6 Bookkeeping Habits of Highly Successful Small Business Owners

We know you didn’t go into business to spend all your time doing the books. But what if just a few tasks of daily, weekly, or monthly maintenance could save you many hours of work and thousands of dollars? It would be worth it, right?

Now they need to go shopping for software again. Here’s how to not make the same mistakes this time.

1. Enter receipts as soon as you get them.

Or at least once a month. One of the most common problems we see is the lost receipts that could have been used to reduce your income tax or to prove your case if you get audited by the IRS. They’re also essential to get an accurate report of your profits and losses. Your filing system or business accounting software should already be set up to do this task in a couple of seconds.

2. Reconcile your bank accounts.

This should be done every month when you get your bank statement. Does the bank balance on the statement match what’s in your records? If not, why not?

3. Keep business and personal accounts separate.

After reading the previous two habits, you have an idea of why this is essential. Many small business owners pay for business expenses with a personal credit card and forget to reimburse themselves. Or they pay personal debt with company funds. Then they forget which is which when they’re doing their taxes or generating financial statements for a loan application.

4. Categorize expenses correctly.

Knowing what type of expense goes in which category does require some bookkeeping knowledge. It’s important, though, because there are different tax treatments for the categories; mistakes here can cost you big bucks.

5. Get serious about petty cash.

Have a strict procedure for who is taking out cash, what it’s being used for, and requiring receipts to account for money spent. Whether the cash is coming out of your pocket or the office safe, the rules are the same.

6. Report sales tax on time.

It’s all too easy to fall behind with this chore. But think how much money you’ll save when you’re not paying all those late fines and penalties. You also need a system that accurately tracks sales amounts, so you don’t accidentally overstate your sales and remit too much sales tax. This should be done automatically, so you don’t have to spend time on it.

If this still seems like too much work on the part of your business you hate most, Xendoo can take much of that load off your shoulders. From bank reconciliations to automatic data entry of transactions to real-time tax coding, we do it all for a flat monthly fee that works with your budget. Your peace of mind is well worth it, too!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

5 Benefits of Owning Your Small Business Property

Is it time to purchase the commercial property you’ve been leasing?  If you’re a small business owner who currently rents office or retail space, you could be in a position to benefit from becoming an owner.

Of course, the decision to own or rent will depend on a number of factors unique to your business, such as your location, revenue, and business experience.

But there are general positives for your business that come from purchasing commercial real estate.  Here are five of the top benefits you could expect to enjoy should you transition from renter to owner.

1. The ability to build equity in your property

Perhaps the greatest drawback to leasing a commercial property is that every monthly payment simply ends up in the landlord’s pocket.  However, purchasing that space gives you the ability to immediately start building equity in the property.

If that property increases in value over time, you can cash in by selling or leasing the building.

Those who secure a loan to help purchase commercial real estate also have the option to tap into their equity by executing a cash-out refinance.  By refinancing and taking out a larger loan, a borrower can convert their existing equity into cash.  The amount of the original loan is then repaid to the lender while the rest can be used for business improvements or future investments.

2. The creation of additional revenue streams

If you purchase office, retail, or warehouse property that your business can’t occupy completely, you have the opportunity to establish a new revenue stream by leasing the additional space to tenants.

Rental income can play an important role in bolstering your revenue during difficult periods for your business.  This can provide a real sense of comfort for those working to get their small business off the ground. 

It must be noted that taking on tenants requires project management capabilities you may not currently possess.  If you do plan on leasing a portion of your commercial property, consider investing in property management training or hiring a professional to assist you.

3. Tax benefits

Owning commercial real estate puts you in a position to enjoy tax benefits that could significantly impact your bottom line.

As an owner, you can take advantage of depreciation deductions and mortgage interest write-offs that can offset the cost of your original purchase and generally ease the tax burden you may currently feel each year. 

Be sure to consult a tax professional to learn more about the benefits (and potential drawbacks) of owning commercial real estate.

4. Freedom and control

Renting a commercial property leaves you with few options when it comes to renovations or additions.  This can be a real source of frustration for those who enjoy being in control of all aspects of their small business.

