Category: Bookkeeping

  • 7 Ways To Keep Your Business Payroll Under Control

    7 Ways To Keep Your Business Payroll Under Control

    For business owners, one of the biggest expenses that you need to keep a handle on is your employee wages. It can help ensure a healthy cash flow and allow you to reduce your accounts payable balance. Business owners have to learn how to keep their payroll under control to cash in on every opportunity that comes their way. 

    The fact is that the wage paid to hourly workers has been on the rise across the United States. This is why you have to make sure that you can cut down on costs to keep your business strong. Otherwise, you may have to use your credit card to pay employees. Although you can reduce wages, lay off employees, and reduce employee benefits policies, there is no need for you to take such drastic and damaging actions unless absolutely necessary. 

    If you take such strict actions, employee morale will plummet which will definitely affect the quality of service provided to your customers. To gain better control of your business payroll, consider the following tips. 

    1. Determine Your Labor Burden Rate

    The first thing that you need to do to keep payroll under control is to determine your labor burden rate. Find out what you’re paying to every employee to cut down on labor expenses. Determine what you provide on top of the hourly rate or basic salary. The total value is considered the employee burden rate. 

    In order to calculate the employee burden rate of each employee, you must add their annual hourly wages or salary, extra compensations like bonuses and overtime, mandatory insurance, payroll taxes, and other employee benefits such as health insurance and 401(k). When you have an idea about how much you are paying every worker, you’ll be able to determine where you’re overspending.

    business owner maximizing payroll with great employees

     2. Optimize Employee Scheduling

    Another tip that businesses should consider is optimizing employee scheduling. When there is a clear schedule, everyone knows exactly what to expect.  This decreases schedule conflicts and helps prevent the need to pay overtime. With a proper understanding of employee costs, you can focus on dialing in your schedule to maximize your productivity within a reasonable number of employment hours used. It will also provide you with the added advantage of a happier workforce as they never have to deal with late, unclear, or shifting schedules. Overtime is necessary sometimes, during emergencies, illnesses, special events or sudden expansion opportunities. But when you plan ahead, you can minimize the times when overtime becomes a necessity. 

    3. Employee Retention

    Focusing on employee satisfaction and retention increases productivity, morale, and longevity. If you key in on hiring well from the start, you’ll avoid problems later with unsatisfied or disgruntled employees leaving. If you’re losing talent regularly, you’re spending a lot of money on training new people. 

    Make sure you’ve got the right people in the right jobs to maximize on their talents and skill sets. Look for opportunities to promote from within to keep upward momentum going for talented individuals who want to help your organization grow and succeed. Pay close attention to the relationships between your staff and their managers, something that has a great impact on the desire of employees to stick with you. Work on improving communication between employees and supervisors and between departments. 

    4. Look at Communication and Redundancy 

    Looking closely at your organization’s effectiveness when it comes to internal communication and possible departmental redundancies is a fantastic way to refine your processes and save payroll. How well are department heads, project leaders and others communicating? Is vital information clearly and efficiently shared? Or are there gaps in their exchanges leading to missed opportunities and repeat meetings? 

    Is your marketing department handling jobs better suited to sales or vice versa? Is R&D handling too much admin? Are two or more people repeating work…doing essentially the same job with only minor variances? It’s time to really dive deep and look at how well your people connect, share information, divide work, and execute on initiatives. 

    business manager trying to control his business payroll

    5. Develop Greater Productivity

    Do you have the right technology in place to equip your people for success? Outdated programs and hardware can lead to slower production, late orders, lost communications, and confused team members. All these lead to a greater burden on payroll from the increased demand on staff to fix these problems. 

    Also, look at new ways to accomplish old jobs. Are there new training programs, new philosophies, new ways of organizing or performing some of your primary functions that would kick them up a notch? Research what other companies are doing that seem to be relieving their stress, lowering their payroll, and upping their output. 

    Below, you’ll find a few more tips on increasing productivity.

    • Ensure Employee Retention: To boost productivity, you have to attract and keep the right people. It should be at the heart of your payroll strategy. 
    • Cross-Train Employees: Another great way to increase productivity is by cross-training employees. You need to teach each employee different skills so that they can take on more work which will ensure you don’t need to hire more people or ask someone to work overtime. 
    • Automate Tasks: To improve productivity, you can sometimes turn to automation. Review different procedures and find out if you can automate them. It will allow you to cut down on labor costs. You might not even need as many employees in a certain department. 
    • Get Employees to Work Overtime Instead of Hiring New Employees: As a last option, you might need to get your workers to work more hours to cut down costs. The reason behind this is that hiring more employees would only cost more money as you would have to pay for employee benefits for them as well. In such a situation, overtime would prove to be a more affordable option.

    6. Consider Outsourcing Some Things

    Another way to keep payroll under control is to find certain tasks that might benefit from outsourcing, specific administrative, communications, media, marketing, or other jobs that outside contractors can perform part-time. With the right contracts and oversight, this can cut down on your payroll, benefits burden and increase productivity in the process. 

    7. Become Agile

    Lastly, you should consider becoming agile to conquer employee cost challenges. The agile philosophy requires you to rethink everything and focus on finding a better way to do things while ensuring that you remain flexible. This mindset helps you break down large goals into accessible steps. This can improve your workflow and cut down on wasted hours. 

    Conclusion

    Controlling employee costs is often one of the most difficult things to manage as a business owner. It can affect your employees’ level of satisfaction, your quality control, and your staff retention.  There is a lot that you need to consider when attempting to get it just right. You want to make changes that give you the most productivity for the labor hours used while maximizing on employee talent and improving team member satisfaction. You might want to seek the help of an expert. A payroll and bookkeeping service provider will be able to provide the best advice so that you can keep costs under control.

    Sound Accounts helps businesses make sense of payroll, maximize on resources and spot opportunities for growth. Contact us today to learn more about partnering with us. 

    To learn more about keeping payroll under control, see our frequently asked questions below. 

    FAQ

    How do I save money on payroll?

    There are lots of ways. Organize your employee schedule more efficiently, study your departments to find redundancies or inefficient communication, update technology to give your employees an edge, rethink certain perks, consider outsourcing some tasks, and focus on hiring great talent and keeping them happy so you can avoid the cost of unnecessary hiring and training. 

    How do I keep the payroll process from becoming overwhelming for me?

    One of the first things you can do is get a great payroll service. Services like Paychex, QuickBooks Payroll, Gusto and others, offer countless options, superb organization, automated payouts and updates, and a range of other features to streamline the process and put your mind at ease. 

    Next, consider partnering with a great bookkeeping service provider to look over your payroll and finances. They can provide you a higher level of management that frees you up to focus more on leading your team and capitalizing on your people’s talent. 

    Is controlling payroll always about reducing hours or laying people off?

    Definitely not! In fact, if you can avoid this, you definitely want to try. Choose other solutions first like focusing on hiring the right people, refining production practices, streamlining communication between departments, getting better trainers to help reduce training time, becoming more agile in your approach and uncovering places where certain tasks or meetings are being repeated. 

  • 5 Tips to Simplify Your Small Business Payroll Process

    5 Tips to Simplify Your Small Business Payroll Process

    When you try to run your payroll manually, it takes a long time to get things done. As small business owners know just how important time can be, there is a need to find a way to simplify the payroll process. 

    It would allow you to easily calculate payroll taxes for your employees. Although business owners rely on a variety of payroll providers, it could still take at least 5 hours a day to complete payroll processing. To help you save time, we have created the ultimate post to give you some of the best tips to help you simplify your payroll process. Read on to find out how you can make a change.

    1. Switch to Direct Deposit

    One of the best tips for simplifying the ongoing payroll process for small business owners is switching to direct deposit. In order for the transaction to be made, you would simply require bank account documents from employees. However, your employees should have no issue as it would ensure that they get their wages paid quickly.

    Even if you offer cash to your employees, they should have no issue with a direct deposit. You may use your payroll software to make the payment for a small fee. But, it would help you avoid printing and mailing costs. Besides, you would not need to waste any more time cutting checks when you opt for direct deposit.

    2. Electronically File Payroll Taxes

    Another great tip that you should consider is filing payroll taxes electronically. When you opt for e-filing, you get to save time and minimize expenses. Having to print forms, fill them out, and send them for each period can be frustrating. This is why it’s best to ditch manual filing altogether.

    Once you’ve set up e-filing, you’ll be able to automatically withhold payroll taxes and social security from the income earned by each employee. A payroll service will simplify things even further by filling out the forms for you. You’ll be able to sit back and relax while everything is taken care of. 

    3. Learn More about Your Payroll Provider

    Most modern payroll providers are going all the way to provide the ultimate accounting and taxation tool. Not only do they help you calculate payroll taxes but also sales tax on goods or services provided to customers. It is due to this reason that you should learn more about your payroll provider. Chances are that the payroll software you are using is packed with all types of capabilities including tracking and reports.

    If you have a bookkeeper, you can ask for his or her help to take complete advantage of the solution. There is no need to feel intimidated by the features as they could provide all the assistance you need to simplify your small business payroll process. 

    You should check to see if your payroll provider offers a tutorial that you can watch to learn more about all available features. Besides, learning more about this tool will familiarize you with payroll processing so that you can quickly get things done. 

    business owner working to simplify his payroll process

    4. Create Reminders

    To keep up with important payroll dates, you should set reminders. There is just so much that you can remember. Once you have set up e-filing, you’d still have to report the taxes that you have withheld.

    and make the right payment. 

    Now, you must report the payroll taxes every month, quarter, year, or period to avoid penalties. Therefore, it is in your best interest to set reminders for payroll tax dates. It will ensure that you don’t miss out on anything. Moreover, you should consider changing the pay period structure to ensure easy payroll processing.

