What Type of Accountant Does Your eCommerce Business Need?

October 18, 2021/by Team

A woman writing and looking at images of shoes

Running an eCommerce business can sometimes feel like a juggling routine. You’ll have to stay on top of your transactions, inventory, administrative fees, and more. Chances are that your accounting and bookkeeping needs are low on your list of priorities, but that can come back to bite you.

Managing your own books may seem like a cost-saving strategy, but many online merchants lack the time or expertise to stay up-to-date and in compliance. Your eCommerce business requires the attention of an eCommerce accountant.

Today, we’ll show you how partnering with an accountant that specializes in eCommerce can help your business to thrive.

Types of Accounting for Your eCommerce Business

One of the first financial decisions you’ll need to make is the accounting method you’ll use for your online business. There are two types of accounting practices to choose from: cash basis and the accrual method.

Determining which method is best for your company depends on several factors, which we’ll explore below.

Cash Basis Accounting

Cash basis accounting is the simpler of the two methods. In this method, you add an accounting entry every time money enters or leaves your bank account. Basically, you’ll be keeping a record of all your transactions, and this record will largely mirror your sales records and bank accounts.

The simplicity of this system is its greatest appeal, since it doesn’t require a lot of accounting knowledge or expertise. It’s actually a great eCommerce accounting strategy for startup businesses.

You might consider this method if you:

Run a small eCommerce business
Run an Amazon FBA store
Produce products on demand

If your eCommerce store starts to grow, you can always switch to the accrual method down the line, though you may need to consult with an eCommerce accountant to help you with your books.

Accrual Method

In accrual accounting, you record your income and expenses as the transactions take place, regardless of when the money reaches or leaves your bank account. This may sound confusing, but it actually presents a more accurate picture of your company’s cash flow.

The accrual method can also help you make financial projections and better manage your inventory, since you’ll have a regular snapshot of your business activity. That is why the accrual method is generally recommended for larger or growing businesses. It can be particularly helpful when you’re juggling the various moving parts and pieces of running an online business.

The biggest drawback is that the accrual method requires a bit more attention to reconcile income and expenses, which is why you will benefit from the attention of an eCommerce accountant.

Which of these methods is right for your business? A professional accountant, who can provide guidance about the right accounting method to use for every phase of your business.

eCommerce Accounting Best Practices to Remember

Online merchants face some unique business challenges. Here are five of the best practices to use when you’re using accounting for Amazon stores and other online businesses.

Maintain a Budget

A budget is the summary of all of the income and expenses associated with your business. Keeping track of this data is a challenge for any business owner, but eCommerce bookkeeping demands that you keep track of such expenses as:

Administrative fees
Warehousing fees
Shrinkage (inventory lost or damaged)
Returns and chargebacks

Staying up-to-date with your books is crucial to understanding the financial health of your business. An eCommerce accountant can help you stay current, while also providing reports to optimize your cash flow and help you grow.

Distinguish Between Returns and Chargebacks

Many online retailers fail to distinguish between returns and chargebacks. The difference is actually quite simple:

Returns: A customer may return merchandise for store credit or a full refund
Chargebacks: A customer disputes a charge, claiming it was fraudulent

If you give a customer store credit, the original transaction should be listed as an expense and added to your accounts payable list.

Both refunds and chargebacks should be recorded under “Returns and Allowances.” Chargebacks may include an additional fee, which can be categorized as a business expense.

Categorize Your Transactions

Categorizing your transactions can help you estimate your monthly revenues, day-to-day expenses, and any one-off transactions, which is why it’s a common practice in bookkeeping for eCommerce businesses.

Your transactions will generally fall into one of the following categories:

Sales
Returns
Chargebacks
Administrative fees
Salary
Marketing

You may have additional categories, depending on the type of business you operate. The point is that by placing transactions in these specific categories, you’ll be in a better position to do financial forecasting and hone in your business strategy moving forward.

This can also be an important step in managing your inventory, as your sales figures can be used to project future demand and show you the best times to order new supplies to keep up with seasonal trends.

Stay Current with All Taxes

Retailers often have to deal with two different types of taxes: business taxes and sales tax. Sales tax can be particularly important for eCommerce businesses, since you’ll have to deal with unique circumstances when you operate in one state but sell to customers in another state—or even another country.

Every state has its own regulations when it comes to filing sales taxes. An eCommerce accountant can help you sort through these details to help you stay up-to-date and in full compliance with all tax regulations.

Your business taxes will be paid on your annual tax return, though businesses that anticipate paying over $1,000 in taxes are encouraged to make quarterly estimated payments.

Again, an eCommerce accountant can help you with tax planning and preparation, so you can ensure you’re prepared for tax season.

Streamline Your Processes with Accounting Software

The right accounting software can make a world of difference for online retailers. Many business processes can be automated to save you time. The advanced analytical and reporting features of this software can help with financial forecasting and long-range planning, too.

Of course, the best way to have access to the latest software is to partner with an online accounting firm. Modern cloud-based software can provide real-time data on your business, which means that the online bookkeeping features provided by these firms can be accessed anytime, anywhere.

Finding the Right eCommerce Accountant

How do you find the right eCommerce accountant for your business? Here are three things you should consider:

Experience in Your Industry

The right accountant should be familiar with the unique needs of an eCommerce business, but the best accountant will also be familiar with your niche industry.

For example, if your company sells books, you may have unique accounting needs when compared to someone that sells office supplies.

Partnering with the right accountant can ensure that your current needs are met. They may also bring advice and expertise from other companies of your size and industry, helping you streamline or even scale your business.

Clear Communication Channels

Every business owner needs to stay on top of their cash flow. That’s why you want to choose an accountant that provides clear communication, so you’re never out of touch with the financial health of your eCommerce business.

At xendoo, for example, our online accounting team adjusts to your preferred communication method. Your business data is never more than a call, text, or email away, helping you stay on top of every aspect of your business.

