Accounting Archives

How to Set Up Accounting for a New Business: A Full Guide

March 16, 2022/by Team

how-to-set-up-accounting-for-new-business

If you are reading this, then it probably means you’ve just launched or intend to start a new business in the near future. As you try to figure out which need to prioritize in your new venture, it is crucial that you first learn how to set up accounting for a new business.

While it might seem mundane, good accounting is integral to the success of any business. You may have the best managers and staff, but it’s impossible for your business to flourish without properly monitoring and managing your money.

An experienced accountant can help you get your business set up faster and create a system for accurate accounting that grows with your business. However, we know that money can be tight for new business owners.

Learning the basics of accounting can help you better understand the inner workings of your new business. As you grow, it’s easier to outsource or delegate the responsibility to a professional, so you can focus on other parts of your business.

If you are only just starting out and have no clue where to begin, this article is for you. We will take you through the essentials of setting up your accounting for a new business.

1. Separate personal and business finances

As any established business owner will tell you, you need to treat your business as a separate entity to yourself. This means separating your business and personal finances.

In fact, it is a legal requirement of LLCs and corporations to manage their business incomes in separate bank accounts. On the other hand, sole proprietors have a bit of leeway. They can use their personal accounts for business, but we strongly advise against it.

Here’s why:

It will make it easier to file taxes for your business (since they are separate from your personal accounts)
Your accountants and bookkeepers can monitor the account more freely
It protects your individual assets in case of lawsuits or bankruptcy
Having business financial records will increase chances of getting funding from investors or creditors
It makes it easier to monitor your business cash flow

Separating your business accounts go beyond setting up separate bank accounts. Here are some additional steps for new business.

Establish your business officially

Before you can get your business a bank account, you’ll need to register it with the state. Your business needs a name and other personalized details for you to open an account.

Get a business bank account

Just like you would a personal account, you should open both a checking and savings account for your business. This way, your money can be kept in an organized manner.

The rule of thumb is to keep a majority of your revenue in the checking account and then a small portion in the savings account to cover such things as emergencies and taxes. It is recommended that you set aside and save at least 30% of your total income for taxes.

To open a business bank account, you’ll need a few details. They include:

Business name
Business license
Social security number
Employer identification number
Organizing documents

Get a business credit card

Getting a business credit card comes with its share of benefits, but mainly, it will help establish a credit rating for your business. With the right card at hand, you can even get travel points or back cash rebates each time you make a purchase.

Track business expenses

Other than preventing instances of petty theft, tracking your expenses can help save a ton of money in tax deductibles. If you are keen, you’ll find a plethora of small expenses within your business are tax-deductible, meaning you can claim them on your tax return. However, the condition is that you have records of the expense.

The IRS demands that you have with you any documentation proving income credits or deductions that appear on your tax return. A few fundamental documents you should make sure to keep include:

Credit card and bank statements
Bills
Receipts
Invoices
Canceled checks
Proof of payments
Previous tax returns
Financial statement from your bookkeeper
W2 and 1099 forms

Now, as you may know, storing paper receipts can get a little messy. And while they can just as easily be stored in a shoebox, it is better to keep them in an organized manner to allow for easy tracking. You can store them in a file, organize them by date or alphabetical order, or use an expense tracking system.

Alternatively, you can take photos of the paper receipts and store them online using software like QuickBooks online. If they are electronic receipts, you can either leave them stored in your computer or online storage systems like Expensify.

2. Choose a bookkeeping system and accounting method

Before we get into accounting methods, it is important to know what bookkeeping entails and how it all fits in.

To break it down, bookkeeping is simply the day-to-day act of recording transactions in business and reconciling bank statements. Accounting, on the other hand, is a higher-level process. It involves closely examining how the company is progressing and using data obtained from bookkeeping to build financial statements.

How to record business transactions

There are a few methods you can use to manage your books.

DIY (by hand) – If you choose to do the bookkeeping yourself, you can make the entries manually using software like Wave or QuickBooks. First-time business owners that start with Excel spreadsheets regret it, so we advise using cloud accounting software.
Outsourcing – If you’d rather spend your time managing other aspects of your organization, you can leave it to a professional bookkeeper. This can be either a remote or part-time local bookkeeper.
In-house – This is usually the most expensive option. If you have the funds, you may employ a full-time in-house accountant or bookkeeper and leave everything to them.

Choose an accounting method

Once you have decided on a suitable bookkeeping solution, the next step is to determine which accounting methods to use. In this case, there are two main types: cash method or accrual method.

If your business is receiving revenue of $5 million each year, you can use either one to track the flow of money in and out of your business.

Cash basis method – Here, expenses and revenues are recognized the moment they are actually paid or received to or by the business. It is the most commonly used accounting method by individuals to balance their books.
Accrual method – In accrual accounting, any income or expenses are recognized the moment the transaction happens, regardless of whether the cash has arrived or left the bank. You’ll need to track payables and receivables.

Now, of the two, new businesses are better off using accrual accounting. With accrual accounting, the transactions are recorded early on in the process. With this, the business can better track accounts receivable and accounts payable. Ultimately, you get a more realistic view of foreseeable future profits.

Also, once any business reaches the $5 million a year in revenue mark, it is legally required to use accrual accounting anyway. Therefore, if you use accrual accounting from the start, you won’t need to switch methods once your business grows.

Determine how you’ll be paid for your products or services

Unlike the olden days, where you could only get paid in cash, there are now a variety of payment systems that customers can use. This can either be online, in person, or using a point of sale or POS system.

POS systems/in-person payments – POS or point of sales systems refer to payments made in person by customers at your store. An efficient system will accept payments and keep track of sales in the store. You can make use of various digital POS software that incorporate contactless payment options, mobile POS, and e-commerce capabilities.
POS payments only – If you’ll only be doing POS sales, you want to look for a POS system that will work with your cash register or a separate credit card reader. For this, you’ll have to open a merchant account that will act as an intermediary between your business bank account and the payment system.
Online payments only – if you’ll only be accepting online payments, you can use PayPal or Shopify if you are an online-based retailer.

Set up a payroll system

As your business grows, you might need to hire employees or contractors to assist run the business. In this case, you’ll have to establish a payroll processing system to handle payments.

For best results, you want a payroll system that automates most of the tasks and automatically dishes out the funds.

Also, as you add people to the payroll, it is important that you place them in the right category. Either as independent contractors or employees. Failure to do so might result in penalties from the IRS.

Determine tax obligations

Your tax obligations will depend on your business legal structure. For instance, if you are a sole proprietor, self-employed, partnership, or LLC, you can claim business income on your personal tax return.

On the other hand, corporations are taken as separate entities and are therefore taxed separately from the owners. Therefore, you will be taxed independently as an employee of the corporation.

If you are self-employed, you’ll need to withhold taxes from your income and then remit them to the government the same way an employer withholds taxes from their employee’s pay. If you owe upward of $1,000, you’ll have to pay estimated quarterly taxes(four times a year).

