Best Real Estate Accounting Tips for Agents and Brokers
Editor’s Note: This post was originally published in November 2019 and has been revamped and updated for accuracy and comprehensiveness. As the owner of a new real estate business, you’re probably aware of the unique characteristics of your industry. You take a personal interest in the real estate market, and you are excited to do great work for your clients, whether buying or selling pieces of property. But here’s the thing—running a real estate business is about more than making great deals. Accounting plays a major role in staying organized, managing taxes, and making smart decisions in any business. Why accounting is important for real estate businesses Setting up your real estate accounting system the right way will enable you to minimize the labor and stress involved in large-value transactions, extreme income fluctuations, employee pay formulas, and government regulations. These tips are for you if your business is: Real estate broker or agent Property management Building construction Residential sales Real estate investment management Another reason to keep accurate financial records is that you will probably have to show them to interested parties at some point. These entities include: Lenders Shareholders Creditors Government bodies (e.g., the IRS) There are many motivations to keep accurate books. And, contrary to popular belief, doing so does not have to be a major headache or hassle. With a service like xendoo, you can outsource your bookkeeping and tax work to focus on what you do best. For more information, check out this post on how to choose the right software to simplify your real estate accounting. Learn the Regulations Did you know that it is not just real estate transactions that local and state commissions oversee? These bodies also oversee the financial management of a real estate business, so playing by the rules is essential. Therefore, it’s a good idea to familiarize yourself with their requirements before making any decisions about your bookkeeping system. If the language is unclear, consult a professional accountant who specializes in real estate. It’s far better to spend extra time setting up your accounting procedures properly at the start than trying to untangle a mess when you run into trouble later on. Choose Who or What Will Do Your Real Estate Accounting For real estate professionals, the most viable options are: Hire an accountant as a full-time employee Outsource accounting services Accounting software used by management or other designated employees Hiring an accountant to work in-house is undoubtedly a powerful approach, but it will be costly and likely beyond the scope of many real estate businesses. On the other end of the spectrum, acquiring accounting software to manage the books yourself or amongst your team might be difficult if no one has proper accounting training or the time to dedicate to ensure your books are up to date. Even minor accounting mistakes can add up to bigger ones down the road. It’s the middle ground – outsourcing accounting tasks to a third party like xendoo – that will make the most sense for many real estate agents and brokers. This option keeps the costs down while still freeing up your time and utilizing experts to make sure the work is done properly. Select Your Accounting Method You have two choices: cash basis or accrual. Once you make a choice, you must stick with it, unless you submit a change request to the IRS. (Your first tax return shows the IRS which one you chose in the beginning — you don’t have to submit any forms for that.) Cash basis accounting is often preferred by small businesses because it’s easier to maintain, and it tells you how much money you actually have in the bank on any given day. Accrual accounting is usually the choice of larger companies because it portrays a more accurate portrait of your real estate business’s financial performance. Accrual accounting also allows you to better your long-term plan, which is helpful if you are thinking about expanding your business. Create a Chart of Accounts This complete index of your company’s transactions is essential for knowing how you stand. It will save you many hours of work when you need to measure performance, generate a report, locate past transactions, or prepare tax returns. The chart of accounts is organized into categories for easy sorting and retrieval. These categories can be anything you need. Under Assets, they might include Cash, Accounts Receivable, and Vehicles. Under Liabilities, you might have sub-accounts such as Accounts Payable, Loans, and Payroll. Keep Business and Personal Transactions Separate Don’t fall into the bad habit of pulling out your business credit card or checkbook to pay personal expenses — or vice versa. Without fail, it will cause more problems than it solves, including inaccurate books, tax mistakes, and cash flow issues. Real estate accounting shouldn’t be complicated, and this is one of the golden rules that can keep things simple—don’t make personal purchases with business accounts. Opening a separate bank account and a credit card strictly for your business will also make you look more professional to your customers, creditors, and investors. Fool-Proof Accounts Receivable Collecting payments that are owed is one of the biggest headaches for small businesses. Prevent delayed and missed payments with an automated invoicing system that: Sends invoices promptly Includes all the necessary information Offers several convenient ways to pay Tracks and contacts delinquent payers With an automated system in place, you’ll save time and avoid missing out on revenue that slipped through the cracks when you were too busy to track it down. Reconcile Your Bank Account Every Month Reconciling your bank account means checking that the transactions listed on the bank statement match what you have in your books. This process will identify any discrepancies so you can figure out why they happened and make a plan for avoiding those issues in the future. Usually, it’s something simple like a financial transaction that’s recorded in your books, but the bank hasn’t processed it yet. However, it could be
