Less Tax Starts with Keeping Good Records

Let’s face it; bookkeeping is the last thing that any small business owner wants or has time to do. But maintaining well-organized books and records is a crucial part of running a successful business, not to mention that it’s required by the IRS. Keeping up with the books year-round instead of scrambling to round up your records at tax time will not only help you monitor the progress of your business, but it will also make for a less taxing tax season.

Followings are just some suggestions. If you haven’t decided how to manage your receipts, this article should give you some ideas.

FOUR ONLINE TOOLS FOR FAST AND EASY BOOKKEEPING

Organize and securely store your records and automate bookkeeping with these user friendly and affordable online tools:

  • Shoeboxed: Mail your receipts and important records to Shoeboxed for scanning, data entry, and secure online organization and storage. From your online account, download Excel and CSV spreadsheets, PDF reports, and QuickBooks and Quicken files, and seamlessly export data to other web applications. Shoeboxed is an IRS-accepted electronic storage system, which means that you don’t have to keep the hard copies after processing, and even offers a free shred-and-recycle option.  
  • Outright.com: Sync your Outright.com account with Shoeboxed, FreshBooks, PayPal, your bank account, and other sources to automate your bookkeeping. At tax time, Outright calculates quarterly estimated taxes, automatically populates your Schedule C, and even requests Form W-9 from contractors and freelancers and files Form 1099-MISC on their behalf.
  • FreshBooks: Use FreshBooks for fast, simple and professional-quality invoicing. Snag receipts directly from Shoeboxed to bill clients for expenses, keep track of overdue invoices, and automatically export paid invoices to Outright.com where income is tracked. Harvest is another excellent invoicing tool for small business owners.
  • Bill.com: Simplify your bill workflow with easy and affordable online bill management and payment tools from Bill.com.

Secure your receipts at Shoeboxed.com

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Posted by Administrator - January 27, 2011 at 10:14 am

Categories: Accounting For Dummies   Tags: ,

Accounting For Dummies

Accounting for Dummies; An Overview

Accounting for Dummies are basic accounting tips and tricks you can master in your business.

Accounting for dummies will show you with basic steps you can create financial information for your business. Please, visit other categories or search for the topic of interest at the left column.

First decision you need to make is whether you want your business be classified as cash-basis or accrual accounting. This is probably already confusing, but read on and I will explain.

In cash-basis accounting, you will record sales when the customer pays.

Ex: on May12th you sell $12,000. worth of books.

On June 12th you receive payment from your customer.

The sale of the books is recognized on June 12th, when the payment is received.

On the other side of the scale, your expenses are recorded when they are paid.

Ex: on May 10th you purchase $8000. worth of books.

On June 10th you pay your supplier for those books.

The purchase is recorded on June 10th, when you pay your supplier.

Cash-basis accounting is shied away from, because your financial statement will not give an actual picture of your company’s activities. It will only show you money coming into the business and money going out of the business.

In accrual accounting, the sales are recorded when they are made, regardless of when the customer pays and the expenses are recorded when they happen, regardless of when you pay them. This method gives a clear picture of your total yearly sales with a balance due from your customers as well as a clear picture of all your expenses and inventory purchased with a balance due to your suppliers.

Now that you have decided on which method of accounting system to use, lets talk about your team.

As a business owner the sooner you establish your team to help you reach your goals, the greater peace of mind you can have. Focus on your relationship with people such as your lawyer, banker, marketing expert, insurance company, and your accountant who will give you financial advise and minimize your tax liability. You also need a bookkeeper to look after your day to day recording of financial transactions.

Some business owners take on the task of bookkeeping themselves and soon only have time to do the bare minimum such as, payroll – employees have to be paid, paying suppliers and creating sales invoices. All these payroll, supplier and customer invoices and documents end up in a basket to be entered into an accounting software program at a later date. Well, you know what, that later day is far away and might never come. The best thing you can do for your business is hire a bookkeeper.

The bookkeeper will record every transaction that takes place with the following six basic types of suppliers or entities.

1- Customers who buy the products and services that the company sells.

2- Employees who provide services to the business and are paid wages and benefits such as, worker’s compensation, unemployment insurance, and medical and dental insurance.

3- Suppliers who provide items such as, products for resale, legal advise, utilities, gas, rent, telephone, computer and furniture.

4-Bankers or trust companies who loan money to the business, charge interest on the principal and are monthly payments are scheduled to pay off the loan.

5- Investors, the individuals that invest money in the business and expect the business to earn profit on the capital they invest.

