures, and do you have significant capital expenditures coming up in the fiscal year?

Budgeting well involves anticipating both your regular expenses and big, unexpected, or one-time expenses that may come up in the fiscal year. When you are working on your budget, think about expenses that you need to plan for in advance. It can be all too easy to just think about your regular, month-to-month expenses, but your actual expenditures are also going to include one-time, capital, or unexpected expenses, so you need to plan accordingly.

Is there equipment or technology that will need upgrading or replacing? Do you have a peak sales season that will require you to purchase more inventory in advance? Are you planning to move into a brick-and-mortar space? Think about the unique aspects of your small business that may require significant capital this year, and plan ahead to make sure your business stays on track financially.

4. What are your projected sales for the next quarter and through the end of the fiscal year?

Using both sales and expenditure forecasts can help you project your profit margin for the next 12 months, which will allow you to make smart, fiscally sound business decisions. If you want to grow your business, you’ll need to know what your profit margin is so that you can wisely invest in new products, services, marketing campaigns, or technology. Using both sales and expenditure forecasts allows you to see how much money you spend on different items. By knowing how much you spend on certain items, you can plan ahead and save money.

5. How often should you review your budget?

Let’s say you have done all of the above. You have your budget and projections and business plan, you have a good idea of what the coming fiscal year will look like, so you’re done, right? Well, not really. Budgets aren’t a one-and-done item that you can check off your to-do list forever. They need to be reviewed and updated regularly to ensure that what you laid out in your budget actually matches the reality of where you are spending and making money with your small business. This doesn’t mean you need to go over it with a fine-tooth comb every day; that wouldn’t be an efficient use of your time. Instead, your budgeting process should include time to review your budget at least once a month, with a more in-depth look at your annual budget a few times a year to make sure that you are meeting your financial goals. If you are not meeting your goals, then you need to adjust your budget accordingly and maybe revisit the strategic plan for your small business.

Working with an experienced bookkeeper can help make your budgeting easier. Sound Accounts works with businesses of all sizes and we offer bookkeeping, licensing, payroll, quarterly reports, office management, and notary services 100% remotely. Let us keep your accounts safe and sound so you can focus on your business.

For some answers to common business budgeting questions, check our our frequently asked questions here:

FAQ’s

What is a small business budget?

Like any other budget, a small business budget is a document that helps you identify your financial needs. It also serves as a tool to help you manage your finances. Your budget should include three main categories: income, expense, and cash flow.

How do I set up my small business budget?

The first step is to determine what your monthly income is going to be and what your monthly expenses will be. Then, you’ll add up these two numbers to get your monthly net income. These may just be guesstimates when you are first starting out as a new business owner, but even having a general idea can help you make good budgeting decisions when you are just starting out.

How often should I review my small business budget?

Budgeting is an ongoing process. You should review your budget at least monthly to ensure that your small business finances are on track. You should also take time quarterly to review it more carefully and plan for big expenses, capital improvements, or peak customer seasons that may come up in the fiscal year.
December 8, 2021
Home Office Deductions: What is Allowed and What to Avoid

Many people took the opportunity to start their own small businesses in 2020 and 2021. During the heart of the pandemic, a record 4.4 million new businesses were created. Up significantly from an annual average that has rested around 600,000 per year for the past quarter century. Nearly 32 million small businesses currently operate in the United States. If you were one of those new business owners or sole proprietors in the past few years, or you are looking to start a new business in 2022, the idea of working from a home-based office is an attractive one.

Many new business owners start out by working from home and the great news is that many home office supplies can be deductions for your small business. But what is and is not eligible to be written off on your taxes? As a home-based business owner, do you know what you are allowed to expense? Do you know what counts as an office expense deduction? Let’s review some broad categories for home office expenses and break down what is allowed and what to avoid when filing home office deductions for your small business.

Home Office Deduction

The home office tax deduction applies if you use a specific portion of your house regularly and exclusively for your business. This is mainly based on the honor system, but here are a few examples that you can think about when deciding how the home office tax deduction applies to your unique business set-up.

If you have a room that is used solely for your home office, such as a second bedroom that is not used for anything other than your small business activity, then that would qualify for your home office deduction because it is a dedicated space for your business. However, if you have that spare room set up as an office but occasionally work from your dining room table, you could not also include the square footage of your dining room to increase the deduction for your home office expenses. The dining room is obviously used for activities outside of business purposes.

Another example would be independent contractors who are able to do all their business from their laptops and choose to work from their kitchen table. In that case, it is going to be impossible to quantify the use of the whole kitchen as an acceptable home office deduction. A kitchen will never be seen as a principal workplace or dedicated space for business because it is impossible to prove that it is used exclusively for your business. So not only do you need to prove that the space is used to run your small business on a regular basis, you also need to prove that the space is not used for any other purposes.

There are also two different ways to go about quantifying the home office deduction and calculating the office expenses for use of the space; the regular option and the simplified option. With the simplified version, rather than deducting expenses you’ll calculate the square footage of your space and multiply it by the rate of $5 per square foot up to 300 square feet of space. This means that, at a maximum, you would get a $1500 deduction for your home office.

With the regular option, you’ll value your home office tracking the actual expenditures of the space against your total home expenses. To do this, you’ll have to add up allowable deductions including mortgage interest, taxes, maintenance, repairs, utilities bills, insurance, and other related expenses. Then you’ll calculate the percentage of those expenses for the size of your home office.

The simplified method is obviously easiest, but you should consider going with the standard method if your home office space is significantly larger than 300 square feet or if you feel that your home expenses and utility bills would put the deduction value of your home office above $1500. Your tax preparer can help you understand which of these methods will be best to track the legitimate deduction for your small business.

There are also a few exceptions that relate to specific types of business owners, one example being if you provide day care services or run a daycare facility from your home. Another example is that you use part of your home for the storage of inventory. If you have a significant amount of inventory and product samples in storage in your home, you can potentially use this exception. Check with your tax preparer prior to tax season to see if there are any exceptions that could apply to your home office space.

Internet and Phone Deductions

If you work out of a home office, some of the most common types of expenses you could deduct are your internet services, telephone service, and fax bills. For a home-based business, those are easy to quantify as a tax-deductible expense. However, you can only count an office expense deduction that is directly related to your business. This means you can’t expense the entire cost of your home phone and internet bills simply because you work from home; to be a legitimate business deduction it has to be related to the running of your business.

It can be tricky to figure out what was purchased for personal purposes and what are deductible home office expenses for business-related activity. The easiest way to manage this is to either add a second phone line to your home, or get a cell phone to use exclusively for your business. Otherwise it will be very difficult to determine what calls were made for personal use vs. what calls related to your home-based business.

Similarly, it can be challenging to know how to deduct a portion of your internet expenses. What you can consider is the cost to build, maintain, and manage your business website. Those are reasonable expenses to deduct if you use a website to manage your current business.

Office Supply Deductions

To be able to deduct office supplies you have to prove that they are ordinary and necessary business expenses, and not materials for personal use. So a printer that is stored in your home office space and not used by anyone else is an acceptable expense, whereas a printer that is used by all members of your family (for example, your kids use it for homework) is not going to be approved as a home office deduction.

