Category: Bookkeeping

  • Get The Most Out Of Your Bookkeeping Service Packages

    Get The Most Out Of Your Bookkeeping Service Packages

    Bookkeeping services can be a great asset to your business, but it’s important to get the most out of them. With the right package and knowledge, you can maximize the benefits of bookkeeping services. In this article, we’ll explore how to get the most out of your bookkeeping service packages so that you can make sure you’re getting the best deal.

    Do you struggle to keep track of your finances? Are you overwhelmed by all of your bookkeeping tasks? If so, a bookkeeping service may be just what you need! Bookkeeping services allow small businesses and entrepreneurs to manage their finances without having to invest in expensive software or hire an in-house accountant. Plus, they offer a range of packages designed to fit different budgets and needs.

    Finally, the key to taking advantage of these services is understanding how each package works and which one is best for your business. In this article, we’ll discuss how to evaluate different bookkeeping service packages so that you can make sure you’re getting the most bang for your buck! So read on and learn how to get the most out of your bookkeeping service packages!

    What Are Bookkeeping Price Packages And Services?

    Bookkeeping price packages and services for businesses are as numerous as the stars in the sky. Most offer the perfect way to get organized and stay on top of financials. With a professional bookkeeper, you can get help on all your bookkeeping tasks, from creating financial reports to filing taxes! Plus, you can customize packages to fit your business needs.

    You don’t have to go it alone when it comes to bookkeeping services. No matter what size business you’re running, there’s a package out there that will make life so much easier. From basic packages that include tax preparation services to more comprehensive ones that cover all your bookkeeping needs, you can find the right fit for you and your company.

    When selecting a package, think carefully about which tasks need immediate attention and which ones can wait until later. You should also take into account your budget and how much you’re willing to spend on expert help. Once you know what you want, look for qualified professionals who specialize in your industry or type of business — this will ensure that they have the expertise needed to provide top-notch service.

    You may also want to consider whether you’d prefer an hourly rate or a flat fee for certain services. Talk with different providers to find out what options are available so that you can make an informed decision about which package is best for your company’s needs. With the right bookkeeping service packages, you can get organized and save time — so why not give it a try?

    Bookkeeping services can be a great asset to your business, but it's important to get the most out of them. With the right package and knowledge, you can maximize the benefits of bookkeeping services. In this article, we'll explore how to get the most out of your bookkeeping service packages so that you can make sure you're getting the best deal.

    Benefits Of Packaging Your Bookkeeping Services

    Bookkeeping services can be a great way to get your business organized, but there are some extra benefits to packaging them together. Having monthly bookkeeping packages can make things easier and help you stay on track. Here are a few of the benefits of packaging your bookkeeping services:

    1. Time Savings – Packaging your bookkeeping services can save you time because you don’t have to go through the process of finding separate bookkeepers for each task. Instead, you can rely on one company to handle all of your bookkeeping needs. Plus, they’re usually able to offer catch up bookkeeping as part of their package, so it’s easy to get back up to speed if you’ve fallen behind.
    2. Accrual Based Bookkeeping – Advanced bookkeeping can be a lot more complex than just entering numbers into a spreadsheet or software program. With packaged bookkeeping services, you’ll have access to accrual based bookkeeping that can help keep your books accurate and up-to-date without having to worry about complicated calculations.
    3. Professional Support – When you package your bookkeeping services with an experienced bookkeeper, they’ll be able to provide valuable advice and insights into running a successful business bookkeeping business. This kind of carefree support can really help improve the efficiency and accuracy of your finances over time.
    4. Cost Efficiency – Many businesses find that they save money when they package their services together instead of buying them separately from different providers. Packaged services often come with discounts or bulk savings that allow you to enjoy all the great benefits without breaking the bank!

    Packaging your bookkeeping services is an excellent way to get the most out of your finances and make sure everything is taken care of properly in one place. With these great benefits, it’s no wonder so many businesses opt for this cost-efficient option!

    Common Pricing Options For Bookkeeping Services

    When it comes to booking services, you have lots of different pricing options. You can choose from monthly bookkeeping services, or a standard bookkeeping service. You could even go for an advanced bookkeeping service if you need more detailed accuracy! Here are some common package options:

    1) Monthly Bookkeeping – This is a great option for businesses that need help with their day-to-day financials. You can get accurate bookkeeping assistance without having to pay for a whole year up front.

    2) Standard Bookkeeping Service – This package is perfect for businesses that don’t require too much detail and want to keep their costs down. It’s also a good choice if you’re just starting out and don’t know what your needs will be in the future.

    3) Advanced Bookkeeping Services – If you’re looking for more detailed accuracy, this is the way to go. It’s more expensive than the other two packages but it can save money in the long run by catching mistakes before they become costly errors.

    No matter what type of business you have, there’s a package that fits your budget and your needs. Choose wisely and make sure to get the most out of your bookkeeping service packages! With the right plan in place, you’ll be able to manage your finances easily and accurately every month. So how much should you pay monthly for bookkeeping? Let’s find out!

    How Much Should I Pay Monthly For Bookkeeping?

    Paying for bookkeeping services can be a bit like buying a car. You have to decide what kind of car you need and what features you want, and then you have to figure out how much money you can spend. Similarly, when it comes to bookkeeping services, there are several pricing options to consider, and it’s important to know how much you should pay on a monthly basis.

    When thinking about your budget for bookkeeping services, the first thing to consider is whether you plan to pay on a monthly or project basis. Monthly payments are ideal for businesses who will use the service regularly. If your business requires less frequent bookkeeping help, then paying on a project-basis may be more cost effective.

    Another factor in determining the cost of bookkeeping services is the type of package offered by the provider. Many providers offer various packages that include customer invoicing systems, online invoicing solutions, and other business bookkeeping services at different price points. You should evaluate all of the pricing plans carefully before making your final decision so that you get the most out of your bookkeeping service packages.

    Finally, it’s important to remember that while cost is an important consideration when choosing a bookkeeping service provider, quality should also factor into your decision-making process. Look for providers who understand your business needs and offer comprehensive solutions tailored to those needs at reasonable prices. This will ensure that you get the best value for your money and can rest assured knowing that your financials are being taken care of properly.

    What You Should Look For In A Bookkeeping Package

    Getting the most out of a bookkeeping package is essential for businesses. It’s important to know what to look for in order to maximize the value of your money. Here are some key features you should keep an eye out for:

    1) Chart of accounts: This is a must-have feature that allows you to organize and categorize financial transactions.

    2) Customer service: Find a bookkeeping package that offers customer service support so you can get help when you need it.

    3) Additional services: Look for packages that offer additional services such as credit card transactions, billing clients, tax filing, payroll services, and business expenses.

    When choosing a bookkeeping package, make sure it comes with all the features you need for your business. Also, be sure to look at customer reviews online and see what other people have said about the product before making a decision. Additionally, don’t forget to check if there are any discounts or promotions available so you can save money on your purchase. Taking all these factors into consideration will ensure that you get the most out of your bookkeeping service packages.

    Fixed Fee Bookkeeping Packages

    Imagine that you are on a boat, sailing through the river of your business. The vastness of the water can be overwhelming, as there are so many paths to take and unknowns to discover. You need someone to help navigate the waters and keep you afloat, which is where bookkeeping packages come in!

    Bookkeeping packages provide dedicated teams that have the expertise and knowledge to ensure your business is always running smoothly. They’ll provide a custom quote for services tailored to meet your needs and allow you access to professional services such as accounting software, accounting systems, and other accounting tasks that are important for any business.

    CPA firms often offer fixed fee bookkeeping packages that give businesses a great deal of flexibility with their finances. These packages usually offer an all-in-one solution for managing accounts receivable, accounts payable, payroll, tax filing and more. This allows businesses to stay up-to-date with the latest trends in financial management without having to worry about additional fees or costs.

    Having a reliable bookkeeping package can provide peace of mind knowing that your financials are in good hands with an experienced team of professionals who understand what it takes to keep your business running efficiently and effectively. From providing custom quotes that fit within budget constraints to offering advanced accounting systems, these packages make it easy for businesses of all sizes to stay on top of their finances without breaking the bank.

    Bookkeeping packages can be just what you need to help chart a course through the sea of financial data – so don’t wait any longer! Investing in a package now could save you time and money in the long run.

    How Bookkeeping Packages Save You Money

    Bookkeeping packages are like a financial fairy godmother – they can save you money in a snap! Whether you’re managing your business finances or preparing for tax season, bookkeeping service packages provide many ways to make the most of your money. Here are just a few:

    1. Streamlined Financial Statements: Bookkeeping firms can help organize your financial statements and credit card statements, making it easier to track where your money is going and review past transactions.
    2. Paperless Payables: By switching to paperless payables, you can reduce costs associated with printing checks and postage. It’s also great for the environment!
    3. Bank Reconciliation: With efficient bank statement reconciliation, bookkeepers can quickly identify discrepancies between the bank statement and financial records to make sure everything is accurate.

    With all these savings, why wouldn’t you take advantage of bookkeeping packages? Not only do they help you keep track of your financial transactions and make sure that nothing gets overlooked, but they also allow you to maximize the return on your investments. And by having everything organized in one place, it’s easy to access what you need when you need it – so no more worrying about paperwork getting lost or forgotten!

    So if you’re looking for ways to save time AND money on keeping up with your business finances, bookkeeping service packages are definitely worth considering. They could be just the thing to give your bottom line a boost!

    How Bookkeeping Packages Save You Time

    Bookkeeping packages are like a secret superpower, saving you both time and money. With professional bookkeeping services, you can get the setup process done quickly and easily. Whether you need help with bookkeeping review or want to streamline your bookkeeping processes, these packages have it all. They make sure your bookkeeping is under control so that you don’t have to worry about it anymore.

    The pricing plans for most bookkeeping services are very reasonable. This makes it easy to find one that fits your budget. Plus, you can customize the package depending on what you need – whether that’s a simple review or an in-depth analysis of all your bookkeeping processes. You’ll be able to see where money is being wasted and how to save in the future.

    Using a bookkeeping package also saves you time by automating many of the tasks associated with running a business. This leaves more time for other important activities like marketing and customer service. The automation features also reduce the risk of human error, making sure everything is accurate and up-to-date at all times.

    Overall, using a bookkeeping package is an efficient way to keep track of finances without having to put in too much effort or stress over it. It’s also great for businesses looking for cost savings as well as those who want to make sure their finances are always organized and up-to-date. So if you’re looking for an easy way to keep your business finances under control, try out one of these packages today!

    Bookkeeping Service Packages Can Streamline Your Business

    Bookkeeping services are a great way to streamline your business. It can help you save time and money, plus it’s super convenient. You can get specialized profitability reports, which give you an idea of how your business is doing financially. Plus, you can keep track of all your financial records and tax returns with ease.

    The pricing structure of bookkeeping service packages varies depending on the provider, but most offer unlimited transactions and cash flow reports for a monthly cost. That way, you don’t have to worry about extra charges every time you need something done. Plus, they’re usually cheaper than hiring someone to do it yourself!

    Another advantage of bookkeeping service packages is that they’re designed specifically for small businesses. This means that they come with features tailored to meet the needs of small businesses like yours. Plus, they usually include support staff who can answer any questions or concerns that you may have while using the package.

    Overall, bookkeeping services are a great investment for small businesses looking to streamline their operations and save time and money in the long run. They provide easy access to specialized reports and financial records, plus an affordable pricing structure for unlimited transactions and cash flow reports each month. Investing in one of these packages could be just what your small business needs!