    5. Opt for Employee Time Entry

    Consider using employee-lead time tracking software. It is well worth the investment and helps you save time. The last thing you want is to manually enter work hours for all your employees. As the time clock would be clock-based, your employees would be able to log their hours. It is the perfect option for remote workers. Even though it’s necessary that you double-check the entries to correct them, the time tracking software will prove to be a huge relief for you. 

    It is a good idea to check with your payroll processor to find out if the solution you are using has time clock integrations and functions. There are many payroll solutions that offer time tracking functionality. You can also use a third-party time tracking tool and integrate it with your payroll software.

    Conclusion

    Payroll can be a time-consuming process and one that causes you a fair share of headaches. These tips should get you started on simplifying your small business payroll process. If you desire more comprehensive help with payroll and financial management, consider partnering with an experienced bookkeeping service provider. 

    Sound Accounts helps businesses improve productivity through streamlined payroll plans and detailed bookkeeping support. Connect with us today to learn more. 

    For more information about small business payroll, check out our frequently asked questions below.

    FAQ

    How Do You Manage Your Employee Payroll Process?

    A great way to manage your employee payroll is by asking each team member to fill out their Form W-4 (Employee Withholding Certificate). The information that your employees provide should be sufficient for their employment. But, you must be aware of periodic changes which would require updates. Regularly review Form W-4 to avoid time-sensitive issues later down the road. It is a good practice to take some time out to review each Form W-4 to ensure that the data points have been properly filled out. Get your workers to update their withholdings to reflect changing benefits, children, and retirement goals.

    Next consider switching to direct deposit as this makes life easier for you and gets your employees paid faster.  Use a trusted automated payroll service like QuickBooks Payroll, PayChex, or Gusto to streamline the entire process and keep all information automated and moving. Lastly, for more comprehensive help, partner with a professional bookkeeping service to manage your payroll, tax process, and finances. 

    How Can I Improve My Payroll Process?

    Managing the payroll process is not easy. While it should be straightforward for small businesses, there is a possibility you might find it problematic. Although a manual process might work if you only have a few employees, you need to improve your payroll process as your business grows.

    Here are some tips that will help provide you with the results you’re looking for.

    Combine or Align Different Pay Schedules: It is quite common for companies to maintain various pay schedules for hourly employees and management. However, it is likely to result in errors. To prevent multiple processes from being duplicated, you must minimize pay cycles for efficient payroll processing.

    Streamline the Payroll Systems: If your payroll software is not in line with the accounting system of your organization, it will cause problems. Similarly, if you have various systems for inputting, tracking, and processing hours worked by employees, it will create pain points. Therefore, it is best to simplify, consolidate, and streamline the existing system to improve the overall process. You can do this by reviewing each step.\

    Upgrade the Payroll Software: The next tip that you should consider is upgrading your payroll software. When you upgrade your payroll software, you get to streamline payroll processing. You can leverage the latest technology to decrease the amount of time it takes to process payroll.

    Ensure a Paperless Payroll Process: When you opt for improved technology, you get to streamline payroll operations and ensure a paperless environment is created. It allows you to cut costs and go green. Besides, it is about time that you ditched timesheets or time cards.

    Train Employees Regularly: To ensure that your payroll process continues to improve, you should regularly train employees. Technological advancements are paving the way for easier payroll processing. Thus, your employees need to know how to keep up.

    Stay Informed About Tax Requirements: Both federal and state governments are always changing tax requirements. This is why you need to stay informed to meet compliance standards. You must regularly review the latest tax regulations to stay updated and avoid costly mistakes.

    What Are the Basic Steps In The Payroll Process?

    Onboard Employees: Firstly, you have to onboard employees and create a list of workers who need to be paid.

    Develop a Payroll Policy: The next thing you will need to do is define a payroll policy to ensure standard execution. The policy should cover pay, attendance, leave, and even employee benefits.

    Seek Employee Information: You also have to gather employee information such as their full names, addresses, and bank account details. Then, you can validate the information by asking employees to review it for accuracy.

    Calculate Payroll: Once you have all the necessary information and have reviewed it, you can calculate your payroll. You will have to use spreadsheets to make these calculations. Fortunately, if you have payroll software, it will handle everything.

    Disburse Wages: Next, you must create a salary bank advice statement for directing the bank to disburse the wages.

    Pay Statutory Deductions: During payroll processing, you will have to determine all statutory deductions like PT, ESI, TDS, and PF which must be made to the relevant government departments before the deadline.

    Provide Tax Computation Sheets and Payslips: Lastly, you will simply need to distribute the tax computation sheets and payslips to your employees. This could be handled using your automated payroll system.

  • How to Get Your Small Business Payroll Ready for Tax Season

    How to Get Your Small Business Payroll Ready for Tax Season

    Business owners have to minimize their tax liability during tax season in order to save money. Payroll issues are likely to arise when submitting tax returns. This is why it is crucial that you prepare yourself thoroughly for this process. All businesses have to calculate and pay taxes at regular intervals and stay current with all tax requirements. 

    Generally, you will need to make payments every quarter. In addition to this, you also have to follow the payroll tax schedule. As you have a responsibility to make a tax payment, everything is interconnected. To help you prepare your payroll for tax season, here is everything that you need to know. 

    business owners preparing for small business payroll tax season

    The Importance of Preparing for Tax Season

    When tax filing season comes around, it is natural to worry. No one likes paying taxes and we like being scrutinized even less. This is why it’s important that you get prepared, especially when it comes to payroll. 

    Since preparing your accounts for taxes can be complex, the earlier you go through your business transactions, your balance sheet, and other statements and reports the better. It can be difficult to navigate US taxation when it comes to payroll. The following reasons highlight the importance of good preparation.

    1. Saves You Money

    One of the main reasons why you must review your payroll for tax season is that it can help you save money. It would give you enough time to identify deductions and credits that you might have not even thought of.

    2. Minimizes Time Involved

    Another reason to prepare for tax season is that it helps minimize the amount of time involved. This allows you to manage your available time wisely. By going through all the forms, documents, payments, receipts, and business expenses, you’re able to determine your taxable income regardless of your business type or business structure.

    3. Eliminates Errors

    No matter how many workers you might have who report to you, it is important that you prepare for tax season to eliminate errors. Errors in payroll taxes can result in audits or penalties. They can also keep you on the IRS’s radar, so to speak, and decrease the confidence of your staff. 

    Top Ways to Prepare For and Navigate Tax Season

    If you are preparing your payroll and other tax documents, you should consider the following tips to breeze through this tax season.

    1. Ensure That You Are IRS-Compliant

    The first thing that you must do before you file any documents is to find out if you are currently IRS-compliant. Make sure that you have properly classified your employees and that you have an EIN (Employer Identification Number). Be sure that all payments and filings are up to date and that you have no outstanding taxes owed for past filings.

    2. Review Documents and Data

    The next thing that you need to do is go through your documents and the information you’ve entered in reports or tax filings to ensure accuracy.

    Even though you have certain things automated, there is still the possibility that mistakes such as misspelling names, transposing numbers, and checking wrong boxes can happen. What seem like simple mistakes can lead to unforeseen consequences down the road. 

    3. Determine Year-End Payroll Before Proceeding with Business Taxes

    Once January comes to an end each year, you have to do a few things as mentioned below.

    • Submit a copy of W-2 for each employee.
    • Submit a Form 940 that contains a summary of the tax payment made for the year and a Form 941 which indicates that quarterly federal tax payments had been made.
    • Submit a Form 1099 if you have hired any contractor and paid over $600 in the previous year.

    4. Know All Payroll Tax Deadlines

    When the new tax year begins, you have to meet multiple deadlines. Most of these will require you to close your financial records for the previous year. You will also need to work out strategic plans. It makes sense to focus on meeting the W-2 deadlines first as you can’t use an extension and would immediately incur penalties. It’s a good idea to have a schedule or calendar posted somewhere that displays all the tax days for the entire year.

    6. Evaluate Payroll Write-Offs

    After you have calculated total wages along with their respective taxes, you should be able to determine if you qualify for a small business deduction or not. Here are some payroll expenses that you should be able to write off.  

    • Cash awards.
    • Paid vacation and sick days.
    • Reimbursements made for covering travel expenses.
    • Bonuses and commissions in case they would be considered additional wages.
    • Benefit programs like an accident, life, and health insurance as well as education reimbursement.
    • Contributions made to certain state payroll taxes, unemployment benefits, social security, and Medicare.
    • Wages paid that qualify as a necessary and ordinary business expense. These are typically considered an expense during the first year of startups.

    7. Have the Right Records on Hand

    Lastly, your tax process will require certain records. You never know if the IRS or the state might conduct an audit and thorough records help you manage your payroll, finances and employee relations with greater ease and confidence. 

    Keeping all necessary documents in order and quickly accessible allows you to access them right when you or the IRS needs them. It also helps you stay organized and on-time. IRS guidelines advise businesses to maintain tax records for up to three years. However, employee records have to be kept for four years. It is best that you keep both electronic and paper copies to stay on the safe side.

    business owner working on payroll for tax season

    Reasons You Should Consider a Professional Bookkeeping Service

    Since handling your payroll and tax issues on your own can be extremely difficult, it might be worth considering seeking a professional bookkeeping service. Here are a few reasons. 

    1. Allows You to Focus on Core Business Activities

    A major reason you could use the help of accountants or a professional bookkeeping service is that it enables you to focus on your core business requirements. To run your business successfully, you need time, attention, good resource and personnel management, a clear plan, and consistent leadership. Hence, the last thing you want is to spend a lot of time working on payroll and taxes and losing track of what matters most to you. 