Likewise, if you do a school supply run for your kids at Target and decide to grab some office supplies for yourself at the same time, it is going to be a challenge to itemize what you purchased for household use and what you purchased for yourself in order to submit an itemized deduction of office supplies.

An easy way to get around this is to use your business bank account for appropriate office supply expenses. That way your receipts and bank records will already be separated from family expenses and household budgeting and you will have an easier time identifying your business purchases. If you are trying to estimate your business taxes, it is much easier to identify appropriate business tax deductions if you are only looking at your company’s bank account. Maintaining accurate records and separating your personal expenses from your business expenses is always recommended, especially for home-based business owners.

The best way to keep track of all potential tax deductions is to have an excellent bookkeeping system in place to keep detailed records of all your business transactions. Sound Accounts provides bookkeeping, payroll, and licensing services. Whether you have a small business or sole proprietorship, and whatever stage your small business is at, we can work with you to provide accurate accounting and payroll support. Contact us to learn more about how we can serve you!

For answers to some standard tax deduction questions, check out our frequently asked questions below:

FAQ’s

What is a home office deduction?

According to the IRS, a home office deduction allows qualifying taxpayers to deduct certain home expenses on their tax return if they run a small business or do work for their small business from home.

What qualifies for a home office deduction?

There are many home office deductions that you may qualify for. The biggest one is usually deducting a specific amount for the physical space that you use in your home for small business operations. There are both simple and standard options for calculating the amount of deduction for your home office space.

Are there limits to what I can expense or deduct for my home office?

Yes, there are some strict stipulations for what you can expense. To get the deduction for the use of a physical space in your home, it has to be a space that is used exclusively for your small business. For office supplies, again they must be used exclusively by you for the management of your small business. There are a few highly-specific exceptions to these limits, so check with your tax preparer to ensure that you are getting all the deductions that your small business may qualify for in 2021.

December 1, 2021
2022 business tax deadlines

Whether you became a new business owner in 2021 or you are a seasoned professional, when tax time comes around everyone takes pause to make sure that they are prepared for tax season and know exactly what their business tax deadlines are. We’ll take you through the tax dates you should be aware of in 2022, and how they differ based on the type of business you own.

If you are self-employed, Forbes recently published a great article with a simple infographic that shows tax forms by type of tax, due date, and who those taxes apply to.

If you know what form you file under, skip ahead to that section to see the 2022 tax deadlines. Otherwise, read each section carefully and check with your tax person to see what forms and deadlines apply to your small business. Tax rates vary, and you will either be required to file on an annual or quarterly basis. You will also be required to provide tax paperwork for each employee.

Employment Taxes

If you have an employee or employees who you pay an hourly rate, tips, or any other wages or compensation, then you as the employer are responsible for filing and paying employment taxes.

W2s and W3s

If you have employees who are receiving wages or compensation of any kind, you’ll provide them with W-2s or W-3s, due by February 1.

Form 940

Similarly, if you pay wages of more than $1500 in a quarter, or you have an employee or employees for more than 20 weeks out of the calendar year, Form 940 is also due by February 1.

Forms 941 and 944

If you pay your employee or employees wages subject to federal income tax withholdings, Medicare and Social Security taxes, Form 941 is due quarterly by January 31, April 30, July 31, and October 31. But if all of the above is true and you also expect to owe less than $1000, then you would file Form 944 just once by January 31.

Miscellaneous and Nonemployment Taxes

If you work with contractors, freelancers, or pay for other services to someone who is not your employee, then there are some miscellaneous tax forms that you’ll need to use. These miscellaneous services can include freelancers and accountants that provide you with legal, administrative, advertising, and other professional services.

Form 1099-MISC and 1099-NEC

If you make payments for services or work from contractors or other non-employees, you’ll file Form 1099-NEC by Feb. 1. If you need to report other income, such as rents, royalties, prizes, or awards paid to third parties, you will need to file form 1099-MISC by March 1.

Self-employment Taxes

For self-employed individuals and sole proprietors with no employees, you’ll file self-employment taxes.

Form 1040

If you have an income or a loss from your self-employment in 2021, or you choose to file as a sole proprietor, you’ll file form 1040 by April 15 for your self-employment income tax.

Form 1040-ES

However, if you expect to owe more than $1000 at tax time, be prepared to file quarterly with the 1040-ES form for estimated tax payments. Making estimated payments protects you from taking a big hit at the end of the year. Your quarterly payments will be due by January 15, April 15, June 15, and September 15. It is important to stay on this schedule because you may be charged a penalty by the IRS if you do not pay enough in taxes or fail to pay on time.

S Corporation & C Corporation

There are unique benefits accompanying both S and C corporations and each requires different tax filing procedures to stay current and avoid penalties.

C Corporations are subject to double taxation. Any profits earned by the C corporation are taxed at federal corporate income tax rates which start at 15 percent. Also, several states apply a corporate income tax. When owners are paid a salary or receive dividends, these payments are also taxed at their personal income tax rates without any adjustments being made for the corporate taxes which have already been paid.

S Corporations don’t pay federal corporate income taxes. Every single shareholder reports their share of the annual profits or losses on their own tax return. This figure is taxed at the shareholder’s personal income tax level.

Filing with an S Corporation or C Corporation

Both C and S corporations are required to file a federal income tax return. C corporations will use Form 1120 to calculate their taxes due. S corporations use Form 1120S as an information return. Additionally, S corporations must prepare a form 10 K-1 for each shareholder to include with their own individual return.

Payroll Taxes for C & S Corporations

While both S corporations and C corporations are responsible for income tax withholding and payroll taxes for salaried employees, S corporations have some additional requirements to take care of during tax time.

To assure that you prevent tax avoidance schemes, distributions to S corporation shareholders “must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation.” In essence, S corporation shareholders cannot take dividends instead of a salary to avoid payroll taxes. This is an area where S corporations are heavily audited to assure legal compliance.

For the most part, C corporations escape scrutiny with regard to how owners are paid. Salaries are deductible and dividends are not, so any gain shareholders receive by taking dividends in place of a salary is mostly canceled out by double taxation.

Several, but not all, states will exempt S corporations from state corporate income taxes. They pass these profits or losses on to the shareholder to be taxed on their personal income tax returns. All appropriate tax forms must be filed by March 31.

Tax Penalties

We mentioned tax penalties earlier, that you could incur by not filing on time. It is important to know that those penalties increase the later you are filing your taxes. It’s not a single time late fee, it is a fee that gets exponentially higher the later you are with filing. Protect your small business assets by making careful note of these dates and giving yourself plenty of time to gather the information needed to file on time.

Quarterly Penalties

When you are paying quarterly taxes, the first one of the year is due on April 30. If you wait until May 3, you’ll incur a 9% penalty. Delay until June 1, and that penalty increases to 19%. File by October 1, and you’ll be paying a whopping 29% penalty to the federal government.

Those penalty rates are the same for each quarter. If you miss the first deadline, you’ll pay 9%. The second missed deadline means you’ll owe 19%, and the third deadline missed will get you a 29% fee. So it’s better not to be late at all, but here are the deadlines for each of those penalties for the remaining three quarters.