    Invest In Your Small Business With Professional Bookkeeping Services

    Investing in your small business with bookkeeping services is a great way to streamline your operations. Bookkeeping packages can help make managing your finances easier. Whether you’re looking for basic bookkeeping or more advanced services, there’s an accounting firm offering the bookkeeping you need.

    Quality bookkeeping services are essential for any business, and they don’t have to be expensive. It’s important to find a reliable service that offers standard bookkeeping packages at an affordable rate. Plus, there are often add-on bookkeeping services that you can use if needed for extra support.

    When you invest in professional bookkeeping services, it gives you peace of mind knowing that your finances are being managed correctly and efficiently. You don’t have to worry about missing any financial deadlines or making mistakes with your records – a good bookkeeper will take care of that for you!

    Bookkeeping packages can save time and money by helping you stay organized and keeping track of all the details associated with running a business. With the right package, you can get the most out of your accounting service, ensuring that your business runs smoothly and efficiently. So don’t wait – invest in quality bookkeeping services today!

    Frequently Asked Questions

    What Additional Services Are Included In The Bookkeeping Package?

    Have you ever wondered what services come with a bookkeeping package? It’s a great question to ask because it can really help you get the most out of your package. Let’s explore what additional services are included in these packages and why they’re so important.

    Some people think that a bookkeeping package only includes mundane tasks like entering data into spreadsheets or tracking expenses. But there’s actually much more to it than that! Many packages include extra services such as organizing financial records, preparing reports for tax purposes, and creating budgets for businesses. These services can help businesses stay on top of their finances and make sure everything is running smoothly.

    Having access to these extra services can be incredibly beneficial for businesses that are just starting up or expanding their operations. They give businesses the ability to focus on other aspects of their business while having the peace of mind that their finances are in order. Plus, it’s much easier to make informed decisions when all of the financial information is organized and easily accessible.

    In addition, having the right kind of bookkeeping service packages can give businesses an edge over their competitors. Having accurate financial data quickly available helps businesses understand how they are performing and makes it easier for them to identify areas where they need improvement or where they could save money. And since these packages often come with regular audits, companies will be able to ensure they remain compliant with any regulations or laws that may apply to them as well.

    So if you want to make sure your business is running smoothly and efficiently, then investing in quality bookkeeping service packages is a good way to go! With the right kind of package, you can save time, money, and stress while ensuring your finances are always up-to-date and accurate – which is essential for any business’ success!

    What Software Do I Need To Use The Bookkeeping Package?

    So, what software do you need to use the bookkeeping package? Well, you don’t need a lot. Most bookkeeping service packages include programs like QuickBooks, Microsoft Excel and Sage 50 that can help you track and manage your finances.

    You can also access these programs online, meaning you don’t have to download any special software or install anything on your computer. That’s why it’s so easy to get set up and start using the bookkeeping package right away.

    Plus, many of these services are cloud-based, meaning they’re always accessible no matter where you are. That way, you won’t have to worry about losing any important data if something goes wrong with your system.

    The best part is that these services come with a team of experts who are available 24/7 to help answer any questions or provide assistance when needed. So, whether you’re a beginner or an experienced user, you’ll be able to make the most out of your bookkeeping service packages!

    What Qualifications Do Bookkeepers Need To Provide The Service?

    Bookkeepers are an essential part of running a successful business. They help keep track of all financial transactions, and make sure everything is accurate and up-to-date. But what qualifications do they need to provide this service?

    To answer this question, let’s look at the story of Joe. Joe was a small business owner who wanted to hire a bookkeeper to help him manage his finances. He knew he needed someone with experience in accounting, but wasn’t sure what qualifications they would need. After doing some research, he found out that bookkeepers should have training in basic accounting principles and be familiar with accounting software like QuickBooks or Sage Accounting.

    Bookkeepers also need to be detail-oriented and organized. They should have excellent communication skills so that they can explain complex financial matters in simple terms. Additionally, they must be good problem solvers who can quickly identify errors and take steps to resolve them. Finally, they should be able to handle multiple tasks simultaneously while meeting tight deadlines.

    In order for bookkeepers to give the best service possible, there are certain qualities and certifications required:

    • Qualifications:
    • Bachelor’s degree in accounting or related field;
    • Professional certification as a Certified Public Accountant (CPA);
    • Experience with popular accounting software such as QuickBooks or Sage Accounting;
    • Skills:
    • Detail-oriented and organized;
    • Excellent communication skills;
    • Good problem solving ability;
    • Ability to multitask and meet tight deadlines;

    These qualifications are key for providing reliable bookkeeping services that small businesses can rely on. With these qualifications, bookkeepers can ensure accuracy and maintain up-to-date financial records – so businesses get the most out of their service packages!

    Is Customer Support Included In The Package?

    Customer support is like a backbone; it keeps the structure of the service package together and allows customers to get the most out of their bookkeeping service. It’s an essential part of any good package, so here are three things to consider when looking for customer support with your bookkeeping service:

    1. How quickly do they respond? You don’t want to be waiting around for days on end for a reply.
    2. Are there different levels of customer support available? Maybe you just need basic answers or maybe you need more in-depth advice.
    3. Is the customer support team knowledgeable and friendly? It’s important that they know what they’re talking about so that you can get the best service possible.

    Knowing what kind of customer support is included in your bookkeeping service package is key to making sure you get the most out of it. Making sure there’s someone on hand who can help should anything go wrong or if you have questions can give you peace of mind knowing that your bookkeeping is in safe hands. Knowing that someone has your back when it comes to the success of your business makes it easier to focus on other aspects like marketing and growth. Plus, having helpful customer support staff gives your customers something valuable, which can ultimately lead to higher satisfaction rates and increased word-of-mouth referrals!

    Are There Any Additional Fees Or Taxes Associated With The Package?

    When considering a bookkeeping service package, there are lots of important questions to ask. One such question is whether there are any additional fees or taxes associated with the package. It’s important to understand all the costs when looking into services like this.

    So, what should you look out for? Firstly, make sure you read through the terms and conditions of the service carefully. You’ll want to make sure that any extra charges, such as transaction fees or late payment penalties, are made clear and understood. Secondly, if you’re using a third-party payment processor like PayPal or Stripe, there may be additional fees charged on top of your monthly subscription cost. Lastly, depending on where you live and operate your business from, taxes may need to be added onto the final cost of the package.

    It’s also worth noting that some service providers offer discounts if you sign up for a longer period of time. It pays to shop around and compare different packages before making a decision. Make sure that whatever package you settle on is flexible enough that it can grow with your business as it develops.

    Before signing anything, make sure that all your questions have been answered and that you understand all the costs associated with the package – both now and in future – so that you can get the most out of your bookkeeping service packages.

    Conclusion

    In conclusion, there are many benefits to using a bookkeeping service package. It can help you keep track of your finances and organize them effectively. It’s important to understand what additional services are included in the package and what software is needed to use it. You should also make sure that the bookkeeper providing the service has the necessary qualifications. Furthermore, check to see if customer support is included in the package and if there are any additional fees or taxes associated with it. With all this information, you can be sure that you’re getting the most out of your bookkeeping service package!

    When it comes to managing money, having an organized system is key. Bookkeeping services provide an efficient way to track income, expenses, and other financial data so you can make informed decisions about your business. Plus, having a professional handle these tasks can save you time and energy so you can focus on other aspects of running your business.

    No matter what type of bookkeeping package you choose, understanding its features and how they will benefit your business is essential for success. Taking advantage of all the features available in a bookkeeping service package allows me to maximize my returns while minimizing my effort. With a thorough understanding of these services, I’m sure I’ll get the most out of my bookkeeping service packages!

  • 15 Accounting Concepts & Bookkeeping Terms Every Business Owner Should Know

    15 Accounting Concepts & Bookkeeping Terms Every Business Owner Should Know

    Have you just started a new business or want to improve your understanding of both bookkeeping and business finances? Then, it’s a good idea to familiarize yourself with a handful of important bookkeeping and accounting terms.

    It’s not just about knowing what they mean, but doing your best to gain a deeper understanding of these important concepts through personal experience and from working with your bookkeeping service provider.

    Your mastery of these terms and their associated practices, along with other concepts covered elsewhere, allow you to manage your money better, balance the books, interpret cash flow statements, know your financial assets, keep track of financial transactions, stay organized with your financial reports and financial records, use business credit cards with greater care, and improve your business operations. To help you sharpen your grasp of these concepts, we have prepared this informative post for you. Let’s explore them now. 

    Business owner learning about accounting concepts and bookkeeping terms

    1. Accounts Payable

    One accounting term every business owner should know is accounts payable. It refers to the combined bills that your company owes and needs to pay. However, it does not include payroll expenses. Since these expenses are not paid immediately, they are classified as liabilities.

    Some examples include unpaid bills and credit card statements. When you think about buying something new, you need to go through accounts payable to determine whether you can even make a purchase or not. It is a basic business function, and will affect business performance.

    2. Accounts Receivable

    Another common financial term that you must know as a business owner is accounts receivable. If you are unfamiliar with accounts receivable, it refers to money that your customers owe to your business for the products or services purchased.

    Accounts receivables are classified as an asset since it is money that your company will eventually receive from customers. Generally, you will need to keep an eye on your invoices to track accounts receivable. Bookkeeping software will help in this area by keeping data organized and ready for analysis. However, you need to make sure you’re entering the correct information into your system in a timely manner. 

    Late payments can affect daily operations and create cash-flow issues, especially for smaller companies with less overall cash on-hand from day to day. Their volume of sales will often be less than more established companies are, therefore, affected more dramatically by unpaid bills. Stay on top of accounts receivable.

    3. Accruals (accrual basis accounting)

    With accruals, income is recorded when it is earned and expenses are recorded the moment they are billed. This means that real-time accounts won’t match the recorded profit. However, accrual accounting is a method that offers a long-term picture of the business’ income and expenses.

    4. Balance Sheet

    A balance sheet is an important financial statement that offers a quick insight into the financial position of a business. You can rely on it to find out what your company owns and owes. Also, a balance sheet lets you know how much capital you have. You can use it to compare the values and performance of different areas of your company to find out which ones are driving you forward and which are holding you back.

    5. Assets

    Small business owners and business leaders of all kinds should also know what assets are. In the simplest of terms, assets refer to all the resources a business owns. It is important that you understand that there are tangible and intangible assets. Some examples of assets include cash, real estate, inventory, owned equipment and vehicles, and investments.

    Calculator representing accounting concepts and bookkeeping terms

    6. Liabilities

    Liabilities are the opposite of assets. They are financial or legal debts that a business owes, such as accounts payable, taxes, credit card debt, and mortgages. Every small business owner needs to make sure to keep their liabilities in check, as they can put pressure on cash flow and business activities.

    7. Burn Rate

    Burn rate is a calculation that allows you to find out how long your company will be able to operate with the cash you have without making a profit. You can monitor the burn rate of your business to determine the amount of time it can sustain itself without income.

    8. Cash Flow

    A notable accounting term that you might have heard of is cash flow. It refers to the amount of cash that comes into your business and the amount of cash that goes out. It includes both losses and gains. Cash flow includes financing activities, investment activities, and operating activities. Of course, it’s generally a good idea to maintain positive cash flow for success.

    9. Depreciation

    Most assets that your business owns will depreciate. In accounting, depreciation refers to the loss in value of an asset over time. You have to calculate the depreciation of current assets to determine their cost over their life expectancy. Some of the assets that you will need to record depreciation for include buildings, equipment, and machinery.

