Is Your Business Prepared for Year-End?

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One way to Increase Your Bottom Line Before Year-End

Have you ever been told that the way to a better and bigger bottom line is to look at your revenue streams? Determine what product or service you offer that is bringing in the most profit and focus on it.  Or brainstorm different revenue streams that could bring in not only more clients, but would appeal to a different market base.

As the last quarter of the year is approaching, I recommend to all my clients to review their financial statements.  But I recommend a different angle than just developing new revenue streams.  At this time of the year, I recommend you concentrate on an area that you have more control over. Your expenses. It is the perfect time of year to review over your last 3 quarters and see what areas of spending are larger than you anticipated.

Like a majority of small businesses one of your biggest areas of spending might be advertising.  This is the perfect time to examine your advertising campaigns and determine what is working and what might not be working for you. You can eliminate the low performing campaigns and still have time before year-end to reap some savings.  Is your phone bill pretty high?  Maybe you need to look into a plan that might be more fitting for your current usage needs. Do you have recurring payments for products or services that you aren’t using anymore? This is the perfect time to cancel unneeded fluff; savings can be found all over.

Just go down your Profit and Loss statement and review each category, looking to see the specific vendors and charges. You may be surprised at what you find. This is also a good time to verify that each transaction is coded to the proper account. If not, move it to the proper account so you can get a true statement of your expenses. This part is extremely useful with tax time right around the corner.

If you are reading this and thinking, “But I don’t have a Profit and Loss statement. How do I get one?”.  You should contact me. I am more than happy to discuss with you how to go about getting and utilizing a system to track your income and expenses.  This will also allow you to have proper reporting and be ready at tax time.

Copyright 2014 Christi Rains, Alpha Omega Consulting & Bookkeeping, LLC  www.aobookkeeping.com

Does Your Business Have a Solid Foundation?

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Is Your Business Insured?

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There are various types of insurance that a business owner should consider to protect their investment. Even if you have formed a legal entity that provides personal asset protection you still need insurance for your business. The limited liability offered with forming an LLC or corporation offers protection of your personal assets if your company is in financial trouble and is in the process of closing its doors.  Commercial insurance offers protection while you are in business, helping you recover from a disaster or tough situation and stay in business.

If someone injures themselves on your premises are you covered? If you are at a client’s place of business and you damage their equipment are you covered? If an employee injures themselves while working how will you pay for their medical bills? If there is a fire at your warehouse or office do you have coverage to rebuild?

Insurance, such as general liability and professional liability, will provide an additional layer of protection for your company. This type of insurance can protect you in various situations with employees, customers, clients, vendors, etc.

Most states require various insurance if you have employees but few require other types of insurance. Be sure you have the proper type of insurance to limit your liability.

Owning a business may be your dream come true, but there are a lot of factors involved to build a strong foundation. Be sure you have a solid foundation before the unthinkable happens to you.

Copyright 2014 Christi Rains, Alpha Omega Consulting & Bookkeeping, LLC  www.aobookkeeping.com

How to Determine if You Have Household Employees

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Do you have household employees?

Do you have an individual that comes to your house routinely to handle such tasks as house cleaning, gardening, cooking, babysitting or any other position that personally supports you? If you pay this individual more than $1900 a year then the IRS recognizes the relationship as an employee/employer. This does not apply if you are hiring these services from a third party company.

Are you treating this relationship properly? How do you know if you are?  The IRS defines a household employee as someone hired to do work in or around a home, at the direction and control of the person who lives in the home.

As an employer, you should be withholding tax from the paychecks. If you are not withholding payroll taxes then you are out of compliance and you will owe back taxes plus penalties. If you have been treating the relationship improperly, it is fairly easy to begin a household employee payroll system. There are many payroll services that can help you by processing the payroll to save you the time and energy with calculating payroll taxes and remittance to the state.

If you have questions about determining the relationship of a worker, please don’t hesitate to contact me.

Copyright 2014 Christi Rains, Alpha Omega Consulting & Bookkeeping, LLC  www.aobookkeeping.com

How to Keep Your Small Business Out of Hot Water

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Is Your Small Business in Danger of an Audit?