Recipe for Success: 5 Must-Have Ingredients of Restaurant Bookkeeping
Editor’s Note: This post was originally published in September 2019 and has been revamped and updated for accuracy and comprehensiveness. As a busy restaurateur, it’s easy to push restaurant bookkeeping tasks to the bottom of your priority list. After all, you have better things to do – right? Not so fast. Restaurant bookkeeping is an essential function for businesses large and small, as accurate, reliable numbers are essential for sound decision making. Also, there is the whole matter of taxes to consider. Safe to say, it’s better to get things right the first time with bookkeeping, instead of paying for your mistakes later on. To help get your restaurant accounting processes on the right track, we have assembled the following five tips. 1. Record Sales Daily It’s dangerously easy to fall behind on recording your sales. In fact, one of the reasons that bookkeeping for restaurants is often a mess is simply because owners and managers fall behind on basic tasks. To stay up to date, make a habit of copying or importing the sales from your POS system into your accounting software each day. What you’re aiming for are books that correlate with your bank statements. If you save up all those credit card charges for a weekly or monthly deposit, you’ll have a hard time doing analysis later. Ideally, your accounting software and POS system are integrated so that this is done automatically. At xendoo, we integrate your bank transactions with your books, so data entry is always up to the minute. Automating this process not only saves you the time of doing the work manually but also greatly improves accuracy. 2. Reconcile Bank Statements Every Month Yes, your bank statements should be reconciled every month. No, it’s not a good idea to let them sit around for 3, 4, 5, or more months. If you’ve forgotten to enter a payment or a sale in your books, but that payment or sale has been processed by your bank, it will be easier to correct the error if you catch it quickly. In an extreme case, not knowing how much you really have in the bank could lead to bounced checks. For every account that you receive a monthly statement — bank, credit cards, lines of credit, and loans — compare what their statement says with what your books say. If there are discrepancies, track down what happened and fix it. Of course, if you outsource bookkeeping to a service like xendoo, you can keep up with this task while keeping your personal schedule open for other responsibilities. 3. Pay Your Bills Promptly Vendors love customers who pay on time – or even early. Doing so will get you better deals and early payment discounts. On the flip side, being late will rack up interest charges. Staying on top of your bills, along with managing labor costs properly, are keys to keeping your financial house in order. To make sure this happens, you should have a reliable Accounts Payable process in place. Your A/P system will record invoices, pay bills online with a credit card or digitally generated checks, and automatically enter the expenses in your books. Record new invoices once or twice a week and make payments once per week to stay current. 4. Take a Close Look at Your Financial Reports Anyone can quickly glance at the bottom line of a financial report—but those numbers only tell a portion of the story. It’s the details that you need to understand, and those can be gathered if you take the time to read through your restaurant bookkeeping reports carefully. Your profit & loss statements and balance sheets can reveal crucial statistics for a restaurant business such as: Profit margin: gross profit ÷ total revenue Sales vs. cost of goods sold ratio Prime cost: ideally food + beverage + labor = 60% – 65% of total sales Compare current profit & loss to previous months and years Profit margins are notoriously tight in the restaurant industry. Having current information about your financial health is just as important as creating tasty food or offering great service. That’s why xendoo guarantees delivery of your P&L statement by the 5th business day of every month. 5. Nail Your Taxes. It’s worthwhile to track down as many tax tips for restaurants as you can find since taxes make up such a notable expense every month. One of the best ways to stay on top of taxes and avoid paying more than is necessary is to keep detailed, accurate records of everything that takes place in your business. Extra Ingredient: Outsource Your Payroll Payroll processing can be quite time-consuming, especially given the complex shift scheduling of most restaurants. It also comes with high penalties if you make mistakes in calculating payroll taxes, or don’t file the taxes on time. Payroll services are generally affordable, and can often be bundled with other accounting services. xendoo offers packages that include payroll processing for a budget-friendly flat monthly fee. Documentation is the name of the game in accounting, yet many restaurants – and businesses in other industries – fall short when doing their own bookkeeping. Working with xendoo is a big step in the right direction when it comes to documentation and record keeping. And, of course, xendoo can manage your tax filing as well, so there is nothing lost in translation when going from one service to the next. As an all-in-one bookkeeping and tax filing solution for your restaurant, tax season will no longer feel like the nightmare it once was.