3. Set up an online accounting system

Once you’ve established the steps above, all that is left is to set up an online accounting system. The easiest way to do this is by using cloud accounting software such as QuickBooks. Usually, it will come with everything you’ll need to record, analyze and report your business transactions.

Can you do accounting on your own?

If you are only just starting out, this might all seem like a lot. You might be wondering: is it really possible to do accounting on your own?

Well, to answer the question, yes; it is entirely possible to do accounting on your own. How well you do it depends on the scale of the business and your depth of knowledge on the matter. As we saw, there are various online bookkeeping software options that can help record transactions and streamline various accounting processes.

Still, doing your own accounting has its downsides. It’s not only prone to errors but will also take time away from focusing on other business activities. To do it successfully, you’ll need to have an aptitude for numbers and a general understanding of basic accounting practices and business taxes.

4. Outsource your accounting

If your heart’s not in it, you’d be better off leaving it to a licensed Certified Public Accountant (CPA) or a professional virtual accounting team like xendoo. We not only have the knowledge and accounting tools, but also the experience of navigating all the balance sheets, chart of accounts, complex sales tax regulations, and rules.

xendoo will also help with such things as lease negotiations, ongoing tax reporting, cash and treasury management, and developing long-term strategic plans for your finances.

Every entrepreneur faces challenges when starting a business. To get your business off the ground, you are going to need all the help you can get. Hopefully, by following the steps above, you have one less thing to worry about.

Of course, you don’t have to carry the weight on your own. If you’d rather focus on other aspects of your business, xendoo is here to assist. With years of experience managing books, our professional accounting team is more than ready to help with all your accounting, bookkeeping, or tax needs. So feel free to contact us today and chat with one of our agents.

How Long Does It Take an Accountant to Do Taxes?

February 23, 2022/in Accounting /by Team

An accountant reviews tax forms.

As tax season looms, you may be wondering whether you should have an accountant prepare your taxes. In addition to considering how much an accountant costs, you’ll also want to consider how long an accountant will take to do taxes compared to trying to do it yourself.

How do you know when to bring in a tax professional? Complicated tax situations like inheritance, small business taxes, or other big life changes usually warrant bringing in a certified public accountant or CPA.

How Much Time Does it Take an Accountant to Prepare Taxes?

The time it takes an accountant to do taxes depends on the complexity of your return and how quickly you make your tax information and necessary documents available to them.

It is better to plan ahead before the tax filing deadline. You can ask an accountant to have a better understanding of the timeline required to complete the process. There are a few ways that you can speed up the process.

Cost and Time Considerations

A number of factors affect the time it takes to file taxes. Not all of these will be the responsibility of the tax preparer.

First, you must make sure that you have all of the required documentation available for the tax preparer. Documentation includes any statements of income you have received from an employer or other entity, as well as any other tax forms for expenses.

Some of the most common forms include:

W-2
1099-NEC
1098

The W-2 is used to report income earned from an employer, as well as the payment of any taxes. A 1099-NEC includes independent contractor earnings. The 1098 form is a statement of any mortgage interest or insurance premiums paid.

Deductions are another consideration. If you prefer to itemize rather than take the standard deduction, you’ll need to have receipts available.

Typical items that are itemized include:

Medical and dental expenses
Mortgage interest
State or local property tax

All of your receipts should be organized and provided to your tax preparer.

Tax Preparation for Small Business Owners

Business owners will have more complex taxes. Businesses are able to claim certain deductions for expenses incurred throughout the year, but they need to have appropriate evidence of these expenses.

Gathering this documentation may take some time, especially if you haven’t kept track of your receipts during the year. Online accounting software can assist in managing small business income and expenses.

The cost of the tax preparation and filing varies. More complex returns will incur higher fees. Often you may offset the cost of these services with your tax refund if you are eligible for one.

If you choose to use a local accounting firm that specializes in tax return preparation, you will pay significantly more. However, if your tax situation is complex, it pays to engage the services of true tax professionals.

xendoo has a variety of plans that are priced to meet tax needs for businesses of all sizes. The accounting team will be familiar with tax law and tax code and can make sure to include all deductions available to you. xendoo’s team can also assist you with tax planning to mitigate your tax expense in future years.

How Much Time Do You Spend Preparing Your Return?

If you have filed your own tax return in prior years, you may have spent a significant amount of time to ensure you filled it out properly. When you did, you likely had to gather all of your tax forms and expense records. Then, check that you included each applicable tax form, including form 1040.

You may have struggled with situations that required more complexity, such as capital gains or business deductions. Perhaps you had significant medical expenses that required you to itemize rather than take the standard deduction.

Whatever the reason, you likely spent significant time and effort preparing your own tax return. At the end of the process, you may not have even been entirely comfortable that your return was correct. This oversight is why it makes sense to hire someone to handle tax preparation for you.

Plus, if you have errors in your tax preparation, it can slow the process down. Tax professionals can prevent common errors so that your taxes are filed faster.

Is It Worth Getting an Accountant to Do Your Taxes?

There are three main types of qualified tax preparers. These include enrolled agents (EAs), certified public accountants (CPAs), and tax lawyers. Other individuals may prepare taxes through retail firms, but often they will not have received education specific to tax.

Thus, if your tax situation is complex, it makes sense to hire someone to prepare your taxes who has the education and experience that fits your particular situation.

While there is an expense associated with hiring a qualified tax preparer, doing so saves you time, energy, and potentially even money. Tax preparers are generally familiar with most of the IRS tax code and must stay up to date on any changes that are made. They will be aware of deductions that you may not know you qualify for.

If you own a business, it is likely that you will need the services of a tax preparer. Business taxes are typically much more intricate than personal tax returns.

They involve a number of different considerations, especially if your company has employees, equipment, or investments. Tax consulting services can assist you with ensuring your business tax return is properly completed.

Tax Accounting Software

Some people decide that engaging the services of a professional isn’t necessary, especially if they have simple returns and have some knowledge of tax. They may choose to utilize tax software to prepare their returns.

To prepare yourself for tax time, there are a few online accounting software options that may help.

When you get a xendoo plan, you can also sync to online accounting software and tools through our partners. These include:

Xero
Quickbooks

Although these tools can make the tax filing process easier, there is still some heavy lifting that you need to do. xendoo comes with accountants that can advise you when filing tax returns.

There are a number of factors that impact how long it takes to complete income taxes. To speed up the process, store all of your tax-related documents throughout the year and keep them organized.

For small business owners and more complex tax needs, using a tax preparer like xendoo can save time and money. If your return is complicated, consider small business tax preparation services.

Accounting for Startups — Starting Off on the Right Foot

February 22, 2022/in Accounting, Taxes /by Team

Author’s Note: This blog post was updated on February 22, 2022, to include new information, resources, and links.

Accounting for startups means more than just keeping up-to-date financial statements and records. Startup founders wear many hats, from sales to accounting.

Accounting may not be on the top of the list, but it is critical to business health and growth. A business that sets appropriate accounting policies from the beginning will have a better chance of success than one that doesn’t.

Does a Startup Need an Accountant?