The best eCommerce accounting solutions will also provide you with financial reports, such as:

Profit/loss statements
Cash flow statements
Cash flow forecast

These reports are crucial to understanding the viability and health of your business. They can also help you better plan for the future. Additionally, if you ever need a small business loan (e.g., to use to increase your inventory), these financial reports can demonstrate the legitimacy of your business to lenders.

Flexible Pricing

Any retail business will have needs that fluctuate with the seasons, and your needs may grow as your business continues to evolve. The services of an in-house accountant cost around $40 per hour or more, depending on the accountant’s skill level and your exact needs.

This is why many small business owners are turning toward outsourced accounting firms that can perform online accounting for eCommerce for a fraction of the cost of a regular employee.

Best of all, when your company’s financial needs are handled by a professional team, you can get back to focusing on your core business processes instead of getting sidelined by administrative details.

Flexible pricing means that you can scale your accounting needs as your business expands. Your accounting team should grow with you, helping you reach your full potential while staying up-to-date with your financial records and tax planning.

Get Your Head Back in the Game

If running your eCommerce business is starting to feel like running a circus, it’s time to contact a professional. xendoo can help you handle your accounting and bookkeeping needs, so you can get your head back in the game and focus on handling your business.

See for yourself by signing up for our no-obligation free trial. You’ll wonder what you ever did without us!

CPA Solutions for Amazon Sellers

October 15, 2021/in Accounting, eCommerce /by Team

An employee hads a customer their food order.

Outside view of an Amazon pick up and return center.

When it comes to sheer exposure for your business, it’s hard to beat Amazon. If you’ve been using an Amazon FBA (Fulfilled by Amazon) account, then you might already be familiar with the administrative fees associated with warehousing, packing, shipping, and customer service. But there’s another need you’ll have to consider: accounting and bookkeeping.

Every business can benefit from the services of a Certified Public Accountant (CPA). But Amazon sellers can especially benefit from online CPA services that specialize in the world of eCommerce.

In this article, we’ll cover the benefits and considerations of partnering with an online CPA when your business is conducted through Amazon.

Why Having an Experienced eCommerce Accountant is Important

Even though online businesses have become quite common, eCommerce bookkeeping remains a niche area for financial professionals. This is partly due to the specialized considerations that go into accounting for online sales.

Finding the right CPA for Amazon sellers means finding an accountant that is intimately familiar with the needs of online merchants.

When you partner with an online accounting firm, you’ll gain access to an array of financial professionals. What kinds of benefits can you hope to gain from these partnerships?

They Understand the Industry

Amazon sellers have unique considerations compared to their brick-and-mortar-based counterparts. It’s likely that your business is located in one state but has buyers in another state or even overseas. It’s also possible that your inventory is stored in another location altogether, if not distributed across a network of warehouses across the country.

These unique circumstances require tailored accounting strategies. With the right CPA for Amazon sellers, you can navigate issues such as:

Inventory management
Amazon’s fees
Returns
Data analytics and reporting

eCommerce accountants may be able to provide advice tailored not only to Amazon’s framework but also to the unique needs of your business.

They Understand the Technology

Online merchants rely on software and mobile apps to manage their inventory, handle transactions, and manage cash flow. An accountant who specializes in eCommerce will be familiar with these tools and technologies and can provide financial guidance that takes these features into consideration.

In fact, partnering with a CPA for Amazon sellers can often streamline the entire process of online sales. A knowledgeable accountant can point out areas in which automation can save you time, while also providing insight into how to manage your data and hone your business strategy.

This can also be helpful as technology shifts and changes. Modern accounting firms can help you to adopt new systems to improve your business, all while maintaining high standards of privacy and data security.

They Understand Tax Code

One of the greatest challenges facing Amazon sellers is sales tax. While Amazon’s digital infrastructure can assist you in calculating sales tax, there are some special considerations that may apply to your business.

For example, if you use Amazon’s warehouses to ship goods, you may be required to pay Amazon sales tax in the states in which those warehouses are located. However, these regulations vary by state, which is why it’s important to understand local laws when you seek out accounting for Amazon businesses.

Partnering with a specialized CPA for Amazon sellers can ensure that you navigate these financial complexities without finding yourself in violation of federal or state tax regulations.

The most experienced online accountants will understand the rules and regulations that impact Amazon sellers, so they can help you remit sales tax appropriately and remain in full compliance with the law.

Staying up-to-date with your books can also ensure you have enough money in your account when it’s time to file your annual business tax return. Online accountants can help you catch up on your books when you fall behind and come alongside you to ensure that you always have an accurate picture of your company’s cash flow.

They Can Help You Grow Your Business

An experienced CPA for Amazon sellers can help you grow your business. A financial professional can sift through the moving parts and pieces that make up your business and give you a comprehensive picture of your company’s financial health.

Amazon will provide some basic default reports, but these reports won’t dig into your financial data the way a trained accountant can.

An online accountant can provide you with resources that include:

Cash flow statements
Profit/loss statements
Cash flow forecasts

The reports and analyses generated by an online accountant can be used to hone your business strategy so that you can effectively plan for the future.

They Can Save You Money

Perhaps most importantly, an accountant with experience in eCommerce can save you money. The services of an online accountant cost less than hiring a full-time staff member. These professionals can even add value to your company through the services they provide.

When you work with a CPA for Amazon sellers, you’ll likely discover ways that you can increase your overall efficiency.

With more time to focus on the revenue-generating activities of your business, you’ll not only save money; you also just might find new ways of expanding your business!

Specific Considerations for Amazon Accounting

We’ve already touched on some of the features that make an Amazon FBA business unique. But being an Amazon seller will also mean you’ll need to consider a few unique factors when it comes to your accounting.

Choosing the Right Accounting Method

Modern businesses often rely on two types of accounting methods: cash-based accounting or accrual accounting.

In cash-based accounting, transactions are documented once the transaction is complete and cash changes hands.