How to Choose the Right Software to Simplify Your Real Estate Accounting
Editor’s Note: This post was originally published in June 2018 and has been revamped and updated for accuracy and comprehensiveness. Let’s face it, bookkeeping for a business in the real estate industry is complicated. That holds true whether your niche is sales, management, construction, or tax and legal services. Unlike some other types of business, you must deal with variables like fluctuating income, expenses, payroll, and property values, not to mention a heavy load of government regulations. All these factors must be accounted for completely and accurately to control profit margins, satisfy clients, and be prepared for tax filing. It’s a big hassle if you’re doing it the old-fashioned way, creating custom spreadsheets and writing down transactions in a ledger. However, the right real estate accounting software will do many accounting tasks for you automatically, leaving you free to focus on your core business. Real estate business payroll Processing payroll is a core function for any business. Using accounting software that takes some of the hassles out of completing payroll each period can save you time and keep your records accurate year after year. Your business may have one or more of these types of workers: • Commission • Salary plus commission • Salary • Independent subcontractors As it relates to real estate accounting specifically, choose software with a payroll feature capable of calculating commissions and tracking those amounts for income tax withholding. Similarly, you should categorize payments made to independent contractors, as those are typically not subject to withholding. Real-time remote work tracking Whether your people are out on a building site or showing homes to prospective buyers, a cloud-based management app will give them access to the office. At the same time, the office is tracking their activities. Info on everything from materials used to schedule changes can be updated and shared with everyone in real-time. A system that integrates all departments saves time and money for workers and managers. It also means that data from the field is incorporated into the books automatically, eliminating duplicated effort and potential errors for the accountant. The inherent challenge with real estate accounting is the many moving parts involved—everything doesn’t happen in the same place. Leveraging technology to automatically collect all of this information and incorporate it into a bookkeeping system is sure to lead to better results. Breeze through tax time The topic of taxes will come up again and again in the search for the right real estate accounting software—and for a good reason. Taxes aren’t only necessary because they are a legal requirement but also because they can represent such a significant expense. If your real estate business holds properties, for example, the property taxes alone can take a big chunk out of your bottom line. You can’t get away from paying taxes, of course, but you can use good accounting software and a tax filing service like xendoo to make sure you don’t pay more than your share. Streamline operational expense recording One of the best real estate accounting tips you can receive is to enter all of your transactions each day. Suppose you wait until a week before your tax return is due to get your books updated. In that case, you’ll be facing a major headache and the likelihood that there will be errors beyond tax filing. Keeping your figures up to date will also reveal when and where you’re losing money. This makes it easier to make sound decisions and avoid spending too much time on a losing endeavor. Consider accounting software that integrates with your bank, recording every transaction automatically and saving you a great deal of time and paperwork. Plus, you’ll be ready for an audit any day of the year. Many real estate professionals – and professionals in other industries – feel like they are constantly behind on accounting. The key to getting ahead of the game is not to spend more of your precious time on the task but rather to streamline it using the right real estate accounting software. Financial reports data access Using cloud-based software allows you to see your financial reports or share data with your accountant anytime, anywhere. And with no need for in-house servers to store your data, you’ll mitigate the risk of losing your data and bring down IT expenses as well. If you are currently storing all of the financial data for your business on a single computer in your office, you are playing with fire in terms of data loss risk. Turning to the cloud leaves you with off-site storage that is backed up and secure. Two noteworthy options Most real estate businesses won’t need to take their accounting software search beyond two of the market leaders—Xero and QuickBooks Online. Each of these options includes all of the features you are likely to need to keep the financial side of your business in order. And, as an added bonus when working with xendoo, we can provide you with a discount on either one of these two excellent accounting platforms. xendoo believes that cloud-based accounting is the right choice for any real estate business looking to increase growth while reducing inefficiencies. By automating bookkeeping chores, we eliminate the hassles, the mistakes, and more than half the costs of traditional accounting. Our real estate accounting service will leave your business ready at every moment to meet challenges and seize opportunities for success. [av_sidebar widget_area=’Blog Post Disclaimer’ av_uid=’av-om2w’]
7 Tax Tips for Independent Realtors
Editor’s Note: This post was originally published in November 2016 and has been revamped and updated for accuracy and comprehensiveness. As a self-employed realtor, you face some unique challenges when tax season comes knocking at your door. Since you don’t have taxes withheld from a regular paycheck, it’s up to you to lessen your tax burden by identifying all of the deductible expenses you incur throughout the year. Without careful planning, the tax bill you face when April rolls around can be quite a shock. But here’s the good news: there’s probably more you can deduct than you realize! By carefully assessing not only your properties but your business as a whole, you can hold onto more of your hard-earned cash at tax time. The following tax tips for real estate agents are a great place to start looking for valuable deductions. 