Taxes in the second quarter are due July 31, with the first penalty fee beginning on August 2, the second penalty on November 1, and the third penalty on October 31. For the third quarter, taxes are due on October 31, with increased penalty dates on November 1, December 1, and January 4. In the fourth quarter, taxes must be filed by January 31, with penalty dates on February 1, March 1, and April 1.

Annual Penalties

Even if you are just filing your taxes annually, you can still owe fees to the federal government if your taxes are not submitted by April 15. The 9% penalty begins on April 18, the 19% penalty on June 1, and the 29% penalty on July 1.

The lesson here is that even being just a few days late on your taxes can result in a significant portion of your earnings being lost to late fees.

FAQ’s

When are the 2022 tax due dates?

If you are filing annually, your taxes are due on April 15. When filing quarterly, they are due April 30, July 31, October 31, and January 31.

What happens if I am late on paying my taxes?

If you are late on filing your taxes, you will incur a fine or fee from the IRS.

How much are the late fees?

The fees increase based on how late you filed your taxes. The first missed tax deadline will incur a 9% fee. The second and third missed tax deadlines will incur 19% and 29% fees respectively.

Sound Accounts provides bookkeeping services to small businesses. While we do not provide legal advice or tax filing services, our excellent and detail-oriented bookkeeping ensures that tracking your business activity and compiling your records for tax time will be a breeze (Just as long as you file your taxes on time!)

November 24, 2021
QuickBooks Online Tips for Small Businesses

If you’re running a small business and new to accounting, then QuickBooks Online is an excellent tool to keep track of your finances. It is a cloud-based accounting software program that allows you to manage your business finances and have a record of each transaction. You can use it to view all of your financial information in one place, pay bills, send invoices, track expenses, and much more. Whether you are a new business owner or just new to using QuickBooks, there are a few things that will help you hit the ground running with QuickBooks Online.

Here are 5 quick tips that will help you get started:

1. Create Your User ID and Password

The first step to getting started with QuickBooks Online as a business owner is to set up your User ID and password. With this, you can access the software from anywhere on any device. To create an account, you need to enter your name, email address, password, and security question. After that, you can log into your account. You can change your password anytime and you can also set up reminders to help you remember your login details. This way, you won’t have to worry about forgetting them when you want to check your accounts or make changes.

2. Set Up Your Company File

The first time you log in to QuickBooks Online, a setup wizard will prompt you through the process. You’ll enter your basic company information (business name, address, contact information.) Then you’ll be prompted to enter more details for your business. These include your industry, the product or service you sell, and your company type. You can add information for your accountant or bookkeeper now to give them access, but you can also skip this and fill out this information later on. You’ll also have the option to import data from QuickBooks, Windows, or MYOB. You can also choose your payment method and select your preferences (cash, check, PayPal, direct deposit, etc.)

Once you click next, the setup wizard will create a list of customized features for you to use. Because this is a customized list, know that there are more feature options and you always have the ability to turn any feature on and off. The suggested customization is based on the information you enter, so it can be helpful to use when you are first starting out and getting to know the QuickBooks Online tool.

You can further tailor your settings by choosing the Company Settings option under the Cogs Company Preferences menu on the upper right hand side of the screen. The Company Settings window will show you four tabs that can be edited for your business requirements. From the Company tab, you can upload your logo, edit your business name and contact details, add your ABN, select your language preference (which is defaulted to English), and more.

From the Sales tab, you can customize your forms, set up default sales invoice terms, and shipping and inventory information, and create default messages for emailing invoices and other business forms. You can also create custom fields and custom transaction numbers from the Sales tab.

The Expenses tab is pretty self-explanatory, but this is where you can track expenses and items by customers, turn on purchase orders, make items and expenses billable, and enter default bill payment terms.

The Advanced tab allows you to manage more complex actions. You can enable account numbers, discounts, automations, and time tracking. You can choose the first month of your financial and tax year. You can close your Books to lock the period down if needed. You can select your currency. You can also enable warnings so that you are notified if duplicate check or bill numbers are used.

The gear icon is also where you’ll find a number of additional tabs that will help you in completing the setup process. The Chart of Accounts tab lets you set up accounts for your industry. The Products and Services tab, which allows you to add services, inventory, and income amounts. From the Manage Users tab you can go in and add your accountant or bookkeeper and other members of your staff. You can use the Transactions>Banking tab to add bank accounts, credit cards, and set up your bank rules. The Employees tab lets you turn on and off payroll. The Customers and Suppliers tabs allow you to add accounts for people in those categories. The Customer Card Information screen allows you to manually add in and save customer pay information and preferences. From the gear icon, you can also customize your Style, Appearance, Header, Activity Table, and Footer.

Finally, the gear icon allows you to Import Data, which is an important step if you are transferring business information into QuickBooks Online. You can import both customer and supplier information, your chart of accounts, and your products and services from another software. You can access these options from gear icon>Tools>Import Data.

If you don’t already have some sort of contact list setup within QuickBooks, you may find it helpful to import a CSV spreadsheet containing customer names and addresses. For payroll purposes, you might consider importing employee transaction records from a separate system like Gusto.

3. Learn How To Use The Software

When you first open QuickBooks Online, the welcome screen will offer links to tutorials, support resources, and other useful tools. After that, these items can be found via the link labeled “Help & Training” at the bottom left corner of the homepage. This will lead you directly to a series of instructional videos designed to walk you step-by-step through all aspects of running your business using QuickBooks Online.

As intuitive and user-friendly as QuickBooks Online is, making use of these training videos and quick-start guides gives you a head start and makes sure you understand all the tools that this software has to offer. You can review the videos anytime you wish, although we recommend scheduling time to watch one per day and familiarize yourself with each new tool before moving on to the next. Building this learning time into your daily routine will help you quickly familiarize yourself with the software.

And there’s no better way to learn how to use QuickBooks than by actually doing it! After you watch videos about basic features like entering transactions, creating reports, or setting up payroll, do your “homework.” Make use of that knowledge while it is fresh and set up those aspects of your business in QuickBooks Online as soon as you complete each video or training.

4. Access Your Reports

Once you’re logged in and have your company file set up, you can access your reports from the left side of the screen. Available features include charts, graphs, and the ability to generate PDFs for your reports. You can choose between a variety of standard reports such as Balance Sheet, Profit/Loss Statement, Income Statement, Cash Flow Analysis, Accounts Receivable Aging Report, Sales By Customer, Expenses By Vendor, Purchases By Employee, Inventory Valuation, and Budgeted vs Actual Spending.

Whatever service or product your small business provides, there are likely several standard reports that will get you the information you need to run your business. QuickBooks Online also provides the ability to create custom reports tailored specifically to your needs, and you can set up any report to run automatically at certain times, saving you time and allowing you to work efficiently as a business owner.

5. Get Help With Specialized Needs

QuickBooks Online offers specialized services geared towards helping a variety of small businesses manage their finances efficiently.