In recent years, the total number of audits on small businesses has increased at the IRS despite a decrease in the overall number of audits.  Sadly, this change in focus by our IRS is based almost solely on their search for more revenue.  Because of the nature and number of small business deductions, the potential for error is greater.  If you qualify for a deduction don’t be afraid to take, but be prepared to prove you deserve it.  Below, is a list of some of the more common deductions that will set off a red flag at the IRS;

5 of the top reasons for an IRS audit 

Home office deduction 

There are two primary areas where filers make mistakes with this one.  First, is calculating the amount of square footage actually being used for the office accurately.  Second, the office space must be used “…exclusively and regularly for your course of business…”  The problem arises over subjectivity; what do they mean by ‘exclusive’?…or ‘regularly’? Should I include that part of the home or not?  These questions can be difficult, but not impossible to prove and justify.

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SEEK PROFESSIONAL HELP BEFORE IT’S TOO LATE!

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Why is it important for finance and accounting functions to be handled by accounting professionals?

Accurate and current books are imperative to operational efficiency. If your business isn’t booking sales and payments on a regular basis then you will not know the current financial position of your company.  If you are not paying bills on time then you are not only paying late fees but are unable to take advantage of early pay discounts offered by some vendors. This also prevents companies from producing financial statements or short and long-term projections.   Continue reading

Do you want to save time and money in your business?

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THE IMPORTANCE OF USING AN ACCOUNTING SYSTEM

One of the most important factors for a small business’ financial health is to use an accounting system. Accounting systems track revenue, expenses and produce financial statements.  They can save a business owner valuable time and money when compared to the alternatives.

Do you use Excel? While Excel might seem like the simple solution, it really isn’t the best use of your time. Why spend your time using a completely manual process when you could be using an automated one?

Are you a shoebox client? Are you not using any type of method during the year to track income and expenses? Do you just toss your receipts in a box and forget about them until tax time? Do you rely on your tax preparer to sort through your paperwork and determine your income and expenses right before the dreaded tax filing deadline? If this describes you, how do you know the performance of your business without proper and routine tracking of sales?

Your time is the most valuable asset your business has.  Use it wisely to grow your business.

The advantages to using an accounting system are numerous. I touch on some of the main advantages below.

  • Tracking Income 

Entering your financial information into an accounting system will automatically track all income. You will know what customers have paid and what invoices are outstanding. Knowing on a regular basis what amounts are owed to you can help you be proactive in collecting past due amounts.

  • Tracking Expenses

You will know what vendors have been paid and what items are open. Having this information can aid you in paying bills on time and avoiding late fees and penalties.

  • Financial Statements 

An automated financial system allows for financial statements and activity reports to be generated quickly, and accurately. Your financials are critical to assessing the health of your business. If you are a shoebox client, reports are not possible during the year.  As well, if you are using Excel you will need to manually prepare reports.

Having all of your information located nicely within an accounting system can help you save time and money, prepare your taxes and increase your bottom line.  A business can’t truly know their financial outcomes without proper tracking. If you are using Excel or are a shoebox client, I urge you to think about moving to an automated system. Your time is the most valuable asset your business has.  Use it wisely to grow your business.

One final point, as important as having and using an accounting system is, it is equally important to ensure it is managed properly.  If you are unsure of how to use an accounting system or how to accurately account for transactions you should seek professional help.  Too many business owners try to do it themselves and find themselves owing penalties and interest on incorrectly filed sales and income taxes.

If you would like to discuss how to get setup on an accounting system please contact us. We handle system set ups, training and routine review for accuracy.

Copyright 2014 Christi Rains, Alpha Omega Consulting & Bookkeeping, LLC

Your Next Big Idea Might be Just Around the Corner

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Why Business Owners Need Downtime

Have you ever been working and had a thought and by the time it took you the 5 seconds to get the paper and pin to write down the thought it was gone?  When this happens it is a CLEAR sign to step away and take at least a few minutes of downtime.  Trust me you will be better off for it.

Our minds read and hear so much information every day. It can be hard to sift through it all, let alone remember it.  Time away from the demands of work can give your mind time to rest and rejuvenate. During non-work activities such as, resting, exercising and hobbies your head can have time to clear. One of the ways I take downtime is by taking a morning walk before I start my work day.  It’s during this time that my mind clears and I think of ideas for my business. It could be a new idea for a blog post, how to solve a clients problem or even a great dinner idea for my family.  When I am ready to start my work day, I can start with a clear mind, which usually leads to a productive day.

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