6-Government, federal and provincial government that collect income tax, payroll tax, sales tax and property tax from the business.

It does not matter what size of business you have. You will be amazed at the amount of paper and transactions accumulate each month. Someone has to keep track, organize and record in order to be able to provide sound financial statements that the business owner can rely on and make good decisions.

As a business owner keep the following steps in mind when starting out or make a change if needed:

1- Make sure you have an accountant/bookkeeper as part of your start-up team.

2- With the help of you accountant/bookkeeper, choose a software to keep track of your business transactions.

3- Open a business bank account and keep it totally separate from your personal account.

4- Get a business credit card or line of credit and keep solely for business use.

5- Set up your office with desk, computer, filing cabinet and start-up office supplier. Make sure it’s user friendly for yourself and your bookkeeper. Situate the computer, mouse, calculator, and telephone in easy reach, so after working 8 hours you or your bookkeeper don’t get a soar neck or back.

6- Invest in office trays and label them to communicate to your bookkeeper as to where the documents are being kept. Once or twice a week when your bookkeeper comes, they know exactly where to go to get the information needed. No time wasted.

I hope this has been helpful. Good luck.

Shin Noo

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Posted by Administrator - June 11, 2010 at 10:40 pm

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Importance of Inventory Count

Take the Stress off Counting Inventory

It’s important to have a handle on inventory. Regular inventory count will let the owner know which items are fast moving and which items are slow moving and adjustments can be made accordingly.

Inventory count can be a pain. That’s why it’s done once a year at tax time and not every 3 months which is recommended by accountants, bookkeepers and business coaches.

Set up the inventory on an inventory software system. When you purchase product increase inventory and when you sell the product decrease inventory. All inventory software come with reporting options and one of them is a report to count inventory.

The software works on a coding method. For each item you have to create a bar code or a home made code. Print these codes on a labelling machine or printer and stick the labels on the shelves. This way you will know if you are running out of products by just glancing at the shelves and inventory count will be less stressful and more accurate.

A client asked “why am I not making money” that is a million dollar question.

so, we sat down and reviewed the products he purchased and his markup.

Well, we found the markup is healthy but it’s still not enough to take care of overhead such as wages, heat, rent, telephone etc.

We added the *fixed overhead expenses to the cost of items he has for sale. We realized the sale price on product has to be increased in order to pay overhead and leave some money for the owner.

Take a look at your overhead and make sure you are considering them when pricing your inventory.

*Fixed overhead expenses are those that come every month. They are re-accuring expenses. Ex: Telephone, Internet, rent, wages, heat, security etc.

Inventory count is important as well as pricing your inventory to make a profit.

 

 

 

 

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Posted by nooshin - December 13, 2012 at 9:38 am

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The Importance of Social Media

Social Media

Maximizing the Benefits

Every so often the business landscape goes through some major changes. Those businesses who can adapt and go with the change become successful but those who stubbornly operate according to yesterday rules fall behind and do not grow as much.

In the past, media changes came relatively rarely. Now however, with the age of social media, businesses must be on their feet and constantly update their knowledge with technology to promote themselves and keep connected with customers or risk being left behind and loose out.

The number of platforms for online marketing for small business owners to promote their business is continuously growing and expanding. Understanding how to use these platforms effectively Is more important now than ever. We looked at three of these platforms.

 

LinkedIn

LinkedIn was launched in 2003 and today it’s become internet’s premier professional networking tool hosting over 175 million members nearly all professional in one field or another.

LinkedIn has become number one resort for those professionals searching to collaborate, find information, employment and for employees. Just about anything a small business owner could need. LinkedIn is useful for all businesses and because it’s free, it makes it a worth while resource for small businesses.

LinkedIn is like a online resume. You need to use it proactively. Great engagement tool. But you need to use it and get involved with the people already in the industries or positions you’re looking for.

 

Facebook/Twitter

In recent years, Facebook and Twitter have become twin standard bearers of the social media scene. Twitter is a small blog site where users can interact with each other in short and easy scannable burst of text.

Facebook was originally geared for college students but now almost everyone, young and old has a Facebook account with over one billion users, it’s at a point  where at least everyone has at least heard of it. That’s a sign of market saturation and a major reason why every business should have a presence on one or both of these tools.

It’s important how you present yourself. You can’t just set up a Facebook account and expect success. You need to figure out why you’re there. Make your existing website to contain professional content and than place a teaser on Facebook or Twitter. That draws eyeballs to your site and starts to build reputation in the industry.