When opening a new business, there are many decisions to be made. Startups may not need to have an accountant on staff if the business is simple and hasn’t generated a lot of revenue yet. As a startup grows, it will become more important to have the right accounting tools and expert advice.

Business owners gain a competitive advantage by having a strong accounting system set up from day one. An accountant helps startups plan for the future. They can assist with services like payroll, catch up bookkeeping, tax planning, and more.

Why Is Accounting Important for Startups?

When first launching a business on a tight budget, it’s tempting to choose a cheaper accounting solution such as Excel spreadsheets. However, that “cheap” solution can turn out to be more expensive. It can’t prevent human error, can cost many unnecessary man-hours, and in the end, not meet your needs.

Instead, it’s wise to have an accounting strategy planned out in advance. Working with xendoo’s accounting system you can accurately account for all of your company’s financial needs.

For example, accurate accounting records can assist startups in obtaining a business loan or investment. Both investors and commercial lenders will look at your books during the funding process. They will be more likely to supply you with funds when you show a clean set of accounting books.

However, accounting services can help startups with many more aspects of their business.

What Are the Benefits of Startup Accounting?

Not having proper accounting records from the inception of your business can result in problems down the line. xendoo uses a cloud-based accounting system for the many ways it saves startups time and money.

There are several benefits of using a cloud-based accounting system. Here are a few ways that xendoo helps startups with their accounting.

Startup Accounting Expertise That Scales

If you are unsure about how to handle accounting tasks (or simply don’t have the time to do so), it’s worth the cost to use a service like xendoo that specializes in accounting for startups.

Your accounting should scale with your business needs. As your business grows, its accounting gets more complicated.

If you choose to handle accounting tasks on your own, you may find yourself stretched for time. Instead of focusing on scaling the business, you may spend too much time on administrative work.

Time-Saving Accounting Automation

xendoo can sync with your bank, so every transaction is automatically entered into the bookkeeping system. It saves many hours of work and avoids the risk of error when a human operator transcribes the numbers.

Instead of spending lots of time at month-end trying to reconcile financial transactions in the general ledger, cash transactions have already been booked accurately. You no longer need to wait for bank statements or credit card statements.

You can know your cash position by having your cash transactions automatically posted in real-time. You’ll be able to make better decisions on upcoming expenses and have better insight into the financial health of your business.

Other entries may also be recorded automatically, such as depreciation on equipment or other fixed assets.

Cost Savings

xendoo can save you serious money on your office staff. You may be employing multiple staff members to handle your accounting tasks, but it may not be necessary. Our trained accountants can handle the accounting transactions for multiple industries, including ecommerce, professional services, and retail.

Our expertise allows us to easily accommodate the needs of your business. The cloud-based accounting system ensures that your financial records are up-to-date and accurate. Plus, you can message your xendoo CPA team anytime for a fast response.

Offering more remote and part-time work options enables you to reduce your full-time office staff, as well as the overhead costs of accommodating them. Because data is stored in the cloud and not your servers, IT expenses can be trimmed.

Employee Tax Forms and Payroll

If your startup hires employees or independent contractors, accurate records become even more important. A startup accountant can ensure that payroll is handled properly and the requisite taxes are withheld and paid to state and local governments.

There are other tax issues that a startup accountant may assist you with, such as sales taxes, local taxes, and accounting for any fixed assets. Accurate records will help you prepare for your business tax returns at year-end.

From a tax perspective, startup founders can save a lot of time and effort with books that are ready to go for tax season. There’s no need to scramble for records related to business expenses — they’ll already be recorded in the xendoo cloud-based accounting system.

Financial Reporting

One huge advantage of working with xendoo is that you’ll have an accounting system in place that provides you with the reports when you need them. You don’t have to read paper receipts or sit at your office computer to see financial reports or bank transactions.

This enables you to respond to changing conditions as they happen, minimizing the risk of losses or missed opportunities. xendoo provides accurate financial reporting, including a balance sheet and income statement.

The accounts payable and receivable reports include an overview of outstanding accounts, so you can make quick business decisions based on current information. Startup accounting with xendoo can also help you reach out to customers who are overdue on their invoices.

Complete, accurate, and up-to-date financial reports are available at any time. Every entry is tax-coded, so no extra work is needed to prepare for filing taxes or being audited.

Financial Planning

Another advantage of using xendoo is financial planning and cash flow statements. A strong understanding of your current cash position can assist with making adjustments to your business strategy as needed.

A basic spreadsheet can’t tell you much about your financial big picture or warn you when things aren’t going according to plan. xendoo’s monthly P&L statements show where you stand and what needs adjusting at a glance. The CPA team can also offer expert advice on planning for the future.

Don’t waste time with Excel spreadsheets that can quickly lead to an accounting mess. Instead, take advantage of a solution designed to assist startups as they scale for growth. An accurate reporting system set up from day one gives up-to-date information on the financial status of your business.

Leave the accounting to our knowledgeable team that understands accounting for startups. xendoo can assist you with accounting processes like compliance, reporting, and financial planning.

The cloud-based accounting system is user-friendly, allowing you to easily view your accounting books at any time. xendoo’s flexible plans are designed to take a business from startup to enterprise level. While xendoo handles the bookkeeping, you can focus on making your new business the best it can be.

When Can You File Small Business Taxes in 2022?

January 12, 2022/in Accounting /by Team

Asian female business owner, working on her laptop in her art studio

Business woman working on lapto

This year, make things easier on yourself by planning ahead. You’ll thank yourself for filing business taxes according to the prescribed deadlines. Not only will this save you from sweating over a shoebox full of receipts, but making on-time tax payments will save you from any late fees or interest payments.

To help you with this process, we’ve put together this complete guide for filing business taxes in 2022. You can use the information and the dates we provide to form a strategic plan for preparing and filing your taxes in 2022.

What Is the Business Tax Filing Deadline for 2022?

You may have already marked April 18, 2022, on your calendar to remind you to pay your personal income taxes. This date is a slight change from previous years since April 15 (the common tax deadline) happens to fall on Good Friday.

But what about your small business taxes? The deadlines for filing business taxes depend on how your business is structured. Here are the deadlines for common business types:

Sole Proprietors, LLCs, and C Corporations

April 18, 2022, is the tax deadline for sole proprietors, limited liability companies (LLCs), and C corporations. They all must all file their taxes by this common April due date.

These businesses can also file for a tax extension, and this extension must also be received by April 18. Once your extension is approved, your new tax deadline becomes October 17, 2022.

It’s important to remember that your tax return must be at least postmarked by the due date. If you choose to send a paper return through the mail, take this into consideration to ensure you comply with the April tax deadline.

S Corporations and Partnerships

Some business types must file their taxes earlier than the April 18 tax deadline. For S corporations and partnerships, the deadline is March 15, 2022.

These businesses can also file for a six-month tax extension, which places their final deadline at September 15, 2022. As with the return itself, applications for a tax extension must be postmarked by March 15, 2022.

