Top Franchise Opportunities in 2020

If you’ve been wanting to start your own business but are worried about going it alone, a franchise may be your answer. You’ll still operate independently, but you’ll be backed by the name recognition, marketing power, supply sources, processes, and products of an established company.

Fast food restaurants, gas stations, and real estate agencies are just three types of business that are often franchised — each location has a different owner, but they all look like they belong to the same, strong company.

The tricky part is that the requirements for buying into the franchise can be quite steep. To get a McDonald’s franchise, for example, could cost you more than $1 million upfront. Other companies demand that you have a lot of previous experience in their industry.

Here’s a select list of franchisors who offer more reasonable investments, a great reputation, and most importantly, high growth potential in an up-and-coming field.

Bricks4Kidz

— build STEM skills with fun activities

STEM (science, technology, engineering, mathematics) skills are hot commodities in the job market. As a Bricks 4 Kidz franchisee, you’ll host birthday parties, workshops, and camps that set children up for career success in an entertaining environment.

• Initial investment: $33,800 to $51,050

• Franchise fee: $25,900

Complete Weddings+Events

— make a living planning parties

Make a couple’s big day everything they dreamed. You’ll coordinate every detail, including music, photography, and flowers — supported by Complete Weddings + Events’ 45 years of experience and a huge network of experts.

• Initial investment: $30,000 to $60,000 (includes $5,000 operating account and 1 year of equipment)

Care Patrol

— help seniors meet their new living needs

The “silver tsunami” isn’t going away anytime soon, and thousands of families need to find the right independent living, assisted living, In-home care, and memory care solutions for their loved ones. Your services to them are free; you get paid by their insurance provider in a nationwide, 20,000+ network.

• Initial investment: $64,400 to $82,450

HealthyYou Vending

— cash in on the health food boom

Provide a welcome alternative to traditional junk snack vending machines. Healthy You’s business model is exceptionally flexible, brings in passive income once installed, can be operated by one person, and offers total operational freedom — perfect for a side gig.

• Initial investment: less than $100,000

• Franchise fees and royalties: None

Hissho Sushi

— open a sushi bar inside an established business

One of the hardest aspects of opening a restaurant is securing a location. Hissho Sushi dodges that problem by setting up shop inside a supermarket, university, hospital, or cafe. With 875 locations, it’s already a proven success.

• Initial investment: $21,050 to $238,950

• Franchise fee: $14,450 to $194,250

Janiking

— clean up with a commercial cleaning business

Every business needs a cleaning service, so you’ll never lack for customers. Plus, commercial accounts are often more reliable about paying their bills than residential customers.

• Initial investment including first year’s franchise fee, equipment, and supplies: $14,500 to $33,850 (or more if you opt for Plan E)

NHance

— refinish wood cabinets, furniture, and floors

The U.S. home restoration industry rakes in $450 billion a year. Get a piece of that pie with a refinishing business that serves homeowners and real estate professionals alike. N-Hance consistently ranks in Entrepreneur magazine’s fastest-growing franchises list.

• Initial investment: $62,212 to $160,909, (minimum $50,000 liquid capital)

• Franchise fee: $21,712 to $42,842

• Royalties: $346 to $692 per month

Pillar Post Home Inspectors

— provide an essential service to home buyers

With low risk, low overhead, low up-front investment, and flexible scheduling, Pillar to Post offers an easy way to jump into a franchise business. They also work hard to make you a success, with expert mentors and proprietary technology.

• Initial investment: $35,350

• Franchise fee: $21,900

• Royalties: 7% of gross revenue

• Advertising fund: 4% of gross revenue

Rhea Lana’s

— resell children’s clothes in your own home

Thanks to the upcycling trend, consignment businesses are exploding. Here’s one that’s perfect for stay-at-home or working parents. Rhea Lana provides the framework for you to sell fashionable, gently used kids’ clothes at home parties that fit your schedule.

• Initial investment: $20,000 to $22,000

• Franchise fee: $11,500 to $14,500

• Royalties: 1% to 3% of sales

Weed Man

— enjoy long-term growth in lawn care

Established more than 45 years ago, Weed Man is the number 1 ranked lawn care franchise by both Entrepreneur and Franchise Business Review magazines. The company provides training, ongoing support, marketing, and CRM systems.

• Initial investment: $43,700 to $58,540

• Franchise fee: $20,000 to $23,750

• Capital investment: $103,700 to $118,450

 

We’ve barely scratched the surface of franchise opportunities that await you in 2020. Whatever your area of expertise — from beauty/fitness to photography to sports — there’s one that’s just perfect for you to ease into business ownership. Here’s to a prosperous new year!