For example, if you sell products over the internet, you may find value in QuickBooks Point Of Sale. POS allows you to track inventory levels, calculate taxes, accept payment, and much more. If you operate an eCommerce store, then you might benefit from QuickBooks Merchant Services which includes similar functionality plus credit card processing capabilities. And if you provide accounting services, then Intuit Business Solutions can assist you with bookkeeping tasks including invoicing clients, tracking expenses, generating financial statements, and preparing quarterly income tax returns.

If you feel like you can’t find specialized options that work well for your particular situation, don’t worry – just contact customer service and ask them what else could possibly fit your needs. QuickBooks Online offers 24/7 support services so you have on-call support anytime you get stuck or have questions about the features.

Sound Accounts is an expert in supporting small business accounting needs. We can help you get the most out of QuickBooks Online to support your growing business needs. Contact us today for a free estimate of services.

November 17, 2021
How do I Know it’s Time to Expand My Business?

Small business ownership is a journey that is full of unknowns, especially in the beginning. It is exciting to own your own business, but it can also be challenging knowing that all the decisions fall on you. One of the biggest decisions you’ll face as a small business owner happens when you ask yourself, “When is the right time to expand my business?” Here are four signs that your small business might be in a good place to expand.

1. You have outgrown your space, or you can’t keep up with demand

So you’re bursting at the seams at your current location and you are so busy that you can’t keep up with your customer demands. That’s great news! But that’s also a clear sign it is time to expand your business.

If the demand for your product and service exceeds what you can produce, it is definitely time to expand. There is clearly a target market for what you have to offer. If your customer base is clamoring for more, why not expand your business and make the changes necessary to meet the demand?

Outgrowing your space is also a clear sign it is time to expand your small business. Whether you and a business partner have outgrown working from your dining room table, or you own a bustling coffee shop with lines that stretch out around the block, you are clearly ready to expand to a space or location that better fits your needs.

2. Your business requires a skill set that you don’t have

When you are just starting out, it is on you to handle all the details of managing your own business. Regardless of what type of business you run, product you create, or service you offer, you are also in charge of your own marketing, accounting, customer service, and more. As your business grows, you may find that you no longer have the skill set to take your small business to the next level. If your business is doing well enough that you have the budget to hire staff or outsource work to experts, then it might be a good time to expand.

If you think you can get more leverage from better social media marketing campaigns, then expand your staff to include someone to do just that. Or if you see a need in the market that you’d like to support, but don’t have the skill set for, bring on a new partner who does. It’s hard to let go of the reins, but bringing in an expert who can fill a need is a great way to expand your business.

3. You recognize the need to diversify

Let’s say that your business is going well, but you have noticed a plateau. You have a steady stream of customers, but they are the same customers coming in over and over. This is one sign you may need to diversify your product or service offerings in order to get in front of a new audience. That’s not to say that there is anything wrong with having repeat customers; the fact that you have loyal customers is great news for your growing business. But if you’ve hit the ceiling of how far you can grow your business with your current product and your current customers, then diversifying can be a great way to expand your business. You’ll have a steady cash flow from your existing products and services that can give you the financial stability and the confidence to branch out and try something new.

On the flip side, you may be offering dozens of products and services, but only one of them is profitable. You’ve got a golden egg, but you’re not sure if that is sustainable. Take a step back and consider how you might scale down or eliminate underperforming products and services. Also, take time to consider that another reason you might need to diversify is that you recognize that of all the services and products you are offering, only one of them is making your “golden egg” successful and think about how you might take what you’ve learned to create more successful products. Diversifying strategically can ensure you aren’t counting on just one thing to keep your business afloat.

4. Your business is in a good place financially

Maybe none of the above applies to you, but your small business is in a great place financially. You have a positive cash flow, your customer base is happy, and you are comfortable. That’s great! But that might also be the nudge you need to try something new. If your business is doing well, it could be an excellent opportunity to think about a new product you’ve been meaning to test out, or offer an additional service that could expand your customer reach. Take small steps to test out growth opportunities, knowing your business is financially sound.

When you are ready to expand your business, Sound Accounts can scale up our services to fit your needs. We support small businesses at every stage of growth. Contact us to find out more about how we can support your growing business.

For helpful info on expanding your business, check out our frequently asked questions and answers below.

FAQ’s

What are some signs that it’s time to expand my business?

If you have grown out of your workspace, are unable to keep up with product demand, or want to diversify your offerings, then it might be a good time to expand. If your business is in a financially healthy place and you want to grow, this is also a good sign that it is time to expand.

What are some things I should consider when I’m preparing to expand my business?

Some things you should consider are: Is my business financially stable? Is there a market for the product or service I want to expand to? Do I have a physical need to get into a bigger space? How will I define success as I expand my business?

What are some questions I should ask before I expand my business?

If you are thinking about expanding your business, here are some questions to ask yourself: Are you growing out of your current work space or business location? Are you unable to keep up with demand? Is there a skill set that you don’t have, one that could help your business grow? Do you want or need to diversify your products and services?

November 10, 2021
Outsourcing Overseas: Is it Right for My Business?
As your small business grows, one question you may be thinking of is whether or not it is worth it to outsource some of your work overseas. If you are considering outsourcing a portion of the work that goes into running your company, there are both advantages and disadvantages to consider before making this decision. Here’s what savvy business owners need to know about outsourcing overseas in order to make an informed choice.

Benefits Of Outsourcing Overseas

Outsourcing saves money

Outsourcing can help you save money by allowing you to hire someone else to do certain tasks for which you would otherwise have had to pay wages. For example, if you were paying yourself $50 per hour as a bookkeeper but could find someone who was willing to charge only $25 per hour, then you might decide to outsource those services instead. This way, you don’t have to spend all of your time doing accounting while also having to worry about finding enough hours in each week to cover both jobs. Outsourcing allows you to focus on other aspects of your business such as marketing, sales, customer service, etc., rather than spending most of your time managing payroll and keeping track of financial records. The cost savings can be significant when you allow someone who is faster and more efficient to manage tasks that are time-consuming for you.

Outsourcing saves time

If you’re already working long hours at your own job, chances are you probably aren’t able to devote nearly as much attention to your business as you’d like. When you outsource part of your workload, you free up time so that you can dedicate even more energy towards growing your business. Instead of being tied down with administrative duties, you can use that extra time to market your products and services, develop new strategies, meet potential clients face-to-face, and generally grow your business.

Continuing with the example of bookkeeping, let’s say that you are responsible for the following (knowing that the specifics may differ slightly based on your unique business model):
- Entering and updating stock and inventory counts
- Creating and updating client files (biographical information, pay preferences)
- Creating, updating, and sending invoices
- Payroll processing
- Reconciling accounts
How often are you required to do each of those tasks to keep your business running smoothly? And how long does the completion of each task take? Add up the hours that you spend on these routine tasks and think about what you could do for your small business if those hours were freed up?

What tasks or processes would you actually like to outsource? Do the above assignment to get a clearer picture of the amount of time saved by outsourcing these routine tasks and processes.

Outsourcing improves productivity

When you take stock of the areas of your small business that you could outsource, you are better able to see the potential for productivity to increase. Outsourcing doesn’t just save you time and money personally; by outsourcing routine, tedious, or time-consuming tasks, you free up your staff to better focus their own time and energy on high-value actions. Outsourcing can improve productivity for your staff overall.

