January 2016 Blog Posts
January 31, 2016
1. Do Your Homework
Whether you are planning on starting a business or are already running one, be sure to do your research. It’s important to understand the different tax forms, write-offs, laws, licensing and other requirements that apply to your business. An awareness of these policies will help protect and stabilize your business in the long run.
2. Open an Account
Creating a separate account for your business from your personal checking makes it easier for you to keep track of your business’s income and makes it simpler for you to do taxes. Start with a simple business checking account and add a savings accounts if necessary. Also consider the benefits of having a business credit card to help you start building credit.
3. Keep Track of All Expenses
It is critical to the maintenance of your accounts and to the success of your business that you collect and track your expenses. This can be done by gathering receipts and recording payments. Even the infrequent meal expenses or travel costs need to be documented and handled correctly. Failing to maintain these accounts can prevent you from being able to build a reliable financial statement or prepare trustworthy reports on your tax returns. It also becomes difficult to monitor the expenses or growth of your business.
Accurate bookkeeping is necessary in order to compile clear and precise reports as well as determine how your business is doing. In that light, be sure to research your bookkeeping options thoroughly to ensure optimal maintenance of your accounts.
A DIY route requires tracking all of your expenses and meticulously documenting them in a spreadsheet. Then, it must be interpreted to produce clear data and exact reports. For many business owners, this option simply asks too much of them, as they have limited time that should be spent on moving their business forward, rather than on tedious accounting work.
A good option is to outsource your bookkeeping and accounting. For those that already have too much on their plate, this is the best option.
5. Establish Payroll
Whether you have your own employees or independent contractors, they all have to be paid for their services. Abiding by a payroll schedule and withholding the appropriate taxes are also steps that can complicate this process. Our services can help you check this item off your list so you and your employees can move on to bigger and better things.
6. Pay Taxes
It’s important to understand the ramifications of tax expenses, deductions and payment plans when organizing your business finances. The type of business that you have will determine the kinds of tax expenses you need to anticipate. Keeping track of various tax requirements as well as deductions that you can qualify for can be difficult. Not only that, but filing taxes can be a tedious process. Our services at Your Balance Sheet can help you accurately fulfill your tax requirements.
7. Gross Margin
The term “gross margin” simply refers to the difference between the cost of the goods you sell subtracted from the revenue that you generate from the sale of those goods. This figure is a helpful determining factor to keep your eye on as your business progresses forward in future months and years.
However, in order to keep tabs on this figure, you must have consistent and organized accounting practices working in the background. At Your Balance Sheet, we’re able to provide those services and provide you with consistent reports so that you can see a snapshot of your business at a moment’s notice. Our accounting tips for small businesses can help you manage your business better.
These are critical and what we recommend to all of our customers who use our CPA Services in North Royalton and Cleveland Ohio.
January 23, 2016
A lot of work goes into getting a small business off the ground. While finding your niche, developing and executing a business plan, and hitting the sales path hard are all extremely important, entrepreneurs
shouldn’t forget about the accounting side of the business.
Jim Bonvissuto, president of BIG Financial & Advisory Services, took time recently to answer a few questions related to the initial accounting steps all business owners should keep in mind during the launch of their business.
Question: When an entrepreneur starts a business, what should they do first?
Bonvissuto: The fi rst step is to consult with a CPA. It is critical that a business has not only the appropriate accounting methodology in place day 1, but almost more importantly is the tax structure regarding entity selection, business registration, and all the federal, state and local payroll withholding tax registrations be set up properly. The second step is planning the ongoing management of the accounting and tax reporting/remittance that is required.
Question: Are there different types of entities and does it matter what type is selected?
Bonvissuto: A key issue that a startup business has to answer is what type of organization structure they want to form. A business can form as an S-Corp., C-Corp., Partnership, Sole Proprietor, and LLC. Each of these entities have diff erent tax pros and cons. The LLC structure is not recognized by the IRS and still requires you to fi le a form with the IRS to determine what type of entity you will be taxed as (S-Corp., C-Corp., Partnership, or Sole Proprietor). The entity selected for tax purposes could impact you personally anywhere from 10% to 35%.
Question: How does a business owner know when it’s right to outsource accounting, or take care of it in house?
Bonvissuto: A business owner’s primary focus is the day to day operations and growing the business. The accounting for the business also needs to be a priority. If there are not enough hours in the day for the owner to also handle the accounting, or they do not have the expertise in house to do so daily, they should outsource.
Question: What common mistakes do new entrepreneurs typically make when it comes to accounting? How can those mistakes be avoided?
Bonvissuto: New entrepreneurs mistake accounting as only a means to filing a tax return annually in April. Accurate and timely accounting is the key tool to a successful business. It will provide the business owner the information to make informed strategic decisions in order to avoid issues and sustain profi table growth. A few examples are: avoiding cash timing issues of when to pay bills and collect from customers, determining the best timing of advertising/marketing for a cyclical business, determining ways to increase profitability, determining whether one can afford to expand or rather should be cutting back. If the business owner does not have the accounting expertise and/or the appropriate staff in place, a CPA has the expertise to guide you in the right direction.
For more information on Tax Services in North Royalton give us a call!
January 13, 2016
Stamp Out Tax Season Stress!
Are you ready for tax time? There are a couple of steps you can take now to alleviate some of the stress of filing your return. Plan to get organized early. Begin by putting together a tax folder with W-2s from your employer, 1099s for other income you may have earned, bank and other financial statements and receipts for things like medical bills and charitable donations. A helpful video from the American Institute of CPAs offers more information on the best ways to get ready now and throughout the year.
Once you’ve gathered all your important paperwork, this is a good time to meet with your CPA to talk about changes in your financial situation or in tax laws that may have an effect on your return. Having this discussion early is key to avoiding surprises at tax time and a great time to get started on planning that can potentially minimize your tax bite and strengthen your financial situation. Call us today!