In accrual accounting, revenue and expenses are recorded as they occur, which means that you’ll record these entries twice and reconcile these figures on a routine basis.

Which is the right method for your Amazon business? While cash-based accounting is simplest, many businesses find that accrual accounting works best as they grow.

A trained CPA for Amazon sellers can help to evaluate your business and help you choose the right method for your company based on anticipated revenue and inventory.

Consolidated Deposits

One of the unique accounting features associated with Amazon sellers is the receipt of consolidated deposits.

Amazon sellers receive payment in the form of a single deposit, which is made once every two weeks. As the name suggests, your consolidated deposit includes more than just sales. It will also reflect:

Chargebacks and returns
Administrative fees
Sales tax

Having an experienced professional on your side can make quick work of sorting through this information, so you have a more precise record of your financial activities and a better grasp on your company’s cash flow.

Inventory Management

Managing your inventory can be a bit more challenging when it’s spread out through a series of Amazon-owned warehouses. And as your business expands, so do the challenges of maintaining your inventory.

Amazon sellers find themselves faced with challenges and questions like:

How much inventory do I need?
When should I order additional inventory?
How long should I let excess inventory sit in the warehouse?
Should I eliminate excess inventory by offering a discount?
How do I account for shrinkage due to damage or loss?

Keeping your inventory organized into clear categories and recorded on an up-to-date balance sheet can help you make better decisions regarding your products.

Working with a CPA for Amazon sellers can help you to integrate your inventory data into your financial reporting, which can help you better understand your overhead costs and profitability moving forward.

If you decide that you need to restock particular items or otherwise increase your inventory, you may need a small business loan. Again, this is where an online accountant can be particularly useful, as they can help to prepare your financial records and determine the size of the loan your company can support.

Create Additional Revenue Streams

While Amazon is an industry giant, it’s never wise to put all of your eggs in one basket. What would become of your business if your Amazon account were to be frozen or suspended? Can you always rely on Amazon to prioritize your shipments? What if a competitor should emerge in the near future, knocking Amazon off its coveted eCommerce pedestal?

Tying your fortunes to the success of Amazon could ultimately limit your business and even bring it to a grinding halt if you’re not careful.

An accountant can help you strategize new revenue streams so that you can continue conducting online business without relying exclusively on Amazon’s warehouses or digital infrastructure to support your business.

Naturally, juggling multiple revenue streams can make managing your finances all the more complex, which only underscores the need for assistance when it comes to eCommerce.

An online CPA can help you make sense of the financial data so that you can effectively manage your income and expenses across multiple digital platforms.

xendoo, Providing Prime Business Solutions

When you sign up for xendoo, it’s like having a professional accountant delivered right to your door. You’ll gain access to our online bookkeeping features at a fraction of the cost of an in-house employee.

A CPA for Amazon sellers can dramatically improve the way you do business online, helping your business to grow and scale over time. If you’re ready to take advantage of everything a CPA for Amazon-based businesses can do for you, sign up for a free trial today.

Celebrating Women’s Small Business Month: Thoughts from xendoo CEO and Founder, Lil Roberts

October 8, 2021/in Accounting /by Team

A female small business owner smiles inside her boutique shop

National Women’s Small Business Month celebrates women’s achievements in business, and highlights what they bring to their communities as small business owners. We took a moment to interview xendoo founder and CEO Lil Roberts, to get insight into what it takes to be a successful entrepreneur, and the importance of women leading in business.

Build Up Your Team

What encouragement do you have for women who are in male-dominated industries?

Shift your mindset. Do not let who dominates the industry define your role within it. Succeeding in business is all about excelling at what you do best, and building up a team that compliments the areas that you lack experience in. A multifaceted team is what makes a business thrive. When your team is growing their skills and knowledge, when your customers are happy, that is where you will find true success in your business.

It is crucial to focus on the problem that needs to be solved, and build a team that is as passionate about solving that problem as you are. That is what success looks like in every industry, no matter who it is dominated by.

Inclusive by Nature

What is the importance of women leading in business?

Lil smiled and recalled a moment in which she had the opportunity to speak to Frances Frei, Senior Associate Dean for Executive Education at Harvard Business School. Frei shared her experience of solving problems with a team of women and immigrants, referencing studies that prove that when women lead, everyone wins. That is not to say that people and businesses cannot thrive under male leadership – they do. It simply highlights that women tend to be inclusive by nature, and adept at empowering those around them to do and be their best. This leads to the creation of supportive, passionate teams and therefore, successful businesses.

Hats Off to You

To all female business owners and entrepreneurs, we are rooting for you. Happy National Women’s Small Business Month from your friends at xendoo! Take time to celebrate your business and your amazing team this month. Focus on what you love – growing your business. xendoo has your online bookkeeping covered.

Schedule a free consultation with one of our accountants. We would love to get to know you and your business, and partner with you as your bookkeeping, accounting, and tax team!

Watch the full interview with Lil below:

How Franchisors Can Build a Strong Item 19

September 13, 2021/in Accounting, Bookkeeping, Small Business Tips /by Team

A black female franchise owner, holding her Item 19 report, thinking about the future of her business

How Much Money Can I Make?

As franchisors work to sell franchises, one question they will always be asked is, “how much money can I make?”. The answer to this question can be found within one section of the Franchise Disclosure Document: Item 19.

In order to create a compelling Item 19, franchisors need financial data on the performance of each franchise location. Typically, it is up to the franchisees to keep their books up to date and share that data with the franchisor. But, like many small business owners, they juggle countless responsibilities, may not understand the complexities of accounting, and bookkeeping understandably falls by the wayside.

An Expert Team

Without the right tools, building a strong Item 19 can feel like a massive undertaking. But, with the support of a franchise bookkeeping team, franchisors can receive timely, accurate information that will help them build a compelling Item 19!

What is Item 19?