Estimated Tax Payment Deadlines

It’s quite common for business owners to make estimated tax payments. These payments are made in each quarter, though the deadlines don’t always fall at precise intervals. For the 2022 calendar year, businesses must adhere to the following quarterly tax payment schedule:

April 18, 2022 (for income received from Jan through March)
June 15, 2022 (for income received from April through May)
September 15, 2022 (for income received from June through August)
January 16, 2022 (for income received from Sept through Dec)

Keeping these estimated tax payment deadlines on your calendar can ensure that you meet your tax obligations. Keep in mind it’s better to overpay than to underpay, as the latter can result in a penalty if your payments are too low.

When Can I Do My Taxes for 2022?

We recommend that business owners not wait until April 17 when filing business taxes. Some entrepreneurs may be particularly eager to file their taxes, hoping to take advantage of deductions based on careful planning on their previous year’s taxes.

Generally, the IRS will begin accepting electronic tax returns by late January. In 2021, the IRS didn’t begin accepting returns until February 12, though this seems to be an anomaly. By January 24, you’ll likely be able to file a business tax return.

This date, of course, assumes you’re ready. Some business owners prefer to have a financial professional or tax services give their tax return a final check before filing to verify its accuracy and ensure that they received all of the deductions and credits to which they’re entitled.

Key Dates

Ready to mark your calendars? Here are all of the important dates for filing business taxes in 2022. You can bookmark this page for future reference or transfer this data to your personal or company calendar, so you never miss a deadline.

January 20, 2022: Employees who earned over $20 from tips in the month of December must report this income to their employers using Form 1070.
January 15, 2022: Your fourth-quarter estimated tax payment for 2021 is due on this date.
January 31, 2022: Employers must send W-2 forms to their employees and 1099 forms to their contractors for earnings from 2021.
February 10, 2022: Employees who earned over $20 in tips during the month of January must report this income to their employers using Form 1070.
February 15, 2022: Financial institutions must send Form 1099-B (sales of stocks/bonds/mutual funds through a brokerage account), Form 1099-S (real estate transactions), and Form 1099-MISC unless the sender is reporting payments in boxes 8 or 10.
February 28, 2022: Businesses must mail Forms 1099 and 1096 to the IRS.
March 1, 2022: Farmers and fishermen must file individual income tax returns (unless they paid 2021 estimated tax by Jan 18, 2022).
March 10, 2022: Employees who earned over $20 in tips during the month of February must report this income to their employers using Form 1070.
March 15, 2022: Corporate tax returns (Forms 1120, 1120-A, and 1120-S) for the tax year 2021 must be filed by this date, or you may file for a six-month extension using Form 7004 (for corporations using the calendar year as their tax year), or Form 1065 (for filing partnership tax returns).
March 31, 2022: This is the deadline to e-file Forms 1099 and 1098 to the IRS (but not Form 1099-NEC).
April 11, 2022: Employees who earned over $20 in tips during the month of March must report this income to their employers using Form 1070.
April 18, 2022: Household employers who paid $2,300 or more in wages in 2021 must file Schedule H for Form 1040.
April 18, 2022: Individuals must file their personal tax returns for 2021, or Form 1040 or Form 1040-SE. Form 4868 must also be filed by this date in order to request an extension.
May 10, 2022: Employees who earned over $20 in tips during the month of April must report this income to their employers using Form 1070.
June 10, 2022: Employees who earned over $20 in tips during the month of May must report this income to their employers using Form 1070.
June 15, 2022: Second-quarter estimated tax payments for the 2021 tax year must be received by this date.
June 15, 2022: U.S. citizens living abroad must file individual tax returns (or Form 4868) by this date to receive a four-month extension.
July 11, 2022: Employees who earned over $20 in tips during the month of June must report this income to their employers using Form 1070.
August 10, 2022: Employees who earned over $20 in tips during the month of July must report this income to their employers using Form 1070.
September 12, 2022: Employees who earned over $20 in tips during the month of August must report this income to their employers using Form 1070.
September 15, 2022: Third-quarter estimated tax payments for the 2021 tax year must be received by this date.
September 15, 2022: Partnership and S-corporation tax returns for the tax year 2021 must be filed by this date if an extension had been previously granted.
October 11, 2022: Employees who earned over $20 in tips during the month of September must report this income to their employers using Form 1070.
October 17, 2022: Final deadline to file individual or corporate tax returns for 2021 using Form 1040 and Form 1120 (if an extension had been previously granted).
October 17, 2022: Eligible taxpayers who earned $72,000 or less in adjusted gross income during 2021 can use Free File to file their returns by this date.
November 10, 2022: Employees who earned over $20 in tips during the month of October must report this income to their employers using Form 1070.
December 10, 2022: Employees who earned over $20 in tips during the month of May must report this income to their employers using Form 1070.

Remember, if you miss one of these important dates, you could face a penalty. At the very least, you might end up paying additional interest on the taxes you owe, so it’s important to keep these dates on your calendar and meet any deadlines that might apply to your business.

Tax Preparation and Planning Made Easy

Filing small business taxes doesn’t have to be a headache. In fact, with the right planning and preparation, your tax return can be the culmination of a year’s worth of hard work and careful strategy.

When you plan ahead for your next tax year, you can take full advantage of any deductions, credits, or other features that can save you money and keep your business financially healthy.

At xendoo, we can help with that. Our team can help you with monthly bookkeeping in addition to helping you plan and prepare your business tax returns. Our tax preparation for small business services can help you save money and meet the IRS requirements, all while relying on our professional team to keep things running smoothly.

Want to learn more? Click here to get started, and our free trial can show you how xendoo’s innovative features can take the stress out of your tax preparation.

Fallen Behind on Bookkeeping? Here’s How to Catch Up

December 23, 2021/in Accounting, Taxes /by Team

bookkeeping and accounting team

Tax season can be stressful, especially if your books are behind, inaccurate, or both. We estimate that roughly 25% of small businesses seek information on how to catch up on business taxes and get their financial records in order.

The benefits of clean, accurate books extend far beyond tax season. When your books are up to date, your business will be better equipped to make strategic financial decisions, analyze expenses, and manage cash flow.

Conversely, when you get behind in your books, it doesn’t just make it harder to prepare and file taxes. Outdated or inaccurate books can limit your ability to cover your expenses, pay your employees, or secure a small business loan.

You’re probably reading this because you already know you’re a little behind on books. The biggest decision to make is whether to try to get your books caught up on your own or secure the assistance of a catch-up bookkeeping service. We’ll help you decide by covering the pros and cons of both approaches in this article.

The Pros of DIY Catch Up Bookkeeping

When you’re considering how to catch up on business taxes, you might decide to handle your own books. That’s not a bad strategy, really, since DIY-bookkeeping offers the following advantages:

Costs Less

Let’s face it: today’s business owners need to cut corners any way they can. Rather than hire an in-house bookkeeper or outsource your bookkeeping needs to an accounting firm, you can simply catch up on your books yourself.

If you’ve already got some experience in filing taxes and managing your accounting needs, this can be an area where you can minimize expenses. For a full overview of the costs of catch up bookkeeping, check out this post here.