    2. Helps You Navigate Taxes

    Since most owners don’t have a background in finance or accounting and don’t know how to manage accounts, it is best to leave the job to an expert who is certified and has the experience needed to handle every aspect of the bookkeeping and tax process. They can help you limit mistakes which would otherwise prove detrimental to your business.

    3. Provide a Different Perspective

    Tax experts work with just about every type of business, and because of this, they’ve acquired a great deal of knowledge. When you hire one to help you out, you get to benefit from their storehouse of experience. 

    Even though you might think that you are managing your startup well, it is always best to seek all the help you can get. Having another pair of eyes allows you to see things that you otherwise might not have noticed.

    4. Eliminate Tedious Work

    Tax submissions can be grueling to take on completely on your own. It makes sense to escape it by seeking a bookkeeping service provider. Preparing your payroll and managing your accounts is often not something you tend to feel passionate about. Bookkeepers are geared for it and will ensure that everything gets managed in the best way possible. 

    5. Ensure Correct Tax Filings

    A great bookkeeping service provider is highly meticulous with details and focused on making sure every piece of information is perect. They go through every corner of your payroll and finances to ensure complete accuracy and compliance. As there are various requirements that you have to meet, it often helps to get a financial expert involved.

    6. Reduce Financial Obligations

    Now, you might think that you can handle all your taxes on your own in the hope of reducing costs. However, you may be missing a few things. A professional bookkeeper would help you save big. The fact is that missing out on tax obligations and payments is easy to do when you’re focused on everything else.

    A lack of knowledge, and the possibility of human error could prove costly. Trying to backtrack and fix errors and pay fines can be overwhelming. 

    Conclusion

    Taking time to walk through the process of preparing your payroll for tax season will pay off several fold. Don’t miss any of the steps and tips above and start early, that way you can avoid the stress of last-minute action. And never hesitate to reach out to a qualified bookkeeper to help you navigate tax season. Their invaluable advice and professional focus will keep your business humming right along. 

    Sound Accounts helps businesses of all kinds stay on top of their payroll and prepare for tax season with confidence. Contact us today to learn more about partnering with Sound Accounts for your bookkeeping needs. 

    To learn more about preparing your payroll for tax season, check out our frequently asked questions and answers below. 

    FAQ

    How do small businesses keep track of taxes?

    Small businesses keep track of their taxes by maintaining accounts, going through their bank statements, understanding your assets, reading through and analyzing all financial reports, staying organized, keeping current with all IRS codes and requirements, and preparing in advance.

    If I need help with payroll or taxes, where should I turn?

    Hiring either an in-house bookkeeper or contracting with an excellent bookkeeping service can help you make sense of your payroll, fix mistakes, find money-saving opportunities, and prepare thoroughly for tax time. 

    Can I write-off small business expenses?

    There are several expenses that business owners can deduct. It is important to familiarize yourself with current options here and reach out to a qualified professional with any questions or needed assistance. Common deductible expenses include:

    Payroll

    Office furniture

    Office equipment

    Rent or lease payments

    Company vehicles

    Company travel and lodging

    …and much more.

  • 5 Common Mistakes Small Business Owners Make with Payroll Taxes

    Paying your employees for the time they have put in is not as easy as you might think. The truth is that businesses of all sizes have to record everything. Organizing your payroll, making sure all info is correct, and staying current on all requirements is imperative to your safety and success. 

    Before you send your workers a check, you have to meet various tax and regulatory requirements. This is what makes processing payroll more complicated. In fact, it’s quite common for business owners to make payroll mistakes when they don’t have a bookkeeper. And it’s not something you want to ignore or try to fix after the fact. That’ll cause even more problems. 

    When processing payroll, you have to adhere to certain rules. However, you must first avoid the following common mistakes to save money and stay compliant with payroll taxes.

    1. State Unemployment Tax Errors

    Unemployment taxes also have to be accounted for, just like payroll taxes. They are paid by employers and withheld at the state level. You must ensure that you file them regularly.

    Keep in mind that every state has its own requirements and rates which you have to meet depending on the state where your employees reside. You have to be extra careful if you operate a business in different states or close to the state border.

    2. Employee Information Errors

    One of the most common mistakes that you need to avoid when dealing with payroll taxes is employee information errors. It occurs right when you hire an employee and complete his or her paperwork or make changes along the way. 

    If you are not cautious, it is easy for errors like wrong Social Security numbers, addresses, and even misspelled names to occur. These costly mistakes are often not easy to correct and only cause clerical headaches in the future.

    It’s even possible for the IRS to fine you for an inaccurate tax return or delayed income taxes. You have to be very meticulous and check the information entered with your employees a few times to ensure accuracy.

    3. Outdated Employee Information

    Another mistake that startups make that costs tax time is outdated employee information. Even after you have correctly entered employee information into your payroll processing software, you also have to maintain it. Otherwise, your records become outdated.

    You have to regularly check employee legal name changes, addresses, tax payments, benefits, and more. Generally, you must update the information of workers when they have a baby, get married, or move to a different area.

    4. Employee vs Independent Contractors

    In addition to the above, it’s common for small businesses to mis-classify their workers as independent contractors when submitting tax forms. If you are unaware of accounting principles, you wouldn’t know how to properly classify employees.

    Now, you have to consider IRS-mandated requirements. However, these are not as well-defined. Only if you have control over how an employee performs his or her duties, would you be able to classify him or her as an employee. It is important that you learn more about what makes an employee different from a contractor.

    We live in an era where our economy is growing more complex and more connected. More and more people are working as contractors, are employees working from home, or working several jobs for multiple companies. 

    Startups such as Lyft and Uber have blurred the lines between how workers and contractors are classified. You have to be careful. President Obama had initially issued an executive order in 2014 to increase scrutiny in order to prevent companies from mis-classifying workers. The government has only enforced more stringent laws ever since.

    5. Payroll Tax Inaccuracies

    Small businesses waste $850 in fines on average every year for late or missed payroll tax payments. The fines are imposed by federal and state tax agencies. However, if your business makes plenty of payroll tax errors, it would only add up business expenses that you would be unable to claim in your tax return.

    Payroll taxes must be paid at the local, state, and federal levels on a pay as you go basis. This means that payments would be due on every payday. There is no denying that keeping up with tax requirements would prove difficult if your business operates in different locations or if you don’t have a centralized office and rely on a distributed team.

    business owner trying to avoid mistakes with payroll taxes

    The Importance of Maintaining an Accurate Payroll and Payroll Tax Process

    The main payroll mistake that you can make is not knowing just how important it is to maintain an accurate payroll and payroll tax process. This is why you need to learn more about establishing a proper tax process. Ignorance is never an acceptable excuse when the taxman comes calling.

    The payroll process represents an accounting system that connects your organization with various agencies that are responsible for the collection of taxes on the wages you pay your employees.

    As you are fully accountable to both your employees and tax authorities, you have to ensure that the payroll process is precise. Besides, an accurate payroll saves you from the stress and hassle that would emerge when your tax deadlines are near.

    Business owners must also understand that maintaining an accurate payroll process is an ethical issue. When you hire workers, you enter a contractual relationship with them that requires you to compensate them for the hours they have worked.

    If you fail to maintain your payroll, you would be unable to adequately compensate employees and it could be considered a form of theft. This could be used as grounds for litigation against you by your employees should a conflict arise. 

    Moreover, an accurate and precise payroll process is integral to reconciling tax liabilities. Every business is legally responsible for withholding taxes from employees to pay federal and state income taxes along with Social Security.

    Only when you have a precise process, can you pay taxes accurately. If you fail to do so, you would end up accruing expensive penalties which could result in a tax audit.

    Consequences for Certain Mistakes

    Payroll errors can hurt your business in ways that you cannot even imagine. Here are some of the repercussions that you need to know.

    Damages Employee Trust: When employees trust an employer, they are likely to work hard and increase your productivity. However, if you damage this trust, it would affect productivity adversely and even result in your star performers looking for work elsewhere.

    Wastes Times: Dealing with tax inquiries and corrections only wastes time. You will end up spending a huge amount of time trying to correct the errors.

    Costly: Certain payroll mistakes would prove costly as you would have to pay for them without being able to claim the expense.

    Damage to Your Reputation: When you make payroll mistakes, it damages your reputation in the market and deters customers from choosing your business and keeps quality talent from partnering with you.

    The Upside of Staying On Top Of Things

    There are many reasons that will convince you to stay on top of things. Let’s look at a few of them. 

    Reduces Expenses: One of the main reasons to focus on your payroll process is that it helps reduce expenses. As the IRS wouldn’t require you to pay any penalties.

    Boosts Employee Morale: By taking care of payroll taxes and paying your employees properly without interruption, you will also notice an improvement in employee morale. If all is well with their paycheck, their tax payments and their benefits, they’ll stay loyal to you and dedicated to their work. 

    Keep Your Business Running Smoothly: An accurate payroll system keeps you clear of the law and the risk of getting shut down, which would definitely affect your brand and your relationship with your customers. 

    Accurate and organized payroll is a great foundation for the rest of your accounting and bookkeeping process, helping you accomplish the basics before adding on everything else. This lowers your stress and helps you focus on leading your team. 

    Benefits of Hiring a Professional Payroll Tax Expert

    There are many advantages of getting professional payroll tax help from an experienced bookkeeping service provider.

    Helps You Stay Organized: One of the main benefits of a professional bookkeeping service is that it would provide an effective system to ensure that you’re able to manage responsibilities, tasks, and meet deadlines. 