Item 19 is a section in the Franchise Disclosure Document (FDD), a document that must be presented to individuals who want to purchase a franchise. The purpose of Item 19 is for franchisors to lay out the financial performance representations (FPR) of the franchise. It paints a picture of how potential franchisees can expect to perform and estimates how much money they could make should they join the franchise.

Why is Item 19 Important?

Item 19 is more than just a rundown of financial performance. It is a powerful tool that aids in decision making, builds trust between the franchisor and potential franchisee, and sets realistic expectations.

Decision Making. A strong Item 19 helps franchisors attract and select the ideal franchisee candidates. It also ensures that a franchise brand is a solid investment, and helps the franchisee compare their options to determine if they are joining a successful business.
Trust and Transparency. Item 19 signifies financial transparency and creates trust between the franchisor and potential franchisee. It shows that a franchisor knows their numbers, and has no issue disclosing them. The more information that can be provided on financial performance, the better. This transparency creates strong relationships between franchisors and their franchisees.
Realistic Expectations. Item 19 allows the franchisor to set realistic expectations for financial performance. While a franchise may be profitable as a whole, individual success can vary. An Item 19 that contains data-backed projections of how much potential franchisees could realistically make provides the clarity they need to make an informed decision.

How to Build a Strong Item 19

What do franchisors need to build a strong Item 19? Put simply, clear, accurate financials. The key elements that create a powerful Item 19 are:

Average Gross Profit
Average Gross Sales
Cost breakdowns of goods and services
Operating cost insights
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Industry-specific data points (number of customers served, number of services provided or products sold, etc.)

These metrics provide financial insight into the franchise, clearly lay out the costs and obligations of a franchise purchase, and set realistic expectations for financial performance.

The amount of information franchisors are able to share in Item 19 largely depends on the information their franchisees deliver. How can franchisees provide reliable, accurate information to their franchisors? It comes down to consistent monthly bookkeeping.

The Necessary Resources

Franchises have unique needs when it comes to bookkeeping and accounting, such as tracking royalties and advertising fees, and sometimes, multi-currency support. All of it needs to be properly recorded in accounting software so monthly reports can be produced. Franchisors need a team of trusted experts with knowledge of the franchise space, so they can receive accurate data from their franchisees.

Consistent Monthly Bookkeeping. In order for franchisors to build a strong Item 19, they need up-to-date financial records for each franchise location. A bookkeeper can provide visibility into financial performance on the franchisee’s behalf, so franchisors have access to the information they need across all locations.

An online bookkeeping service is particularly helpful in this situation. Instead of hiring multiple bookkeepers, the franchisor can rely on a single provider who delivers uniform services for each location – no matter where they are located.

Accurate, Up-to-Date Reports. Accurate monthly reports are crucial to creating a solid Item 19, as all information is legally required to be accurate, truthful, and backed by numbers. A well-documented financial history showcases franchise growth and profitability and helps franchisors create a compelling Item 19.

Expert Bookkeeping for Franchise Businesses

xendoo Online Bookkeeping is a leading provider of online bookkeeping and accounting services for franchise businesses. Our franchise-focused team provides franchisors with timely report delivery and visibility into financial performance for each location.

Are we a fit for your franchise? Let’s talk! Schedule your free consultation today.

How To Find The Right Online Accountant For Your Business

September 10, 2021/in Accounting, Bookkeeping, Franchises /by Team

hiring a bookkeeper

Every small business owner should have access to an accountant. A small business accountant can provide guidance at every stage of your company’s development, and they can be invaluable when it comes to tax preparation, succession planning, and more. An online accountant can also deliver these services at a price that fits the limited budget of modern business owners.

But finding the right accountant is about more than just cost. Today, we’ll go over the best features offered by online accountants for small business owners so that you can find the right fit for your company.

What to Look for in an Online Accountant

What should you expect when you’re searching for online accountants for small business needs?

We’ve narrowed it down to these five essential features:

Industry Experience

Online accountants are not hard to find, but the key is to find an accountant whose skill set matches the needs of your business.

What type of business do you run? Are you a service provider, a retailer, or exclusively eCommerce? Is your business structured as a partnership, an LLC, or an S Corp?

These questions will be critical in finding the right accountant. You’ll need to partner with an online accountant who has clear experience in preparing tax returns and financial documents for companies that have a similar profile to yours.

Ideally, you’ll want an online accountant who has worked for companies of a similar size, revenue stream, and industry, too.

But don’t limit yourself to accountants that work with companies of your size. After all, most entrepreneurs entertain dreams of growing their businesses. This will also require the assistance of an accountant who has worked for companies that are larger than your own.

Finding an accountant who has experience in working with companies your size and larger can set you on a positive trajectory, knowing that your accounting help will scale with your business.

Access to Tools

The right accountant for small business owners might also need to have some experience in cloud-based systems, especially if your business relies on such software as part of your regular operations.

Before committing to an accountant, make sure to go over these requirements, and ask about their prior experience. This will ensure that you hire an accountant whose experience matches the evolving needs of your company.

Dedicated Support

Some business owners might feel nervous that hiring online accountants for small business needs will deprive them of the personal touch of a regular employee. This concern is perfectly understandable, but the right accounting firm can offer dedicated support in the way that you choose.

You need an online accounting service that relies on the latest and best accounting software. You want a provider who can minimize accounting errors and ensure a greater level of accuracy. This is especially important during tax season, where errors can lead to an audit and potentially result in penalties and fines.

Online software also means that you’ll be able to access your company’s financial information anytime, anywhere

xendoo provides a number of ways to keep clients connected to the process. Our online bookkeeping features include regular monthly reports that will keep you up to date on your cash flow and other financial data.

All of our dedicated professionals are available on your terms, whether that be through email, text message, or a phone call. We’ll work with you to communicate when you want and how you want, so you never feel out of touch with your online CPA.