Intimate Knowledge of Your Business

No one knows your business better than you do. When you handle your own books, you’ll have an intimate knowledge of your income and expenses and will be in a better position to make updates and correct errors as you proceed.

This consideration might be especially true if you’ve collected a lot of receipts and paperwork on your own. Having these documents on hand can make it easier to record income and business expenses as they happen, and by handling your own bookkeeping, you’ll be better able to identify expenses.

Privacy

As a business owner, you might be reluctant to hand over your sensitive financial data to a third party. By handling your own books, you eliminate all possible breaches in your data security, and you keep your business information limited to your eyes only.

The Cons of DIY Catch-Up Bookkeeping

There’s a reason that so many small businesses outsource their needs to a catch-up bookkeeping service. While there are many business tasks that you can handle on your own, bookkeeping isn’t always one of them and there are so many benefits to catch up bookkeeping.

Business owners often discover that the bookkeeping process can be:

Time-Consuming

Stop and think about this for a minute. How did your books get so behind in the first place? For a lot of entrepreneurs, it comes down to a lack of time. But if you didn’t have time to maintain your books, how likely are you to find time to catch up on your books?

This contemplation actually brings us back to the question of money. Sure, handling your own books will cut down on your administrative expenses, but at what cost? Your efforts are better spent on the revenue-generating activities of your business, not the administrative details of your back office.

Confusing

It can be a challenge to get books caught up in time for tax season. Accounting terms and software tools aren’t always easy to navigate, especially without some degree of specialized training. And that’s to say nothing of the jumble that can occur when you get behind in your books.

This confusion is why it’s best to rely on an accounting professional who knows how to catch up on business taxes. They can sort through the mess on your behalf and bring clarity to your books, so you don’t have to sweat the process when it comes time to pay your taxes.

Inaccurate

The more tasks you’re juggling, the easier it is to make mistakes. But errors in your books can cost you, especially when it comes to tax preparation. Reporting errors can change the actual amount of taxes you owe, and if you underreport, you could be subject to penalties.

Having access to a team of financial professionals can ensure that your books are fully up-to-date, as well as free from any inaccuracies that can cause problems for your business. Plus, a financial professional may be able to help you maximize your deductions, saving you money and enhancing your profitability.

Get Started Now

If we’re honest, most of us make a plan to get started “tomorrow.” But by the next day, we put it off once again.

The best time to get started is now. With tax season looming on the horizon, you can’t afford to wait for another “tomorrow.” In fact, the more you put it off, the more your overdue books can snowball into an even messier problem.

This time crunch means that whether you plan on catching up on your own books or relying on a professional service to provide catch-up bookkeeping for small business, you’ll want to get a plan in place so you’ll be prepared for tax season.

How to Catch Up on Business Taxes Faster Than Ever

The expert team at xendoo has already provided catch-up bookkeeping for small business owners across the country. We can bring your books up-to-date so that you’ll be prepared for tax season and put you on the road to greater financial control.

How much does catch-up bookkeeping cost? Your final price depends on how far behind you are, but xendoo can provide catch-up services starting as low as $295. The real value is found in the peace of mind you get, knowing your financial records are handled by a trained professional.

Find out for yourself by signing up for a free trial, and see what xendoo can do for your business.

The Top 5 Benefits of Catch Up Bookkeeping

December 15, 2021/in Accounting, Bookkeeping /by Team

Young cafe owners sitting at table, working on their catch up bookkeeping

Whether they coach chess players or sell organic puppy food online, every small business owner shares a common driving force: a passion for growing their business. Increasing sales and gaining new customers is one part of the equation. Consistent bookkeeping provides the financial insight needed to strategize for long-term success. With so many obligations resting on the business owner’s shoulders, it can feel like there are not enough hours in the day to accomplish every task, and eventually the books may fall behind.

Even if the books are only behind a few weeks, up-to-date records are crucial for the financial well-being of every business. Catch up bookkeeping accelerates business growth by increasing financial visibility, which enables business owners to make decisions based on accurate information and remain tax-compliant throughout the year! In this blog post, we are exploring the top 5 benefits of catch up bookkeeping!

Reliability in Your Opening Balance

The Opening Balance is the amount of money in your bank account at the beginning of a new financial period, such as the start of the month. Be aware that your bank account does not necessarily reflect the exact amount of cash that is available to spend. For example, if your Opening Balance states that you have $50,000, but $20,000 worth of checks have not cleared yet, the actual balance is $30,000. The best practice is to consult your updated accounting software or financial statements, which provide insight into your true financial position.

The financial statements report revenue, expenses, and profitability, all of which contribute to the Opening Balance. They also guide decision-making and reveal opportunities for business growth. The more up-to-date your books are, the more reliable your financial statements (and Opening Balance) will be!

If your bookkeeping is behind, there will be little to no financial data for that time period, which means you will not know your true Opening Balance for today. For example, if your account was reconciled in January, but February was skipped, the Opening Balance would be incorrect for March. This could skew your numbers going forward, and costly choices could be made based on inaccurate data. This could also affect future bank account reconciliation, as well as the balances in your revenue, costs, and expenses. It is a vicious cycle.

Catch up bookkeeping corrects these issues and provides clarity and accuracy in your financials. Once your books are caught up, keeping them up-to-date becomes second nature.

Financial Accuracy Through Bank Account Reconciliation

A bank account reconciliation is performed to confirm that your accounting records match the information in your bank account. It is an opportunity to identify and correct any bookkeeping errors before the financial statements are finalized, as well as detect and prevent fraudulent activity in your bank account. Bank account reconciliation also ensures that you are accurately reporting your income to the IRS. The best practice is to reconcile your bank account once a month.

Proper bank account reconciliation can only be accomplished when the books are up-to-date. By getting your books caught up, you can ensure the reliability and accuracy of your financials each month.

Cash Flow Management

Catch up bookkeeping can have a significant impact on cash flow. When your books are caught up, you can pinpoint how and when cash enters and leaves your business each month. This delivers a deeper understanding of your cash needs, so you can create a plan for cash flow management.

For example, as your books are caught up, you may uncover past due invoices, or find that you are sending out vendor payments before you receive the cash needed to cover them.

With this insight, you can monitor your Accounts Receivable to ensure you are paid in a timely manner going forward, and find solutions for the timing of your own payments. You can also forecast future cash needs to be confident you have what you need for continued operations.

Click here to learn more about cash flow.

Insight into Net Income

Keeping your books up-to-date plays a vital role in calculating your bottom line, or Net Income, which is the profit that remains after all costs and expenses are subtracted from revenue. In order to know your true Net Income, all business expenses must be accounted for through accurate and timely bookkeeping. This understanding of your Net Income provides the opportunity to increase your bottom line.

Getting your books caught up is also essential when applying for loans. Creditors and investors examine Net Income when deciding to invest in a business, as it highlights the business’s ability to pay back loans efficiently. Catch up bookkeeping determines your bottom line, so you can understand and increase the profitability of your business, meet loan requirements, and secure funding for your next venture!