7 Tax Tips for Real Estate Agents #1 – Mileage & Auto Expenses Realtors tend to spend a lot of time behind the wheel. The miles you rack up can include getting to appointments, taking clients to see new properties, and staging homes. Don’t also forget to include car maintenance like new tires, tune-ups, and even car washes! At tax preparation time, you will need to determine whether the standard or actual cost deduction will save you the most money. #2 – Office Space Whether you pay desk fees under another agent or work from a home office, the IRS allows you to deduct the cost (or a percentage of) your office space. Depending on your situation, this could be a rather significant expense over the course of a year, so you don’t want to miss out on this deduction. It’s important to note that you won’t be able to deduct both the desk fees you pay and the space you use at home for an office. Instead, you can only deduct one or the other – whichever is greater. Keep careful records of how much you spend on any office-related rent and purchases, so you have an accurate accounting of this component when it comes time to file. #3 – Marketing Business cards, website maintenance, mailers – any method you use to get your name out there is deductible as a business expense. Did you have a new logo designed? Maybe you purchased a mailing list? Those are included, too. Unfortunately, many agents simply fail to track these kinds of costs throughout the year. The money just goes out to various vendors and services, and a (digital) paper trail is not kept up. This can be an expensive mistake. Instead, by utilizing online bookkeeping for real estate agents, you can adequately record all marketing expenses along the way, saving them in one central location for use at tax time. #4 – Supplies & Equipment Think of all the tools you use to run your business: a nice camera to photograph properties, your computer, lockboxes, and staging decor. Did you buy a new vacuum to clean up that “fixer-upper” you were showing? Work-related cleaning supplies are also deductible! Once you start keeping careful track of everything you purchase, you might be surprised to find how many items fall into this category over the course of a year. #5 – Licenses & Fees As a real estate agent, you are all too familiar with the various fees you pay throughout the year. Fortunately, MLS, brokerage, and legal fees — to name just a few — are all deductible. You can even deduct professional membership fees — just remember that any portion of dues designated for lobbying or political advocacy is not deductible. And don’t forget about your state license renewal. #6 – Meals & Entertainment Do you take clients out for lunch after a morning of showing properties? Did you meet up with a prospective business partner for happy hour? Did you cater an open house? If you discussed business before, during, or after the meal, it could be deducted on your tax return. Using the right accounting software will make it much easier to track all of these types of casual expenses throughout the year. #7 – Professional Development Staying at the top of the real estate market in your area means you’re always looking for ways to expand your learning and stay on top of industry trends. Professional development events, along with any trade events, can be deducted. Also, books you purchase or publications you subscribe to can be subtracted from your revenues. Utilizing the services available from xendoo can help make tracking all of your business expenses a whole lot easier, so you can spend more time selling and less time worrying about next April. Get started today! [av_sidebar widget_area=’Blog Post Disclaimer’ av_uid=’av-om2w’]
How Your Small Business Can Prepare for Florida’s Minimum Wage Increase
In recent years, we’ve seen a reopening of the debate over minimum wage. Advocates are currently pushing for an increase to $15.00 per hour by 2026, with the door open to possible increases in the years after that. If you’re a worker, this is good news. A slight bump in the Florida minimum wage can increase the pay you receive, compensating for rising costs of living and other expenses. However, if you’re a small business owner, this wage increase can lead to tough decisions. Unless you’re a corporate giant, it can be tough to maintain your current roster of employees if you have to pay them more. In this post, we’ll help you to prepare for the coming changes in the Florida minimum wage. We’ll also provide suggestions about the best ways to navigate the road ahead. What is the Current Florida Minimum Wage? As of January 1, 2021, Florida’s minimum wage has increased from $8.56 per hour to $8.65 per hour. Tipped employees have seen a recent increase in their wages, rising from $5.54 per hour to $5.63 per hour. According to federal law and in some states, like Florida, employers may pay tipped workers less than the mandated minimum wage. This is called a “tip credit” as employees earn enough in tips to make up the difference. The “credit” is the amount the employer doesn’t have to pay. So for employers, the applicable state or federal minimum wage minus the tip credit is the least amount the employer pays tipped employees per hour. If an employee doesn’t make enough tips during their shifts to earn the hourly minimum wage, the employer has to pay the difference. Are There Plans to Change the Florida Minimum Wage After 2021? These changes will not stop in 2021. In November of 2020, Florida residents voted to raise the Florida minimum wage to $15.00 by 2026. The minimum wage increases will take place in a phased approach, raising the minimum wage each year on September 30. The proposed schedule will run as follows: $10.00/hour on September 30, 2021 $11.00/hour on September 30, 2022 $12.00/hour on September 30, 2023 $13.00/hour on September 30, 2024 $14.00/hour on September 30, 2025 $15.00/hour on September 30, 2026 While there are no specific plans after 2026, the minimum wage increase may increase based on changes to the federal Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region. How Should Small Business Owners Prepare for Florida Minimum Wage and Paid Leave Increases? If you’re a business owner, don’t panic. At xendoo, we understand the unique challenges facing today’s small business owners. Here are some suggestions on ways that your business can prepare for changes in the Florida minimum wage: Audit Your Expenses How much are you already spending on overhead, supplies, and operating costs? You may be able to cut a few corners with certain expenses or by eliminating wasted spending. The money you save can be channeled into your human resources budget. Determine Your Budget Using these increased wage figures, calculate your new operating budget. Forecasting your operating expenses will let you know what you’re dealing with and provide an idea of what your income needs to be to maintain your profit margin. Update Your Tech Stack A tech stack refers to the digital tools you need to run your business. An update can help you to automate your social media presence, streamline scheduling, or integrate automated forms into your company’s website. These improvements optimize your business without the need for additional personnel or work hours. Check Your Employee Classifications How many full-time employees do you need? How many part-time employees do you need? Of course, you don’t need to start considering downsizing, but at the same time, it can be helpful to consider what your future needs may be. Staff Accordingly You may find that in the future, you can get by with fewer staff members. Perhaps you can rely on part-time staff to fill roles that you currently staff with full-time employees. Gradually Increase Prices Your new operating costs will probably push you to increase your prices to maintain your profit margin. However, raising prices slowly will give your loyal customers time to adjust while still ensuring you get the revenue you need. Outsource Your Back Office Are you still handling your own bookkeeping and accounting? Paying an employee to handle these specialized tasks may put a strain on your operating budget. Instead, outsource these tasks to a company like xendoo. We can keep your company up and running without allocating your employees to do the job. Contact xendoo Today The increase in the Florida minimum wage might mean big changes for your business. At xendoo, we can help you stay ahead of the curve, adapt to these changes, and remain healthy and profitable. We understand the challenges that Florida small businesses face. We can provide small business owners with Florida bookkeeping services that ensure accuracy and efficiency so that you don’t have to allocate precious resources to maintaining the books. We can also help you with your Florida tax preparation, helping you to navigate the laws and changes that are likely to come your way in the immediate future. [av_sidebar widget_area=’Blog Post Disclaimer’ av_uid=’av-om2w’]
