As a franchise owner, you have more than enough to do just taking care of the core operations. Outsourcing support functions which are not your area of expertise — such as accounting — will definitely save you a ton of time and effort. But that’s just the beginning of what it can do for your business.
Professional accounting for your franchise brings peace of mind.
When a real CPA maintains your books, you can rest assured that it’s getting done right. Nothing is forgotten or entered incorrectly. Even if you plan to use your accounting system yourself, an independent advisor can help you set it up, teach you how it works, and make sure it has all the functionalities you need.
Accounting expertise is well proven.
Imagine working with an accountant who has been through an extensive vetting and hiring process by people in his/her own field. You’d feel more confident in that person than in someone you hired yourself, right?
Rookie mistakes don’t happen.
Are you sure you’re tax-coding transactions or categorizing your business expenses the right way? An accounting specialist can help you avoid that tax time nightmare. They can also advise on when to make capital investments for best tax savings, whether to take out another loan and how to improve cash flow, among other things.
Data entry and math errors are eliminated.
An up-to-date accounting service will use advanced technology that syncs with your bank, POS system, and management software to make bookkeeping automatic. With no human input, there’s no possibility of human mistakes.
Accounting Laws and regulations are met.
With tax and business laws changing at the speed of the internet, it’s almost a full-time job in itself to keep up with them. Better let someone who really does it as a full-time job handle this stuff for you.
Processes are always state-of-the-art.
When you or a staff member does the accounting in-house, you probably won’t be watching industry news and constantly upgrading to the latest technology, as an accounting company does. You benefit from their investment for a fraction of what it would cost to do it yourself.
Outsourcing costs less than a staff franchise accountant.
Many franchisees don’t really need a full-time accounting employee — they just need a few hours of work a week, plus the ability to call or email someone with questions. For that, you’re better off with a flat monthly fee to an outsourced accounting company rather than paying an employee’s salary or a traditional accountant’s retainer.
This affordable option is exactly what Xendoo offers to small business owners such as franchisees. Our flat monthly fee is less than half what you’d typically pay an hourly accountant, while providing you with at least double the speed and access to financial expertise. It’s easy to get started — just give us a call!
Is your small business ready to size up? Here’s how to put yourself in a position to seize that growth opportunity when it comes along.
ANALYZE your Products
This is especially important if your expansion involves introducing new products and services. Perform market research to make sure you’re providing what customers want or need, as well as how to reach them with your marketing messages.
ANALYZE the Market
Growing your company may bring you into an arena with a new set of competitors. First, identify who they are. Then do a SWOT (strengths, weaknesses, opportunities, threats) analysis to guide you in out-competing them.
ANALYZE your Workflow
A larger business can only operate on established procedures — no more winging it or depending on one person’s knowledge. You may need to improve the efficiency of your daily activities and/or standardize the company policies.
ANALYZE your Cash Flow
Use your financial reports as a starting point to calculate how much money will be coming in and going out as the company grows. For example, payroll will go up when you hire additional employees, and rent/utilities will increase if you move to a larger space. In addition, figure out how much cash will be needed for capital investments such as additional equipment.
PLAN your Team
As you expand your business, you’ll probably need more employees. What skills must be brought in? How will you integrate them with the current crew? Given our current tight labor market, you should also think about rewards packages that will attract the best talent — and keep them on board long-term.
PLAN your Communications
The new look of your business should be reflected in every touchpoint with customers, suppliers, and partners. Review your marketing budget: is it enough, and is it allocated to the right channels to reach your target audience with maximum efficiency and effectiveness? Channels that may require updating include:
• Company website
• Social media pages
• Advertising media such as flyers, sales letters, and coupons
• Business documents such as invoices and purchase confirmation emails
• Invitations to try new products or visit new locations
PLAN for Setbacks
Minimize the risks of your new venture by setting aside the funds to survive a slow start or an economic downturn. Identify liquid assets or those which can easily be liquidated as a last resort.