    Define and Document Your Processes: The payroll tax expert would provide clear documentation of the process which you can utilize for finding answers to all types of questions you might have.

    Avoid Mistakes and Spot Problems Early: Bookkeepers are always monitoring your process and crunching the numbers. This in turn allows them to spot errors within documentation or your process, correct some past mistakes and spot opportunities for doing things better in the future. 

    Keep Up with the Latest Laws: Professional bookkeeping services are always up to date with the latest laws and tax codes. They will work with you to make sure you don’t miss a single beat. 

    Conclusion

    Your payroll process is nothing to take lightly. It is part of the foundation of a strong company. It keeps you on the right side of the law, keeps you organized, protects your relationship with employees and customers, and makes other accounting practices run more smoothly. 

    Sound Accounts helps small business owners create and manage the perfect payroll and bookkeeping process. Connect with us today to learn more about reducing stress and increasing productivity with better bookkeeping. 

    For more information about the payroll process, check out our frequently asked questions below. 

    FAQ

    What Is A Payroll Error?

    A payroll error can be inaccurate information, a wrong payment, a late or missed payment, improper employee designation, or several other things. 

    Do Payroll Taxes Affect Employees?

    If you aren’t keeping up with your tax process, the consequences can destroy your relationship with valued employees, leading them to talk bad about you and your organization, look for work elsewhere and sometimes even bring litigation against you. 

    What Challenges Do Payroll Professionals Encounter During The Payroll Process?

    Payroll professionals encounter a number of challenges during the payroll process including the following.

    • Record keeping
    • Misclassification
    • Managing changes
    • Tax non-compliance
    • Over or under payments
    • Manual payroll processing
    • Confidentiality and privacy
    • Keeping up with the most recent law and regulatory changes in the relevant states
  • Small Business Payroll Options: How to Choose the Right Service for You

    Small Business Payroll Options: How to Choose the Right Service for You

    When it comes to calculating employee pay, determining payroll taxes, making payments, and sending necessary tax forms for ensuring compliance, a small business payroll option is just what you need. Payroll is usually complex and difficult to tackle entirely on your own. You are likely to struggle if you have several employees to manage.

    According to data provided by the IRS, it was found that 40% of small businesses lose an average of $845 every year on tax penalties. This is why it makes sense to use a payroll solution. It would handle all the hard work and help you stay on top of the legal requirements for your state.

    As there are various payroll providers, you might not know which payroll software to use. However, there is no need to worry. We’ll give you exactly the information you need to move forward with confidence.

     

    7 Trusted Payroll Service Options

    These choices represent some of our favorite payroll services. Each one carries its own features and benefits. Only you can decide which is best, but this guide will give you a quick view of a handful of options. 

    1. Gusto

    One of the best payroll companies that offers a powerful payroll tool is Gusto. It allows you to perform all types of tasks, simplifying the payroll process. You can generate reports, prepare tax filings, and make important decisions. Take advantage of this all-in-one accounting solution to take your business to new heights.

    Known for its competitive pricing, you can browse through its different prices to determine which plan to go with. What sets Gusto apart is that it is packed with features that allow you to handle everything. Besides, your employees would appreciate you using the software.

    Automate your payroll no matter which state you operate in and get all the support you need when you use it. As it is very easy to use, it won’t require any prior experience to unleash its full potential. Its tax services include automatic calculation of taxes and withholdings, along with end-of-year tax forms. Moreover, Gusto offers excellent customer service that you can rely on for dedicated support.

     For quick reference, here’s a list of some of Gusto’s features:

    Automated Taxes

    W2s and 1099s

    Child-support Garnishments

    Tip Credits: Minimum Wage Adjustments

    Gusto Debit Card

    Paperless Paychecks

    Multiple Pay Rates

    Unlimited Payrolls

    Flexible Payment Schedules

    Net-to-Gross Calculations

    Contractor Payments

    Expense Integration

    Payroll Reports

    Time-Tracking Integrations

    Federal R&D Tax Credit

    Deductions

    And so much more…

    2. QuickBooks Payroll

    Another amazing small business payroll option that allows you to fully utilize your resources is QuickBooks Payroll. Most of its features are similar to those offered by Gusto. It even accounts for checks, deposits, and employee health benefits.

    If you’re looking for a well-rounded online payroll service with upfront pricing, that offers different pricing plans, QuickBooks has got you covered. It’s possibly the most used software out there. And for good reason. For years, individuals and business owners across industries have learned to trust their most important bookkeeping needs to QuickBooks suite of services, allowing them to manage their finances, their payroll, and continue filing taxes with ease. You’ll likely find it to be the perfect fit for your business.

    Some of its full-service payroll tools and advanced features include company tax payments, automatic calculations of withholdings, 1099 e-file, tax penalty protection, time-tracking, connections with bank accounts, same-day direct deposit, automated payroll reports, and much more. As it integrates with most accounting platforms, you should have no trouble using it. Besides, it also provides strong customer support from a dedicated team and decades of use and refinement which have made it, perhaps the most recognizable bookkeeping and payroll software solution out there. 

    business owner using a payroll software solution

    3. Paychex

    The next payroll software that we just had to mention is Paychex. It allows you to expand beyond payroll and covers HR modules, including recruitment and hiring. Boasting world-class compliance expertise, you can use this tool to stay on the right side of the law. The system is regularly updated to keep up with the latest changes in the tax code.

    Features include employee self-service, direct deposit and on-site check printing, general ledger support, garnishment payment services, accounting software integration, W2s and 1099s, new-hire reporting, labor compliance and worker’s comp insurance, tax credit services, financial wellness programs, an awesome 5-star mobile app, and several others.  

    Besides, it even offers 24/7 support, which is often not the case with other options. With an online library and comprehensive resources, you can rely on the software for tackling all types of issues. Even if your accountant or bookkeeper isn’t proficient, he or she should be able to learn how to make the most of the system to maintain compliance.

    4. OnPay

    Considered a solid payroll solution, OnPay provides integrations for just about every accounting software out there. It is possibly the best time-tracking tool available. Generally, it is recommended for businesses that are on the lookout for integration options.

    You’ll have an easy time processing payroll as it streamlines the entire process and even allows you to run things using your smartphone. It’s also extremely easy to use and handle all 1099 and W2 filings as well as annual employer tax filings. OnPay also has positive customer support reviews.

    Some features include:

    Integration with QuickBooks, Xero and more, integrated 401k, wage garnishment, employee self-onboarding, time off tracking, multiple PTO accrual rates, automated tax payments, reimbursements, digital paystubs, mobile friendly access, a tax-accuracy guarantee and too many others to list here. 

    5. Wave

    Offering a flat rate to businesses, Wave is a great payroll option. The price you pay for the service depends on which state you live in. It even provides free accounting software which you can combine for a more affordable option.

    If you’re contemplating which payroll tool to use, you can try out Wave for free for up to 30 days. Its tax services include free tax filings, contractor 1099s, and employee W2s in 14 states, such as Texas, New York, and California. However, you should keep in mind that it has average reviews for customer service.

    Here’s a look at some of Wave’s great features, which include both payroll and comprehensive bookkeeping. 

    Estimates, invoice payment reminders, invoice scheduling, live bank feeds, expense tracking, receipt scanning, contract management, 12 different reports, multi-currency support, exchange rate calculations, customizable invoices, and more. 

    6. ADP

    A major reason we’ve included ADP is that it’s possibly the most experienced solution out there. It caters to every type of business regardless of the size. It can easily handle hundreds of workers. As your business grows, you will find ADP to be an incredible asset.

    ADP offers automated payroll, time and attendance tracking, multiple integrations, tax compliance support, integration with HR and benefits, a wide range of apps from ADP Marketplace, and countless other tools and solutions. 

    It is worth mentioning, however, that it is not as easy to use as some other solutions. The learning curve may be a bit more involved. Still, it is definitely worth it. Its tax services include 1099 and W2 filings and even employer tax filings. With 24/7 customer support, you can reach out to the company at any hour to get the help you need.

    business owner working hard on payroll

    7. SurePayroll

    Lastly, SurePayroll is also a notable choice. It is suitable for small businesses that operate in a niche industry and struggle to find an appropriate payroll solution. The service works for just about every type of business, from retail outlets to churches and even non-profits.

    Even though it’s not the easiest option, it’s quite intuitive, so you should have no trouble navigating through it. Some of its tax services include employer, 1099, and W2 filings. You can either opt for its no-tax filing plan or full-service plan. Its customer support also has a great reputation online. Just a few of SurePayroll’s tools include:

    Calculates payroll taxes

    Mobile functionality

    Payroll step-by-step

    Process year-end forms and reports

    Auto Payroll

    Pay 1099 contractors

    Employee self-serve access

    Why Certain Choices Work Better Than Others For Certain Businesses?

    Not every business is the same. This is why a payroll option might work for some businesses and not for others. There are many factors that come into play when selecting payroll software, such as payroll legislation compliance, integrations, security, support, features, and ease of use.

    It’s important for you to think about and discuss your priorities, the features that benefit your business and workflow the most. You can line them up side by side or use a chart online that someone else may have already compiled and created and use it to compare and contrast to figure out which one is best for you. 

    The Importance of Keeping Payroll Organized and Well-Managed

    Maintaining your payroll is necessary to ensure that your small business continues to operate without any issues. Here are some of the benefits of an organized and well-managed payroll that will convince you to invest in a small business payroll solution.

    Saves Time: When you organize your payroll, you get to save a ton of time. It ensures that you are able to load data quickly, right when you need it most. In addition to this, it even lets you generate reports instantly rather than having to go through an endless pile of payroll records.