    10. Credit

    In accounting, a credit is an entry in which you record a decrease in assets or an increase in liability, along with a decrease in expenses or an increase in revenue (as opposed to a debit that does the opposite). With a credit, net income increases on the company’s income statement, while a debit reduces net income.

    11. Dividends

    When you pay your shareholders or stockholders for their investment in the company from the profit generated for the year, the amount paid is called a dividend. You distribute the earnings of a business and reward owners. The business will not be able to pay dividends if they record a loss.

    12. Expenses

    The costs a company pays or owes to purchase anything are called expenses. There are different types of expenses, as mentioned below.

    Accrued: These expenses have to be calculated and reported, but are paid later.

    Operational: These expenses are vital for running the daily operations of a business.

    Variable: These expenses are often paid on a regular basis, perhaps each month, but periodically or frequently change in cost because of shifting markets or increased/decreased usage. Examples of variable expenses include the cost of raw materials and goods (cost of materials), fuel prices, utilities, delivery costs, credit card fees and more.

    Fixed: These expenses remain the same from month to month or even for years. Some examples of fixed expenses include salaries and rent, insurances, cell phone and internet plans, property taxes, loan payments and more.

    13. Forecasting

    To predict business trends that might occur in the future, you need to get proficient at forecasting. With forecasting, you analyze past financial data and current trends which allow you to anticipate your future sales and gross profit as well as how long it might take you to pay off certain outstanding debts.

    Business owner familiarizing himself with accounting concepts and bookkeeping terms

    14. Break-Even Point

    When you first start a business, you are likely to come across the term break-even point. It refers to the point in which total costs and total revenue are equal (total expenses equal total revenue). Therefore, your business will neither make a profit nor a loss at this specific point in time. 

    15. Profit and Loss Statement

    Lastly, business owners also have to know what a profit-and-loss statement is. It is an earning statement that enables you to determine whether you have made a profit or loss during the year. Also called an income statement, it lets you evaluate the performance of your company fo a specific period.

    You can create monthly, quarterly, and yearly profit-and-loss statements to make important decisions. An income statement shows the sales revenue and the expenses as well as the profit or loss realized by the business. Therefore, you can use it to find out just how profitable your business is and gain some traction on where to go next. 

    Bonus Term

    Just because we thought you might enjoy it. 

    Return On Investment (ROI)

    Return on investment (ROI) is a performance measure. It is used to determine the profitability of a particular investment. It is also used to compare the efficiency of a number of different investments. ROI attempts to measure the investment’s return relative to the investment’s cost.

    If you want to calculate ROI, divide the return of the investment by the cost of the investment.

    In Closing

    If you want to have a solid understanding of basic business accounting and bookkeeping concepts, it’s vital that you do your homework, meet with your bookkeeper, and take your financial acumen seriously. Successful entrepreneurs and leaders have a strong grasp of money management, budgeting, accounting, investment, and other aspects of finances.

    There is much more to learn about each of these concepts, and many more terms to get a hold of. But this is a good place to begin and will hopefully inspire you to keep learning, keep refining your financial practice, and to make wise decisions regarding your company’s financial well-being.

    Sound Accounts helps business owners make sense of their budgets, their cash flow, and their goals, with experienced, attentive bookkeeping support and solid advice. Contact us today to get started and ask how you can qualify for 6 months of free QuickBooks.

    To learn more about accounting and bookkeeping terms, check out our frequently asked questions below. 

    FAQ

    What are 5 common accounting or bookkeeping terms?

    1. Financial Statements: These are statements you can review to determine the financial situation of a business. Four primary financial statements include the statement of owners’ equity, statement of cash flow, income statement, and balance sheet.

    2. Asset: Everything that is owned by a business is an asset. It can either be tangible or intangible. Assets are shown on the balance sheet in their cash value. Some examples of assets include a patent, trademark, cash, equipment, vehicles, real estate, and land.

    3. Liability: The debt owed by a business is called liability. It includes unpaid rent, income tax, salaries, and loans, and more. Liabilities are classified as long-term and current on the balance sheet.

    4. Revenue: The sum of the money that your customers have paid or will pay for your goods or services is known as revenue.

    5. Expenses: All the costs you incur for generating income are expenses. There are fixed expenses and variable expenses.

    Why do small business owners need to have an understanding of bookkeeping and accounting practices?

    Money management makes all the difference in long-term success. The best CEO’s, entrepreneurs, and leaders understand the power of making a plan, following a budget, investing wisely, keeping good records, staying compliant, balancing the books, and using cash flow more strategically. 

    WIthout a solid understanding of these concepts and the ways they affect your business, you cannot expect to achieve your goals. 

    What are the 6 Golden Rules of accounting?

    You need to know the following accounting principles if you want to run your business successfully.

    Accrual Concept: It is an accounting method where revenue or expenses are recorded the moment a transaction occurs instead of recording the transaction when cash is received or paid.

    Business Entity Concept: It states that the transactions associated with running a business need to be separately recorded from those of its owner.

    Money Measurement Concept: It states that a business can only record a transaction if it can be expressed in terms of money.

    Going Concern Concept: It is an accounting term that requires a company to have enough resources to continue operating indefinitely.

    Duality Aspect Concept: It states that every business transaction needs to be recorded in two different accounts.

    Realization Concept: Revenue can only be recognized once the goods or services associated with it have been delivered.

  • How to Avoid a Tax Audit: 12 Tips to Keep Your Business Safe

    How to Avoid a Tax Audit: 12 Tips to Keep Your Business Safe

    When it comes to running a business, you need to make sure that the IRS doesn’t consider your company a top priority for a tax audit. Otherwise, all your accounts will be investigated in detail, to see if your submissions and records add up.

    On top of this, you will have to provide evidence for each receipt and payment claimed. Since only a small percentage of small businesses are audited each year, there are some things that you can do to take corrective action and keep up to date. Be sure to keep up with financial statements. Complete records of all transactions. Get a handle on your cards, charges, and investment activities, and stay in control of your total financial picture with the help of a great bookkeeper. Here are some tips that will help you avoid a tax audit.

    Business owner trying to avoid a tax audit by being compliant and honest

    1. Always Evaluate the Numbers

    One of the most important tips that will ensure your small business isn’t selected for a tax audit is checking your numbers. You should know that when someone provides a tax form that reports income, the same information will be available to the IRS. Therefore, the IRS will expect you to include the details in your tax returns.

    If your numbers don’t match what other parties have mentioned, you will be issued a notice for an audit. It makes sense to double-check every detail that you enter on the tax return. Accounting and bookkeeping errors don’t just inspire audits, they affect the clarity of your decision-making and the perception you have of your company’s financial health.

    2. Do Not Continuously Report a Loss

    Another tip that you should consider is not reporting a net loss for more than two continuous years. If you report a loss every year, the IRS will be more likely to evaluate your tax returns and issue a notice for a tax audit. Besides, it might even disallow most of your business expense deductions. 

    3. Accurately Report Income and Expenses

    To minimize the chances of being called for a tax audit, you have to report your income and expenses accurately. For instance, it is important that you use your business bank account for receipts and payments. Besides, this will make it a lot easier for you to prepare tax returns every year, as you will just need to go through your bank statements.

    Although you can round the numbers to the nearest dollar, you must ensure that you do not go overboard. The fact is that the IRS will discover if the information entered is incorrect. It is best that you avoid rounding to hundreds or even tens. Your personal assessment of risk should always lead you toward the common sense decision of complete transparency, compliance, and preparation.

    Calculator, pen, and folio representing the tools of a tax audit

    4. Do Not Pay High Salaries to Shareholders Working for You

    A notable tip that you must consider so that you can avoid a tax audit is paying reasonable salaries to employees who happen to be shareholders as well. Although you can pay a high salary to executives to minimize profits and tax, the IRS would have some reservations against such a decision. This is why you should stick to a salary range that is typical of your industry.

    5. Be Wary of Contractors

    If your business process involves a lot of independent contractors, it will often be more prone to a possible audit. The reason behind this is that it is possible to avoid payroll taxes when you employ independent contractors. Moreover, you should go through the guidelines set out by the IRS for independent contractors to ensure that you follow the regulations perfectly. To avoid any complications, consult your bookkeeper. 

    6. Claim Only Legitimate Home Office Expenses

    The IRS is skeptical of home offices and reviews the expenses to make sure they are legitimate. For this reason, you need to only claim expenses that you know you can justify. You must have a separate space at home for your business. Working in your bedroom does not count. Moreover, having large expenses for utilities and maintenance (this risks an energy audit) when operating a home office will often result in greater scrutiny. Your method of accounting and keeping the books should always include an accurate record and justification for all home office expenses. 

    7. Pay Your Estimated Small Business Taxes

    In addition to the above, you need to pay your estimated small business taxes on time. If you believe that you would have to pay around $500 in taxes by the end of the year, it is crucial that you make quarterly estimated tax payments. Otherwise, the IRS will issue a tax audit notice and require you to pay penalties.You don’t want back tax-payments affecting your ability to make the most of your funds and pursue business expansion.

    Business owner counting cash during a tax audit

    8. Honesty Is Important

    If you think that you can submit tax returns with falsified information, you need to think again. It is vital that you are completely truthful. To avoid a tax audit, you have to accurately report income, expenses, and credits, along with a wide range of details such as financial actions including the purchase of supplies, labor costs, sales transactions, credit card activity, delivery charges, finance charges, mortgages, loan payments, assets and debt, investment income, and much more, whenever these details are required or requested. 

    9. High Earners Need to Be More Careful

    Most filers are people who earn less than $200,000 a year. If you fall in this camp, you should be able to avoid scrutiny, at least when it comes to this detail. On the other hand, anyone who makes more than $1 million and pays abnormally low income taxes will be audited.

    The IRS will look into your deductions, including charitable contributions. Furthermore, if you file Schedule C, your tax returns will be questioned.

    10. Make Realistic Deductions

    While reviewing your tax returns, the IRS will pay special attention to any deductions you have made. If there are unrealistic or unusual deductions, the auditor will issue a tax audit notice to call you in. For instance, if you claim charitable tax deductions that amount to 40% of your annual income, or claim tens of thousands in computer hardware purchase costs when you’re the only one on staff, you will likely be audited. 

    11. E-Filing Helps

    Since the error rate of electronically filed returns is 0.5%, whereas the error rate of paper returns is 21%, it is best that you file your returns electronically. Many taxpayers have opted for electronic filings over the years. In fact, around 138 million taxpayers e-file every year. Since there is a lower chance of mistakes when you file electronically, it is often the right move. However, combining this with a trusted bookkeeper is the way to completely protect yourself. 

    12. Match Up All Your Paperwork

    Lastly, you need to make sure that you have sufficient evidence for everything. The IRS will find out if there are any discrepancies. You need to review all government-issued forms, your own financial statements, and any important documentation so they match the information you report in your tax returns.

    Keeping good records and staying honest should help you avoid a tax audit. Now, if you are unsure about your income and deductions, don’t hesitate to team up with an accountant or bookkeeping service provider to help you out. 

    Graffiti representing the disappointments of a tax audit

    In Closing

    Tax audits are not much fun. It’s not the way you want to start off in the new year. Take your finances, your books, and your tax obligations seriously. Don’t get sloppy or accept errors. it will come back to haunt you. Remember, the IRS can come after you for bad tax returns for years afterward. 