Streamlined Processes

Modern business owners face a variety of financial needs, including:

Bookkeeping
Payroll
Tax planning
Tax preparation
Budgeting and planning
Personal tax preparation and filing

Partnering with online accountants for small business needs such as these can ensure that important processes are completed on time and with total accuracy.

Some business owners find that this is a welcome change from trying to juggle their own books. If you find yourself falling behind, some accounting firms offer catch-up accounting services, which can help you bring your books up to date.

xendoo, for instance, offers catch-up services to clients who have fallen months or even years behind.

By reconciling your books regularly, your small business accountant can ensure that you always have a clear picture of the financial health of your company.

Understanding your cash flow can be invaluable when it comes to long-range planning, and it can also save you the hassle and expense of penalties from filing a late tax return.

Streamlining your financial processes can even be helpful for obtaining future business loans. Usually, lenders will expect to see a report of your company’s financial status. By having recent reports relating to your income and expenses, you’ll be able to gain access to the funds you need to grow your business.

Strong Reviews

Once you locate a few online accountants for small business owners, you’ll want to narrow down the field a bit further. What are other customers saying about this accounting service?

While every accounting firm will boast of its strengths, the real evidence of its success is found in the testimony of its clients!

Typically, you won’t have to look far to find online reviews for an accounting firm, though the best online accountants will feature customer reviews and testimonials directly on their websites.

These reviews provide several relevant clues about the nature of the firm. First, it communicates that other business owners have benefited from the services of an online accountant. Second, skimming through these reviews may help you locate companies that operate within your industry, which helps you to know whether an accounting firm “gets” the unique needs and challenges you face.

You might also check to see whether an accounting firm has received any third-party awards or certifications. xendoo, for instance, is accredited by the Better Business Bureau and currently holds an “A” rating, the highest rating available.

Transparent Pricing

Finally, you want to find an accountant that offers transparent pricing. How much does an accountant cost? An accountant for small business owners will usually charge around $40 per hour, according to the Bureau of Labor Statistics, though it’s not uncommon to find accountants that charge significantly more.

An online accountant costs less than an in-person service, though you’ll want to make sure you find an accounting firm that offers transparent pricing.

By “transparent,” we mean that there should be no hidden fees. You don’t want to find yourself “stuck” with an online accountant who later demands additional money for their services. It’s vital that you know what to expect and how much you’ll be charged for financial services.

At xendoo, we offer several clear plans designed to fit the needs of your business. Our most popular plan will cost only $395 per month.

Many business owners find that partnering with online accountants for small business services can save a significant amount of money that would otherwise be spent on a full-time employee.

xendoo: Find an Online Accountant for Small Business

Where can you find an online accountant that ticks all these boxes? xendoo strives for excellence in all these categories, thanks to our dedicated team of professionals.

At xendoo, we provide a variety of accounting and bookkeeping solutions that can be tailored to the needs of your business.

Our friendly team of experts can straighten out your books, help you prepare for tax season, or provide the data you need for long-term success.

Want to learn more? Take us for a test drive by signing up for our free trial, and see how xendoo can bring your business even further into the future.

4 Signs Your Business Needs Online Bookkeeping

September 1, 2021/in Accounting /by Team

White male business owner, hunched over on his couch, staring at a pile of documents with a calculator in hand

Bookkeeping is Holding You Back

Business owners know their companies like the back of their hands. They are the head of every department and perform the work of multiple people. Of all the roles they play, our customers express that the bookkeeper role is their least favorite.

DIY bookkeeping holds business owners back from fully focusing on their business, which is why they decide to outsource it. Is it time for you to do the same? Let’s take a look at 4 signs that it could be time to hire an online bookkeeper!

#1. Bookkeeping Takes Time Away from Your Business… and Your Life

Assess what bookkeeping is costing you. Is it taking significant time away from running your business? Let’s break it down.

Suppose your time is worth $200 per hour, and you spend 10 hours per month doing your books. That costs you $2,000 per month just for bookkeeping! How much could you increase your sales? What else could you accomplish with that time?

How does bookkeeping affect your personal life? Before partnering with us, many of our customers were up late at night and missed out on time with loved ones due to bookkeeping. Whether you are closing sales or enjoying a family dinner, your time is valuable. DIY bookkeeping does not make sense when you could be spending your time on the things that matter to you.

#2. Your Books are Behind

It is impossible to evaluate your business’ financial health when your books are behind. Old data cannot predict cash flow, track your revenue, or indicate if you are profitable. Out-of-date books may prevent you from making the best financial decisions for your business.

A professional bookkeeper can bring your books up to date. Bookkeepers input and classify your monthly activity. They also generate vital monthly reports such as Profit & Loss statements and Balance Sheets, which display your total income and expenses and your assets and liabilities, respectively. They also provide actionable insight to the current state of your finances. xendoo bookkeepers reconcile your books weekly to keep you on track for future success.

Guess what! You are not alone. 25% of business owners are behind on their bookkeeping. Whether you are behind a few months or a few years, xendoo will bring your finances up to date in no time. To get your books caught up, click here.

#3. You are Not Sure if You are Doing Your Books Correctly

DIY bookkeeping leaves room for error, especially in the hectic life of a business owner. It is rarely anyone’s area of expertise (or passion). If your numbers are not adding up, do not wait until tax season to figure out why.

Bookkeepers connect the dots between your sales, expenses, and profits to ensure business growth. They know how to properly categorize your transactions, keeping your books compliant and ready for tax season. At xendoo Online Bookkeeping, you can rely on your dedicated team of finance experts to deliver accurate statements and financial peace of mind year-round.

#4. Tax Season is Chaotic

When tax season rolls around, do you drop off a 30-pound box of receipts at your accountant’s office and hope for the best? After all the back and forth, are you disappointed by your tax refund?

A chaotic and unrewarding tax season is a surefire sign that it is time to hire a bookkeeper. Your bookkeeper’s meticulous organization of your finances sets you up for smooth sailing during the most dreaded time of the year.