    Cost-Effective: A major advantage of using a payroll solution for keeping your payroll well-managed is that it is cost-effective. By using a payroll service, you get to save money by avoiding compliance penalties. Similarly, you also get to make sure that you don’t overpay employees, vendors, or different subscriptions and services. 

    Improves Compliance: As the possibility of making errors would be mostly eliminated when you use a small business payroll solution, it would help improve compliance. The fact is that there are countless payroll tax rules and regulations that you need to keep up with. By using the right tool, you get to avoid stress.

    Conclusion

    With the right payroll software, you get to calculate how much your employees earn based on the wages set and the hours worked. It also ensures that you pay the correct payroll taxes, including local, state, and federal taxes. 

    Managing payroll manually often results in errors, leading to confusion and IRS fines. Opting for a payroll solution helps you maintain compliance and avoid these nasty consequences. Payroll and bookkeeping service solutions keep track of multiple streams of information, allowing you to know exactly where your money is going, how it’s being used, how it might be used more effectively, and how to capitalize on new opportunities. It’s always wise to take advantage of the best tools available. Don’t hesitate to get on board with a trusted digital payroll solution and experience the peace of mind they can provide.

    Sound Accounts is your complete bookkeeping service solution. We help business owners find greater productivity, organization, compliance, and success by managing their books and opening greater opportunities through sound financial practice. Contact us today to get started. 

    For answers to some of your payroll service inquiries, check out our frequently asked questions below. 

    FAQs

    What Is The Best Way To Handle Payroll?

    The best way to do payroll for your small business is by starting with a good payroll software. It will ensure that you stay organized, efficient, and compliant. It’s also wise to link up with an experienced outsourced bookkeeping service provider to make the most of your software, provide financial advice and help you spot opportunities for improvement. 

    Do I Need a Payroll Service if I Only Have One Employee?

    Since payroll taxes apply even if you only have one employee, you must maintain your payroll. There are no special exemptions for any type of business. While managing payroll and bookkeeping in smaller companies is often more straightforward than with larger corporations, it is usually the right idea to use a dedicated program to keep yourself organized, avoid mistakes, and set the precedent for continuity and success as your business grows. 

    What Is The Easiest Payroll Software To Use?

    If you’re searching for the easiest payroll software, QuickBooks is probably your best option. It offers an intuitive user experience that you will quickly become familiar with. Besides, it even provides plenty of resources and how-to videos to help you get started. There’s a reason it’s one of the most trusted options out there. 

  • How to Use Xero Accounting Software

    How to Use Xero Accounting Software

    Xero is one of the most popular accounting software programs out there. It is widely used by small businesses everywhere. If you’re a new Xero user, it is important that you learn how to make the most of this resource. In this guide to Xero accounting software, we’ll share all the information you need to get started. The following steps will allow you to manage your finances with greater ease and confidence.

    1. View the Xero Dashboard Video

    As a newbie to Xero accounting software, the first thing that you need to do is watch the Xero dashboard video to get an idea of how it works. It’s located at the top left corner and will provide you with valuable information about navigation.

    2. Enter the Business Details

    The next thing that you need to do is provide all your company details. If you are running a limited company, you’ll have to enter the registered office address and the registration number. The information you provide would be displayed on the invoices you issue clients. To enter or update the business details, you need to head over to Settings and select Organization Settings. Here is the information that you will need to provide.

    Logo

    Email

    Website

    Trading Name

    Display Name

    Physical Address

    Registered Address

    Organization Type

    Registration Number

    Phone and Fax Numbers

    Organization Description

    3. Head to the Financial Settings

    Make sure that you go to Financial Settings from Advanced Settings to provide the following information.

    VAT / Sales Tax Details: The VAT period, VAT number, and VAT scheme should be filled in.

    Financial Year End: To make sure that the right year-end appears on all of your reports, you must determine your financial year-end first. 

    business owner using xero accounting software

    4. Include Company Branding

    Another great thing that you can do with Xero accounting software is that you can add your company branding. To do so, you have to go to Invoice Settings from Settings to make sure that the invoices include your logo and payment terms. By covering your payment terms, you can improve your cash flow and encourage customers to make payments on time.

    5. Create the Chart of Accounts

    One of the main reasons why businesses rely on Xero accounting software is that it allows them to import their chart of accounts from another accounting software. Then, it’s possible to modify the chart of accounts. An accounting service provider can help you decide the chart of accounts. Otherwise, you can add, customize, and delete the accounts based on your business goals. For changing the accounts, you have to check out the Chart of Accounts in Accounting. It would enable you to customize the chart of accounts.

    6. Create the Bank Account Feed

    If you have a PayPal account and credit card, you will need to create your bank account feed. You can watch the video on this to get started.

    7. Reconcile Regularly

    Even if you don’t have much experience with bank reconciliation, Xero makes everything super easy. Within a few minutes, you can go through the pre-matched items to make sure that all your data is updated. Since Xero would be connected directly to your bank account, it would automatically pull up transactions. In fact, it even remembers when you categorize transactions. Therefore, you can click “OK” to ensure that it sticks to the category of your choice. It’s important that you reconcile your accounts every week to ensure they remain accurate.

    When you update your invoices regularly, you also benefit from a clear picture of your cash flow. With an accurate view of your cash flow, you can avoid falling behind on payments and make better decisions. You can also make use of Xero’s useful add-on apps to help you reconcile more efficiently. 

    8. Create the Payroll

    If you have employees, you’ll need to utilize Xero to create a payroll for monitoring expenses. It would provide you with access to all your payroll costs without having to go through different spreadsheets to determine total costs. Creating the payroll is straightforward. You can visit Payroll from the Payroll Overview to get started. If transferring payroll data from a different system during the financial year, you will need to add opening balances.

    9. Include Payment Services

    Small businesses that use an active payment service should link it to their Xero account. Some options include GoCardless, Stripe, and PayPal. As there are plenty of payment options to choose from, you should have no trouble finding the solution that’s right for you. All you have to do to get this going once you’ve decided on a service is head to Payment Services which is located in Invoice Settings.

    10. Create Payment Reminders

    To ensure that all your customers stay on top of their payments, you can also create payment reminders on Xero accounting software. Getting paid on time is necessary for staying afloat. By setting up payment reminders, you can expect to get paid quickly and keep your books more accurately. You can head to Invoice Reminders by opening Invoice Settings. Only if you have the habit of regularly reconciling receipts should you set up the payment reminders. If you chase payments that customers have paid, it can hurt your reputation. To avoid this, make sure to reconcile daily.

    authorized employees using xero accounting software

    11. Add More Users

    Xero accounting software also lets you add more users. To add more users, you need to head to Users from Settings. This means that you get to add the bookkeeper, accountant, and just about any other stakeholder. Here is some of the information offered by the software.

    Send Invitation to a User

    Edit a User

    Add a User’s Details

    View Your Xero Users

    12. Generate Basic Reports

    To unleash the potential of Xero accounting software, you need to know how to generate basic reports. Only when you have entered the data will you be able to put these reports to good use. You can view the Profit and Loss, Balance Sheet, Aged Payables, and Aged Receivables. Visit Reports in Accounting for more options.

    13. Connect Apps

    Lastly, you can connect apps to the Xero accounting software. It offers a variety of add-ons and apps that you can leverage for streamlining processes and saving time. You can view the apps for performing a variety of functions such as document management and cash flow forecasting. Check out the Xero app marketplace to find out more. By connecting Xero to apps, you can get more out of the software.

    Conclusion

    Now that you know how to use Xero accounting software, you can get started. There is a lot you can do with this incredible tool. It’s a strong choice for many businesses. However, it is still important that you partner with a great bookkeeping service provider to help you plan ahead and make the most of your financial data. 

    Sound Accounts helps business owners manage their finances and put their data to work for them. We’ll stay on top of your bookkeeping so you can rest easy and have the knowledge you need to make excellent business decisions. Connect with us today to get started. 

    Check out our frequently asked questions below for more information about accounting software and bookkeeping. 

    FAQ

    What does Xero accounting software do?

    There is a lot that you can do with Xero accounting software. If you haven’t used it yet, you’re missing out. It is a cloud-based accounting software, designed to help small businesses manage all their finances. You can rely on it for performing bookkeeping functions such as payroll and invoicing. It can even be connected with apps and your bank accounts. You’ll have access to just about every type of information you could possibly need.

    Which is better, Xero or QuickBooks?

    Since Xero and QuickBooks are both extremely popular, chances are that you are wondering which

    software is better. It is important you understand that these two applications are designed for different purposes. Xero is a powerful accounting software that caters to small businesses that require simple navigation and processes. On the other hand, QuickBooks is designed for businesses that have an accountant on board and prioritize scalability. Therefore, it is difficult to claim that one is better than the other. It all comes down to your requirements.

    Is Xero difficult to learn?

    The best thing about Xero accounting software is that it’s easy to use. Unlike most accounting software solutions, it is relatively straightforward and doesn’t require accounting expertise. This means that you should get the hang of it within a few days. Besides, Xero even has a training portal that offers courses which you can take to learn how to navigate within the program. The learning programs do not require any prior knowledge and teach you everything you need from the ground up..

    How Much Does It Cost To Set Up Xero?

    You can decide whether to use either the free version of Xero or the paid version. If you want more features, you will need to spend at least $13.50 a month. However, it is well worth the cost.

    Do I still need a bookkeeper or bookkeeping service if I use Xero?

    Although it isn’t necessary just to use Xero,  you will need one to make sense of the reports and help you plan ahead. He, she, or they can manage your payroll, produce graphs, spot hidden details and issues, and make projections to ensure that you’re getting the most from your software. 