Pros and Cons of Putting Your Small Business on Amazon
Ecommerce is booming. Total revenue will reach nearly $4.6 billion in 2021 and grow at an annual rate of 4.6% over the next five years – reaching $5.6 billion by 2025. It’s easy to see why owners of small and medium businesses are asking themselves how they can get a piece of the eCommerce pie. One popular option—the Amazon small business marketplace. In the first quarter of 2021, 55 percent of the units sold on Amazon were from third-party sellers. For a company with sales of more than $300 billion, that’s more than pocket change. But what are the pros and cons? And is it worth the trouble? What is Amazon marketplace? The Amazon marketplace is an eCommerce platform that allows independent vendors and sellers to sell their goods on Amazon. The platform allows Amazon to forego the typical retail model, where it sources materials, then produces and stores each of its products until shipment. Instead, third-party vendors put products on Amazon and take care of the details, while Amazon gets a cut of the profits. What are the pros of selling on Amazon as a small business? There’s no question that Amazon is popular with small businesses: In 2018, nearly three-quarters of Amazon sellers had between one and five employees. And Amazon for small business does have plenty of benefits, like the following. You can reach a larger audience One of the biggest benefits of selling products on Amazon is that it can connect you with a wider audience: There are more than 200 million Amazon Prime members worldwide, and that’s not counting site visitors who don’t subscribe to Prime. That’s a huge audience for Amazon small businesses. Amazon can take a lot of the work off your plate Getting set up with Amazon marketplace is relatively easy: Just sign up and add products to the catalog. If you want Amazon to do more work for you, you can sign up for Amazon FBA, or Fulfilled by Amazon, which allows you to use Amazon’s warehousing, packaging, shipping, and customer service. Amazon has tools to help you sell In addition to Sponsored Ads – which actually make Amazon the third-largest digital advertiser behind only Google and Facebook – Amazon small businesses have access to MerchantWords, a proprietary keyword research tool. It uses actual Amazon data to help you optimize your product names, descriptions, and ads. Amazon provides technical support Amazon Seller Central is the platform’s support team for Amazon small businesses. It’s available 24 hours a day, although most sellers will be required to submit a request and wait for a callback. Still, most sellers receive a prompt response and are happy with the support they receive What are the cons of selling on Amazon as a small business? Amazon Marketplace sounds pretty great, right? For many small and medium businesses, it is. But it also has a few drawbacks you should be aware of. It can be expensive With charges for selling, referral fees, and Amazon sales tax, the cost of selling on the marketplace can quickly add up. Sellers without a monthly plan will pay 99 cents per item sold, while those with a Professional Plan pay $39.99 per month. If you opt for extra features, like Fulfilled by Amazon, expect to pay more fees. If you are looking to start selling online there are options to secure ecommerce funding. It can be time consuming Getting set up with Amazon Marketplace is easy – understanding how to be successful there can be more time-consuming. Diving into the tools Amazon provides and optimizing your product take time. Plus you’ll need to figure out Amazon bookkeeping and accounting, inventory management, and more. The competition is fierce There were 1.1 million active Amazon marketplace sellers in the United States alone in 2019. Amazon Marketplace is also incredibly popular with Chinese merchants, some of whom sell products at super-low, factory-direct prices. You’ll even compete with Amazon’s own private label brands. And fake reviews abound on the platform, with competitors using bots to write thousands of five-star reviews at once. It’s Amazon’s world, you’re just selling in it Some Amazon small businesses feel they don’t have much power over the selling process. There are reports of Amazon punishing businesses for selling at lower prices on other marketplaces, or pressuring them to sign up for extra services. Should I use Amazon for my small business? There’s no one-size-fits-all answer to whether you should sell products on Amazon. Certain categories, like personal care, beauty, and home goods, seem to have greater success on the platform. Businesses with high margins, who can afford to give Amazon its cut, can also do well. However, success with Amazon for small business depends more on your ability to figure out what works for you than on the type of business. xendoo can help dive into your books and help you make a sound decision on whether to sell on Amazon Marketplace. If you’re already a seller, we can ensure your books are in order – allowing you more time to focus on selling. [av_sidebar widget_area=’Blog Post Disclaimer’ av_uid=’av-om2w’]
Sunshine Tax: Taxes for Small Business in Florida