PLAN External Support
There comes a point in your business growth when you just can’t do it all yourself anymore. If you want to open additional locations, maybe a franchise set-up or buying an existing business will let you do that without taking on a full load of new administrative work. Consider outsourcing some tasks you did yourself when the volume was smaller, such as bookkeeping, payroll processing, accounts receivable/payable, and sales/income/payroll tax filings.
Xendoo provides small businesses with a full array of accounting services, from daily bookkeeping to timely financial reports. It’s an affordable outsourcing option that may be just what you need while you take your business to the next level.
Paying your employees is probably not your favorite part of doing business. After all, it’s so time-consuming. You not only have to calculate their wages, but you also must withhold employment (income, Social Security and Medicare) taxes, as well as any additional deductions for health or retirement plans. And then there’s all the paperwork of reporting and paying withheld taxes to the government(s).
Fortunately, you no longer have to do this with cumbersome spreadsheets and manual inputting. Payroll software — either as part of your accounting system or a stand-alone app — automates much of the work for you.
Choosing Payroll Software
- Here are some questions to get answered before you decide which product to buy.
- Does the accounting software you already use have payroll functionality? If not, can you add a plug-in to it? (Saves money)
- Is the stand-alone software compatible with your system as well as the systems your financial consultants use? (Makes it easy to share files)
- Is it cloud-based? (Improves access, reduces hardware and IT support needs)
- Does it keep real-time records? (Ensures up-to-date information)
- Does it provide the right reports? (Simplifies business operations)
- Does it have features relevant to your business, such as timesheet processing or direct deposit payments? (Saves time)
- Is it scalable? (Avoids the hassle of changing systems as you grow)
Using Online Payroll Software
For best performance, start off on the right foot with your new system. Set it up with complete and accurate information, including:
- Your employer identification number (required by the IRS)
- Your business registration number (required by some states)
- Required employee data (varies according to federal and local regulations) such as name, address, social security number, deductions, contact information, salary, days off, sick days, overtime and any other compensation
- Methods of compensation you’ll be using in the system: salary, hourly, commission, tips and supplemental wages (covers anything else such as back pay, severance pay, bonuses and accumulated sick leave)
Archiving Payroll Records
Employers are required by the government to keep records for the current and previous three tax years. Your online payroll software will be a big help with this, but may not do everything — especially since local requirements can vary. In addition, you must keep some paper records, such as tax forms. Archived information should include:
- Employee’s name, address and social security number
- Dates of hire and termination (if applicable)
- Copies of all relevant forms supplied to (and by) the employee
- Amounts and dates of all wage, annuity and pension payments
- Fringe benefits and expense reimbursements
- Sickness or injury payments
- Tax deposits you made
- Copies of returns filed and confirmation numbers
Xero accounting software that comes included with your Xendoo package integrates directly into Gusto, an automated payroll solution. Check for current online payroll offers here.
The monthly P&L statement you receive from Xendoo is a great snapshot of how your business has performed in the recent past. But did you know that it can also help you strategize for future success?
Its numbers can guide you to answers for frequently asked questions like these:
Am I Meeting My Profit Margin?
If your Net Income is very small (or worse, a loss) and there are no external influences such as a normal seasonal dip in sales, your profit margin is too low. To figure your profit margin, use this formula:
Gross Profit ÷ Total Revenue = Profit Margin (usually expressed as a percent)
Example: $25,000 Gross Profit ÷ $100,000 Total Revenue = 0.25 Profit Margin (25%)
Is that percentage the one you determined when you set up your business plan? If not, look for areas that may need improvement in both the Revenue and Cost of Sales sections of your profit & loss statement. Consider raising prices, trimming expenses, or doing some of each.
Do I Have Money to Reinvest in the Business?
Look at the “bottom line” — your Net Income. This is how much you have left of your total sales after you pay both direct and indirect costs of operating the business. You should keep some cash available as a cushion against unexpected setbacks, such as an interruption in cash flow. If the net income is more than that, you can think about ways to use it to grow your business, such as buying new equipment.