Best of all, because your bookkeeper understands your business and your finances, they recognize every opportunity to maximize your tax savings! You will never have to worry if you pay too much in taxes. With a bookkeeper on your corner, you can walk into tax season prepared – and you will walk out knowing you maximized your tax savings!

The Importance of Bookkeeping

Bookkeeping is vital to the success of every business. It provides insight into your financial health and drives your decisions. When your books are in order, you can strategize effectively and plan for growth. Keeping your books compliant and up to date is crucial throughout the year so that you are ready for tax season. Consistent bookkeeping habits maximize your deductions and make an otherwise stressful time, a breeze.

Bookkeeping is preventative care for your business. It puts a microscope on your finances to help you catch small problems before they snowball. A professional bookkeeper can take the stress of bookkeeping off of your plate so you can fully focus on running your business.

xendoo Does it for You

Bookkeeping does not have to be an uphill battle. Let xendoo’s expert online bookkeeping and tax team handle the hassles so you can have more time for what you love!

Schedule your free consultation today!

xendoo vs. Pilot: Comparing Online Bookkeeping Services for Small Business Owners

August 30, 2021/in Accounting, Bookkeeping, Taxes /by Team

White female business over pointing at a computer and speaking to her white male employee

Bookkeeping is critical to the financial health of every business, but business owners rarely have the time (or desire) to manage it themselves. To take their time back, many business owners choose to outsource their bookkeeping and accounting. There are many options available, from traditional CPAs to tech-savvy online companies. So, how do you choose the right financial partner for your business?

Today, we will take a look at two popular providers: xendoo Online Bookkeeping and Pilot. Both provide quality online bookkeeping and tax services, but there are some key differences in features that will help you weigh your options:

Online bookkeeping and tax services
Accounting software
Accounting methods

In this blog post, we will explore these key differences so that you can make the best choice for your business!

Online Bookkeeping and Tax Services

Most of xendoo’s online bookkeeping packages are tax-inclusive, with prices starting at $295 per month. Plans can be paid monthly or annually, whichever works best for you. We reconcile your books weekly, and deliver your reports as early as the 5th business day of the month, depending on the plan you select!

Pilot offers three online bookkeeping plans, with prices starting at $599 per month, all of which are paid annually upfront. Tax services are available at an additional cost and must be purchased separately.

If you are behind on your bookkeeping, xendoo and Pilot also offer catch-up services so you can get previous months’ books in order!

Accounting Software

Most small business owners manage their finances in a variety of ways, the more software options, the better! That is why xendoo works with both Quickbooks Online and Xero. Depending on the nature of your business, one of these options will be able to meet your specific needs.

Pilot only offers Quickbooks Online. If you are already working in Xero, they will have to switch you to QBO and leave your history behind. While QBO is a solid option, it may not be the ideal choice.

Accounting Methods

Accounting methods determine when income and expenses are recorded in your financial statements. They affect how cash flow, profitability, and business performance are tracked. The method used depends on your business and tax needs.

xendoo and Pilot use different accounting methods, with one exception: cash basis accounting. Depending on the plan you select, xendoo will use a cash basis or modified accrual basis. Pilot defaults to an accrual basis on all plans, but you can request a cash basis.

Cash basis accounting is a method in which revenue is reported only when cash is received, and expenses are noted when money leaves your account. It is often used by small businesses because of its straightforward nature.

Accrual basis accounting records income once it is invoiced to the customer and records expenses once the bill is entered (even if it has not been paid yet). This is a complex method, used mostly for businesses with $5 million or more in annual revenue.

Modified accrual basis accounting combines the best aspects of accrual and cash basis. It recognizes prepaid expenses and offers accrual for inventory and other Balance Sheet categories.

As accrual basis accounting is the most complex method, it is the most expensive and time-consuming method to complete. Even if your business needs to account for inventory and accounts payable and receivable, the accrual basis method may not be necessary. The modified accrual method can meet your business needs in a cost-effective and timely manner.

We recommend speaking to your accountant to determine the ideal accounting method for your business.

Try Us Out

xendoo offers a free trial in which we complete your bookkeeping from the previous month, plus the Profit and Loss Statement and Balance Sheet, so you can experience the xendoo difference for yourself. If you decide that xendoo is not the best fit for you, we will gladly connect you with others in our network so you can find your ideal financial partner. The data and reports are yours to keep in your QuickBooks Online or Xero account. If you choose to partner with us, you will have access to a comprehensive customer portal, with data-driven visualizations, and your financial reports at your fingertips 24/7.

At this time, Pilot does not offer a free trial. They do weekly demos where business owners can tour the platform and ask questions.

For a brief summary of how xendoo and Pilot compare, check out the chart below:

Who is Right for You?

It depends! Every business owner needs financial visibility into their numbers for effective decision-making and growth. If you are looking to simplify your books, xendoo is the best choice for timely, accurate, and worry-free bookkeeping, accounting, and tax services for you and your business.

xendoo is a team of real people that care about you and your business. Allow us to handle the hassles while you put more money in your pocket, reduce your stress, and get back to doing what you love. So, are we a fit for your business? Let’s talk! Schedule your free consultation today!

How Do I Pay Myself and My Taxes as a Sole Proprietor?

August 24, 2021/in Accounting, Bookkeeping /by Team

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

Where to Begin?

Businesses are created because business owners have a passion that needs to be pursued. They may be changing the world and even their own lives. Payroll, however, is most likely not their passion. Yet, every business owner faces the unique challenge of figuring out how to pay themselves.

Paying yourself as a sole proprietor can feel daunting. How much do you pay yourself? How do taxes factor in? Unless you have a side hustle as a financial advisor, it can be difficult to know where to start.

Self-Payment, Simplified

Breathe a sigh of relief. Paying yourself as a sole proprietor is not as complicated as it seems. Tax filing is simplified too! In this blog post, we will walk you through paying yourself as a sole proprietor!