  • The top 3 financial reports every small business owner must know

    The top 3 financial reports every small business owner must know

    When starting a company or managing a business, it’s easy to overlook certain things. Our hands are full of so many concerns. One thing you should never forget is your finances. Not only do major corporations need to keep an eye on their numbers, but the success of small business owners depends heavily on managing resources well and gaining a deep understanding of reports and analytics. 

    The numbers tell us about the financial health of our company in multiple areas. Only when you have the right information, can you expect to make the right business decisions. This affects decisions like when to hire someone, the purchase of inventory, market pricing, departmental resource allocation, new investments, product development, and expansion. Although bank statements might provide some level of insight into your financials, they are just never going to be enough to manage a business effectively.

    You need in-depth metrics to make sense of many factors, like determining how long your company can survive without cash and how long it takes for sales to bring cash, referred to as the cash conversion cycle. 

    If you want a comprehensive understanding of your business’s financial health, there are a few reports that every small business owner needs to understand. These include a balance sheet, income statement, and a statement of cash flow. Each of these provides valuable data for assisting with key decision-making.

    These three financial reports are interrelated and you need to understand each of them to unlock the true potential of your business. Let’s take a brief look at each one. 

    1. Balance Sheet

    One of the most important financial reports that you need to understand is your balance sheet. It reveals what you own in comparison to what you owe. A quick glance at a balance sheet will show you the value of your company’s assets at a specific date (i.e. today), the money that debtors owe you, and how much you owe creditors. In addition to this, it would also mention initial investments and equity over time.

    In order for a balance sheet to be considered accurate, it must balance. This means that both sides of the report have to balance. Keep in mind that the money you borrow would be considered both a liability and an asset, as it would appear on both sides of the balance sheet. For instance, if you take a 3-year loan of $5,000 from your bank, it would appear in the financial report as $5,000 in cash and $5,000 in liabilities. Thus, the equation would balance the statement.

    The following equation is used for preparing an entire balance sheet.

    Assets = Equity + Liabilities

    To better understand a balance sheet, you should view it in personal terms. We all have a balance sheet in our lives. Our personal balance sheets include how much money we owe on a mortgage, credit card bills, interest on student loans, and the cash in our bank accounts. The same goes for your business. Cash refers to the money that you have on hand, whereas, accounts receivable is how much money you are entitled to receive for providing a product or service. It is vital that you keep an eye on this number.

    For instance, when you provide products on credit terms, your accounts receivable would be much higher than your cash at hand. Perhaps your clients might default on payments. In such a situation, you should consider charging a retainer, especially when dealing with first-timers.

    Inventory is an asset that you can sell to receive cash. Similarly, prepaid expenses such as marketing and rent are also an asset. On the other hand, liabilities are on the opposite side of the equation and account for what you owe. The two most common liabilities that small businesses have are accounts payable and credit. The amount is owed to suppliers and vendors. Then, there is equity, which serves as your net worth. It is defined as the difference between what you own and what you owe. Hence, you can learn a lot about a company by viewing its balance sheet. You need to find out if the debt owed is higher than the assets owned. Moreover, you also have to know how long it would take for sales to convert into cash.

    Some additional important information that you can obtain from the balance sheet is mentioned below.

    Cash Conversion Cycle: This ratio determines how long it takes for sales to provide cash. It is important as it allows you to find out whether to trade in cash only or provide credit terms.

    Working Capital: It is calculated by deducting current liabilities from current assets. The formula is used for finding out how much money you have for daily operations.

    Debt Ratio: This is used to find the ratio of debt to assets.

    Sales and Inventory Ratios: If you hold inventory, you can use these ratios to find out how quickly the inventory converts into cash after-sales.

    business owner working with their top 3 financial reports

    2. Income Statement

    The next financial report that you need to know is your income statement. It is used for determining profit or loss over time, usually a year. An income statement is necessary for finding out if a business is profitable or not. It includes sales, cost of goods sold, and operating expenses. Every entrepreneur has to know how to read an income statement to better understand the finer points of their finances. There are two sets of transactions that are mentioned in this financial report. They include operating revenue and expenses which relate to the cost incurred for directly generating the revenue and non-operating expenses such as tax.

    A great thing about an income statement is that you can easily adjust it to suit your requirements. Whether you require an income statement for a month or a year, you should be able to generate it for the desired period using accounting software. For instance, if you have two revenue streams, which include cosmetics and hair products, you can create an income statement to find out how much profit each product is generating for you. The following are some crucial indicators that you need to evaluate using your income statement.

    Burn Rate: This is the amount of money a business loses each month. Specifically, it measures how long it takes you to spend money on the business.

    Net Profit Growth Rate: It measures the increase or decrease in revenue by comparing two income statements.

    Net Profit Margin: It is the ratio of net profit to sales revenue.

    3. Statement of Cash Flow

    Lastly, you’ll need to know what a statement of cash flow has to offer. Small business owners tend to neglect this integral financial report and simply focus on the income statement and balance sheet. However, it can make or break a business. The statement of cash flow maps out how cash and cash equivalents enter your business and leave. It merges both the balance and income statement to provide valuable insights.

    A valuable metric that you need to calculate using the statement of cash flow includes sources of cash. It allows you to find out how much money you are receiving within a given period and where the money originates. You might accumulate money by getting a loan, fundraising, selling stock, or through sales. Negative cash flow would indicate that your business is having trouble meeting expenses. This is why it’s important that you learn to better manage your cash flow, as it would serve as a cushion for your continued efforts.  

    The statement of cash flow provides an overview into where cash is coming from and where it is going, which you cannot expect to determine with an income statement alone. For instance, when your bank account has a large deposit, it doesn’t mean your sales have increased. Instead, you might have taken out a loan. There is plenty of information you can gather with a statement of cash flow. Never underestimate its importance. 

    business owner using his top 3 financial reports

    Conclusion

    Each of the above financial statements is necessary for evaluating the performance of your small business. You can use the information for making both short-term and long-term decisions. In addition to this, the bank will ask you to submit these statements to determine if you qualify for a loan or not. When you immerse yourself in accounting, you get to gather valuable insights. With professional bookkeeping services, you get to hire an expert to prepare these three financial reports for your business so that you can make the best decisions.

    Sound Accounts is your ideal small business bookkeeping partner. We help business owners from every market sector organize, analyze, and capitalize on their financial info. Contact us today and discover the difference excellent bookkeeping and financial knowledge can have on your growth. 

    Check out our frequently asked questions below for quick information about taking advantage of your financial reports. 

    FAQ

    Why is it important to monitor and understand my financial reports?

    Using your accounting software and partnering with your bookkeeper to print and analyze your reports gives you the vital information you need to see your current performance clearly, uncover problems, reallocate funds, spot trends, and make decisions for growth with much more accuracy. 

    Financial reports include an incredible amount of data related to your spending, debts, assets, investments, departmental performance, revenue and so much more. There is simply no way of accurately or confidently managing a business without a clear understanding of every aspect of your company’s finances. 

    Besides the three important reports mentioned above, what are some other financial reports I should always be aware of?

    Some other good reports include Accounts Receivable, Net Profit Margin Over Time, Budget vs. Actual Report, AR Days vs. AP Days and more. 

    How do I make sure I’m making the most of my financial reports?

    You should be tracking your info and studying it consistently, preferably on a daily basis. Set aside time each day to focus on your financial health and toward making projections and decisions based upon the information gathered. 

    Most of all, it’s a good idea to partner with an experienced bookkeeper to help you make sense of your data, spot details you may overlook, explain financial info in easily understood ways, and help you decide on a plan of action for the next season. 

  • Is The Cash Accounting Method Right For Your Business?

    Is The Cash Accounting Method Right For Your Business?

    There are times when cash accounting might seem like the best option. Smaller businesses and startups are free to choose between cash accounting and accrual/GAAP accounting. Timing is the main difference between the two accounting methods.

    Unlike cash accounting, which only records transactions at the time cash is paid or received, accrual accounting immediately recognizes the value the moment it is performed, spent, or earned regardless of whether you receive payment for it or not. If you are wondering whether the cash accounting method is the right option for your business or not, you have come to the right place.

    What Is Cash Accounting?

    The cash basis accounting method is usually the most basic. Cash accounting is straightforward and focuses on cash received and paid. It is normally used by small businesses and for personal accounting. A cash-based accounting system recognizes revenue and expenditure only when cash is exchanged, regardless of whether the product or service has been delivered. This helps ensure that additional complexities, such as current assets and liabilities, receivables, and payables, are not introduced.

    It also means that the sales and expenses do not reflect the exact period they accrue in the financial statements and show investments as expenses. Thus, it can be difficult to assess the performance of your business using cash accounting.

    business owner using the cash accounting method for bookkeeping

    Benefits of Cash Accounting

    Cash accounting is used to this day because it offers a few benefits. For instance, it would allow you to record advance payments made by customers in your income statement the moment you receive them instead of recording them as a prepayment until you have provided the product or service. This means that small businesses can benefit from a ton of creative freedom for manipulating their statements according to a style and context that suits them best.

    Besides, it would allow for easier internal tracking. But, even though a custom reporting system might work for you, it does not mean that it would make sense to others, such as investors and the IRS. It explains why large corporations and public companies cannot use cash accounting.

    Impacts Income, Profitability, and Taxation

    If you decide to use this method of accounting, you need to understand that it would affect your income, profitability, and taxation. It is crucial that you choose the right accounting method, as it would affect your taxation. The more profitable your company, the more money you would need to pay in taxes.