Can I Afford to Expand?
Unlike the previous question, this one is about increasing your ongoing operating expenses — hiring additional employees, moving to a larger space (with higher rent), and so on. To make this decision:
1. Plug the increased numbers into the relevant lines in your in Other Income and Expense section on the P&L statement (i.e. Payroll).
2. Add up the section to get a new Total Other Income and Expense.
3. Calculate Gross Profit – Total Other Income and Expense = your new projected Net Income.
Now you can easily see whether the business can tolerate higher operating costs. We suggest that you use year-to-date figures rather than the results for the previous month. They are a more reliable indicator of how your business is likely to be performing in the future.
Should I Get a Business Loan?
Here again, the costs of paying back the loan will be reflected in the Other Income and Expense section of the profit and loss statement. Use the same steps in the paragraph above to decide whether this is a smart idea.
As a general rule, using a business loan to cover overhead expenses such as payroll is only digging yourself deeper into the hole. Go back to the first question for suggestions on how to improve profit margins so that you won’t need to seek loans.
Also, be aware that potential lenders will look at your P&L statements to judge whether you are a good risk. These financial professionals will be able to tell whether your business model is working and how efficient your operation is. Make sure you know those things yourself, so you can address any issues they might bring up with you.
Have more questions about the numbers on your profit and loss statement? Just ask your Xendoo accounting professional. And remember, Xendoo guarantees delivery of the statement by the 5th business day after the end of the month, so you can rest assured you’re acting on timely information
Basically, Accounts Receivable is the invoicing, collecting, and recording of money owed to you by your customers. It’s all very well to see an Accounts Receivable number in the asset column on your balance sheet — but what are you doing to turn that theoretical money into actual money in your bank?
Accounts Receivable as Asset
It’s important to keep track of how much money you have tied up in outstanding invoices (and debts not yet invoiced). As we mentioned above, this asset will be reflected in your balance sheet, so it must be accurate for you to know how profitable your business really is.
Another reason it’s an asset is that you can sell these debts to a finance company (for up to 90% of their value) if you suddenly need cash and can’t wait for payment. This is called invoice financing or accounts receivable financing.
If an invoice is way past due despite multiple attempts to collect it, this type of finance company probably won’t be interested. However, a debt collections company may buy it off you for a discounted price. (Better than a total write-off, right?)
Invoices should be sent in a timely manner. The easiest way to do this is with online invoicing software that completes the task in just a few clicks. As well as being emailed to the customer, the invoice is automatically entered into your bookkeeping and collections system.
Good software should also allow ways for the customer to make payment online, such as a credit card or bank transfer. This saves a lot of time for both your Accounts Receivable staff and your customers.
Next, you need a strategy in place for aging (overdue) invoices. Your accounting software should be able to automatically send past-due reminders, according to trigger dates you’ve established.
• How you will notify the customer: “2nd notice” invoice, email, snail mail, phone call
• At how many days past due to each of these will action be taken
• How many reminders you will send before you take the next step
• What is the next step: late fees, cut off sales until the outstanding balance is paid, call in a debt collector or lawyer
Your software should also be able to generate an aging report, which shows you at a glance all your past-due invoices listed in order from least to most overdue. Review your report at regular intervals, so you won’t overlook any steps you need to take personally (that the software can’t do) to collect the debt.
If all your efforts to get the invoice paid have failed, the time has come to write it off as a bad debt. (And make a note-to-self to be more diligent in running credit checks on new customers in the future.)
You decide when that write-off will occur: after 6 months, 18 months, or whatever. Be sure to include the write-off on your income tax return. If the customer does eventually pay, you can declare it as income on next year’s tax return.
Failure to collect debts is one of the top reasons small businesses go out of business. So it’s super important to make consistent, persistent efforts to get the money owed to you. If you don’t think you have the time or capability, Xendoo comes to the rescue with advanced bookkeeping software, an automated Accounts Receivable process, and expert debt management and income tax guidance.