Once you own your office or storefront, you have the freedom to truly make it your own.  If you purchase your restaurant’s building, for example, you could finally create more room for tables or redesign the kitchen.  Getting these types of changes approved by a landlord can take ages – by the time you’re able to make a necessary change, your business has already suffered irreparable damage.

With control also comes consistency.  Owners of commercial real estate never have to worry about a landlord’s rent hikes or rule changes that can stunt a business’ growth. 

5. Appreciating value

Commercial real estate investments have a history of strong appreciation.  Besides the general demand increases that come from scarcity in an active market, commercial real estate can appreciate in value based on their ability to generate income.

This means that as the owner of a commercial property, you have a hand in increasing the asset’s value.  By renovating the building or adding rentable space, you can effectively add value to your original investment.  This is one of the main advantages a hard asset like commercial real estate has overstock or bond investments.

Owning commercial property is not without its disadvantages as well.  The purchase price itself may be staggering for those just starting their business.  Additional challenges having to do with building repairs or tenant vacancies can be debilitating for business owners who don’t have the resources to manage them.  

But you may find that the benefits of finally owning your own office or retail storefront far outweigh the potential difficulties.  If you value day-to-day control and have a long-term vision includes both your business and the building it occupies, ownership may be your best bet for success.

If you’re interested in purchasing a commercial property, one of your first steps should be to determine the financing solution that makes the best sense for your business.  Commercial Direct, a division of Silver Hill Funding, LLC, specializes in providing flexible commercial mortgages to small business owners – even those with tax documentation issues that make it difficult to work with traditional banks.  

Learn more about how Commercial Direct can help you own your commercial property here.   

 

Author: Zack North

Zack North is the Director of Marketing for Commercial Direct.  As a regular contributor to a number of top industry publications, Zack enjoys writing about topics that help investors and business owners approach commercial mortgage financing with confidence.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

File Your LLC in These States and Save $$$

Did you know that you don’t have to register your limited liability company (LLC) in your home state? Instead, you can file in one of the states below, and save considerably on fees and state income taxes.

There are also advantages to keeping all the paperwork close to home. Before you decide which way to go, check out these pros and cons.

Benefits of Filing in Your Home State

For those who have a brick and mortar location and conduct most or all of their business in the state where they live, convenience will probably be a major consideration. It’s easier to do business when all your customers, suppliers, contacts, and government offices are near at hand.

When you form the LLC in any state other than your home state, you must register as a foreign LLC — requiring a fee and extra paperwork you would avoid by filing at home.

Another added expense involved in an out-of-state LLC is that you must hire a registered agent to represent your company and accept the service of process in the state where your LLC is registered.

Benefits of Filing in a Business-Friendly State

If your business does not have a set location, for example, a consultancy, the convenience of home filing may not be that significant for you.

Income taxes and business fees can be thousands of dollars less than those in your home state. And there are other factors which may swing the convenience vote in their favor, too.

Here’s a run-down of each state’s advantages.

Delaware

The most well-known business-friendly state offers:

• Simple filing process, so you can start doing business quickly

• No tax on out-of-state income, a huge deal if most of your business happens in other states

• Low filing fees and franchise taxes

• A separate court for business cases (Chancery Court), so your case will get resolved faster, and you’ll be heard by judges experienced in business law

Nevada

In addition to being a great state for combining business with pleasure, Nevada offers:

• Fairly fast filing times

• No tax on business income, capital gains or inheritances

• No franchise tax (there are fees for business licenses and annual filing)

• No requirement to create an operating agreement or hold annual company meetings

• No information-sharing agreement with the IRS (if privacy or anonymity is your priority)

• Not much state disclosure required either, allowing LLC owners to file public documents anonymously

Wyoming

A relative newcomer to the business advantage arena, Wyoming is now an equally good choice, offering:

• No business income tax

• No franchise tax

• Lifetime proxy — you appoint a permanent representative for your company stock and votes while you remain anonymous

If you don’t already know your home state’s tax rates, business fees, and red tape hassles, do some research. Then see how they compare to the 3 most popular states for LLC registrations. You may not have known these options existed, but one of them could be the perfect choice for your company.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.