    When you make spending choices for lowering your net profit, you get to reduce your tax obligations. It is common for companies to opt for the cash method to stock up on assets and avoid appearing profitable. For instance, you would be able to pay the lease for your office for the entire period and record the expenses to decrease your profit margin considerably. Even though it might seem somewhat dodgy, you are legally permitted to do so to establish your business for success in the future. However, it is due to this reason that the IRS often does not allow companies to use cash accounting, as they can simply buy inventory in bulk to appear unprofitable. Moreover, with larger companies, you have to account for bigger complexities which make cash accounting a never-ending headache.

    When Can Small Businesses Use Cash Accounting?

    In order to be qualified for filing taxes with the cash accounting method, the IRS requires businesses to pass their test of gross receipts or sales to make sure that organizations are under the revenue threshold, as mentioned below.

    Small business entities (C corporations and partnerships) need to generate under $10 million in annual sales over the last three years. 

    Both a sole proprietor and an S Corporations need to generate under $1 million per year or $5 million in annual sales during the past three years.

    On the other hand, the following companies will find the cash accounting method to be a great choice:

    Qualified Personal Service Firms and Small Service Businesses

    Accountants, real estate agents, consultants, therapists, lawyers, and other professionals as well as small group companies that provide services or a simple product can opt for the cash accounting method. Generally, these businesses operate as sole proprietors, partnerships, or privately held companies.

    Family-Owned Farms

    Family farms also have the option to use the cash accounting method for tax purposes as long as they do not generate over $25 million a year. Farms that are run as family entities are a special exception. Otherwise, the IRS does not raise its threshold. There are specific stipulations that you need to be aware of if you are running a farm. Although family farms may be able to use the cash accounting method for filing taxes, they would be unable to account for grains for resale, livestock costs, and other farming costs.

    Freelancers and Individuals

    The cash accounting method is also widely used by independent contractors, personal businesses, and other self-employed persons. There are certain complexities that you need to deal with in order to ensure that you are able to meet the requirements set by the IRS. Generally, the procedure is quite straightforward.

    cash accounting method tools

    What If Cash Accounting Is Not Right For A Small Business?

    After reading the above, you would have gotten an idea that using the cash accounting method is only acceptable for a few businesses. The fact is that the majority of companies, regardless of their size, realize that the accrual method offers plenty of benefits, especially if they wish to grow. Besides, you would need to switch to GAAP once your company generates over $3 million a year.

    A great reason to switch to accrual accounting from cash accounting is that it is cheaper. Your CPA would only need to file extra forms to make the switch. The earlier you adopt accrual accounting, the cheaper it would be.

    What Is Accrual Accounting?

    Accrual accounting is an accounting method that requires companies to record revenue before payment is received for goods or expenses are due. This means that you would need to account for income and expenses based on whether they have been accrued or not rather than the exchange of money. Thus, the revenue generated by the organization would be recognized in the accounting books as soon as it is earned rather than cash transactions occurring, which makes it the complete opposite of cash accounting, which only focuses on cash transactions.

    How Does Accrual Accounting Work?

    The main concept behind accrual accounting is that an economic event needs to exist to be recognized. It is based on the matching principle, which focuses on matching revenue and expenses to the period when the transaction first occurs instead of when payment is received or made.

    The accrual accounting method combines current cash inflows and outflows with future expected cash flows to provide a more accurate idea about where the company stands at a specific date.

    How Can You Qualify For Accrual Accounting?

    The thing about accrual accounting is that it is considered to be the standard for most organizations. However, only a few small businesses do not follow the method. Small businesses are permitted by the IRS to select their preferred method. However, if your revenue is greater than the specified threshold, you would need to opt for accrual accounting.

    What Are The Benefits of the Accrual Accounting Method?

    There are plenty of advantages of using the accrual accounting method, as mentioned below.

    The Option to Increase Revenue

    A major benefit of the accrual accounting method is that it allows you to increase your revenue. This can help you secure a bank loan and pay tax during a period when the tax rate has been reduced.

    A Clear Picture Of A Company’s Financial Position

    Another reason why you should consider the accrual accounting method is that it provides a clear picture of your finances. It sets the basis for preparing financial statements which you can analyze to determine where your company stands.

    Real-Time View of Finances 

    By following the accrual accounting method, you get to receive a real view of your finances. This means that you would be able to determine if your finances are in order or not.

    Good Management of Debt and Income 

    When you stick to a cash accounting method, you would have no idea about your debt and income. This is not the case with accrual accounting.

    Conclusion

    By this time, you should have the knowledge you need to understand the cash accounting method. If you are contemplating whether to opt for the cash accounting method or the accrual accounting method, it is crucial that you reach out to an expert to help you. Consult with a professional who has expertise in both of these accounting methods and can determine which method you should select so that you can organize your finances, face audits, and pay your taxes with ease. 

    Sound Accounts offers superb bookkeeping support and advice based on years of experience helping countless businesses organize their finances and use this information to make better business decisions. Contact us today to make a change in your business bookkeeping. 

    For some quick answers to bookkeeping questions, see our frequently asked questions below. 

    FAQ

    What is the cash accounting method?

    A cash-based accounting system recognizes revenue and expenditure only when cash is exchanged, regardless of whether the product or service has been delivered. This helps ensure that additional complexities, such as current assets and liabilities, receivables, and payables, are not introduced.

    It also means that the sales and expenses do not reflect the exact period they accrue in the financial statements and show investments as expenses. Thus, it can be difficult to assess the performance of your business using cash accounting.

    What is the accrual accounting method?

    Accrual accounting is an accounting method that requires companies to record revenue before payment is received for goods or expenses are due. This means that you would need to account for income and expenses based on whether they have been accrued or not rather than the exchange of money. Thus, the revenue generated by the organization would be recognized in the accounting books as soon as it is earned rather than cash transactions occurring, which makes it the complete opposite of cash accounting, which only focuses on cash transactions. 

    Accrual basis accounting might not be as simple, but it gives a more accurate picture of your long-term finances. 

    Why use the cash accounting method?

    Because of its relative simplicity, many smaller businesses utilize this system of accounting. It has the quickest learning curve and is generally considered the easiest for new business owners. 

    However, you need to do your research and likely discuss this with a qualified accountant, bookkeeper or tax professional to make sure you fall within all the rules governing this accounting method. Even if you are qualified to do so, you may want to use the accrual method if you’d like a system of accounting that gives you a broader view and a more long-term look at your finances.  

  • Guide to Free Accounting Software

    Guide to Free Accounting Software

    Whether it’s about getting more organized, keeping better records, tracking cash flow and tracking expenses, making better use of your financial statements, or finally contracting a professional bookkeeping service, developing a strong bookkeeping strategy will always change your business for the better and often enable you to grow in ways you didn’t previously have access to. 

    It’s important that, as business owners, we take full advantage of technologies that might give us a leg up in our efforts. One area that often needs an upgrade is in our bookkeeping and money management. One affordable way to get a better handle on things, especially when you’re just starting out or fairly new, is picking up a good accounting software. 

    While free options will not be as robust as paid choices like QuickBooks or Xero, several no-cost options exist that offer a range of possibilities for business owners hoping to better manage their books, simply handle invoicing with ease or take advantage of the sleek workflow and automated data organization that comes with accounting software. Let’s look at 4 choices for free invoicing or free accounting software in 2022. 

    1. Wave

    A top choice, Wave is a web-based software, which means you can access your account from anywhere with an internet connection. It may lack some advanced features, but it’s no slouch. Wave gives you the ability to connect unlimited credit card and bank accounts, and track income and expenses. You’ll also have the capability of invoicing clients and partners and scan receipts as well. 

    Some additional Wave features include:

    Journal transactions

    Bill and invoice reminders

    Payments made in foreign currency

    Customizable sales tax

    Customizable income and expense categories

    Double-entry software

    The ability to run multiple businesses through one account

    Exportable Accounting Reports

    Another great perk of Wave software is its security. It packs 256-bit SSL encryption and data backup. You’ll also get support via email, along with helpful hints from their blog, forum, and help center. Lastly, Wave expands your options by offering free add-ons like Wave Invoicing or pay-as-you-go add-ons like Payroll by Wave, that enhance your experience and give you more control over your accounting. 

    As with any product, Wave does have a few drawbacks. It carries few tax capabilities and isn’t ideal for larger companies. Still, Wave, with its strong security, thorough collection of benefits and add-ons and ease of access, makes it one of the best choices for free accounting software. 

    2. ZipBooks

    ZipBooks contains most of the features you need for basic business bookkeeping, like expense management, bank syncing, billing, invoicing, and even reports. Additional features include bank reconciliation, auto-categorization, tagging and more, plus a wide range of detailed reports. ZipBooks helps you accomplish even more with data-driven insights to enable you to make the most of your financial reports. With greater financial intelligence comes better business decisions. 

    ZipBooks offers an automated payroll option via a link with Gusto. You’ll need to subscribe with Gusto, which starts at $39 a month plus $6 per person per month. While this means an extra expense for you, Gusto is a great service that many business owners swear by. And paired with ZipBooks, can really streamline your payroll management. If you’re hoping to make online payments to your invoiced customers, you’ll need to use Square or PayPal and pay the associated fees. 

    ZipBooks is an above average choice for free accounting software. With several built-in features and some of the best intelligence and reporting insights of any free software, it’s an excellent program for many businesses. Learn more about ZipBooks here.

    business owner using free accounting software

    3. CloudBooks

    This one is sort of a cross between no-cost and low-cost. You can use CloudBooks to invoice, track expenses, create estimates, track time, easily communicate with your entire team, assign tasks, run projects, and more. However, you’ll need to upgrade and pay a very reasonable fee of $10 per month if you’d like to send more than 5 invoices, offer payments online for your invoices or brand your materials. 