    Be disciplined in your level of organization, your records, and your communication with your bookkeeper. Don’t add stress to your life. You’ve already got enough of that. Keep it all together each day, each week, and each month, so you’re never caught off guard or tempted to push details around during tax season. 

    Sound Accounts gives business owners greater confidence and peace of mind by providing top-notch bookkeeping support and sound advice. Contact us today to learn more and find out how you can qualify for 6 months of free QuickBooks.

    To learn more about avoiding a tax audit, check out our frequently asked questions below. 

    FAQ

    What are some common triggers for a tax audit?

    The following mistakes are likely to trigger a tax audit.

    Overestimating Donations: Although the IRS encourages taxpayers to donate money and items to nonprofit organizations, it makes sure that no one takes advantage of the system.

    Mathematical Errors: Another mistake that can trigger a tax audit is errors in your computations. Even though it might sound simple, most tax returns are audited just because of mathematical errors. This is why you have to ensure that everything adds up when you fill out your paperwork.

    Failure to Sign the Return: Whether you file your tax returns electronically or manually, you have to make sure that you sign them. Otherwise, you can expect additional scrutiny and the possibility of an audit.

    Under-Reporting Income: Even though you might be tempted to exclude certain income, the IRS will easily find out if you have under-reported it.

    Over-Reporting Home Office Expenses: If you are running a business from your home, you need to ensure that you do not over-report expenses. If the deductions are too large, the IRS will definitely raise an eyebrow and reach out for a talk. 

    Who gets audited the most?

    The IRS is more likely to audit taxpayers who have earned over $500,000 or under $25,000.

    How can you reduce your chances of being audited?

    Here are some of the ways you can reduce the possibility of getting audited.

    Not Reporting a Loss: If you report a loss, an audit is more likely. This is why it is important that you recheck your income and expenses before you claim a loss.

    Specify Expenses: Each expense you claim needs to be specific. Otherwise, it would be deemed fictitious.

    File on Time: By filing on time, you can reduce the risk of being issued a tax audit notice.

  • Year-End Bookkeeping Checklist: 8 Tips to Finish the Year Strong

    Year-End Bookkeeping Checklist: 8 Tips to Finish the Year Strong

    Being a business owner comes with its fair share of responsibilities. When the year is about to end, you are likely to struggle with bookkeeping procedures. In order to make it through the year’s end with confidence, it is necessary that you follow a detailed year-end bookkeeping checklist as it will ensure that everything gets taken care of. To help you get things in order and transition into the new year right, here are some tips to consider. 

    Business owner going through her year-end bookkeeping checklist

    1. Prepare and Analyze Financial Statements

    The first thing you need to do once the year ends is prepare and analyze financial statements. The fact is that financial statements provide a lifeline to every business by providing a glimpse into its financial standing. Look at all your reports, outstanding invoices, credit card accounts and credit card statements, cash-flow, accounts payable and receivable, and all financial reports.

    When you go through your statements to determine the state of your finances, you’ll have the information you need to forecast for the coming year and beyond. Your financial health gets clearer and your business goals are more attainable.

    Financial statements are necessary for preparing tax forms, and they help you, your accounting team or bookkeeping service provider, who can also serve as tax professional when the time comes. Financial records afford you a comprehensive evaluation of your business as you head into that year-end closing.

    When you analyze the year-end statements, including the income statement, balance sheet, and cash flow statement, you will get an accurate picture of your operations. The income statement is also called a profit-and-loss statement, and it summarizes the income and expenses for the year. This means that you will get an idea of how much revenue you generated and the payments you had to make.

    Some of what you’ll see on the profit-and-loss statement includes revenue, cost of goods sold, operating expenses, tax expenses, and other financial costs. 

    As for the cash flow statement, it simply lists all your cash inflows and outflows, along with a few other items of interest. Now, the cash flow can either be positive or negative. If it is positive, it means that you have some cash on hand. However, if cash flow is negative, it means you have to obtain working capital. The balance sheet shows what assets you own and how much debt you owe. 

    2. Collect from Pending Invoices

    Another tip that will prepare you for the new year is collecting from customers who have not paid yet. You’ve got to take care of all your uncleared transactions, unpaid bills, and unpaid invoices. You will need to put in some effort if you want to collect past due totals. But it’s worth it since you’ll have more working capital to expand your business in the coming year. 

    Some customers just need a nudge, a bit of a reminder. Another copy of the invoice and a friendly email should do the trick. To make sure that everyone pays on time, you can set up invoice payment terms, contact customers who have past dues, and establish a payment plan or automatic payments from some vendors. However, you must be professional, positive, and understanding at all times. Otherwise, you will struggle to collect from late-paying customers.

    If your customers or vendors are having trouble making payments on time, you should discuss a payment plan with them. It would enable them to pay in installments instead of leaving the entire balance unpaid. This allows you to prove to customers that you truly care about them and their requirements. But if you continue to have trouble after repeated attempts and letters, you’ll want to seek outside help, sometimes from a collection agency.

    3. Inventory Accounting

    Businesses that have inventory need to keep an accurate count of all the materials that are available on the premises or the warehouse. Otherwise, you’ll be dealing with inventory shortages or an unnecessary surplus.

    Towards year-end, you need to conduct an inventory check or inventory count. You will have to use inventory tools, inventory management software or even hire out the service, and determine if there are any discrepancies between the balance sheet and the count.

    When you account for inventory, you will determine how much money you have spent during the year on goods and supplies. Also, it enables you to find out how much money you will need for purchasing additional inventory going forward, and to adjust spending accordingly. 

    Business owner working through his year-end bookkeeping checklist

    4. Organize Business Receipts

    When it comes to storing business receipts, make sure everything is organized. As the year ends, it makes sense to tidy things up and prepare for the new year. If your receipts are disorganized, your business will have a difficult time making sense of your transaction history or how to move forward with certain aspects of spending or product and service offerings. There will also be a risk of inaccurate and sloppy books leading to difficulties with taxes, the possibility of an audit, and poor decision-making. 

    Here are some things that you can do to get all your business receipts in order.

    • Use folders and labels
    • Sort receipts by type of expense
    • Organize all the receipts chronologically
    • Store the receipts electronically on your computer

    Keep in mind that it is easier to stay organized than to organize a mess. Maintaining order is better than trying to fix chaos. You should file a receipt the moment you get it. This will minimize the risk of omission. Now, if you have accounting software, it would even be possible to upload the receipt along with all relevant documents associated with the transaction. This way you have a permanent electronic copy or record of the transaction.

    5. Reconcile Bank Accounts

    When the accounting year ends, you need to reconcile all your bank accounts. This will allow you to verify whether your accounting records are accurate and updated. Review your bank statements to reconcile the accounts. It is necessary that your actual bank balance matches your books. This is also a good time to remind you to keep your business and personal expenses separate.

    6. Review Your Accounts Receivable and Payable

    In addition to the above, you also have to review your accounts receivable and payable so that you settle debts and collections. You need to follow up with vendors and pay them off so that the new year starts with a clean slate. Also, you must ensure that your accounts receivable reflects how much money your customers actually owe you.

    Financial statements used for a year-end bookkeeping checklist

    7. Back Up Information

    If there is one year-end booking tip that you simply cannot afford to overlook, it is to back up information. This will save you time and make things a whole lot easier for you when you need to access that data for yourself or the IRS.

    You do not want to lose important information, as your company’s financial history and other details help you steer your business in the right direction. Having a reliable backup system, including a trusted cloud backup service, along with additional in-house physical storage like tape and hard drives, makes all the difference. Data back up isn’t an option; it’s a necessity, and one no good business owner neglects. 

    8. Provide Documents to Your Bookkeeper

    Lastly, you must have all important documents on hand so that you can give them to your bookkeeper. . Bookkeepers are great at keeping things organized. But if you’re still handling part of the bookkeeping process and aren’t as organized as they are, make sure to provide them will all necessary documentation so they can excel at their job.

    Some of the documents that you will have to provide include sales records, invoices, petty cash records, bank statements, financial statements, loan information, and payroll records. If you are using software, it should take you just a few minutes to gather all the necessary documents. Talk with them beforehand to see what documents they need. 

    In Closing

    This should give you a solid start to your year-end bookkeeping checklist. It is important that you follow the steps mentioned above for a stress-free new year. Give your bookkeeper the info they need to help you succeed. And give yourself a break in the new year by starting off organized, up to date, and with clear goals for 2023. 

    Sound Accounts helps small business owners get organized, make sense of their finances, and sharpen their business with individually tailored bookkeeping support plans and trusted advice. Connect with us today to get started and find out how to qualify for 6 months of free QuickBooks. 

    To learn more about year-end bookkeeping preparations, check out our frequently asked questions below. And Happy New Year!

    FAQ

    What does a bookkeeper take care of at year’s end?

    When the year ends, a bookkeeper has a lot of tasks that need to be performed. The professional will have to go through all your accounting records, perform necessary entries, complete bank reconciliations, and prepare financial statements. Moreover, they will also prepare your business for tax season.

    How long will it take to prepare year-end accounts?

    Preparing year-end accounts is often time-consuming. The larger your business, the more time it will take. It can take an entire month for an accountant or bookkeeper to complete the work. However, it can take even longer if you try to take on the work yourself. It is recommended that you hire a bookkeeper or bookkeeping service provider to help you manage your books. That way, you can focus instead on leading your team and your business operations.

    Do bookkeepers handle invoicing?

    Yes, bookkeepers can handle invoicing. They are experts in several roles. Therefore, you should have no trouble asking your bookkeeper to take on the invoicing and other tasks such as preparing financial statements and completing the bank reconciliations as well as preparing your tax returns, as long as all tasks are clearly communicated early on, written in a contract, and your bookkeeper is getting paid accordingly for their work.

    What are some things I need to do as the new year approaches?

    • Organize your receipts
    • Back up your data
    • Print and go over all your relevant financial statements
    • Reconcile your bank accounts
    • Do a full inventory count
    • Collect all unpaid invoices
    • Pay any invoices you still owe
    • and more
  • Better Invoice Tracking: Top 5 Invoicing Software Programs

    Better Invoice Tracking: Top 5 Invoicing Software Programs

    When it comes to running a business, one of the most important tasks that you need to stay on top of is your invoice tracking. Invoicing helps you with expense tracking, payment options, and dealing with unpaid invoices. It helps you pay bills, solidifies customer and vendor partnerships, and more. It also keeps you correct and compliant during tax time.

    This is why it is wise to use an invoicing software program in order to instantly deliver customizable invoices and benefit from cost savings. It allows you to ditch manual printing and delivery of bills. Therefore, you get to utilize a pain-free and professional way to create and send invoices to your customers, vendors, and others. To help you pick out the best invoice tracking software, we share some of the most popular tools. Let’s take a look.

    1. Melio

    One of the best invoice tracking software programs that you need to know about is Melio. It is a modern payment solution that allows small businesses to excel in account management. You can even use it for paying business bills easily using a credit card or bank transfer. Users get rewards and can manage their credit card billing cycle better. Some of the additional features that you will find incredibly useful include seamless sync, scheduling multiple payments, and payment approval workflows.

    There is very little you cannot do with Melio. It simplifies bill-paying and improves cash flow. If you are on the lookout for a user-friendly accounts payable tool that truly delivers, Melio has you covered. It might just be the cloud-based software you need to use for sending and managing customizable invoices.