Florida is among the most tax-friendly states in America and has seen huge growth, especially in their tech economy. If you have a small or midsize business in the state of Florida, you may be shielded from many typical forms of small business taxes. But how can you know which tax laws apply to your business? This post will cover some of the more common tax questions related to taxes for small businesses in Florida. What Types of Tax Liabilities Are There for Florida Small Businesses? Florida business owners should be aware of the following: Corporations that do business in Florida must pay a 5.5% income tax Florida has a sales tax rate of 6% S Corporations are exempt from paying state income tax Sole proprietorships, partnerships, and most LLCs are exempt from state income tax Florida residents do not pay a state income tax Business owners should expect to pay federal income tax on business earnings Business conducted in other states may be subject to additional state laws Because so many businesses are exempt from Florida state income tax, many small business owners can benefit from having their business shielded from traditional tax liabilities. Below, we’ll go into greater detail regarding the rules for taxes for different types of business entities in the state of Florida. What Kinds of Taxes Can an S Corporation Expect to Pay in Florida? In Florida, S Corporations are not treated as traditional corporations when it comes to taxes. Thus, S Corporations do not pay the state’s 5.5% corporate tax. S Corporations are also exempt from federal income tax. How is this possible? With an S Corporation, the income earned by the business goes directly to the business owners. The owners are then expected to pay federal income tax based on the income they receive from their company. However, this income is not subject to Florida state tax. How Are Small Business LLCs Taxed in Florida? An LLC can be classified in one of two ways. Typically, LLCs are designated to be partnerships or disregarded entities. However, in this case, the LLC does not pay Florida income tax simply because it is not classified as a corporation. However, some LLCs can be classified as incorporated. If they are classified as an incorporated business, the LLC must pay the standard 5.5% Florida state income tax—or at least the 3.3% alternative minimum tax. LLCs classified as corporations will file Form F-1065 if one or more of its owners is a corporation. The actual business owner does not have to pay tax to the state of Florida for the income they personally receive from the business, except in those cases in which the LLC is incorporated. How Are Small Business Partnerships in Florida Taxed? Business partnerships can be classified as general partnerships, limited partnerships (LPs), and limited liability partnerships (LLPs). Regardless of these specific designations, none of these partnerships are required to pay state income tax in Florida. However, the partners of these businesses are required to pay federal income tax on the money they receive from these businesses, based on standard income tax rates. But because Florida does not tax ordinary income, business owners of partnerships are not required to pay Florida state income tax. What Tax Obligations Are There for Sole Proprietorships in Florida? Florida treats a sole proprietorship like a partnership. The only difference is that the state looks at the distributed income to one proprietor instead of many partners. Thus, like partnerships, sole proprietorships are shielded from traditional state income tax. This also means that the proprietor is expected to pay tax on any business income he or she receives, though only to the federal government. Since it is considered to be personal income, the individual does not pay state income taxes. What If You Have a Multi-State Business? How Are You Taxed? For most organizations, there are no required taxes for small businesses in Florida. However, if you own a business in Florida but earn money from another state, you are considered to have a nexus in those states. Therefore, in these situations, your business may be subject to the tax laws in those states. Because different states have different state tax laws, this can be confusing. If you earn money in multiple states, it may be prudent to review nexus rules to see how they may impact your business. Let xendoo Help You Looking for Florida bookkeeping services? xendoo can help. We understand the rules regarding taxes for small businesses in Florida and help you keep your books up-to-date. We can even help with Florida tax preparation. When you have questions, contact the experts at xendoo. [av_sidebar widget_area=’Blog Post Disclaimer’ av_uid=’av-om2w’]
Best Small Business Invoicing Practices
Is getting people to pay their invoice balance a challenging part of running your own business? You are not alone. According to a report in Entrepreneur, on average, small businesses had $84,000 in unpaid invoices. Waiting weeks and sometimes months for the checks to arrive and managing cash flow in the meantime can be daunting, to say the least. Since invoicing isn’t the most exciting aspect of your business, we want to share these tips for small business invoicing to help you get paid faster, increase client relations, and save time and money. What is an invoice? An invoice is a bill generated by a vendor that lists details and costs for goods and services provided. You’re likely already invoicing your clients, but don’t forget it is a legally binding contract. Making sure your small business invoicing system is up to snuff can save you headaches down the road. Setting Expectations Review your contract template and make sure you set expectations for invoicing. Likewise, make sure your invoice aligns with what is in the contract. Include payment schedule, estimated totals, and project milestones for payment. Consider your software As you strategize for creating, sending, and organizing your invoices, we recommend automating as much as possible. Your accounting software likely offers a way to do this. At xendoo, we use QuickBooks Online and Xero, which both have invoicing solutions and are known for being the best accounting software options. If you’re considering an invoicing program separate from your accounting, ensure the two integrate and consider online payment processing. Clients love having the option to quickly pay online, so make sure your software can integrate with payments. The easiest method is the simplest—at xendoo we offer solutions with online bookkeeping services, accounting, invoicing, and integrated payment processing all in one. Make sure you include these basics in your invoices Dates: Include invoice creation date. Consider including the date the good or service was delivered in the summary. Unique invoice number: Especially important when sending multiple invoices to the same client. Client’s P.O.: During the contract phase, find out if your client uses Purchase Orders (P.O.s). A P.O. is an agreement between a vendor and a customer that outlines the purchase details and is issued by the client before work is performed. Contact information for all parties involved: Include name, address, phone, and email for both companies’ project and accounting contacts. Payment terms: Terms indicate how long the client has to pay you and are determined initially. Net 30 (due in 30 days), Net 60, and Due Upon Receipt are popular terms. Summary description of goods/services provided: Make it concise! A common way to summarize is to refer to completed milestones that were outlined in your contract. SKU numbers: If your company uses SKU numbers for goods/services, make sure to include them. SKUs are helpful when you need a pricing breakdown and to determine what goods are taxable. Totals: Include the cost for each line item, subtotal, taxes or discounts, and the final total. Late/early payment details: Consider charging an added percentage if the payment is late and a discount for early payments. Method of payments accepted: Indicate all options for how to pay and details. Let them know who to make a check out to and where to mail it, and include a link to pay online. Be straightforward Make your summary description brief while ensuring the client will understand how you arrived at the total. Do everything you