Click here to learn more about Net Income.

Tax Compliance

As tax season draws closer, a concern that many business owners have is under or over reporting their earnings, and missing out on deductions. They may also experience a back and forth with their Tax CPA over missing documents and gaps in their financials. Breathe a sigh of relief – catch up bookkeeping takes the headache out of tax season!

By getting (and keeping) your books caught up, you can identify the deductions you qualify for, maximize your tax return, and stay compliant all year long!

Get Your Books Caught Up with xendoo

Behind on your bookkeeping? You are not alone! 25% of business owners are behind on their books. Get a fresh start with catch up bookkeeping services from xendoo, so you can take your time back and focus on the future of your business.

Let’s chat! We would love to get to know you and your business. Click here to schedule a free consultation.

How Do I Pay Myself and My Taxes as a C-corporation?

December 6, 2021/in Accounting, Bookkeeping, Small Business Tips /by Team

Diverse group of business owners in a C-corporation, reviewing documents together

When businesses are first created, every responsibility falls on the business owner. As they juggle increasing sales, customer service, marketing, and even bookkeeping and accounting, two questions come to mind – how do I pay myself? How do I pay my business’s taxes?

Self-payment for small business owners is far from simple. There are certain requirements for the amount you pay yourself, and even how you receive payments. That is why the xendoo team has created this guide to help you navigate self-payment and taxes as a C-corporation owner!

How to Pay Yourself as a C-corporation: Salary or Dividends

The payment you receive depends on your role within the company. C-corporations are made up of the following roles:

xendoo provides financial visibility to C-Corp owners through online bookkeeping, accounting, and tax services.

Directors, officers, and employees in a C-corporation take a salary, which is subject to payroll taxes. Shareholders can take a salary and dividends, which are allocations of stock from retained earnings, if the company chooses to distribute profits. Some shareholders opt not to take dividends, which will be discussed shortly.

In smaller C-corporations, one person can act as the shareholder, director, officer, and employee. Shareholders can also be involved in the day-to-day operations of the company, and are referred to as shareholder-employees.

How Do I Pay My Taxes as a C-corporation?

C-corporations are considered separate legal entities from their owners. This means that the business is taxed at the corporate level, with dividends being taxed again at the shareholder level, resulting in double taxation. Smaller companies may choose to avoid dividend payments for this reason.

C-corporations file their taxes using Form 1120, which reports the business’s income, losses, credits, and deductions. If shareholders take dividends, they use Form 1099-DIV to report the amount that was distributed to them.

To ensure that your C-corporation taxes are filed correctly and on time, you can partner with an online CPA. They will help you to maximize your tax savings and enjoy peace of mind during the most stressful time of the year.

Are Salaries and Dividends Tax-Deductible?

Dividends are not tax-deductible expenses, but shareholder-employee salaries are – as long as they are reasonable. Some business owners may take high salaries in order to reduce the company’s taxable income. However, if the salary is too excessive, it could be reclassified as a dividend payment, taxed at the shareholder level. The company would then lose that excess salary as a deduction. On the other hand, if the salary is too low, it can be considered an attempt to avoid employment tax liability, which could draw scrutiny from the IRS.

Every business is different, so the salaries that business owners take will vary. To get started, you can take a look at the factors the IRS uses to determine a reasonable salary for shareholder-employees in C-corporations:

What comparable businesses pay for similar services. If an employee’s salary falls in line with what similar businesses pay for that position, the salary will be considered reasonable.
Character and condition of the corporation. If the company is performing exceptionally well, an above-average salary can be considered reasonable.
The role of the employee within the business. The IRS considers the hours the employee works, the duties they perform, and the contributions they make to the success of the business. If the employee receives a raise, they must also receive an increase in responsibility for their salary to be considered reasonable.
Internal consistencies in establishing compensation levels. Inconsistencies in the compensation of other employees can suggest that the employee’s salary is unreasonable.
Conflicts of interest in setting compensation levels. Conflicts of interest occur when there is a clash between personal interests and professional obligations. For example, if a shareholder attempted to disguise dividends as a deductible salary, the IRS would deem the salary unreasonable.

You do not have to figure your salary out on your own. Discuss your options with an online C-corporation accountant at xendoo today!

xendoo is Here for You

Every business owner deserves an accounting team that is dedicated to their financial success. xendoo provides online bookkeeping and accounting services to C-corporation owners, so they can make the most informed decisions for their business!

We would love to get to know your business. Click here to schedule your free consultation.

Want to learn more about the different business entity types? Click here.

How Do I Pay Myself and My Taxes as a Partnership?

November 22, 2021/in Accounting, Bookkeeping, Taxes /by Team

Two young black business owners working on a computer

Every partnership owner faces the unique challenges of self-payment, tax filing, and maximizing their tax savings. Although they would rather focus on growing their business, taxes and payroll often take up too much of their valuable time.

If the self-payment struggle is all too familiar to you, xendoo is here to help. We have created this guide to help you pay yourself and maximize your savings as a partnership owner!

How to Pay Yourself as a Partnership Owner: The Owner’s Draw or Guaranteed Payments

Partnership owners pay themselves by taking an owner’s draw or a guaranteed payment, with profits distributed to each member based on the partnership agreement. Note that partnership owners are not permitted to take a salary, as the IRS states that you cannot be both a partner and an employee.

The Owner’s Draw

An Owner’s Draw differs from a regular salary in that you can take money from the company’s earnings as needed, rather than on a scheduled basis. Depending on how well your business is performing, you can draw more or less, allowing for flexibility in your payments.

If your business is profitable, subtract liabilities (any debt your company owes) from assets (items of value the company owns). The remaining amount is referred to as ownership equity, which is what you will take your draw from. This amount is reflected on the Balance Sheet, under Owner’s Equity. Once you determine the amount you want to take, it can be transferred from your business bank account to your personal account.

Because the Owner’s Draw is taken from ownership equity, it reduces the funds that can be used for operating or growing the business. Partnership members must balance how much they need to support themselves and what the business needs to thrive.

Guaranteed Payments

What if your business is in the early stages, and not producing profit yet? The solution lies in guaranteed payments.

Guaranteed payments are a minimum amount that is guaranteed to be paid to a partner regardless of business profitability. The payments must be made even if the result is a loss for the business. They provide a consistent income to partners as the business grows and becomes profitable. Note that if the business is operating at a loss and providing guaranteed payments to partners, that loss must be funded through debt or investments (equity) to ensure that the necessary expenses of the business can be paid.

Discuss your options with an online partnership accountant at xendoo. They will provide the financial insight needed to make the most informed decision regarding self-payment in your partnership!

How Do I Pay My Taxes as a Partnership Owner?

Partnerships file their taxes using Form 1065, which determines that each partner is reporting their income correctly. Each partner must complete an accompanying Schedule K-1, which breaks down their share of the profits and losses. They also report this information on their individual tax return (Form 1040), with a Schedule E attached. The owner’s draw is not subject to payroll taxes, but it is considered personal income and is taxed accordingly. If partnership members take the owner’s draw, they must pay estimated taxes, which helps decrease their tax bill.