    In fact, its user experience is considered one of the best. You can add vendors quickly, upload files with a timestamp, and more. Also, it allows you to assign roles and permissions so that only the right people use it. The more you use it the easier your life and work will become.

    business owners struggling without an invoicing software program

    2. Zoho Invoice

    Another excellent invoicing software that small businesses should consider using is Zoho Invoice. You can use it to craft professional invoices and have them sent automatically to customers. Besides this, you also get to send payment reminders in order to receive payments on time.

    With Zoho Invoice, you get to brand your invoices and add options for different languages and currencies for completely customizable invoices. On top of this, you have the option to automatically send recurring invoices (automatic payment reminders). It doesn’t get better than this.

    Moreover, you can use the program to track reimbursable expenses, bill clients, time tracking, get detailed estimates, and accept online payments. What’s more, you can use its mobile app for all mobile devices with Android or iOS to unleash its full potential.

    The main reason that we had to mention Zoho Invoice is that it has been designed for micro-businesses. This is why home-based businesses, consultants, sole proprietors, independent contractors, and freelancers often find it to be the best option. If you employ under 10 people, it will allow you to manage employee wages as well.

    Best of all, Zoho Invoice is a great solution for businesses that have a small budget and don’t require an overly complicated program. You will appreciate its straightforward nature and low pricing. Furthermore, it is important for you to keep in mind that it is also a scalable invoicing tool. It is due to this reason that you will not need to switch to a different software program when your company expands. Most of the options can be upgraded and integrated with other applications. Besides, its mobile application allows you to keep up with work on the go.

    3. QuickBooks

    QuickBooks is a name that most businesses are familiar with. Whether it be the traditional software based program or QuickBooks Online, it is the ultimate invoicing software that enables you to create customizable invoices quickly. You should be able to create a custom invoice that represents your brand or opt for an invoice template to guide you. It is also possible to keep track of payments in real time with QuickBooks. Users can rely on automated recurring invoices and reminders to ensure accuracy and save time.

    Moreover, it is possible to create invoices with shipping costs, discounts, and taxes. QuickBooks provides mobile access (invoice app) as well so that you can send invoices from just about anywhere. Besides, it allows integration with multiple applications including Whatsapp. This ensures that you are able to send invoices to customers regardless of where they might be.

    As a small business owner, you will find QuickBooks Online to be the ideal accounting software. It lets you choose from four plans and even has an option for people who are self-employed. Each plan provides a host of features that enable you to up your game. Furthermore, you will get to generate various reports for accounting purposes. QuickBooks also lets you upgrade your plan as your business scales, making it a versatile and adaptive invoicing solution with a range of invoicing features and invoicing options. 

    If you have never used accounting software in the past or are simply looking for one that is easy to set up, you can rest assured knowing that QuickBooks has you covered. If you require assistance, you can reach out to a professional bookkeeper to configure the software for you so that it makes sense for your business operations.

    • Once you use QuickBooks, you likely won’t want to go anywhere else. The benefits are myriad, including: 
    • Simple billing process
    • Intuitive client portal
    • Connection to your bank accounts
    • Simple invoice generator
    • Management of outstanding invoices and partial payments
    • Streamlined payment processing
    • Customizable templates
    • Online Invoicing
    • Expense management
    • Track expenses
    • Ability to run financial reports and other detailed reports
    • Access to a range of other advanced features
    • And much more

    4. Xero

    The next invoice tracking software program on our list is Xero. It is an online accounting, billing, and invoicing software that aims to help you run your business better. You can use it to access real-time information and make important decisions.

    Xero lets you send invoices, accept payments, and pay bills. Some of the features that you can use include sales tax calculation, quotes, purchase orders, inventory management, reporting, online filing, data capture, contacts, payroll, project tracking, bank reconciliation, and to claim expenses.

    What sets Xero apart is that it makes tracking payments a lot easier. If you are struggling with invoice tracking, give it a try. It allows you to maintain an excellent relationship with customers without having to worry about them making payments on time. Therefore, you will be able to maintain a positive cash flow and not stress about having to take out a loan or access additional lines of credit.

    Moreover, you will find its user-friendly dashboard incredibly helpful. It will let you know when a bill is due and makes it possible for you to manage all your purchase orders. With the spare interface, you get a complete picture of how your business is performing. Also, you can check out the costs in real-time and make modifications instantly.

    Since Xero is a cloud-based solution, you won’t need to install any programs on your computer. Besides, it provides double-entry bookkeeping functionality, which ensures that there is a debit and credit for every transaction. Also, you have the option to schedule upcoming payments to save time. Small business owners can rely on its automation capabilities to improve their performance.

    The same business owners now succeeding with quality invoicing software

    5. WorkflowMax

    Take your small business to the next level with WorkflowMax. It is an online invoice management software that will change your life for the better. As the leading all-in-one accounting management software, you can use it to generate reports, send invoices, track time, create schedules, and more.

    You should be able to quickly create customized invoices with its online billing feature. It even lets you use progress amounts, costs, and actual time so that the invoices are able to include all the information that you deem necessary. You can use a simple template to create a universal invoice for all customers or you also have the option of sending a unique and detailed invoice that covers different rates, cost quantities, and tasks.

    WorkflowMax is just the invoice tracking software you need to manage payments in one central location. It provides a clear view of all your finances and allows you to easily automate key accounting processes.

    The program has a unified dashboard that has reporting, reconciliation, approvals, and payment capabilities within reach. Moreover, there are even secure electronic payments for speeding up accounts payable.

    Conclusion

    Invoice tracking software allows small businesses to improve their workflow and manage several aspects of their finances. Using the right program makes all the difference in today’s fast-paced business environment. Forget about having to perform manual entries for anything ever again as the software takes care of everything. You even have the option to integrate it with other applications for improving business operations.

    Every business owner that wants to stay on top of invoicing and continue to grow needs a quality invoicing program. Take time to research your choices and ask other business owners and your bookkeeper what programs they prefer. 

    Sound Accounts helps business owners increase both efficiency and productivity with individual bookkeeping service plans. Contact us today to learn more and find out how much better business can be with an experienced, attentive bookkeeper in your corner. 

    To learn more about invoicing software programs, check out our frequently asked questions below. 

    FAQ

    What program is best for invoices?

    If you are on the lookout for an invoice management program, you have a number of options, including Xero, Zoho Invoice, and QuickBooks. Consider your requirements to decide which solution is best for you and your business goals.

    What Is an invoice tracking software program?

    Invoice tracking software is a program that streamlines the creation of bills and invoices so that you receive payments on time and manage these aspects of business with greater ease. It even lets you monitor and track bills so that you can send reminders automatically and encourage customers to clear their dues. With invoice tracking software, you can minimize personnel costs and maximize on your time and organization.

    Is Excel or Word better for invoices?

    When it comes to creating invoices, you might be wondering whether to use Excel or Word. Generally, it is best that you use Excel as it provides advanced capabilities.

    How do I decide which invoicing program is best for my business?

    It’s a good idea to ask around. Talk with other business owners about their successes with certain programs. Read reviews and articles on the subject. Test a few programs out before making a final choice. And most of all, work with your bookkeeper or bookkeeping service provider to help you make the right choice. 

  • Surprising Tax Deductions You May Not Be Aware Of

    Surprising Tax Deductions You May Not Be Aware Of

    Nobody wants to overpay taxes. However, many people overlook various tax deductions that could have helped them save more money. Whether you are interested in paying fewer taxes or just want to stay in the know, the following tax deductions will ensure that you have the information you need. If you’re a business owner, working from self-employment income, married filing jointly or separately, a full-time student, or have moved into a different tax bracket, this list will help you uncover more than just your standard deduction and develop a few great ideas to minimize your federal taxes.

    1. State Sales Taxes

    There are a few states such as Wyoming, Washington, Texas, Tennessee, South Dakota, New Hampshire, Nevada, Florida, and Alaska where residents are not required to pay income tax. This means that you get to choose whether to pay local and state income taxes or local and state sales taxes.

    If you live in a state that charges income tax, you should opt for local and state income tax deductions. However, residents of income tax-free states can claim sales tax deductions in two ways. They can either track all the sales tax paid during the year or rely on the IRS tables to determine how much state sales tax they have paid on purchases and major renovations.

    2. Reinvested Dividends

    Although reinvested dividends do not count as a tax deduction, it allows you to subtract the amount you reinvest from stock and mutual fund dividends from your taxable capital gains. If you are an investor, it would allow you to save a ton of money. You should definitely keep an eye on how much you reinvest from dividends received.

    cash symbolizing money saving tax deductions

    3. Charitable Contributions

    If you make out-of-pocket charitable contributions, you can deduct the value from your taxes. The fact is that the charitable contributions you make in a year can quickly add up. It makes sense to write off the cost of your good deeds.

    A great thing about this tax deduction is that you can include just about every type of out-of-pocket cost including the fuel consumed by your car when you drove for charity or gave up ingredients for a soup to a nonprofit organization.

    4. Interest on Student Loan Paid

    Whether you have paid interest on a student loan you took out for your studies or on behalf of someone, you can deduct it from the chargeable taxes for the year. As long as a student hasn’t claimed themselves as a dependent, he or she can qualify for a deduction of up to $2,500. If you are a young professional or have recurring student debt, you should be able to benefit from some respite. It is definitely important that you take advantage of this tax deduction for education costs.

    5. Moving Expenses

    Military personnel still have the option to deduct moving expenses. Previously, every taxpayer was permitted by the IRS to claim moving expenses. As an active duty military member, you should be able to deduct expenses incurred for relocation. But you can only use this tax deduction for eligible expenses if you haven’t received any reimbursement from the government. You are not required to pay taxes on moving expense reimbursements either if the move was permanent and necessary for your job.

    Hence, you should look for those receipts in order to claim the costs of travel and lodging as well as for moving household items, shipping your automobile, and other moving expenses. After all, anyone who serves their country deserves a thank you. Why not some form of tax benefit.

    6. Child and Dependent Care

    Did you know that you can get a tax credit for caring for a child or other dependents? As you might already know, tax credits are a lot better than tax deductions, as they help reduce the total tax charged for the year. 

    Some people don’t know about child and dependent care credits. There is a tax-favored reimbursement account in place to provide some relief in caring for your loved ones. You can easily get a tax credit of up to $5,000. You can even claim an additional tax credit if you spend a lot on work-related child care. It is because of this reason that parents can cut their tax bills significantly.

    Moreover, the tax credit amount increases for households that have a lower income. The American Rescue Plan was introduced in 2021 and many of the changes it brought to the child and dependent care tax credit are still in place. It increased the credit and made it possible for taxpayers to get a credit if they do not owe any taxes. However, it is important that you consult with an expert to make sure that you take complete advantage of this tax credit.

    7. Earned Income Tax Credit

    The earned income tax credit is wonderful for many lower-income taxpayers. But there are still many people who do not claim it despite being eligible. The rules can be somewhat complicated, which can deter one from going after it. Since tax credits offer greater value than tax deductions, it is vital that you look more into this.

    The maximum amount you can claim varies depending on your filing status. It supplements low to moderate-wage earners. However, you need to understand that the tax credit is not only offered to someone who earns minimum wage. In fact, it provides support to the entire middle class, including white-collar workers who have worked fewer hours during a given year, took a pay cut, or became jobless.

    If you are wondering about the exact refund you can receive, you need to know that it all comes down to your family size, marital status, and income. In order to get a refund, you have to file your tax return regardless of whether you owe taxes or not. Furthermore, anyone who was eligible to get the credit previously but failed to do so can file during the year and get a refund for up to 3 tax years.