    For help, you can contact CloudBooks by email or even phone. They also keep a regular blog going with some great articles, featuring not only helpful hints about using CloudBooks, but timely posts about business, accounting, media, and marketing. Check out and sign up for CloudBooks here. 

    4. Zoho Invoice

    This self-admitted “forever-free” tool is an excellent choice for small business owners looking to create and manage invoices and collect payments, all with ease. Customize your templates with brand-specific choices, track expenses, communicate with customers using your client portal, create estimates, and run time-tracking on project billing.

    Zoho is trusted by a wide range of businesses and entrepreneurs for its ease and automation. Everyone from freelancers, musicians and artists, to designers, lawyers, consultants, non-profit organizations, taxi and transportation, medical, travel and tourism, and everyone in-between, are using Zoho to manage their invoicing and payments. 

    At its heart, Zoho isn’t just one, but a suite of apps, designed to help you manage your business better in just about every way. Their offerings include programs like Zoho Books, which goes beyond invoicing to include everything you need for complete bookkeeping. From there you get to choose programs or subscribe to the entire suite and gain a serious selection of features that allow you to email, invoice, manage bookkeeping, create and track marketing campaigns, manage projects, design, handle customer service and sales pipeline oversight, and book appointments. 

    Zoho is customizable, features great mobile apps, and its interface is attractive and mostly intuitive. They’ve also made considerable upgrades over the past few years, allowing for a greater level of control and customization. 

    Free for the basic service of Zoho Invoice, which includes one user, if you’d like to step up, which will be necessary for many if not most users, there are a range of paid Zoho Invoice plans, with a graduated system of features and pricing. From there, you can move into Zoho’s wider range of business products, requiring anywhere from $30 to $250 per month for a comprehensive suite of management tools to help you take care of just about anything. 

    Conclusion

    This is by no means an exhaustive list. And we’ll look at another set of free software options in the near future. But this should at least inspire you to take a look at bookkeeping or invoicing software if you’re not already taking advantage of the features and benefits of today’s available technologies. 

    Remember, though, no program is a full substitute for an experienced bookkeeper. It’s important to create bookkeeping habits and strategies that are sustainable, comprehensive, easy-to-follow, and cover everything. A bookkeeper can make this happen for you and take the burden off your shoulders. 

    Sound Accounts helps companies from all sectors achieve greater productivity with a range of superb bookkeeping services. Don’t leave your finances to chance. Reach out today to see the difference great bookkeeping makes in your business. 

    For quick answers to questions about free accounting software, see our frequently asked questions below. 

    FAQ

    Is accounting software right for me?

    The answer to this depends on a few things. It’s really never a bad idea to pick up a quality bookkeeping management tool. These programs, whether you’re handling your own books or outsourcing, can give you quick access to basic accounting tools and a range of reports. Not to mention keeping your records organized.

     How do I choose the best software for me?

    There probably isn’t a “perfect” software for any business owner. So many of them will work just fine for most companies. It comes down to which features you need, the ease of use and the style of navigation you prefer, and how customizable your options are. You’ll also need to determine which is better for your success, a good free version or a more comprehensive paid program. 

    Is accounting software a good replacement for a bookkeeper?

    The short answer is no! While very small businesses, say one or two people, especially ones with a very basic business model, a limited range of expenses, and few customers, can manage their own books using accounting software and good habits, most growing businesses need to eventually transition to some kind of professional bookkeeping help. This might be an in-house employee or even the more versatile outsourced bookkeeping service, which offers you exactly the services you need at a price you can afford. 

  • 5 Small Business Bookkeeping Myths

    Small business bookkeeping is sometimes a contentious subject, with business owners digging in hard to set up camp on their own chosen side. Some swear by staff help, others love the ease of contracting with an outside service. Still, there are those who only want to handle it themselves. 

    There are definite pros and cons for each. And within each one, a range of responsibilities, inherent to that particular approach. Whatever your chosen bookkeeping path, it’s clear that great bookkeeping is essential for professional success. It’s also clear there is a great deal of misunderstanding surrounding the subject. Let’s look at 5 small business bookkeeping myths that often trip up business owners and how to approach them instead. 

    Myth #1 Bookkeeping is Just Data Entry

    To be sure, there is a fair amount of data entry involved in the bookkeeping process. If you’re doing it the old-fashioned way, with ledgers and notebooks, you’ll be writing down a lot of information each day. If you’re using software, it will save you a lot of time but still require you to enter certain information and go over your reports regularly. 

    But bookkeeping isn’t just entering information, it’s a lot more. It involves keeping track of and reconciling bank accounts, organizing and filing receipts and invoices, tracking expenses and payroll, understanding cash flow, credit and debt, following up with customers, partners and vendors to go over payments, verifying costs, fixing accounting errors, preparing you for business taxes, understanding capital, preparing you for an audit if necessary, and doing an analysis of detailed financial statements and reports to ensure overall financial health.. 

    Proper bookkeeping can mean the difference between a business that loses money, is prone to audits, and wanders aimlessly and one with a clear vision, well-managed finances, and a structured path toward growth. 

    business owners thinking about bookkeeping myths

    Myth #2 Bookkeeping is Expensive

    Another myth that often keeps business owners frantically trying to manage their own bookkeeping is the idea that bookkeepers are expensive. With an annual average between $30,000 and $60,000 for in-house bookkeepers, the truth is more reasonable. Beyond this, many small businesses, especially when starting out, don’t need full-time bookkeepers and would do just fine with part-time help. 

    When it comes to outsourcing, you get to pay for exactly the services or time you need. Bookkeeping service providers usually offer a range of options to meet the varying needs and budgets of their clients. So you get top-notch industry experience and the support you need without having to go through the hiring process or setting up an office. 

    Myth #3 I’m Giving Up Too Much Control

    A common belief is that outsourcing to a professional bookkeeping service means losing control of your business and finances. This couldn’t be further from the truth. Professional bookkeeping firms stake the success of their business in being trustworthy, consistent, organized, transparent, and good communicators. 

    They take data safety seriously and use a host of technologies and best practices to ensure your company’s info is protected. Bookkeeping service providers work with you to make the most of your financial management, helping you make more informed decisions and allowing you to focus on core management activities instead of using up time on bookkeeping activities. If anything, bookkeepers enable and empower you to gain greater control with more time, a clear vision, and more focused financial choices that lead to business success.

    Myth #4 You Only Need Bookkeeping Help During Tax Time

    It’s true that bookkeepers can be lifesavers during tax season, especially for small business owners who already have a lot to deal with. But if you neglect taking advantage of the organization, expertise, analysis, and advice provided by great bookkeepers throughout the year, tax time is likely to be fraught with problems, missing paperwork and records, and a lot of stress. 

    Having a bookkeeper throughout the year means your books are maintained accurately every single day. Your records are always in order. Accounting mistakes are caught early and fixed quickly, and you ensure that taxes are paid accurately and on time. Bookkeepers also help you find the maximum deductions so you end up saving money. 

    Additionally, gearing your financial focus simply around tax season is a bad idea. Your bookkeeper’s knowledge is invaluable. You’ll be able to partner with them to put your financial reports to better use, helping you streamline spending, hire more strategically, reorganize under-performing departments, and invest with greater clarity. 

    business manager's bookkeeping ledger sitting open

    Myth #5: Bookkeeping is Simple Work; I Can Handle it Myself

    It is occasionally true that there are business owners with bookkeeping training who successfully manage their own books. But this is rare and also applies mainly to companies where the business owners themselves are the only employee, or one of only a few staff members. 

    Most of the time, business owners find that bookkeeping takes more time and focus than they’d like to be spending. They find that their attention is pulled away from management tasks toward bookkeeping needs. They also discover that bookkeeping is a lot more than data entry and keeping a box of receipts. It involves consistent follow-through, good organization, analytical skills, a grasp of tax laws and details, and a desire to understand the nuances of financial data. 

    Contracting a bookkeeper means you get to lead your company instead of being stuck catching up on the books. It means you won’t miss a beat, not only during tax time, but every day. They’ll help you avoid repeat audits and use your financial data to grow your business. Bookkeepers are partners in helping you develop your dream further. While bookkeeping might seem dry and boring to you. To them, it’s an opportunity to help business owners achieve more of their goals. 

    Sound Accounts is your ideal bookkeeping specialist. We help businesses reach the next level of their development with comprehensive bookkeeping support. Contact us today to get started.

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

    FAQ

    Why is bookkeeping so important for small businesses?

    Bookkeeping ensures organized records, prepares you for taxes, helps you avoid mistakes and penalties, enables you to make better financial decisions, gives you a clear view of performance and all aspects of your business, and equips you with the knowledge you need to move forward more objectively. 

    Is hiring a professional bookkeeper right for me?

    Most of the time, yes. Professional bookkeepers take care of managing your books and financial reports, allowing you to focus on management and leadership concerns. This lowers your stress, frees up time, helps you avoid costly mistakes and keeps you informed on performance and areas of opportunity. 

    Which is better for me, an in-house or outsourced bookkeeper?

    There are several things to consider: the amount of work needed, your budget, your ability to outfit a new office and pay benefits, the desire to have someone down the hall or across town and much more. 

    In-house bookkeepers can be great, but outsourcing is often the right move. You get all the upsides of a dedicated and experienced bookkeeper without having to pay a full salary, benefits or preparing an office with all its expenses. Bookkeeping service providers already have their own equipment and technology and establish their reputation on providing consistent service and a trustworthy relationship.