How Do I Pay Myself?

You can pay yourself as a sole proprietor by taking an Owner’s Draw. An Owner’s Draw differs from a regular salary in that you can take money from your earnings as needed. Depending on how well your business is doing, you can take more or less, allowing for flexibility in your payments.

If your business is profitable, start by subtracting liabilities (any debt your company owes) from assets (items of value the company owns that will provide benefit in the future). The remaining amount is referred to as ownership equity, which is what you will take your draw from. Once you decide on an amount to take (more on that in a moment), 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 the business. Sole proprietors must balance how much they need to support themselves and what their business needs to thrive.

How Much Do I Pay Myself?

To set an appropriate payment for yourself, you have to determine your projected profits. To estimate how much you can draw and when you must:

Set up a separate business bank account. As a sole proprietor, you do not need to incorporate or register your business. The business name will default to your legal name unless you file a DBA (doing business as), which allows you to operate under a different name. Once your DBA is set up, you can open a business bank account. This ensures that your personal and business expenses stay separate, and creates an accurate picture of your business’s finances.

Keep your books up to date. Keeping detailed records of your income and expenses will help you identify when cash flows into and out of your business, and how cash flow may change over time. An online bookkeeping service will be able to take this task off your plate, saving you time and stress. You will also receive monthly reports that give you actionable insights to help you make the best decisions for your business.

This will help you determine your projected profits and when you should take your draw. You can start out by paying yourself only what you need to meet your basic needs until your business breaks even. From there, you can increase your pay to your “market value”. You can increase your pay again once your business is producing consistent profits. How often you choose to draw is up to you. Some may follow a bi-weekly schedule, others may draw as needed. It ultimately depends on your personal preference.

How to Pay Your Taxes

Sole proprietorships are considered pass-through entities, meaning the IRS views your business, personal assets, and liabilities as one and the same. Because of this, you are only required to file a personal tax return. Income and expenses related to your business are accounted for on your individual Form 1040, Schedule C.

While the Owner’s Draw is not subject to federal or state income tax, it is also not expense-able. It will appear under the total net income of the business, which is taxable. Be aware that sole proprietors are required to withhold self-employment taxes, which contribute to Social Security and Medicare. As of right now, the self-employment tax rate is 15.3%.

So, how can you maximize your tax savings? Business tax preparation and filings are included with almost all of our packages! Your online Tax CPA takes care of filing your Schedule C that goes along with your personal tax return to itemize business deductions.

xendoo is Here for You

The good news is that you do not have to figure it all out on your own. xendoo Online Bookkeeping is here to help! We move at the speed of business, so you can make informed decisions faster – like deciding how much you should pay yourself as a sole proprietor! Get started with a free trial.

Ready to take the next step? Schedule a free consultation with a xendoo accountant today!

Want to learn more? Learn the difference between the business entity types here.

Six Signs You need to Hire a Bookkeeper or an Accountant

July 26, 2021/in Accounting, Bookkeeping, Small Business Tips /by Team

hiring a bookkeeper

Owning a small business requires you to make a constant stream of decisions, one after the next, day after day. While you might have little trouble making decisions on the things that are core to your business – like what products to stock or what services to offer – other choices are outside of your comfort zone.

How to deal with accounting is a choice that you might not want to face, but you have to deal with nonetheless. This is an essential function for all businesses large and small. Should you hire a bookkeeper or hire an accountant? Or should you do it all yourself? Making the wrong choice here won’t necessarily sink your business, but it sure can make things a lot harder. Many business owners consider handling accounting on their own to cut costs, but the 8 ways DIY accounting costs more than it saves highlights how this decision can actually be more costly in the long run.

Six Signs You Need a Bookkeeper or an Accountant

As you read through this list, think about your own business and how these points apply to your operations. If a few of them hit close to home, it might be time to outsource this important task.

#1 – It Takes Too Much Time

No matter how committed you are to seeing your business succeed, there are only so many hours in the day. You can’t make more time for yourself, so at some point, it is going to be necessary to offload some of your duties. Bookkeeping and accounting are great targets for outsourcing, as they can be extremely time-consuming and they probably aren’t your area of expertise. Keep track of how much time you are spending using your bookkeeping software each month and it will quickly become clear if outside help is required.

#2 – Your Books Are Always Behind

Most small business owners are familiar with the stress that comes along with being behind on the books. When your bookkeeping lags behind, it’s hard to make the right decisions to guide your business forward. After all, you won’t have accurate, up-to-date information available, so what will your business decisions be based on? Struggling to keep up with the books isn’t a sign that you are a bad business owner – it’s a sign that you have too much to do and you need some help.

#3 – You Have Bigger Goals

If business is going well and you have been thinking about expanding, it’s unlikely that you will have time to grow your business and keep doing the bookkeeping at the same time. Also, your books are going to get more complicated as the business gets bigger, so bringing in professional help can make sure they remain accurate and reliable.

#4 – Sales Are Strong, Profits Are Not

One of the most frustrating situations for a small business owner is when sales are going strong yet profits don’t seem to be rolling in as they should. Accurate accounting is the best way to solve this problem. Having detailed records of all of your financial transactions will give you the clear picture you need to figure out what changes are needed to optimize profits.

#5 – Google is Your Accountant

Is your search history filled with accounting-related questions? Whether you are trying to correct your QuickBooks mistakes or you’re just trying to get a better grasp on how accounting works, countless hours can be wasted with search after search. Don’t go down this rabbit hole day after day when a better solution is readily available. Also, don’t waste time trying to settle the debate of bookkeeper vs. accountant for your business – both roles are important, and both can be covered by an outsourcing service like xendoo.

#6 – Cash Flow Problems Are Constant

Small businesses often struggle with cash flow. If your business is healthy overall but you are having trouble meeting your cash flow needs, this is another area where a qualified accountant can help. It’s one thing to keep accurate books, but it’s another thing entirely to understand those books and what they mean for how your business operates. With an accountant on your side, you can get insight into the bigger picture and finally understand your cash flow once and for all.

