Tag Archive for: small business bookkeeping

When You Need to Hire a CPA

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Bookkeeper? Accountant? CPA? Which one does your business need, or does it need all three of them? Actually, it depends. Staying on top of your business’s finances is key for a small business owner, but you may need more than day-to-day bookkeeping. When you have more questions than a bookkeeper can answer, you’ll probably need to look into CPA services. Fortunately, Xendoo has you covered. Read on to see if online CPA services are best for you and your business.

What is a CPA?

It’s important to understand the differences between a Certified Public Accountant, CPA, and a regular accountant. A CPA is an accountant who has met specific state and education licensing requirements and passed the CPA exam. So, accountants with the title of CPA offer a higher level of financial analysis for you and your business and can act as a fiduciary on your behalf.

At that same time, an accountant can give you tax savings advice, such as when to make capital purchases, what you can deduct, and how to reduce taxes on capital gains. They can answer your questions about financial reports, cash flow, depreciation, and other accounting processes and identify opportunities to improve profit margin and business growth. Additionally, they can help set up business accounting systems, teach you best practices, keep you legal, and prevent missed deadlines and noncompliance penalties.

What does a CPA do?

Certified Public Accounts can be the financial strategist for Fortune 500 companies or advisors to neighborhood businesses.  CPA act as consultants on many issues, including taxes and accounting. Generally, online CPAs services include:

  • Prepare financial statements
  • Identify red flags and growth opportunities
  • Prepare and file taxes
  • Plan capital purchases and other investments
  • Strategize for scaling the business

When should I hire a CPA?

Whether you’re starting or growing your business, an accountant can help set up financial systems and analyze data so that you can make smarter business decisions. They have the power to forecast business success, diagnose financial health issues, and increase revenue—saving you significant money, time, and hassle. 

So while a bookkeeper focuses on the everyday tasks that maintain your business’s finances, accountants consider the big picture strategy to keep your business strong and growing, and a CPA has an even higher level of financial analysis to assure you’re making the right moves at the right time.

How much does a CPA cost?

Budgeting for bookkeeping and accounting services is tough for a small business. Traditionally, bookkeepers have charged an hourly rate; the more time they spend on your books, the more you have to pay. Typical rates are:

  • Bookkeeper — $30 to $90 per hour
  • CPA — $150 to $450 per hour

Or you may only need an accountant for an occasional project such as tax preparation.

  • Tax return (unincorporated) — $200 to $500
  • Tax return (incorporated) — $800 to $1,800
  • Financial statement — $1,000 to $2,500
  • Audit — $2,000 to $5,000

This is why accounting for a small business can become expensive. Plus, you may decide you only need an accountant for an occasional project such as tax preparation, financial statement, or audit, which costs a fixed amount that can add up, or you may not have allotted this in your end-of-the-year budget. A popular option with small businesses is an accounting service that charges a fixed amount every month. It’s easy to budget for, and it can cost less than half what you would pay an hourly accountant for the same amount of service. That’s why Xendoo offers a monthly pricing structure to our clients, charging a fixed amount every month. It’s easier to budget for bookkeeping and inline CPA services monthly and cost less than half of what you would pay an hourly accountant for the same service amount.

The right account professionals for your business

A small business accounting service will file your taxes, but you’ll need to have your bookkeeping in order so you can provide them with the data and reports they need. Xendoo’s online team of bookkeepers and CPAs will handle everything for you – they will manage all of your bookkeeping and accounting and will file the right return for you, right on time. Plus, Xendoo also takes care of all the filing that goes along with your tax return to itemize your business deductions.

Ultimately, it’s best for you and your business to have both a bookkeeper and an accountant. Making Xendoo your financial partner means joining a community of small business owners who love working with Xendoo’s bookkeepers and CPAs. Xendoo’s online CPA accounting services are ideal for small businesses because the more eyes looking out for your business, the better. Your dedicated financial team provides the perspective on your finances that can help ensure you’re able to anticipate problems and have the appropriate solutions ready to go. In gaining a complete picture of your company’s financial health, you can confidently grow your business.

10 Reasons Your Small Business Needs a Bookkeeper

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Are you behind on your books? Losing track of your expenses? Do you need someone who can help you file your taxes and stay compliant? 

A small business bookkeeper or bookkeeping service can support you with everything from simple bookkeeping to offering more in-depth tax filing services and business consulting. A skilled bookkeeper will save you time and money, set you up with systems that will simplify running a small business, keep you tax compliant and ready, and ensure you are always in-the-know when it comes to your financials.

Save time

Whether you’re filing your taxes or just doing simple data entry, it is incredibly easy to make mistakes when you aren’t a professional bookkeeper and these mistakes can cost you a lot of time. When it comes time to speak with a lender, make a big decision, prepare your taxes, or just wrap up your monthly reconciliation you might end up having to undo an entire month’s worth of data entry – or likely even more due to one little mistake. One simple slip-up in your books can have a huge ripple effect and cost a busy business owner like you a massive amount of time that would be better spent elsewhere.