Perhaps there are areas where outsourcing makes sense for your staff. It may not necessarily free up your own time, but you’ll be better able to redirect your employees time toward areas that they excel in or avenues for business growth that you haven’t had the staff power to pursue.

When you are outsourcing work overseas, you’ll be working with an individual or team in another time zone. While communicating with a different time zone may require some adjustment, it also means that you have people working for you around the clock. Improvements will be made to your business even as you sleep!

Outsourcing gives you access to experts

The benefits of outsourcing go beyond simply saving you time and money. One major benefit is that you can work with people who are experts in the area that you wish to outsource. You can tap into expert advice and guidance whenever you need it. Whether you’re trying to figure out how to streamline your bookkeeping, create a website, design a logo, or identify areas of inefficiency in your warehouse management, you can always turn to professionals who know exactly what you need. If you have an idea for something that you want done, but don’t feel confident enough to tackle it yourself, consider hiring someone else to help you achieve your goals.

In addition to gaining access to additional resources, you also gain access to different perspectives. By tapping into the experiences of other people, you learn from them and adapt your approach accordingly. For instance, maybe you’ve been using Excel spreadsheets to manage all of your data entry needs. But after talking to a professional accountant, you realize that this isn’t the best way to organize your finances. So instead of continuing to rely solely on Excel, you decide to switch to QuickBooks Online. The difference between relying on Excel versus QuickBooks is that you now have two options available to you. With both systems, you still have access to all of the same features, but you now have the option to choose which system works best for you.

Challenges of outsourcing overseas

Security Risks

One of the disadvantages of outsourcing overseas is the security risk if the tasks you are outsourcing have to do with accessing or handling data of any kind. But this would be true whether you outsource locally or abroad. Some things you can do to lessen security threats:
- Carefully vet your outsourcing company
- Require advanced security levels, such as multi-factor authentication, changing passwords often, and using a virtual private network
- Have clear guidelines about who can access sensitive data, when they can access it, and under what circumstances they are allowed to access it
Loss of control

You have to give up a certain amount of control when outsourcing overseas; you can’t physically be there to observe and supervise the way tasks are handled and priorities managed. The suggestions above can help mitigate some of these worries, especially when you take the time to choose a reputable outsourced company and you have clear guidelines about how they will manage your tasks. But there is truth to the fact that if you are going to outsource, you are going to have to give up some control. And that can only work when you have a high level of trust in your outsourced service provider and are confident in their ability to make wise decisions and then loop you in when needed.

Communication Challenges

Clear and honest communication can be challenging even under the best of circumstances. But when you are working with an outsourced team overseas, you add additional challenges to your communication. These can include cultural differences or nuances that take time to recognize and understand, language barriers and translation errors, and even communicating virtually means you lose the ability to read body language and tone. None of these are insurmountable challenges, but if you are going to outsource overseas you are going to need to put more time into relationship management in the beginning to ensure that you and your outsourced team are communicating accurately. Clear communication will be a major factor in your ability to maintain healthy ongoing relationships with your outsourced provider.

The bottom line is outsourcing has many pros and cons. Ultimately, though, it comes down to this simple decision: will outsourcing overseas allow you to maintain the quality of your products and services while freeing up time to focus on growing your business, creating new products and services, and expanding your vision? Only you know what is best for your business, but we hope this guide has helped you better understand the pros and cons of outsourcing.

Are you ready to outsource your bookkeeping but are unsure of where to start? Or maybe you’d like to keep your business relationship closer to home? Sound Accounts offers a variety of bookkeeping services. Contact us today to find out how we can best serve your needs.

For quick information on outsourcing overseas, check out our frequently asked questions and answers below.

FAQ’s

What is outsourcing?

Outsourcing is taking a service or a task that you might normally do in-house, and contracting with someone outside of your business to manage it on your behalf.

What tasks can be outsourced?

Just about anything! You can outsource your bookkeeping, administrative tasks, human resources, marketing, web design needs, application development, and your manufacturing, just to name a few. Any business operations you can do in-house, you can probably outsource to someone else.

What are the benefits of outsourcing?

Outsourcing often saves both time and money. It can allow you and your staff to work more efficiently and focus your energy on your own areas of expertise, while allowing other experts to manage aspects of your business that are more challenging or simply not time-effective for you to manage.

What are the downsides to outsourcing?

Outsourcing involves a certain level of loss of control; you have to be comfortable allowing someone else, perhaps even multiple people, to manage something that was once under your purview. Depending on the type of service or task you are outsourcing, there may be some security threats or concerns that you need to address. And you will also find that communication may be more challenging when you are outsourcing to a company that is overseas.
November 3, 2021
What is the Average cost of accounting services for small business?

It is a wonderful thing when your small business grows to the point that you need to add support staff. And one of the best investments you can make in support staff is to hire outsourced accounting services. Outsourcing your bookkeeping to a professional service provider can free up your time and allow you to focus on growing your business. It also ensures that you have an expert accounting professional who can manage your small business finances with accuracy.

But how do you know what to budget for when it comes to accounting services? Let’s break down the different ways you can look at the cost of accounting services so that you can make the best financial decisions possible for your small business.

How to calculate the cost of accounting services

Accounting expenses should be included in your businesses’ overhead costs. These are costs that do not necessarily turn a profit, but are nevertheless necessary for the function of your business. Other examples of overhead include software, rent, licenses applicable to your industry, shipping, and legal expenses. When you understand that accounting services are a necessary part of your overhead, it is easier to budget an appropriate amount for that line item.

The fees for accounting services vary based on your business size, needs, and even your business structure. For example, if you ship a physical product, your accounting services will need to keep track of incoming and outgoing inventory, warehouse stock, shipping costs, and more. If you have a large staff, your accounting services will have to factor in payroll management. Are you a sole proprietorship who just needs occasional support to keep all your invoices straight? Can you manage basic bookkeeping tasks, but need help to create accurate financial reports and forecasts? These are all different needs that may have different prices associated with each task.

If you hire a part-time bookkeeper or business accountant for simplified accounting tasks, then you will likely pay an hourly rate for their services. As your needs increase, you can add on more hourly work as needed. The hourly rate for outsourcing a bookkeeper runs between $25.00 and $300.00 an hour depending on several factors, especially if services involve more complex accounting practices.. Keep in mind that this is a national average, and the average in your city may differ. A skilled and experienced bookkeeper will usually land on the higher end though it would still be a worthwhile investment because of the expertise they bring to your small business.

If you run a larger or more complicated business, you may need to pay a monthly retainer for a fixed number of tasks and services from a freelance accountant. The average price of outsourcing your bookkeeping can range from $500 a month to $2500 a month, depending on the amount of work and the complexity of the bookkeeping you need.

Or you may choose to go the route of accounting software, which can streamline your bookkeeping and provide similar reports and insights that a bookkeeping professional can. In that case, your costs will be based on the accounting software you choose, whether it is a one-time desktop software purchase or a cloud-based monthly subscription. You may also have different subscription options where your monthly fee will depend on the size of your business or the number of software users.