A Simple Solution

Once you reach the conclusion that a bookkeeper or accountant would be a big help for your business, one question is sure to come next – where do I turn? xendoo is the easy answer. With our bookkeeping and accounting services, you’ll spend less time deep in the books and more time serving your customers. Whether you don’t have the time to keep up with the books or you just aren’t sure that you’re doing it right, xendoo can help. Get in touch today to learn more or to get started with our services.

Online Bookkeeping Services for Small Business Owners

July 26, 2021/in Accounting, Bookkeeping /by Team

Black male consultant points to a laptop screen with bookkeeping plan details. He is discussing options with a potential customer, who is out of frame.

Author’s Note: This post was updated on February 23, 2022, with new information, links, and resources.

Bookkeeping is vital to the success of every business, but business owners rarely have the time (or desire) to manage it themselves. Many small businesses save time by partnering with an online bookkeeping and accounting team. However, there are some key features to consider when selecting online bookkeeping services for your small business.

What Is Online Bookkeeping?

Online bookkeeping, also called virtual bookkeeping, means managing your bookkeeping remotely.

A virtual bookkeeper works directly with your business to manage your company’s accounting and financial reporting. Typically, your company’s financial activity, records, and transactions will be stored in cloud-based accounting software that you are able to easily access.

An online bookkeeper will initially undergo a consultation with you to understand the needs of your business and your regular financial activities. Then, they can set up a system to generate sales invoices, manage accounts payable, and process payroll. With the right online bookkeeper, you can regularly view your company’s financials and make strategic business decisions. How do you choose the right financial partner for your business?

There are many options available, ranging from traditional CPAs to tech-savvy online providers.

Today, we will take a look at two popular options: xendoo Online Bookkeeping and Bench. Both provide quality bookkeeping and tax services, but there are some key differences in features that may tip the scale for you:

Online bookkeeping and tax services
Additional services
Accounting software
Free trial

In this blog post, we will explore these differences so that you can make the best choice for your business.

Online Bookkeeping Services and Taxes

xendoo’s online bookkeeping and tax packages start at $395. We reconcile your books weekly, and deliver your reports as early as the 5th business day of the month, depending on the plan you select.

What Services Do Virtual Bookkeepers Offer?

You may also want to consider what other financial services your business needs. A virtual bookkeeper offers a wide range of services. These may include any of the following:

Cash Reconciliation

Your company may have many cash transactions throughout the month. These can include payments, receipts, and other items. A virtual bookkeeper can connect your cash and lines of credit with your accounting system to record transactions as they occur automatically.

Accounts Receivable Management

As a business owner, you likely don’t have a lot of time to chase down overdue payments from your customers. Instead, your focus is on growing and managing your business. A virtual bookkeeping service can assist you with client account collections and ensure that any significantly overdue accounts are brought to your attention immediately.

Accounts Payable Management

Rather than relying on what you think you have incurred in expenses for the month, you can allow a virtual bookkeeper to record actual and expected expenses. This approach allows you to strategically plan your outgoing cash flow for the upcoming weeks.

Cash Flow Management

Cash flow management tracks the money that you have coming into and out of your business. Online accounting services should provide a clear picture of your cash flow. Simply put, money coming in from revenue should be greater than money going out for employee pay, vendors, tools, and other expenses.

Financial Reporting

Accurate financial reports are an important part of the monthly accounting process. xendoo’s financial reports include profit and loss statements and balance sheets. Plus, you can view reports from anywhere with the mobile app.

Tax Preparation

Frequently, online bookkeeping services will offer tax preparation services. This service can save you a lot of time and effort. You can also make sure that your tax return will be completed by someone who understands your company and its financial performance.

What if you are behind on your bookkeeping? Outside of the ongoing subscriptions, xendoo and Bench offer catch up bookkeeping services so you can get previous months’ books in order!

Accounting Software

There are a number of online accounting software systems available. The most popular include QuickBooks Online and Xero. Both of these services are cloud-based, with modern user interfaces that are easy to interpret. They integrate with a number of third-party applications, which gives them greater functionality.

Prices for both systems are much less than you would pay for a full ERP. However, both systems allow for a wide range of reporting tools that are perfect for small business accounting.

They have the ability to reconcile cash accounts and provide accurate accounts receivable and payable reports. You may also generate a full set of financial statements for monthly reporting purposes.

The biggest difference between xendoo and Bench is the software used to do your bookkeeping and accounting.

xendoo works with both Quickbooks Online and Xero. The biggest advantage of these two programs is that you own the software. Working with Quickbooks Online and Xero, you will always have access to your financial records, no matter who does your bookkeeping.

Bench only uses its proprietary software, which does not integrate with any other accounting programs. If you ever need to leave Bench, your records will not go with you and your financial history will have to be rebuilt. If you want to be able to hold onto your data, Bench may not be the best choice for your business.

Try Us Out

xendoo offers a free trial. The online accounting team completes your books from the previous month and provides a Profit and Loss Statement and Balance Sheet.

What happens if xendoo is not the best fit for you? In that case, we will gladly connect you with others in our network so you can find your ideal financial partner. The completed books and financial reports are yours to keep in your QuickBooks Online or Xero subscription!

If you decide not to work with Bench, you can hold onto the financial reports, but you will no longer have access to the previous month’s bookkeeping as it is done in their proprietary software.

We’ve done a detailed xendoo vs Bench comparison, but we’ve highlighted key differences in the chart below:

*Some options may only be available on certain plans.

Who Is Right for You?

It depends! Every business owner needs their bookkeeping done, and they deserve the freedom to take their data with them. xendoo Online Bookkeeping works with industry-standard accounting software, ensuring you will always have access to your financial records and data.

Are we a fit for your business? Schedule your free consultation today!