Save money

Small business bookkeepers and bookkeeping services can save small businesses money in many different ways. Since one simple slip-up in bookkeeping can have a huge ripple effect and cost you a massive amount of time as you try to fix your problems – you know you’ll be saving money by trusting a professional with your books from the start. A very popular option with small businesses is an accounting service that charges a fixed amount every month. It’s easy to budget for, and it can cost less than half what you would pay an hourly accountant for the same amount of service.

Xendoo bookkeeping service plans come with a dedicated team of bookkeepers who are committed to helping you grow your business. Xendoo offers a variety of packages because we know not all business owners are created equal, so you can choose the package that works best for you and your business. A great place to start is the Hustle plan – it’s made for self-employed small business owners like you and starts at $195/mo. You’ll get expert bookkeeping and on-time financials – and you won’t stay up at night worrying about catching up.

Gather Information

Bookkeepers can help you with the big picture aspects of running a small business, such as reviewing options for how to finance your business. Whether it’s how to apply for loans and which ones to apply for in the first place, to exploring options for lines of credit, bookkeepers can help you navigate how to grow your business. Big picture bookkeeping services can include financial analysis, tax reporting, year-end tax projections, and so much more. 

Keep you up-to-date

When you don’t have up-to-date books during the year, you can’t use monthly or quarterly financial statements to guide your business decisions.

One of the most essential services a bookkeeper can provide for a business owner is to keep the company’s books accurate and up-to-date. Being able to quickly and easily review the status of your finances is crucial to short and long-term success for any business owner. When you know the health of your finances, you can make decisions quicker concerning everything from who to hire next, to what marketing strategy recently worked best. It truly informs all aspects of a healthy business. 

There’s no need to play catch up when you have a professional bookkeeper keeping you up-to-date every step of the way!

Keep you organized

A small business bookkeeper helps everyone stay organized. They help you categorize expenses correctly, reconcile your accounts, and even help you keep your business and personal accounts separate. In small businesses especially, you’ll often see bookkeepers paying bills, cutting checks to employees, invoicing clients, and making deposits. Just like a small business owner, a small business bookkeeper wears many hats!

Xendoo will keep you organized – we provide on-time monthly reports and data for your business. You’ll receive monthly balance sheets and profit and loss statements that you can easily access from your desktop or mobile, as well as weekly reconciliations so you have clear visibility of your business’s financial health.

Payroll

A small business bookkeeper can save you time and money by managing your business’s payroll – and many choose to use online payroll services such as Gusto. With Gusto, you can schedule payroll to run automatically each pay period, and even reimburse employees for out-of-pocket expenses at the same time. They take care of all the employee management involved in payroll, too, like setting up direct deposit, online onboarding, digital paystubs, and tracking vacation and sick time management.

Financial reports

Small business owners who have access to up-to-date financial statements are more confident and quick in their decision-making. Every kind of decision, from what kind of inventory and equipment to invest in, to who to hire next, is made easier when you have a recent profit and loss statement and balance sheet in hand.

As you grow you may want to borrow money or open a line of credit. Your lender will want accurate financial statements, and ideally, you aren’t scrambling to create them right then and there. With a professional bookkeeper on your side, you can quickly access all financial statements necessary as soon as you need them.

A small business bookkeeper can help you report sales taxes on time with a system that accurately tracks sales amounts, so you don’t accidentally overstate your sales and remit too much sales tax – a surprisingly common error that bookkeepers can prevent.

File your returns

A small business bookkeeper will set up a tax recording system for you and submit government reports – like employee tax and sales tax – making it simple for an accountant to regularly file your returns.

Work with accountants

Bookkeepers focus on the everyday tasks that maintain your business’s finances while accountants consider the big picture strategy needed to keep your business strong and growing. Understanding the difference between bookkeeping and accounting is crucial as they play complementary but distinct roles in the business environment.

Accountants can answer your questions about financial reports, cash flow, depreciation, and more. They can give tax savings advice, such as when to make capital purchases, what you can deduct, and how to reduce taxes on capital gains. They can identify opportunities to improve profit margin and business growth and keep you legal – preventing missed deadlines and noncompliance penalties.

Working with an accountant can be complicated, confusing, and expensive – but bookkeepers make it easy and save you money by being an efficient and knowledgeable partner for the accountant to work with.

Xendoo offers a dedicated bookkeeper that keeps monthly books up to date, plus you also have access to a CPA and an accountant. This allows us to offer tax consulting and yearly planning to all Xendoo customers.

Overall, contributing to the success of your small business

Every aspect of a company is affected by its finances, so having a clear and accurate picture of these records is key to a company’s health and success. Properly managing and organizing your small-business finances and operations will help ensure that you are hitting your profit goals, staying legally compliant, and will overall contribute to the success of your business. 

Final

Hiring a small business bookkeeper or bookkeeping service like Xendoo will keep your books organized and accurate so you always have easy access to the most up-to-date information on your company’s finances. It is invaluable to your business to have the administrative details taken care of, so you can focus on running your business and doing the parts that you do best – or even taking a day off! 

Pass-Through Deductions: What It Is and Who Qualifies

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

What Is the Deduction

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

What Is a Pass-Through Entity

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

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

However, there are some restrictions.

Taxable Income Restriction

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

Specified Service or Trade Restrictions

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

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

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

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

Employee and Property Restrictions

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

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

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

 

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

 

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