can to make it easy for your client to pay you. Keep your invoice to one page. Send invoices as soon as possible An invoice should be sent promptly when the project has been completed. Your client will use the invoice as the first step in processing your payment and likely has internal steps to take before paying you. Therefore, the quicker you send the invoice, the quicker you get paid. Give your customer multiple ways to pay your invoices Consider including a “Pay Now!” button on digital invoices. Clients love the convenience of online payment and often take immediate action. And these online payments can sync with your accounting software and help you avoid the “checks in the mail” scenario. If you are issuing an international invoice, indicate which currency you accept. The Art of the Follow-up Frustrations aside, you must send professional follow-ups when you haven’t received payment. Consider making a schedule for follow-up emails in advance and writing templates, customizing them for each client. This might make the process quicker and less frustrating. Also, consider using read receipts. They are a great way to track when your communication was received and when to follow up. When a few emails aren’t enough, call your client. A brief, friendly call gives you another opportunity to connect with your client. They are likely receiving invoices from multiple vendors. Stand out by offering a friendly, professional demeanor. Don’t Forget to Say Thanks! Once you’ve received payment(s), send a thank you note. It’s an opportunity to remind your client what a positive experience it was to work together. Communication Strategy and Branding Consider your invoice a branding opportunity! Xero and QuickBooks offer customizable options to add to your logo, colors, and fonts. If you’re planning to mail a thank you note, keep it on-brand, too. Streamlining your small business invoicing process can help you retain customers, increase cash flow, and increase stability. In addition, your customers will remember your professionalism and gratitude. Sign up for xendoo today, and let us help with bookkeeping and accounting for your small business. [av_sidebar widget_area=’Blog Post Disclaimer’ av_uid=’av-om2w’]
Why You Should Hire an Experienced Florida Accountant
As a small business owner, you want to keep your head in the game. After all, you started your business because you’re passionate about the work you do, and you want to connect your products and services to customers. So why are you trying to juggle your own books? We understand the pressures that small business owners are experiencing. Handling your own bookkeeping and accounting may seem like an easy corner to cut, but the chances are that you’ll pay for it in one way or another. You simply might not be able to give your books the time and attention you need—a problem that can snowball out of control and leave you with a disaster once tax season approaches. There are many online accounting services available. You can’t discount the value and simplicity that these services can offer, but how can you be confident that these services will understand your local business or Florida state law? Unfortunately, accounting software is similarly generic and can only take you so far in navigating the needs of local Florida businesses. An experienced Florida accountant can help you with more than just the books. So let’s explore the various benefits of hiring a Florida accountant for your business. A Florida Accountant Can Help with the Legal Structure of Your Business On paper, businesses are largely defined by their legal structure. A business can be a limited liability company (LLC), a partnership or corporation, or a sole proprietorship. These structures are based on characteristics such as: Liability Taxation Fees and forms Investment needs and opportunities Maintaining operations When you set up your business, how will you consider these factors? This is where an experienced Florida accountant can really be helpful. Choosing an accountant can help your business to navigate these questions and ensure that your business is optimized according to Florida business law. A Florida Accountant Can Keep Your Books and Records Up-to-Date and Accurate Perhaps the most obvious benefit of working with a Florida accountant is that they can keep an eye on your books. Ideally, an experienced accountant will monitor your books all year long (or at least at regular intervals), which is vital when it comes to tax planning. A Florida Certified Public Accountant Can Help You to Understand Sales Tax Laws Tax laws are notoriously complicated. Sales tax laws in Florida are no exception. Unless you have a degree in accounting, you could quickly start tearing your hair out trying to stay above board. And if you slip up, your business could face stiff penalties for violating tax laws or failing to meet deadlines for your tax returns. This doesn’t just affect you — it will also affect your staff and your loyal customers. What about an eCommerce business? Organizations that work with out-of-state customers create a business connection called a “nexus” that requires them to pay sales taxes. An experienced accountant can help you to navigate these twenty-first-century questions and spare you the penalties that might come your way for improper financial reporting. This is where xendoo can be especially helpful. Our online financial experts provide tax services to a variety of businesses, but our real advantage is our understanding of the Florida economic landscape. Businesses looking for bookkeeping in Naples or bookkeeping in Gainesville, for example, can take advantage of our financial expertise and local knowledge. A Florida Accountant Can Help to Expand Your Business Are you looking to grow your business? An accountant can help with that, too. Good accountants can distill your financial statements into a digestible summary of your overall cash flow. Understanding your company’s financial health can be a great first step to discovering growth opportunities. An accountant can point out ways to leverage your assets so that your business can grow and flourish without sacrificing the organizational strategies necessary for filing taxes. When certified public accountants handle the books, you can focus on the day-to-day operation of your business. We Handle the Books; You Handle the Business Ready to hire an accounting professional for your small business? As you’ve seen, there are many benefits of hiring an accountant. The average base salary for a Florida accountant is over $50,000, plus benefits. Most small businesses simply can’t afford to hire someone for the position. If your company needs bookkeeping services in Orlando, where can you turn? This is where xendoo truly shines. With our localized knowledge, we can provide expert Tampa bookkeeping services as well as almost anywhere in Florida. You won’t have to pay a full-time professional or contract with expensive accounting firms. Businesses grow when they are well-managed, and an accountant can handle the books while you run the business. When you’re ready to stop juggling the books and get back in business, contact us and see how our online services can help your business to thrive.