 

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.

 

Pass-Through Deductions: What It Is and Who Qualifies

One of the best small business-friendly aspects of the Tax Cuts and Jobs Act (TCJA) is the 20% deduction you can take on your income tax if your business is a pass-through entity. Here’s what you need to know about it.

What Is the Deduction

The TCJA was passed in 2017 and first applied to 2018 tax returns. Provision 199A of that law states that you can deduct 20% of your “qualified business income” which was earned from a “qualified trade or business.”

What Is a Pass-Through Entity

Any business structure that allows you to receive income as an “owner’s draw” rather than as a regular employee is a pass-through business. The money is “passed through” from the company account to your personal account. You only pay income tax on it with your personal return; you don’t have to file a separate return for the business.

Pass-through entities include:
• Sole proprietorship
• Partnership
• LLC (limited liability corporation)
• S-Corporation

However, there are some restrictions.

Taxable Income Restriction

• Less than $157,500 (single, married filing separately, head of household) or $315,000 (married filing jointly): you qualify for the full 20% deduction.
• $157,500 – $207,500 or $315,000 – $415,000, respectively: your deduction may be less.
• More than $207,500 or $415,000, respectively: you are not eligible for the deduction.

Specified Service or Trade Restrictions

What your business does may disqualify it from the deduction. Here’s the list of excluded fields, as issued by the Treasury Department in August 2018:

• Health
• Law
• Accounting
• Actuarial science
• Performing arts
• Consulting
• Athletics
• Financial services
• Brokerage services
• Any business where the principal asset is the reputation or skill of one or more of the employees or owners
• Any business that consists of investing and investment management, trading or dealing in securities, partnership interests or commodities

But don’t give up if you see your business in one of these categories, because there are numerous exceptions. For example, in the Health category, healthcare providers who provide services directly to patients — such as doctors and dentists — are not eligible. On the other hand, health clubs, spas, medical research companies, and those who sell pharmaceuticals or medical devices may qualify for the deduction.

In the case of businesses who both provide services and sell products, eligibility is determined by sales:
• Less than $25 million in gross receipts and less than 10% of your business comes from disqualified services; or
• More than $25 million in gross receipts and less than 5% of your business comes from disqualified services

Employee and Property Restrictions

There are two further conditions that could affect how much of a deduction you can take. They are:
• Business that pay W-2 wages
• Business that owns “qualified property” such as real estate or other tangible assets that can be depreciated

If your business fits either of these descriptions, your deduction will be the lesser of:
• 20% of qualified business income (or the “tentative deduction”); or
• The greater of:
o W-2 wages paid x 50%; or
o W-2 wages paid x 25% + the unadjusted basis (cost) of your qualified property x 2.5%

Still confused about the pass-through deduction? Your Xendoo small business expert can clear things up, answer your questions, and help you get every tax break you deserve.

 

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.

 

How to Track Deferred Revenue for SaaS Businesses

Subscriptions are the most important revenue stream for software-as-a-service (Saas) businesses. Yet many accountants don’t correctly record that revenue in the company’s books. This makes it difficult to see your true financial position and make informed decisions.

What Is Deferred Revenue

Say your customer pays you $6,000 for a 1-year subscription. Instead of recording that entire amount in the month, it was received, you divide it up evenly among the 12 months of the year — $500 per month.

How to Record the Payment

Since you obviously haven’t yet created balance sheets for the entire year, you’ll need a way to credit the subscription payment on your balance sheet (not your income statement). In the month you receive the payment, debit the full amount in Accounts Receivable and credit the full amount in Deferred Revenue, like so:

Accounts Receivable Deferred Revenue
DR $6,000 CR $6,000

The next month, debit the monthly amount of $500 from Deferred Revenue and credit it to Subscription Revenue. Follow the same procedure each month for the rest of the year.

Deferred Revenue Deferred Revenue
CR $6,000
DR $6,000 CR $5,500

 

SubscriptionRevenue Subscription Revenue
DR $6,000 CR $500

If you want to be even more detailed, you could do daily entries instead of monthly. In that case, you would divide the monthly amount by the number of days in that month.

Why Deferred Revenue Is Better

• It keeps your income statement uncluttered and more accurate
• It’s easier to see whether your recurring revenue is growing, and by how much
• It’s easier for investors and banks to understand your business performance
• It allows you to calculate gross margin and recurring gross margin
• It allows you to determine metrics such as customer lifetime value or CAC payback period

Need assistance setting up a chart of accounts, balance sheets, and income statements for SaaS deferred revenues? Xendoo’s small business experts have all the answers at their fingertips.