    8. State Tax Paid Last Spring

    If you pay quarterly taxes, you can claim the state tax you paid last spring. You should include the amount in the state tax itemized deduction of your return. Also, you can add the state income taxes that had been withheld from your salary. Hence, you should be able to save additional money when you utilize this tax deduction.

    Individual working on tax deductions

    9. Refinancing Mortgage Points

    When buying a property, you get to deduct the points you paid for obtaining the mortgage in one go. On the other hand, you have to deduct the points over the new loan’s life if you decide to refinance a mortgage.

    This would mean that you will be able to deduct about 1/30th of the points for the year in case of a 30-year mortgage. For instance, you would get to deduct about $33 for every $1,000 worth of points paid. Even though it might not seem like a lot, there is no reason for you to overlook this. Moreover, you can deduct all the points that you hadn’t deducted when you pay off the loan because of the need to either refinance it again or sell your house.

    10. Jury Compensation Paid to Your Employer

    There are some employers who pay their employees a full salary when they take on their civic duty but require them to hand over their jury fees. However, the fees paid to you have to be reported as it is considered taxable income. Therefore, if you have handed over the money to your employer, you should be able to deduct it so that you don’t end up paying taxes on money that you never even got to keep.

    Conclusion

    Of course, everyone wants to save money at tax time regardless of their income level. But finding the best tax breaks as an individual takes reading, research, and oftentimes, linking up with a good bookkeeper who can uncover every possible avenue of savings. Don’t short-change yourself by missing out on key opportunities and putting yourself and your family in a stronger financial position.

    Sound accounts empowers business owners with individually tailored bookkeeping service plans that increase efficiency and help businesses reach their goals. Contact us today with questions and find out how good life can be with a top-notch bookkeeper by your side.

    To learn more about tax deductions, check out our frequently asked questions below. 

    FAQ

    What are the easiest tax deductions?

    Some of the easiest tax deductions that you need to know about include state sales taxes, charitable contributions, travel, moving, medical expenses, and interest paid on student loans.

    What are some hidden tax deductions?

    Now, some of the hidden tax deductions that most people don’t know about are charitable contributions, earned income tax credits, and child and dependent credits, and certain jury duty costs.

    What expenses can I write off?

    The expenses that you should be able to write off include purchases, home renovation expenses, and work-related childcare costs. 

    Who can I talk to for help with saving money on taxes?

    A qualified bookkeeper or accountant will be your best advocate. They’ll be able to uncover savings, not only for you as an individual, but for your business as well.

  • Expense Tracking: 5 Tips for Small Business Owners

    Expense Tracking: 5 Tips for Small Business Owners

    Owning and running a business is no easy task. There is so much that you need to manage. It can be overwhelming, especially when you’re new. One of the tasks that you are likely to struggle with is expense tracking. According to studies, small businesses have a difficult time keeping track of expenses and managing money. That is, staying on top of business finances. Since it is crucial that you avoid wasting money, consider the tips mentioned in our post to stay on top of expense tracking.

    register or calculator symbolozing expense tracking

    Why Track Your Business Expenses?

    Although expense tracking can seem like a mundane task, it offers a host of benefits.

    1. It Increases Financial Awareness

    One of the main reasons you have to track your business expenses is that it allows you to become financially aware so that you can improve your money management strategy. Most companies fail as they struggle with cash flow issues and abiding by their business budget. Therefore, you have to account for daily expenses. Otherwise, your expenses would outstrip income and leave you vulnerable, at times, not simply in your business transactions, but with personal funds as well. 

    2. It Prepares You for Tax Season

    Tax season doesn’t have to be tiresome. By keeping track of all your expenses, you could even get some money back on your tax returns. It will also decrease the likelihood of fines. Keeping a meticulous record of your expenses and monitoring bank statements and financial statements will ensure that you know which expenses are tax deductible.

    3. It Ensures You Pay Employees on Time

    Tracking expenses will ensure that you are never in a situation where you cannot pay your employees their salary. Timely and accurate payroll will help keep everyone happy, help you protect your reputation, and allow you to attract stronger talent. 

    How To Track Expenses

    Of course it sounds like a wonderful idea. But you’ve got to know exactly how to track expenses the right way before you can reap its many benefits. Let’s make tracking expenses an integral part of your business plan, Here are some important steps to take to ensure you do it right. 

    1. Create a Separate Business Bank Account

    When it comes to expense tracking, you need to consider opening a separate bank account for your business. You should consider multiple accounts for business income, business savings, business-related expenses, and more.

    The last thing you want is to mix up your personal expenses with business expenses. Once you have created your company, you have to open a new bank account to separate your personal and business accounts. Not only does separating bank accounts help with keeping finances organized, but it also helps simplify everything and makes it easier for you to submit your accounts for both federal taxes and applicable state taxes. 

    Moreover, having a business credit card will eliminate any confusion associated with personal finances. It is quite easy to get a credit card for your business. Otherwise, you have the option of getting a debit card. A credit card is an absolute must for benefitting from the additional funding and to build your business credit rating.

    In fact, you should be able to find a specialized card for small businesses. It will enable you to make payments (both your credit card payments, and payments to vendors) without having to worry about cash flow issues. Also, it makes for an excellent strategy to avoid a cash flow shortage.

    Managing cash flow, expenses, along with loan and credit card payments shouldn’t be as difficult as some people make it. You can use accounting software and an experienced bookkeeping service to help you stay on top of these as well. 

    2. Use an Expense Tracker

    Another great tip for keeping track of business expenses is using an expense tracker. It will allow you to stay on top of everything. There are plenty of business expense management tools out there for you to choose from. You can easily use one on your mobile or laptop.

    It will ensure you can manage each expense instantly without having to perform additional manual entry procedures. It doesn’t get better than this. Only when you give it a try will you come to realize just how practical and time-saving it is.

    You should consider using a few mobile apps to determine which works best for you. Generally, you will just need to log the expenses and the tool will perform all calculations for you. The app will also sync with your accounting software and track every single expense. Therefore, you will get to use a centralized system for managing expenses. 

    Stay on top of supply purchasing, business mileage, additional business purchases, entertainment expenses, variable expenses, business loan payments, and much more. 

    3. Save Your Business Receipts

    Next, you have to scan each business expense to ensure that you overlook nothing. It is important that you have access to all your business expense receipts so that you are able to verify each expense in detail and be ready in case of an audit.

    Since you have a separate business account, you will have separate business receipts which you can store. Your expense app and software should enable you to scan each receipt from your purchases using your business credit card. Then, it will log all information so you can quickly account for everything, suddenly making your smartphone the ultimate tool.

    business owner working on expense tracking

    4. Immediately Record Every Expense

    Whenever you incur an expense, you should record it immediately as you might forget about it later on. In order for your business to be a success, you have to avoid overlooking anything. It is necessary that you account for each expense so that you maintain accurate records.

    Keep in mind that it isn’t easy to remember every detail. Even if you have a tendency for remembering facts, it is best that you don’t take any risks. Instead, you should simply record the expenses on a business expense tracker application connected with your business accounting software.

    5. Determine Tax-Deductible Expenses

    Lastly, you have to know which expenses are considered tax-deductible. This will ensure that you get to deduct these expenses when calculating the taxable income of your business. You need to monitor tax-deductible expenses as they will help you save a great deal of money.

    Every successful business owner takes advantage of tax deductions. Some of the most common tax deductions that you should look out for include:

    • Office expenses
    • Tools and equipment
    • Self-education expenses
    • Clothing and laundry expenses
    • Vehicle and traveling expenses
    • Other work-related deductions

    It is important to access your state’s taxation codes and rules online to make sure you’re doing everything right. This resource will also explain which business expenses are considered tax-deductible.

    Conclusion

    Tracking business expenses is necessary for running a successful company. If you don’t take expense tracking seriously, you could end up suffering cash flow issues, supply problems, payroll issues, and much worse. 

    Fortunately, the above tips will allow you to track all expenses incurred by your small business with confidence. Make sure to use the best applications and accounting software choices to stay organized and up to date. It is also worth it to hire a bookkeeper to handle expense tracking. A bookkeeping service provider will have the experience, knowledge, and technology needed for top-notch money management. 

    Sound Accounts brings the benefits of top-notch bookkeeping and to businesses of all sizes. Get organized, improve your money management, stay compliant, and make the most of your dollars. Contact us today to learn more and find out how to qualify for six months of free QuickBooks.

    To learn more about expense tracking, check out our frequently asked questions below. 

    FAQ

    What is the best way to track expenses for a small business?

    The best strategy for tracking small business expenses is working with a bookkeeping service provider. There is only so much you can do on your own. It is wise to turn to an experienced professional with the knowledge base and tools necessary to achieve the best results. Afterall, you have your business to run.

    What strategies should I use to track my expenses?

    The following strategies will enable you to track all of your expenses.

    Activate Your Bank SMS: A great way to track each expense is by activating the bank SMS. It will ensure that you know whenever a payment is made using your business bank account.

    Record Every Transaction: Since you would eventually forget about the transactions incurred, you need to document each one immediately.

    Categorize Your Transactions: It is a good idea to categorize your transactions so that you can determine which ones need to be eliminated.

    What should small businesses keep track of?

    When it comes to running a small business, you are likely to incur a variety of expenses including:

    • Payroll expenses
    • Interest expense
    • Retirement plans
    • Employee benefits
    • Insurance premiums
    • Home office expenses
    • Depreciation of equipment
    • Rent or mortgage payments

    What are the 4 types of expenses?

    In order to get a handle on your business, you need to know about the different types of expenses common to business owners.

    Fixed Expenses: One type is fixed expenses. These expenses happen every month or year and are of a fixed amount. Some examples of fixed expenses include car payments, cell phone bills, mortgages, and membership fees. Fixed expenses are easy to track and anticipate but can change over time based on changing needs within your business. 

    Recurring Expenses: Also known as day-to-day expenses, recurring expenses are unpredictable, unlike fixed expenses. However, they are still reliable and can be budgeted. Some examples of recurring expenses include gasoline and electricity bills.

    Non-Recurring Expenses: Most business owners tend to be worried about non-recurring expenses as they cannot be anticipated and are likely to affect your budget adversely. These expenses can either occur once or a few times a year. They are likely to be hefty and can take a toll on your cash flow. Some examples of non-recurring expenses include car registration fees, moving expenses, and maintenance costs.

    Whammy Expenses: Whammies can throw your business under the bus. These are frustrating to deal with as they are incredibly unpredictable. Since you don’t know when whammy expenses will occur and how much you’ll have to spend, you may need to rely on your emergency fund or a loan to pay for them.

  • Better Financial Reporting: 8 Tips for Timely, Accurate Reports

    Better Financial Reporting: 8 Tips for Timely, Accurate Reports

    Accurate financial reporting is one of the foundation stones of financial stability and success. However, it can be difficult to ensure both timeliness and accuracy. Maintaining a high quality of reporting is necessary, not only for things like tax compliance, but to ensure you have the information you need to make better business decisions.

    Since market conditions change daily, stakeholders require access to updated financial reports on a regular basis in order to make these decisions. This is why businesses need to follow certain best practices to get their financial reporting right. Whether you’re in senior management, a new business owner, or any professional level in-between, timely, accurate financial reporting is a skill worthy of your best efforts. Let’s look now at 8 tips to ensure accurate reports. 

    1. Identify Critical Information

    One of the most important tips that you have to consider if you want to create financial reports on time is to identify critical information. Start by evaluating which documents are necessary for making data-driven decisions. Then, you must prioritize these documents accordingly. Simplify all of your deliverables so that every piece of critical information is provided on time.