Guaranteed payments are tax-deductible to the partnership, and are treated as self-employment income for the partnership members. They are reported on the Schedule K-1, and noted as income on the Schedule E. If the partnership members choose to take guaranteed payments, they will pay both income tax and self-employment taxes as individuals.

What are the Tax Advantages of Filing as a Partnership?

No Double Taxation

The partnership itself does not pay income taxes. Partnerships are considered “pass-through entities”, meaning that profits and losses “pass through” the business to the partners, with each paying a portion of the total income tax of the business’s earnings. In this situation, profits and losses are only taxed at the personal level, which allows partnerships to avoid double taxation.

Even with a significant tax advantage, taxes can still be stressful. Talk to a small business CPA at xendoo. We provide online accounting for partnerships, as well as online bookkeeping services so you can stay tax-ready all year long.

xendoo is Here for You

You are not alone as you navigate self-payment, tax filing, and all the financial ins and outs of your partnership. xendoo is here to help! Our online bookkeeping and accounting team provides partnership owners with the financial insight needed to make the most informed decision regarding self-payment and partnership taxes!

Are we a fit for your partnership? Get started today with a free consultation.

Want to learn more about the different business entity types? Click here.

How Do I Pay Myself and My Taxes as an S-corporation?

November 2, 2021/in Accounting, Bookkeeping, Taxes /by Team

White female business owner and black male business owner using a laptiop, looking happy about business performance

When businesses are born, business owners are likely not daydreaming about taxes and payroll. Yet, they still face the unique challenge of figuring out how to pay themselves, file their taxes, and maximize their tax savings.

As their business grows, many business owners opt for S-corporation Election due to the tax advantages it presents, but they must be mindful of how much they pay themselves, in order to remain compliant in the eyes of the IRS. Unless they moonlight as an experienced accountant, self-payment and tax filing can be confusing and stressful for small business owners – understandably so!

Like most things involving taxes, it gets complicated. That is why we have created this comprehensive guide to help business owners pay themselves and maximize their savings as an S-corporation!

How to Pay Yourself as an S-corporation: Salary and Distributions

Under other business structures, you simply take a share of company profit as your payment. In an S-corporation, you have the option to pay yourself in two ways:

Salary, your wages or reasonable compensation. This is considered taxable income to the payee by the IRS.
Distributions, the earnings that are paid as distributions to you as the owner. These are not employee wages and are not taxed as self-employment income in an S-corporation.

For example, if your business produced $100,000 in profit, you could take a reasonable salary of $40,000, and the remaining $60,000 as a distribution. It may seem strange to receive payment in two different forms, but it comes with significant tax savings, which will be discussed shortly.

How Much Do I Pay Myself as an S-corporation?

The short answer is, it depends.

S-corporation shareholder-employees are required to receive a reasonable salary, which is generally defined as at least what other businesses would pay someone in that role for similar services. Every business is different, so the exact amount that business owners pay themselves will vary.

To determine your reasonable salary, you can start with the U.S. Bureau of Labor Statistics, which provides insight into compensation across different industries. This will give you an idea of what you should be paying yourself based on your field and the profit you produce.

Some of the factors the IRS considers to determine a reasonable salary are:

Training and experience
Duties and responsibilities
Time and effort devoted to the business
Distribution history
Payments to non-shareholder employees
Timing and manner of paying bonuses to key people
What comparable businesses pay for similar services
Compensation agreements
Use of a formula to determine compensation

You must be careful to pay yourself a reasonable salary. Paying yourself a salary that is too low (or none at all) can draw scrutiny from the IRS, as it is considered an attempt to avoid paying self-employment taxes.

The good news is that you do not have to figure it all out on your own! The xendoo team is more than happy to help you determine your reasonable salary. Speak to one of our online accountants to learn more.

How Do I Pay My Taxes as an S-corporation?

The first step is to elect to be taxed as an S-corporation. To qualify for S-corporation status, your business must meet the following requirements:

Your business must be incorporated in the United States.
Your business may only have certain types of shareholders, including individuals, and certain trusts and estates. They may not be partnerships, corporations, or non-resident alien shareholders.
Your business cannot have more than 100 shareholders.
Your business can only have one class of stock.
Your business cannot be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

If your business meets all of this criteria, you can move forward by filing Form 2553, and sending it to the IRS. If your company has multiple shareholders, each of them must sign and submit this form as well. Once approved by the IRS, you will file your S-corporation taxes using Form 1120S.

To minimize error and maximize tax savings, partner with an online Tax CPA at xendoo. We file your taxes for you so you can focus on growing your business.

What are the Tax Advantages of Filing as an S-corporation?

No Double Taxation

C-corporations are taxed twice, with the business paying corporate income taxes, and shareholders paying taxes on their share of the income. On the other hand, S-corporations are not subject to corporate income tax. Instead, shareholders file a Schedule K-1 along with Form 1120S, which reports their share of the company’s profits or losses. This allows S-corporations to avoid double taxation.

No Self-Employment Taxes (on Distributions)

Another key advantage of S-corporations Election is that the distributions owners receive are not subject to self-employment taxes!

Every small business must pay self-employment taxes to fund social security and medicare. If your business operates as an LLC, you are required to pay self-employment taxes on your entire share of the profit, regardless of how you use the money. On top of that, you will also be taxed at your personal income tax rate. As the owner of the S-corporation, you only pay self-employment taxes on your reasonable salary. The distributions you take are exempt from self-employment tax!

To illustrate, let’s revisit the example from earlier:

Your business makes $100,000 in profit.

As a single-member LLC, you will pay $15,300 in self-employment taxes.

If you file the S-corporation Election, you pay yourself a reasonable salary of $40,000. The remaining $60,000 is taken as a distribution from profit. You will pay $6,120 in self-employment taxes only on your salary. The remaining $60,000 is exempt, resulting in a tax savings of $9,180 compared to the LLC!

For quick reference, take a look at the chart below:

S-corporation Election is a simple, yet effective, way to maximize your tax savings. Are you ready to take the next step? Schedule a free consultation with a xendoo accountant today!

xendoo is Here for You

You are not alone as you navigate the waters of self-payment and tax filing. xendoo Online Bookkeeping, Accounting, and Tax is here to help! We move at the speed of business, so you can make informed decisions faster – like deciding if an S-corporation Election is right for your business!

Want to learn more about the different business entity types? Click here.

Click here to access Form 2553.

Click here to access Form 1120S.

Click here to access the Schedule K-1.

Learn When You Should Outsource Your Accounting

October 20, 2021/in Accounting, Bookkeeping, Taxes /by Team

A man looks at an expense report on his laptop

Business owners have a ton of demands on their plate, from bringing on the right staff members to marketing their products and working to improve the customer experience. But as your business starts to take off, it can leave you with a difficult choice. Should you focus on growing your core business or continue to focus on the administrative side, like managing your accounting and bookkeeping needs?