See for yourself with a one-month free trial.

 

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.

 

Thinking About a Second Location? Do These 5 Things First

Is becoming a multi-location business right for you? We’ve put together a series of steps to analyze the factors involved and help you make a smart decision.

1. Determine whether you’re in a position to expand.

There are many signs that your business has outgrown its single location, including not enough space to handle the current volume, worsening customer service due to heavy traffic delays, and a need for your product or service in other territories.

The first step is to evaluate whether you’re ready for the additional challenges of operating multiple locations. Be sure to examine:

• Financial ability to absorb the costs of opening a new location

• Staff that can handle operations at your original location while you’re birthing the new one

• Increased demands on your time and energy before, during and after the launch

2. Create a vision of your ideal new space.

Before you begin actual planning, do some dreaming. Will it be a carbon copy of the original location? Or do you want improvements and modifications based on what you’ve learned in your current location or different market conditions in the new one?

3. Choose a location.

This step is critical because a bad location or landlord can ruin your business. Carefully examine space configurations, customer accessibility, and lease terms, bearing in mind that you’ll probably be committing to at least a 5-year deal. Keep a checklist of the features your new location must-have.

Even finding the right real estate agent can be difficult. As a small business owner, you probably won’t be at the top of their priority list. Be prepared to do a lot of looking on your own, through commercial real estate websites and simply walking the streets.

4. Put the plan into action.

Every business and industry will have its own requirements, so we can only discuss this process in a very general way. Your implementation may include:

• Design the space with an architect and/or interior designer

• Build out the space, install fixtures

• Order additional inventory

• Train staff to run the original location and make decisions without you

• Hire and train additional staff for the new location

5. Optimize the launch.

Before opening day, give your new baby its best chance to thrive with some or all of these activities:

• Clear your schedule of any other commitments

• Make existing customers aware of the new location through social media and other marketing channels

• Invite press coverage — post press releases, add a newsworthy gimmick (such as a contest or celebrity appearance) to your grand opening event

• Have a soft opening to iron out the glitches

• Advertise the grand opening to the general public

 

Throughout the process of opening a second location, your financial status could be the difference between success and failure. As small business specialists, Xendoo can help you make the right moves, explain your numbers, and set you free from time-sucking bookkeeping tasks. After all, you have enough on your plate!

 

Check us out with a one-month free trial.

 

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.

 

2020 New Year’s Resolutions for Small Business Bookkeeping

Not as on top of your business as you would like? Get rid of bad bookkeeping habits and start some new, good ones. Check out our suggestions for being more efficient and profitable in the years ahead.

Update the books once a week.

There’s a saying for managing workload: “Do a little and do it often.” Keep the accounting tasks small and easy by doing them at frequent intervals. Waiting until the end of the month piles up a daunting amount of work, which means you’ll be tempted to put if off yet another month. Plus, you’re more likely to forget what happened 3 weeks ago than 3 days ago, which causes more mistakes.

Find financial software that really works for my business.

Does your accounting system make your work life easier, is it a struggle to use? The ideal system should integrate easily with your business management system, eliminate duplication of effort, prevent errors, and automate routine tasks such as following up on outstanding invoices.

I will keep business and personal bank accounts separate.

Do you find yourself using the business credit card for personal purchases, or the personal card for business ones? This bad habit makes it extremely difficult to track business profits and losses, not to mention turning your tax prep into an absolute nightmare. The long-term hassles are far worse than the short-term convenience. A better way to take money out of the business is as a bank transfer of salary.

Make a business budget.

Now that you have complete, updated financial records (see resolution #1 above), you can create a budget based on reality, rather than guesses. You’ll know exactly how much you need to spend on supplies, payroll, overhead and other costs of doing business; and how much money you need to bring in to make a profit.

I will compare the budget to the actual numbers every month.

No matter how accurate your budget was when you made it, conditions are constantly changing. The only way to know how your business is really doing is to compare actual income and expenses against what the budget projected them to be. Now you can make the right corrections and nip problems in the bud.

Outsource my bookkeeping.

This is absolutely the easiest resolution to keep — just let someone else handle the hassles! Xendoo’s cloud-based, real-time accounting system is fast, comprehensive, and affordable. Best of all, it lets you devote your time and energy to the aspects of your business you really love. Here’s a toast to your thriving business in 2020 and beyond!

 

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.