    Besides, you don’t need an extensive profit-and-loss statement every month. Instead, a simple profit-and-loss statement will sometimes suffice. The same goes for your balance sheet and the statement of cash flows.

    business owner improving her financial reporting

    2. Use Collaborative Digital Tools

    In order to create financial statements on time, give collaborative digital tools a try. They will make your life a lot easier. Go through the digital tools available to you to determine which ones to use for automating tasks.

    These tools will also help reduce costs and allow you to get more accomplished. Some of the tasks that you can easily automate include inventory management, tracking receipts, making certain payments, tracking expenses, and other important functions.

    Besides, you can turn to bookkeeping platforms for centralizing data and generating financial reports with minimal time. There is just so much that you can do on your own. This is why you have to take advantage of the latest technologies. This will help you improve your reporting practices, easily create needed forms and documentation, gain quick access to any evidence of financial errors, stay on top of your pre-determined control criteria. 

    3. Create a Calendar of Events

    To stay on top of financial reporting, you are going to need to prepare a schedule for all the activities you expect to occur in a month. Before the start of a new month, go through your calendar to determine what events will take place and make sure there aren’t any necessary changes that need to be made.

    Even the simplest of schedules will make it a lot easier for you to manage your work, finances, and financial reporting. This is part of your control framework. You must ensure your team understands and agrees to the timeline so you can maintain consistency.

    Speak with your bookkeeper, audit committee, CFO, and other key decision makers in advance to clarify the scope of work for each month. During your meeting, set the specific parameters of key projects before you work on your financial statements. This will ensure every person is on the same page with regard to financial decisions, goals, and reporting. 

    4. Tailor the Reports for Your Industry

    The next tip that you have to keep in mind if you want to prepare financial reports on time and ensure that they are accurate is to tailor the reports to meet the requirements of your particular industry. Since every industry is different, you are going to need to make changes to your financial reports to meet these unique requirements. 

    Financial statements make for excellent tools when running a business. They enable business owners to make decisions proactively. Your focus should be on reliability and fulfilling the needs of your industry. Your stakeholders need to compare the financial statements of your company with other similar companies in your field or similar fields to be as relevant and productive as possible.

    5. Reconcile Your Transactions Regularly

    A great tip that will help you improve your financial reporting is reconciling transactions on a regular basis. The last thing you want is to have to make reconciliations at the end of the month. It will only make things a lot more difficult for you, as you would have to recall certain facts and figures and put in the extra effort to ensure accuracy.

    In fact, successful businesses know the importance of tracking and recording operational transactions daily. You also need to reconcile general and subsidiary ledgers every week to save a ton of time. If you fail to do so, you will have a lot on your plate and you will struggle with creating timely and accurate financial reports. The more regularly you reconcile transactions, the easier life will be for you.

    6. Prepare a Delivery Schedule

    In addition to the above, you need to come up with a delivery schedule to create your financial reports on time. It is best to dedicate plenty of time to building a detailed close schedule, as it will guarantee that everyone has an idea of what and when things need to be done.

    Setting a deadline for each task will ensure adherence to the objectives that guide your long-term goals. Most entries, schedules, and reconciliations should be completed before the period ends, so that you can focus on performing accuracy checks. Reviewers need to perform reviews early on instead of waiting.

    Prep work can make all the difference. That way, you no longer need to check on everyone constantly. Instead, your team members can come to you whenever they have issues.

    7. Leverage Data in Real-Time

    One secret to creating accurate financial statements is using data in real-time. Since most software packages integrate APIs, you should be able to extract all the data you need to create the reports. In fact, you can rely on software to make quick changes to reports and to save you time.

    The past few years have seen an improvement in the way people use technology. Remaining competitive and relevant in today’s world means choosing the right tools and making the most of available data-driven technologies.

    Data is your biggest asset. You have to use it to get the results you are looking for. The latest software allows you to obtain data in real-time with ease. Don’t hesitate to use it so you can unleash your organization’s full potential. 

    business owner working on better financial reporting methods for more accurate financial reports

    8. Focus on Flexibility

    Lastly, you have to improve flexibility. It is only possible when you optimize your workflow. Staying flexible, agile, and adaptive is important in every aspect of business, even in your bookkeeping, money management, and financial statements.

    These statements are more than just reports for filing taxes and attending board meetings. They serve as effective tools for making the right decisions. You want to be sure your workflow, data collection, and reporting methods meet the current needs of your company and your objectives and be ready to change some of them when they do not. 

    A quick way to get on top of flexibility issues is by automating much of the work. It is important that you use a modern cloud application for accessing accounting data and automating the creation of financial reports.

    It can be very time-consuming to sift through everything to create various financial reports. Also, automation helps reduce the possibility of making errors. You will save money and manage your company with greater confidence. Software is there for a reason. Use it to take care of some of the heavy lifting.

    Conclusion

    Creating timely and useful financial reports shouldn’t be difficult. It also shouldn’t be something you undervalue. It needs to be a key component in your financial goals and in the way you plan each month.

    If you are struggling to keep up with your company’s accounts, find yourself overwhelmed with more bookkeeping that you ever wanted to be, outsourcing to an experienced bookkeeping service provider may be your way out. It will, instead, allow you to focus on core objectives, like innovation, talent acquisition, training, operations, and growth. 

    Sound Accounts helps business owners achieve more and do so with less stress every day, by providing individually tailored bookkeeping support plans that meet the needs of companies in every market. Connect with us today to learn more and see if you qualify for 6 months of free QuickBooks. 

    To learn more about good financial reporting, check out our frequently asked questions below. 

    FAQ

    How do you ensure timely and accurate reporting?

    If you want to ensure timely and accurate reporting, you need to employ a bookkeeper or partner with a bookkeeping service provider to handle your accounts and allow you and your key players to focus on their strengths and goals. 

    Additionally, make sure you’re using the latest accounting technologies, reconciling accounts regularly, recording information immediately, reviewing your bookkeeping, reporting, and financial goals on an ongoing basis, and training your team to gather and provide the information you need to create accurate reports and projections. 

    Why is it important to provide accurate and timely reports?

    The main reason why you need accurate and timely reports is that they help you, your management team, and all stakeholders to make important decisions when they need to. Accounting is the language of business. By presenting the right financial statements, owners, board members, key investors, and your financial management team will have the right information to steer the company exactly where it needs to go.

    Some good reporting habits include:

    • Hire an external auditor.
    • Adopt strict internal controls.
    • Ensure accurate data entry by employing an experienced bookkeeper.
    • Reconcile internal and external records regularly to save time and effort.
    • Check the income statement and balance sheet to find out if any errors have been made and make necessary changes.

    What are some other helpful financial, organizational, and management habits to keep in mind?

    Studying consistently to make the most of business insights and for making improvements in management decision-making, the testing of controls, and providing reference standards for accounting.

    It’s important to make the most of annual reports, along with monthly, weekly, and daily reporting. Don’t miss staying on of your credit score, credit report, and credit history, maximizing your financial status and agility within your field, and owning up to the practice of transparent reporting. Use consumer reports, audit reports, and error reports to refine your practices, and make the most of technology and data to improve accuracy standards, while using your money to achieve the goals you set out from the beginning. 

  • 7 Strategies for Surviving a Cash Flow Crisis

    7 Strategies for Surviving a Cash Flow Crisis

    One of the worst fears that most business owners have is a cash flow crisis. Cash-flow management issues can leave companies in a difficult situation, where they have to struggle for ways to avoid liquidity problems.

    Knowing different strategies to survive a cash flow crisis is something that you cannot afford to overlook, no matter your business model. In order to take timely action and save your company from damage or insolvency, you should consider the cash-flow strategies mentioned here. Let’s begin.

    business owner dealing with a cash flow crisis

    What is a Cash Flow Crisis?

    Before we cover how you can survive a cash flow crisis, we need to have a better understanding of what it is. In the simplest of words, a cash flow crisis occurs when you spend more money than your business receives. It causes a cash flow shortage and can make it difficult for you to pay salaries, maintain cash reserves, keep your lines of credit, meet current payment terms,  budget for operating expenses, and much more. 

    Therefore, you have to stay alert and manage the situation with extreme caution and sound financial wisdom so that your business doesn’t suffer the same fate as so many other failed organizations. 

    The Best Strategies for Managing a Cash Flow Shortage

    There are certainly more strategies than we will get into today. But this list should give you a good place to start and put you in the right mindset of better financial management and a sound cash flow plan. 

    1. Improve Receivables

    Speeding up your receivables will allow you to deal with the cash flow crisis in the best way possible. The faster money flows into your company, the faster you can make payments and avoid cash problems altogether. You should be able to speed up receivables by providing pre-orders on products that are not yet in production. Other excellent tips that will improve your receivables are mentioned below.

    Ask for a Deposit from New Customers: It is always a good idea to ask your new customers to make a partial payment up-front so that you can have some cash available for operating and production costs. It also makes for an effective collections strategy, as people have an easier time paying in intervals and are more likely to stay with the agreement if they already have some skin in the game. 

    Send Invoices Early: The next tip that you must incorporate is sending invoices to your customers early. It is best that you send an invoice to each client immediately following a purchase instead of waiting to send it later on in the month. The earlier you send the invoice, the sooner the payment will be made.

    Send Invoices Frequently: You shouldn’t wait for the entire job to be completed before sending an invoice. Instead, you can cover the services that have been delivered so far by generating invoices every few weeks.

    Focus on Past Due Clients: Make sure to go through your accounts receivable to find past due clients and give them a call. You might want to offer a partial payment plan to ease the cash flow crisis. After all, you could use the money.

    Make It Easier for Customers to Pay: If there is one tip that always works for easing cash flow problems, it is providing additional methods of payment like mobile or credit card payment options and other savvy, easy-to-use payment apps. 

    2. Negotiate the Payables

    Another strategy that will help you survive a cash flow crisis is better negotiation of your payables. By delaying or reducing how much cash flows out of your business, you should be able to reduce the strain on your working capital. It might be best that you practice honesty with vendors and let them know that you are dealing with a cash flow shortage and could benefit from better terms or at least delaying payments for some time. If you’ve built a loyal relationship with your vendors, they will often be happy to work with you to find equitable solutions. 

    Even though not every vendor will be willing or able to do so, there are bound to be some that will allow you to make it through your tight situation using more favorable or creative terms. 

    managers dealing with cash flow crisis

    3. Adjust Your Business Plan for Improving Profit Margins

    When it comes to a cash flow crisis, a great strategy that you should consider is inspecting your business plan and strategy. You need to uncover the root cause of the cash flow shortage. There is the possibility that it is related to a recurring problem. This means it is time to look more closely at your process through detailed analysis, examining each area of your plan completely.

    Start by evaluating your profit-and-loss statements using job costing. It will allow you to determine the profit margins of each category, such as jobs, employees, clients, marketing strategies, events, products, or services, and more. Then, you will know which areas of the company are the least profitable so that you can make necessary adjustments to your business plan.

    Once you’ve evaluated your plan and come to some conclusions, you might have to make difficult decisions like letting go of certain clients that cost more money than anticipated, optimizing your pricing structure, and cutting down on expenses that appear redundant, excessive, or simply not paying off.

    4. Borrow Money

    In addition to the above, you should consider borrowing money to resolve a cash flow shortage. To bring more money into your company, you can either take a credit card advance or a business loan. You must evaluate the interest rates and the terms of each loan before you agree to take on new debt.