PCMag.com did a 2021 round-up comparing ten top accounting software systems, which includes not only specifics and benefits for each but a cost comparison. If you were to choose from those options, you could pay anywhere between $3.99 a month to $60 a month. Within that price range, you have a wide array of options to suit your needs and find the product that gives you the features you want at a price you can afford. Just be mindful that you get what you pay for, and you still may end up wanting to hire a bookkeeper to manage the software for you.

If you have a large business or run multiple businesses, it may be most valuable to have an in-house bookkeeper. But if you go that route, you’ll be adding a full-time staff to your payroll and possibly including benefits, making this the most expensive option if you are just comparing dollar amounts between the above options.

The cost of not having an accountant

The flip side of this is, of course, counting the cost of not having an accountant. That may not seem as straightforward or tangible as looking at the hard numbers of hiring an accountant. But consider the following questions:

How many hours a month are you spending on bookkeeping, and what is your hourly rate? How much are you investing in managing your small business accounting yourself? How much time are you putting into it? Could that time be better redirected to other areas of your small business, such as pursuing growth opportunities, improving your marketing, or coming up with new products and services? Is your time more valuable as a bookkeeper and managing reports, or as a visionary for your small business? What is the return on investment when you are your own bookkeeper vs. hiring a bookkeeper?

You know your small business best, and as a business owner you are already juggling multiple priorities. Does hiring a bookkeeper help you better realign your priorities in a way that promotes growth? If so, the cost is a worthwhile investment, no matter which option you choose.

FAQ’s

What are the benefits of bookkeeping services?

You’ll get peace of mind, knowing that a bookkeeping expert is managing your small business accounts, maintaining your financial records, and providing tax preparation and other tax services. You’ll benefit from their experience and skill at maintaining detailed records. You’ll also have more time to devote to managing and growing your business. A bookkeeper can also give you a clear picture of your cash flow management and the overall financial health of your business. This gives you the knowledge to make wise financial decisions as your business grows.

What can I expect from a bookkeeping service?

Bookkeeping services can include invoicing and bill pay, bank and credit card reconciliations, financial reporting, financial statement preparation, accounts payable or receivable management, sales and sales tax reporting, tax planning, filing business taxes and more. A bookkeeping service can also help clean up your existing financial files, adding financial information to a new bookkeeping software, and even training on bookkeeping software.

So how much will bookkeeping services cost my small business?

The short answer, it depends! Do you need support on a monthly basis, or just in advance of quarterly tax returns? Do you want to hire a bookkeeper, get an accounting software subscription, or a combination of both? There are many affordable options out there that will fit your needs and budget. Most experienced bookkeepers and accounting software services offer options for a flat rate per month. Your annual costs for bookkeeping will be easier to plan for when you can break it down into cost-per-month.

If you are ready to expand your business and outsource your bookkeeping, Sound Accounts is here to help. We offer both monthly and quarterly bookkeeping services so you can get the support you need that fits in your budget. Contact us for a free assessment today!

October 27, 2021
What Does a Bookkeeper Do Exactly?

Bookkeeping is the process of recording financial transactions and other information related to a business or organization. This includes keeping track of income and expenses, payroll, accounts payable, accounts receivable, and more. But more than that, what a bookkeeper does is give you peace of mind. When you hire a bookkeeper, you get an expert at managing business accounts, tracking expenses and income, and ensuring that your quarterly taxes are paid accurately and on time. But that’s just the short answer. Let’s get down to the nitty gritty of what a bookkeeper can do for your small business.

What can a bookkeeper do?

Most bookkeepers are no longer keeping hard copy “books” and ledgers to track financial statements and other transactional information for business owners. To manage bookkeeping services, they may use spreadsheets, accounting software, and even bookkeeping apps that connect bookkeeping software to banks and other financial institutions to make tracking income and expenses easier. They perform a variety of bookkeeping tasks all designed to help you manage your small business finances in a healthy and prudent way.

Bookkeepers use these tools to complete data entry and record transaction details for both income and expenditures. They’ll track credits (incoming money) and debits (outgoing money) for each account of your small business. They can manage both paying bills and employee payroll. Bookkeepers can create a balance sheet, income statement, cash flow statement, statement of changes in equity, and many other types of financial statements that help you understand where your business is financially. Each detailed report can highlight a different snapshot or key metric of your businesses’ financial health at any given time.

Bookkeepers also produce and/or pay invoices for inventory orders, services, outgoing transactions, and other bills. They can manage accounts receivable, accounts payable, and employee payroll services. This ensures that your bills get paid, your employees get paid, and you get paid on time. Their attention will ensure that you don’t have any overdue accounts, and that any debt payments happen on time. They can ensure that you have a healthy cash flow throughout high and low-volume cycles of your business.

Because they have the full financial picture of your small business, your bookkeeper can help you make better budgeting decisions, identify patterns, and understand the seasonal flow of your income and business expenses. They can help you understand the metrics of your company’s financial health, monitor debt levels, keep you up to date on any tax code changes, and report on issues as they come up. They can highlight the financial impact of business decisions and provide the best value recommendations for a financially sound future.

Beyond the practical services that a bookkeeper provides, their value also lies in the efficiency they bring to your small business. As a small business owner, you obviously have the acumen for managing the financial details of creating and owning a business. Still, hiring a bookkeeper means you have a financial expert keeping an eye on the bottom line, helping to ensure that all your choices lead to a more focused and successful financial makeup within the framework of your business. Even freelancers can benefit greatly from the organizational and financial benefits of a good bookkeeper.

One of a bookkeepers’ most important tasks is to monitor financial records to ensure they are accurate, which means reconciling and reporting any discrepancies found in the bookkeeping records. They’ll be able to minimize and correct errors to ensure that your financial reports and data are accurate. The peace of mind and attention to detail that a bookkeeper brings can be invaluable if your business is audited. Having accurate bookkeeping records can make the auditing process go much more smoothly than if you have incomplete records.

They also free up your time and allow you to focus on the areas of business ownership that you excel at or enjoy the most, such as planning for future growth, focusing on customer and user experience, or creating new products and services. And as your business grows and your accounting needs increase or become more complex, your bookkeeper can also train additional bookkeeping staff to meet the changing needs of your professional objectives. One of the best financial decisions you can make is to hire an expert bookkeeper who can support the financial health of your business and train other employees to do the same.

Sound Accounts provides bookkeeping, payroll, and licensing services for small businesses. Contact us to see how we can best support your growing business.

For quick answers to a few of your bookkeeper inquiries, check out our frequently asked questions below.

FAQ’s

What does a bookkeeper do?

A bookkeeper records and reconciles all financial aspects of your small business. They can maintain financial records, manage invoicing, bank reconciliation, payments, and payroll. They manage day-to-day accounting tasks in addition to generating both annual and monthly reports to keep you up to date on the financial health of your business. And their experience can simplify the process of paying small business taxes each quarter.

How can a bookkeeper help my small business?

They can take the load of making and recording financial transactions off your plate. Their expertise can give you peace of mind and free up your time to manage other areas of your small business. They can also help you understand the overall health and seasonal patterns of your small business, provide business recommendations, and help you make wise financial decisions through accurate reporting.