When your business was small, it was easy to handle both. But now that you’re growing, it may be more difficult to adequately cover your administrative tasks.

Getting behind in your books can leave you frantically preparing for tax season. Without accurate financial records, it can be harder to secure funding and prepare for the future, too.

Outsource accounting services can help you stay up-to-date on your books, compliant with regulations, and firmly in control of your company’s financial future. With that in mind, here are some of the reasons why you should consider partnering with an online accounting firm.

Scaling as Your Business Grows

Your profitability depends on your ability to generate revenue and sustain growth over time. Outsource accounting services can help you accomplish this, providing a set of benefits that can help to cover back office responsibilities as you and your team focus on your core business tasks.

Specialized Skills for Every Step of Your Journey

While in-house accountants tend to be generalists, online bookkeeping firms can offer a specialized experience for every phase of your business journey.

Outsource accounting firms can often provide experience in unique areas such as:

Personal financial planning and assistance
Forensic accounting
Managerial accounting
IT auditing
Non-profits
Tax preparation

Additionally, the financial professionals found at today’s top firms often have experience in your respective industry, providing actionable advice that can optimize your company at every step of your journey.

Tax Planning

The specialized skills of an outsourced accountant typically include experience in tax planning and preparation. Outsource accounting services can not only ensure that your company has set aside sufficient funds to pay your annual income tax, but they can also help you to take advantage of the existing tax code to enhance profitability while staying in compliance with regulations.

This can be crucial for growing businesses. As your business expands, you may discover that rising revenues and a changing customer base can place you in unique tax situations. These needs can best be addressed by a professional accountant. Outsource accounting teams can enable you to navigate the confusing world of tax law.

Financial Reporting and Planning

Growing businesses often rely on small business loans for tasks like:

Increasing inventory
Hiring new employees or contractors
Investing in new technologies
Expanding retail or office space
Other overhead costs

But in order to secure a small business loan, most lenders will want to see the basic data about your financials.

If your books are “a little behind,” this can jeopardize your ability to secure the necessary funds to grow your business.

Top-quality outsource accounting services can provide catch-up options designed to bring your books completely up-to-date. Best of all, with accurate reporting, you’ll be in a better position to secure additional funds as your business expands.

Taking Your Time Back

Your time is too valuable to spend on your books. And accounting doesn’t usually fall under your team’s core competencies.

A core competency is a unique skill or advantage that is ultimately responsible for your company’s growth. Any business process that’s not a core competency should be outsourced, allowing your team to focus on their respective areas of specialty.

That’s why bookkeeping and accounting rank among the top tasks to outsource for growing companies. Outsource accounting services can help you with these administrative processes so that you and your team can stay focused on your core business.

Here are just a few of the additional benefits that you can expect when you partner with high-quality outsource accounting services:

Saving Time While Staying in Control

Running your company is job number one. Relying on outsourced online bookkeeping services to handle your books can liberate you from the tyranny of administration and put you back in a position to make data-driven decisions.

Some business owners are reluctant to do this since it naturally means surrendering control. But letting someone else handle your books can actually mean greater control over your company—not less.

For instance, most accounting firms rely on the latest cloud-based technology, offering access to your financial data 24/7 from anywhere in the world. And at xendoo, our professional team is never more than a phone call, text message, or email away.

You save time and benefit from up-to-date, easy-to-access information about your company’s cash flow and financial forecasting, giving you confidence that you simply can’t match by juggling your own spreadsheets and flow charts.

Keeping Your Employees Focused

Of course, you may already be wise enough to delegate these responsibilities to another team member. But think about how much more your team could accomplish if they weren’t spending time clicking around in QuickBooks.

Your office staff could divert their attention to revenue-generating tasks as:

Social media management
Marketing
Contacting customers
Pursuing new leads
Negotiating with vendors

Outsource accounting services reduce the burden on your staff as a whole, allowing you to direct your team’s attention to the key processes that go into running your business.

Spending Less Time Hiring New Staff Members

When you pursue outsourced accounting for small business needs, you won’t have to interview, hire, and onboard your own staff accountant. That means you’ll spend less time assembling a job description, posting a job ad, reviewing resumes, onboarding a new employee, setting up benefits, or securing an office space.

With an outsourced accounting firm, you can rely on a partner that will be around for the long term. You’ll benefit from the reliability of a dedicated team that understands your needs and provides ongoing support.

A Fast, Reliable Turnaround

What happens if your in-house accountant needs to take a sick day or goes on a two-week vacation? Depending on the circumstances, this could bring your company—including its payroll—to a grinding halt until your staff member returns.

With an outsourced financial firm, you have the reliability of a remote team and can avoid the time delays associated with unexpected absences or delays.

Reduce Costs and Increase Accuracy

Outsource accounting services can reduce costs, all while ensuring greater accuracy for your financial records. These benefits are seen in several ways:

Reduce Staffing Costs

Did you know that a typical certified public accountant (CPA) can charge roughly $40 per hour? The number climbs even higher if you need someone with specialized experience.

Hiring an in-house accountant can be cost-prohibitive for small businesses, whose margins are often already razor-thin.

Outsource accounting services typically operate on a monthly fee. xendoo, for example, offers plans starting at $195 per month. These monthly fees are a mere fraction of the costs of hiring an in-house accountant.

Reduce Errors

Errors can cost you, especially when it comes to your annual taxes. In many cases, business owners may face penalties for errors made in their tax reports, along with consequences for failing to file appropriate documentation on time.

Outsource accounting teams can minimize these errors, eliminating the expense associated with mistakes.

Optimize Costs

Accounting firms can streamline tax preparation to help grow businesses. But the advanced reporting features that they offer can also help you to streamline every aspect of your business.

Advanced analytical data can help you refine your business strategy and find ways to reduce costs. It can also help you to plan for seasons of increased demand, which may be particularly helpful information for retailers or eCommerce companies.

Get Paid Faster

Businesses often lose money from unpaid invoices. Online accounting services can speed up the invoicing process, ensuring that you can send invoices and receive payments faster than ever before.

Eliminating the delay between delivery and payment can ensure a healthier revenue stream and keep money from getting lost in a sea of outstanding invoices.

The reporting features offered by modern accounting firms can alert you to outstanding payments that need to be collected, giving you better control over your company’s cash flow.

Reduce Fraud

While no business owner wants to consider themselves to be vulnerable to fraud, an online accounting service can minimize your risk by handling your finances through a secure cloud-based platform.

This professional team might also be able to help investigate employee fraud by closely examining your books, saving your business the money that could otherwise be lost from white-collar crime.

The Best Time Is Today

If you’re wondering when to invest in an outsourced accounting company, the best time is now.

At xendoo, we offer our clients online bookkeeping features and accounting services that streamline every aspect of their businesses. We can save you time, save you money, and help your business thrive and grow.

If you’ve been spending your time trying to stay focused on two things at once, it’s time to go “all in.” Give us a try today by signing up for our free trial. Get out of the back office and back to doing what matters most.