    It is vital that you consider your options to ensure that you don’t end up making any mistakes. You don’t just want to get rid of the problem temporarily. You should always borrow money with a long-term perspective in mind, with a clear understanding of how this new loan will both benefit and negatively affect different areas of your business. If your company is suffering from an intrinsic problem, taking on debt might not be the right option. But always do so with great consideration.

    5. Raise Capital

    Successful companies also opt for investor capital to increase their working capital. However, think about this decision, as you don’t just want to sell an ownership stake to anyone simply to resolve a cash flow shortage. You must determine which type of investor will suit your business, and choose only those who display the traits, knowledge base, and experience needed to bring the most benefit with the least amount of hassle. Raising capital is a solid option to remedy a cash flow problem, and can be a quick cash injection, but you should do so only after thorough research. 

    6. Cut Down Expenses

    Every single expense should be scrutinized to ensure that it is genuine and necessary. You don’t want to waste money when it is already a limited resource. You must be critical of how you spend each penny, and be able to link your spending to specific desired outcomes. It is the only way you can stay on top of things. Go through every expense to find out which expenses are unnecessary so you can eliminate those that aren’t benefiting your business and focus on those that are. You should only spend on expenses that help in generating revenue and expanding your reach.

    business owner dealing with a cash flow crisis

    7. Sell Unused Assets

    Lastly, you should go through all the assets your company owns and find out which ones are unused or underused, and sell them to improve your cash flow. Sometimes, cutting unessential expenses is just not enough. This is why you have to sell unnecessary items to raise much-needed cash. We often have more things around that aren’t serving our needs or have ceased being the useful tools we once enjoyed. Free up the cash and the space. 

    In Closing

    Since approximately 82% of companies struggle with cash flow issues, it is crucial that you learn how to deal with these difficult seasons in proven and creative ways alike. When you implement an effective plan which incorporates useful tips, sound financial wisdom, and thorough research, you should be able to avoid difficult situations and future cash flow problems or at least have a better grasp for how to get yourself out of them. And don’t forget to connect with a great bookkeeper to help you make the most of your finances and business plan. 

    Sound Accounts helps business owners organize and manage their finances successfully, so they can stop worrying about the books and focus on the core of their business. Find out the difference Sound Accounts can make in your business today. Also, see if you qualify for 6 months of free QuickBooks while you’re at it. 

    To learn more about dealing with a cash flow crisis, see our frequently asked questions below. 

    FAQ

    What are some strategies for reducing cash flow problems?

    If you want to reduce cash flow problems, there are two strategies that you need to follow. These are preparation and prevention. It is vital that you create a plan after analyzing your most recent financial statements, including cash flow statements, income statements, and balance sheets. 

    By going through your financial statements regularly, you will gain greater control of your financial usage and goals. Improving your financial position comes down to taking active prevention steps like tightening business operations, monitoring KPIs, and cash flow forecasting.

    What can I do to improve my company’s cash flow?

    There are a number of things that you can do to improve the cash flow of your business, which are mentioned below.

    Improve Receivables: The first thing you need to do is encourage customers to pay for products or services sooner than later. You will have to send invoices early on to get them to do so, and conduct regular but friendly follow-ups. 

    Negotiate Payables: Have a chat with your creditors to negotiate payables and negotiate more favorable terms.

    Eliminate Unnecessary Expenses: Keep an eye on all your expenses and eliminate ones that don’t contribute to your business.

    What parts does a statement of cash flow consist of?

    There are three parts to a statement of cash flow, which include cash flow from all the operating activities, cash flow from financing activities, and cash flow from investing activities. With just a bit of practice, you should be able to create a statement of cash flow for your business and improve your situation.

    It is good practice to monitor all your cash inflows and cash outflows, perform a cash analysis regularly, and be ready to constantly refine your business strategies, cash flow techniques, and daily decisions to become a better money manager and business leader. 

  • Understanding 7 Functional Areas of Business

    Understanding 7 Functional Areas of Business

    When it comes to running a company, you need to have a solid understanding of the key functional areas involved. Every healthy organization operates like a living organism and there are functional areas which ensure that it achieves all its objectives.

    These key functions encompass a range of areas affecting things like employee training, the acquisition process, company size, management styles, marketing strategies, customer service, employee relations, supply chain management, company policies, distribution channels, effective project management, organizational structure, production planning and much more. 

    Whether you are a new entrepreneur or have been running a business for quite some time now, it is crucial that you know these 7 functional areas of business. To provide you with insight into the core of your organization, we’re presenting this informative piece. We’re confident it will help you better understand the underlying processes that keep your business growing.  

    managers discussing the functional areas of their business

    1. Strategy

    One of the most important functional areas of a business is strategy. Every organization needs to have a clear strategy in order to ensure that it moves in the right direction. Top management teams spend a great deal of time working on the development of a strategy that makes sense for their market. It is normally headed by the CEO or COO. Then, corporate policies are created and conveyed to all staff members through in-depth training and follow up, and through company communications and initiatives. These policies dictate just about everything, such as paying rent, handling business licenses, ordering office supplies, marketing, and even recruitment.

    No matter the size of your business, there is great need to develop a strategy that takes all major areas of your business into account. It can best be described as a clear set of goals, actions, and plans that outline how an organization aims to compete in a specific market. In fact, entrepreneurs need to present a strategy to creditors so they can get the funding they need. It is impossible to run a business without a proper strategy.

    Your strategy needs to be evaluated from time to time to ensure that everything is going according to plan, as much as anyone can ensure that in a complex world. A good strategy allows you to follow a path while remaining adaptive and agile enough to navigate changes, market fluctuations, shifting demand, and unforeseen events.

    2. Finance

    Another integral functional area of a business is finance. It is impossible to run a company without funds and preferably, good money management. Organizations need to have some form of financing. You must monitor cash flow and strategize so that you use your resources wisely. This functional area requires a great deal of time and focus. 

    To get your finances in order, you must have a dedicated account and finance department, or just as good, an experienced bookkeeping service provider. It is essential for maintaining books and accounts. You need to be on top of all accounting tasks to avoid issues down the road. If you want to prevent a situation where you are unable to pay bills, where you miss taxes, or default on loans, you must take your finances seriously and put together the support and resources necessary to this function. 

    3. Marketing and Sales

    Regardless of which product or service you provide, you have to generate demand if you want to increase sales. In order to do so, you have to get the word out about your offerings. This is where marketing and sales come into place. They go hand in hand and allow you to maximize your earning potential. It is in your best interest to create a dedicated staff for handling client communication, including complaints and feedback.

    Through marketing functions, you get to provide the best customer experience and keep everyone coming back for more. The marketing department works with other departments to achieve its objectives, using the latest technologies, social and digital marketing practices, savvy advertising practices, and substantial analysis.

    Generally, marketing and sales are combined as one informs the other. The marketing department manages brands, develops company messaging, creates the look, feel, and voice of your brand(s), establishes communication pathways across several channels, and works to not only build, but keep customers for the long haul. 

    On the other hand, the sales department will focus on selling your products or services. This involves different levels of sales, sales management, and sales and customer support. Both marketing and sales personnel will allow you to keep up with the latest market trends and practices. 

    4. Production and Operations

    The production and operations department oversees the production of goods or services. Regardless of what you sell to your target audience, you must have a functional department that is responsible for production.

    For instance, if you offer physical products, the production department would handle the manufacture of these goods and ensure quality standards throughout. As for businesses that offer a service, there will need to be a person or team responsible for managing operations on several levels.

    Also, the production department has to manage inventory and place supply orders before inventory runs out. No matter how complex it might be to run an organization, the production and operations department will work to increase efficiency and productivity levels. Your team will monitor equipment and perform the necessary repairs. In order to look after production, you need to train existing staff and hire new workers to keep your manufacturing system working.

    owner using functional area of business for strategy

    5. Research and Development (R&D)

    Businesses cannot expect to continue developing and growing without research and development. It provides vital information and insight, enabling you to make improvements to existing products or services and come up with new offerings. In fact, research also helps reduce costs and increases efficiency. Research and Development requires a solid investment of time and money, but it’s worth it. Organizations that take R&D seriously, adapt quickly, innovate continually, and meet their customers’ needs. 

    As the world of business continues to get more competitive, you simply cannot overlook research. You have to find new ways to do things and come up with things that no other company offers or offers quite like you. There is a lot that goes into research. You have to look beyond your current boundaries and take advantage of new technologies and creative thinking. This will ensure you overcome current limitations, meet business goals, and continue to grow as markets and consumer habits change. 

    6. Employment and Human Resources

    If you want your organization to be successful, you need to recruit the right people and ensure they stick around. This is where the employment and human resources department comes into focus. Unless you’re running the entire organization on your own, you require dedicated staff to manage, equip, and enable your people to have the support system they need to remain successful. 

    A dedicated human resources department will ensure everyone works toward the desired outcome. It will structure company policies as well as maintain consistency so that communications are clear and every staff member is treated equally. Human resources helps manage the application process, organizes personnel files, deals with employee concerns, and works to improve communication between individuals and between departments.

    7. Insurance and Risk Management

    Lastly, insurance and risk management are key functional areas that business owners must never overlook. Every company faces risks and has to focus on safeguarding itself from financial losses. There are various factors to keep in mind, such as accidents, theft, natural disasters, cybersecurity threats, various liabilities related to materials, production, and facilities, along with the safety and function of your products or viability and consistency of your services.

    Insurance is vital, as it can help minimize financial losses caused by these threats. The insurance and risk management department will strive to protect your business from significant financial risks. They will pursue the best insurance plans to shield your main vulnerabilities. Also, it will prepare the company for difficult situations with training and information to help individuals refine their choices, behaviors, and habits to minimize risk to themselves and the organization. Is arguably one of the most important departments in your business.

    business owners discussing the functional areas of business

    Conclusion

    Every key function of your organization holds secrets to maximizing the quality of your business activity, achieving your goals, meeting your business plans, and keeping all departments in top form. It is imperative you understand the differences between departments and that you equip and develop each function so that every pillar in your business remains a strong part of your foundation. 

    Success takes firm ground to build on. It also takes creativity and an agile approach. Investing in each functional area of your organization will keep you right where you need to be to meet every challenge.

    Sound Accounts helps business owners make better decisions and achieve more with excellent bookkeeping management, uniquely tailored for each organization. Connect with us today to discover the difference Sound Accounts can make in your business, and find out how to qualify for 6 months of free QuickBooks. 

    For more information on the functional areas of business, check out our frequently asked questions below. 

    FAQ

    What is a functional area of business?

    In the simplest terms, a functional area of a business is a key department that every organization needs and can’t operate without. Some examples include finance, marketing, R&D, and human resources.

    How do functional areas work together within a business?

    The functional areas of a business are like parts of a human body. And just like the human body, each one performs a unique function while every part needs the other parts to function together as one. 

    What is the importance of business functions?

    Business functions are crucial as they enable an organization to compete with major players, meet their goals, and remain relevant in changing markets. They also help business owners reduce risk, avoid errors, make the most of your finances, build brands, communicate effectively, and stay relevant. 

    Why is IT necessary to evaluate different areas of business operations?

    We live in a modern and digital world, one that requires us to make the most of available data. IT has become an integral component in analysis and decision-making. It allows organizations to evaluate the performance of every department and customer behavior.

    Technology is constantly evolving, and new tools are emerging all the time. It’s important to use technology, sound financial management, and bookkeeping to lead your organization with clarity and confidence.