Can I just use a bookkeeping software instead of hiring a bookkeeper?

Bookkeeping software or cloud-based bookkeeping services are fantastic resources, but they are only as good as the information you put into it. It can store your business transactions, but it can’t make intuitive business decisions, identify growth areas, or catch mistakes and reconcile errors in the same way that a person can. Hiring a bookkeeper is an investment that will pay off for your small business.

October 20, 2021
How to choose the best Virtual bookkeeping services

Whether you are just thinking about starting a business or are in the early stages of running your small business, one top priority should be to decide how to manage your bookkeeping. Keeping your business finances organized, especially in the first year, is vital to the success and health of your growing business. Here are our top tips for how business owners can choose the best virtual bookkeeping services. For quick answers to some of your most important questions, check out our FAQ (frequently asked questions) at the end of the article.

What is virtual bookkeeping?

There are really two answers to this question, but both essentially have to do with recording, categorizing, and reconciling your business transactions, producing financial reports virtually, and even managing payroll. The difference is in whether you choose to do it yourself with accounting software, or hire a dedicated bookkeeper to manage your business finances virtually.

There are more options than ever for business owners, both in terms of software options for do-it-yourself bookkeeping and with bookkeeping companies and freelancers who can bring both bookkeeping and small business experience to your company.

Virtual bookkeeping software is designed to take the guesswork out of expense tracking, inventory tracking, reconciling monthly transactions, and creating cash flow statements. Whereas hiring a virtual accountant means you have a real person who understands the nuances of accounting and bookkeeping. Online accountants can answer questions in real time and be on call when you need support and advisory services.

Why choose a virtual bookkeeping service?

One of the most obvious benefits of virtual bookkeeping is how it organizes your record-keeping. Picture this: relying on paper files means you have to take the time to create an easy-to-navigate file organization plan, follow through on that organization so that you can conveniently find the information you need, and manage an ever-growing storage system to stay on top of your records.

On the flip side, virtual bookkeeping organizes all your small business data and information in the cloud. Not only do you have robust search engines that help you find important information in a fraction of the time, you’ll probably free up an enormous amount of physical space in your office. Virtual bookkeeping is secure and simple to navigate, and makes tax season that much easier.

But staying organized doesn’t just help you when tax filing needs to happen; the robust reporting tools that come with virtual bookkeeping products allow you to identify areas of improvement, make healthy financial decisions, and think ahead about when and how to scale up your business sustainably. Choosing a good virtual bookkeeping service can help you accomplish these aspects of running a small business while keeping an eye on the bottom line.

Choosing a dedicated bookkeeper to manage your small business finances provides peace of mind for business owners. Whether they feel nervous about reconciling business accounts, or feel they don’t have the time needed to manage the volume of monthly reconciliations, a dedicated account manager or virtual bookkeeper can provide accurate accounting and additional services as needed.

Using a virtual bookkeeping business or hiring an experienced freelance bookkeeper also provides affordable bookkeeping services, as compared to hiring someone full-time to manage your books in-house. Many professional bookkeepers offer competitive pricing with either a flat rate, monthly rate, or custom pricing based on your individual needs, making this an excellent option for small businesses or companies that are just starting out.

What are the options for virtual bookkeeping services?

The most important thing that any bookkeeper will do for you is keep track of your books on an ongoing basis so that they know what’s going on with your money. This means keeping accurate records of transactions as well as tracking income, expenses, and payroll over time. If you’re looking for online bookkeeping services, there are three options: cloud-based solutions, desktop software, and hiring a virtual bookkeeper. Cloud-based solutions offer many benefits including ease of use, flexibility, scalability, security, and cost savings. Desktop software offers similar features but also includes more robust reporting capabilities. Both options have their pros and cons, which we’ll discuss below.

Cloud-Based Solutions

A cloud-based accounting system works by storing data online instead of using local hard drives. The advantage here is that this type of setup makes accessing information easy because everything happens through the internet. You don’t need to worry about backing up files or having them physically stored somewhere else. It also helps if you want to access your accounting records from anywhere since you won’t need to download anything onto your computer. However, one downside to cloud-based systems is that they aren’t always secure. They may not encrypt sensitive documents like bank statements, making them vulnerable to hackers who might steal personal information. Another drawback is that some companies charge monthly fees for storage space. These costs add up quickly, particularly if you run multiple businesses.

Desktop Software

If you prefer working with traditional methods such as spreadsheets and paper forms, then desktop software is probably right for you. With desktop software, you get full control over every aspect of your accounting processes. For example, you can create custom reports, enter new transaction details manually, and even print invoices directly from within the program itself. One major benefit of desktop software is its ability to integrate with other programs. So, if you already use QuickBooks Online for payroll processing, you could easily import employee hours into QBO while still maintaining separate entries for each individual. In addition, you can sync your inventory between different locations via barcode scanning technology.

Virtual Bookkeeping Personnel

You can also choose to outsource your bookkeeping and hire a dedicated bookkeeper to manage your accounting virtually. This is someone who has access to and can manage and reconcile your financial transactions. They’ll provide accounting expertise and take the guess-work out of filing your quarterly and annual taxes. You may even be able to find someone that has significant experience in your industry, meaning they can provide expertise and knowledge beyond number-crunching.

Think about the unique benefits that cloud-based solutions, desktop software, and virtual bookkeepers can each provide your small business. Your decision may just come down to personal preference, but think about what makes your small business or industry unique.

Are there services and benefits that make one option more attractive than the other? How does cost factor into your decision? Do you want to have robust options for scalability as your small business grows? Can you invest better in your small business by managing your accounting and transactions yourself or by outsourcing your bookkeeping?

Your answers to each of these questions can help you narrow down the options and make the best choice for your virtual bookkeeping services.

What makes a good virtual bookkeeping service?

When it comes to software, every option is going to offer basic bookkeeping services and accounting support. But the best ones go above and beyond that with added tools that make small business management easier and more efficient.

Some systems offer project management and communication tools, allowing a high-level of collaboration that is ideal for businesses with a lot of employees. Other tools have processes for tracking and managing inventory and shipping, which is great if your small business produces a physical product. Some services will give you the option of creating custom reports, while others offer a variety of reports but no custom build-out options. And some software providers offer efficient solutions for automating regular processes, such as monthly reconciliations and quarterly financial statements. Again, a big factor in your decision-making should be deciding what bells and whistles are specific to your small business needs and necessary for your success.

One specific service to research when looking into managing your own finances through bookkeeping software is customer service or customer support. When you are looking at virtual bookkeeping services, find out if they offer training videos, troubleshooting, or a 24/7 hotline that you can call anytime you need help with the software. The more responsive they are to customer needs, the better your experience will be in using their virtual bookkeeping software. You can also check out online reviews of their customer service.

When looking for a virtual bookkeeper to manage your accounts, ask about their experience, how long they’ve been bookkeeping, how they will communicate with you, if they offer payroll services, and the accounting tools that they prefer to use. Check to see if they have their own website, or if there are online reviews of their bookkeeping services. If you feel like you can manage the majority of your accounting yourself and just need help around tax time, ask about their fees for quarterly tax services.