 

Blogging

Blog, short for weblog, came about only 15 years ago and blogging already established a status in the world of online business promotion. Blogging has placed a secondary importance compared to Facebook, Twitter and LinkedIn.

In the late nineties and early 2000′s the Internet based writing was lot smaller and bloggers were able to build audience slowly without lots of promotion.But now, the blog market is overstuffed. Social media is required to promote a blog. You need to post links on Twitter and Facebook to drive people to your blog content.

We live in a day and age of content marketing. Drawing people to your site. A blog is a great way to educate people on the information they need to make a better buying decision. And if your content offers that, it’s mush more likely you’ll get the sale.

 

You’re Audience and Your Needs

Experts caution businesses to do a self-examination before getting involved with the online world. Even though social media tools are free to use, they can take a lot of your valuable time. Time that can be spend elsewhere and can still be effective.

Know where your target audience is and who your customers are. Sometims a business will think they need a LinkedIn  or Twitter account, but it might not be beneficial to your business or target market.

Know your audience and you’re need.

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Posted by nooshin - November 26, 2012 at 2:39 pm

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Marketing for Dummies

Entrepreneurs , by nature, are do it yourself people. To be successful at marketing business blemishes must be seen and effective marketing starts with an unbiased perspective.

Here are five marketing tips for your business.

1- Advertise small – not like a big business.

Big businesses advertise to gain name recognition and sales. A small business approach should be to have an insentive program and draw customers to it.  Example: 15% off your next hair cut or website classes original price $1200. Now for a limited offer $599. The customer will generally come for the sale and than remember your store name.

2- Offer cheap or premium.

Some customers are not willing to pay full price for your product. However, they will pay a lower price rather than get best quality. You can offer a smaller or stripped down version of your product to meet there needs.

But not all customers are looking for cheap price. Some are willing to pay a little more and get high quality product. To these kinds of customer, a more comprehensive product or combine several products in a special premium package.

3- Reduce your ad.

Reduce the size of your ad so you can run more ads for the same price. Repetitious and consistency is the key. If your ad is in color run the ad using the same color every time. Use the same consistancy of ad size, color and layout every time. This way your ad will stay in people’s mind and it’s a way to start branding your business.

4- Joint promotion.

Partner up with some non-competing businesses serving customers in your market and by combining efforts your ability to cross-promote will help sell products for a very low cost.

Example: A health clinic, a children’s store and a pizza store, they got together and the health nurse immunized kids in a fun party atmosphere and gave happy parents coupons for the pizza store. The foot traffic to these stores were overwhelming.

5- Your current customers.

Your current customers are great advertising tool, they already know you and trust you, so when you have a new product or enhancing an existing product introduce it to your existing customer first. It’s easier to get more sales from them, than to get any business from somebody who has never bought from you. Create some special deals for your existing customers and announce the deal to them first before announcing it to the general market.

I hope marketing for dummies helped you a little bit. You can always ask us a question.

 

http://www.accountingfordummies.net/category/ask-us-questions

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Posted by nooshin - November 12, 2012 at 5:13 pm

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Money for Dummies

Your business is your baby. This very idea can leave you inspired and liberated. But there is also an edge, how do you get some cash to either advance your idea to the point of attracting investors or make your business profitable.

1- Asset sale.

If you have assets, such as car, RV, jewelry, rugs, motor boat, motor bike or second property. They can be turned into cash. Most people’s biggest asset is a home and a car. If you own a late model car, you can sell it and replace with a lower model car with no down payment. This will free up cash and leave you with a low monthly payment.

2- Borowing against your home.

This is an old trick. It’s also the best because you are in control of the money borrowed. The interest rate will be the same as your mortgage and the payment will be added to your moetgage payments. Keep in mind at tax time the interest portion of the business loan is an expense for the company. In that case ask your banker to keep a separate statement to show how much interest and principle you paid for your home as well as your business loan

Once your business gets off the ground and you are able to take a salary, start making monthly payments toward the loan. This way it will be paid off faster instead if having the same amortization as your mortgage.

3- Insurance policy.

Most of us pay into health insurance, life insurance, auto and home insurance. You can borrow against life policy insurance. Most life policies have some cash value after three years. Call or write your insurance agent and get details on how you can access these funds.

4- Try friends and family.

Your typical friend and family investor is someone who is in business and will help because he wished someone had helped him those early days. If you go this route make sure there is a written agreement in place. There is nothing worse than hearing “you never said that.”

I hope Money for Dummies was beneficial. You can always ask a question.

 

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Posted by nooshin - November 11, 2012 at 2:23 pm

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