Tips to Increase Retail Sales for Your Small Business
This past year has been incredibly hard on retailers, especially small businesses. Retail sales plunged more than 20% between February and April last year, but with pandemic restrictions easing, the industry is starting to recover. As folks are venturing out more, it’s the perfect time to refresh yourself and your sales associates on tips to help increase retail sales and work towards building your business back up! Make your customers feel safe Many people are finding it tough to return to their pre-pandemic selves quickly and are still moving with caution. Help them feel at ease by reminding them they are safe in your shop. Take note of what protocols major retailers are following. For example, hand sanitizer can be available at the entry and the register. Use signage to share your mask policy, cleaning protocol, and any policies on the dressing room or how to use ‘tester’ products. The safer customers feel, the more likely they are to purchase, which will help increase your retail sales. Curbside pickup and local delivery Many stores began offering curbside pickup and local delivery in 2020, and most customers have become accustomed to these services. Keep in mind that today’s customers value convenience, so continue to offer these alternative methods moving forward. Train your staff While refreshing your team on cross- and up-selling, ensure they are up to speed on the basics, too. For example, do they need a reminder on any specials or promotions you offer? Ensure they are experts on your store’s products and are as informed as possible on your customer service expectations. Please encourage them to think ahead about how they might answer specific questions customers might ask, including all frequently asked questions. If your staff can put your customers at ease, they are more likely to purchase from you than your competitors. The savviest sales associates know how to cross-sell and up-sell. When a customer is interested in one particular item, the savvy salesperson suggests a corresponding item to go along with it. “If you like that, you will love this, too!” Up-selling suggests a more expensive alternative to the item the customer is already interested in buying. “Oh, that one you have is great, but have you seen this (more expensive) version?” If your customer leaves with an item they will enjoy more and feel like they got a great deal, they are more likely to be a repeat customer, which can further help increase retail sales. Merchandising Make the way you merchandise or display your products a priority. Keep your displays fresh and regularly move merchandise around the store, creating a sense of newness and having your regular customers look at products they may have otherwise passed. Feature new and seasonal products near the entrance. Keep everything clean and organized, and ensure it’s easy to navigate the store. Keep popular and inexpensive items near the registers to encourage impulse purchases during check-out. It would be best to keep up on your inventory accounting to ensure that those displays have enough product. Make it personal 80% of companies are more likely to purchase from a company that offers them a personal experience. So, how might your store offer a personal touch? Branded items are a great way to connect with your customers creatively – ensure your logo or taglines are on bags, receipts, and automated email receipts. Consider slipping an extra treat into shopping bags, too. Perhaps a small button or magnet with your logo and website. And the best way to get personal is to connect with your customers. Make it a priority to chat, remember their names, and take note of the types of products that interest them. Loyalty programs Customers love loyalty programs! Many small businesses still enjoy using classic “buy 10, get 1 free” style punch cards, but there are great digital-focused loyalty programs, too. Options like Loopy Loyalty and Smile.io encourage customers to shop with you again and engage with your brand. And get creative! These programs offer ways to customize the program to match your branding and speak to your customers. As you build your loyalty program, ensure you aren’t creating an unattainable goal. Earning $5 for every $25 you spend feels much more exciting than earning $1 for every $50, right!? Make time to analyze Small retail store owners are notoriously stretched for time, but it’s essential to set aside time to review what sales tactics are working and what aren’t. Look at the numbers and strategically think about what might have led to increases or dips in sales on any given day. This is where having professionals like the team at xendoo manage your retail bookkeeping can go a long way. You can quickly review the numbers through accurate and timely reports and determine the most effective sales strategies. It’s an exciting time for retailers to have a fresh start! Seize the opportunity to train your staff on new sales tactics, refresh your inventory offerings and displays, and get creative with new ways for your customers to engage with your brand. By outsourcing your bookkeeping and accounting to the team at xendoo, you’ll save time and money, and you’ll finally have the data you need to be more strategic about increasing retail sales and remaining profitable.