Going with a virtual bookkeeper (rather than managing bookkeeping software yourself) can provide business owners with real-world advice on the best software and tools for their unique business needs.

Sound Accounts offers virtual bookkeeping, payroll, and licensing services to small businesses in a variety of industries. Contact us for a free consultation to see if our services are a good fit for your company.

Learn more about virtual bookkeeping with our frequently asked questions and answers below.

FAQ’s

What is a virtual bookkeeping service?

A virtual bookkeeping service is a cloud-based software used to track transactions, prepare monthly income and expense summaries, file taxes, and generate various types of reports. Business information is entered into the system so it accurately reflects the company’s finances.

What is a virtual bookkeeper and what do they do?

A virtual bookkeeper is an online accountant who works remotely from home. They take care of all aspects of running your books including: entering transactions, reconciling bank accounts and financial records, preparing financial statements, analyzing data, generating reports, and providing tax advice. A virtual bookkeeper also helps clients file taxes on time so they don’t incur penalties. Virtual bookkeepers typically charge hourly rates based on how many hours per month they work.

What are the benefits of hiring a virtual bookkeeper vs. using bookkeeping software?

There are several reasons why you might want to hire a virtual bookkeeper instead of doing this task yourself. They save time by taking the task of entering transactions manually off your plate. Hiring a professional means you won’t have to worry about mistakes being made because no one else has access to your personal files. Finally, working with a virtual bookkeeper allows you to focus on other parts of your business rather than spending valuable time tracking down errors and trying to figure out where things went wrong. Bookkeeping software is a great tool, but it is only as good as the information you put in it. If you have concerns about accuracy, or feel you may not have the time to devote to tracking all your transactions, then hiring a virtual bookkeeper is a wise investment for your small business.

October 13, 2021
Everything You Need to Know About Sales Orders in QuickBooks

A sales order is simply a document used by businesses to record transactions with customers. It contains information about products sold, prices charged, payment terms offered, and shipping details. A sales order includes all the necessary information needed to complete a sale transaction between two parties: buyer and seller. For example, if the product you sell is a widget and you sell online, then you would need to have a sales order created so that buyers could place their orders. Once they do, you send out invoices based on the amount paid per widget. If you are selling more than just widgets, then you may also want to use other types of documents, including vendor bills of lading, delivery tickets, packing slips, and more.

How to Use the Sales Order Option

It is important to know that Sales Orders are only available in QuickBooks Desktop Premier and QuickBooks Enterprise versions. But if you have one of those versions, you’ll be able to use the sales order tool to save time and manage your inventory more efficiently.

To turn on the Sales Order feature once you are in QuickBooks, go to the Edit menu and click on Preferences. Select Sales & Customers and then go to the Company Preferences tab. From there you can select the Enable Sales Order checkbox and then click OK.

Go back to the QuickBooks Home screen or the Customers menu and click on Sales Orders/Create Sales Orders. You can select a customer or customer job from the Customer: Job drop-down, or Add New if your customer is not on the list. Fill in the form with relevant customer and sales information. If you select or add an item you already have in QuickBooks, then the description and amount can be set to automatically populate when you make your selection. Otherwise, you’ll have to take the time to fill in that information yourself.

You can also create discount items so that when you select them, the discount auto-populates into the Sales Order. To do this go to the QuickBooks Lists Menu and select Item List. Right-click so that an option box opens and click New. In the New Item window, choose the Type drop-down and then click Discount. You can then enter the Item Name or Number, a Description, Sales Tax, and other necessary information for the customer. Then in the Amount or $ area you can enter the discount amount or the percentage of cost savings. Click Save and Close when you are done.

If you provide estimates to your clients, you can also create sales orders from those estimates. Just find the correct estimate and click Create Sales Order at the top of the estimate form. You can then edit the information if needed before clicking Save & Close.

QuickBooks has a great visual tutorial for how to create Sales Orders from scratch, so check that out if you get stuck.

How Sales Order Stages Update Your Inventory Levels

The other thing to know about creating Sales Orders is that it can update your inventory items’ stock level based on the stage of the Sales Order. This is a great way to keep track of product inventory.

Stage 1 is the Draft stage. Some users choose to bypass this, but it can be helpful if you want to use a Draft as an estimate sheet for a customer. Creating a draft will not affect your stock record. Stage 2 is Active, where you have assigned stock to an order but it has not been deducted from your stock yet. On an Active Sales Order click Finalize to move to the third stage which is, of course, the Finalized stage or Stage 3. From here you can start fulfilling your order, which will mark the stock as committed but not yet deducted from your total. Stage 4 is Fulfilled, which is when you ship the order and your stock will update to show the reduction in inventory values. This inventory tracking method ensures that you aren’t still counting inventory that is already out of your warehouse and in the shipping process.

Using the Sales Order Stages is one of the best inventory tracking models and an excellent way to keep an accurate count of your inventory quantities. Using this tool will help you make the most cost-effective business decisions because you will always have an accurate count of your product inventory values.

Integrating Your e-Commerce Channel with Your Sales Orders

QuickBooks Commerce allows you to integrate your e-Commerce with QuickBooks so that you have a central hub from which to manage your orders. The way this is managed will be different based on your e-Commerce channel. Whether you deliver your product through a B2C or B2B e-Commerce channel, an Online Marketplace, a Consignment Location, or a Point of Sale System, QuickBooks can integrate with those systems so that your records sync up and your inventory tracking methods stay accurate.

QuickBooks has tutorials for each of the above e-Commerce channels so no matter how you’ve set up your sales, it only takes a few steps to integrate these channels with QuickBooks Commerce. And while QuickBooks Commerce may be a better choice for larger businesses, it is a good idea to see what solutions it offers when you are ready to scale up.

How to Use the Sales Order Fulfillment Worksheet

QuickBooks provides a Sales Order Fulfillment Worksheet to give you a simplified process for reviewing all aspects of the sales order. To get started, go to the QuickBooks Edit menu and click on Preferences. On the left side, click on Items & Inventory and then go to the Company Preferences tab. Click on the Advanced Inventory Setting button and then go to the Site Operations tab. From there, check the Sales Order Fulfillment Worksheet box. Now you can start managing and fulfilling your sales orders by selecting the Customers menu and then the Sales Order Fulfillment Worksheet.

The Sales order Fulfillment Worksheet has three tabs, titled Dashboard, Pick, and Pack. On the Dashboard tab, you can see an overview of your sales orders and their statuses. You can also perform actions from the tab, such as Send for Packing or Print Shipping Label. You also have the ability to sort each column within the Dashboard. The Pick and Pack tabs allow you to manage your picklist and your packing orders.

You can also choose between one of three processes for fulfilling sales orders. The process that is best for you will depend on how big your company is, your sales order volume, and your operations. Your options are: 1. Pick, Pack, and Ship, 2. Pick and Ship, and 3. Ship. Again, QuickBooks has a great visual training page for setting up and managing these workflows so you can find the perfect solution that fits your small business needs.

When you know how to manage Sales Orders in QuickBooks, keeping your sales records straight is easy. When you need support in managing all your financial statements during tax time, Sound Accounts is here to help.

October 6, 2021