Tag Archive for: Florida Small Business

What Is Bank Reconciliation: Template and Step-By-Step Guide

October 12, 2022/in Accounting, Small Business Tips /by Team

This article was updated on October 19, 2022 with new links, resources, and templates.

Bank reconciliation may sound like a daunting task for a business owner, especially those without an accounting background.

As a business owner who already has too many tasks and not enough time, you may overlook or put off this important task. You need to know how much money in your bank you can spend. Bank reconciliation helps you do that.

Skipping out on bank reconciliation is not something you can afford to do. It is a necessary part of running a business. However, with these bookkeeper-approved tips and tricks, you can make bank reconciliation almost painless.

We’ll explain what a bank reconciliation is and why you need it for your accounting and bookkeeping. Plus, we’ll share a free bank reconciliation template.

What is bank reconciliation?

Many business owners check the balance in their online bank account or most recent statements. They assume that the number in front of them is the amount of money they have available to spend.

The problem with this approach is that it doesn’t account for the items that don’t appear on your bank statement yet.

Let’s say a business has a bank balance of $20,000. The owner writes a check for new equipment that cost $8,000. However, the supplier hasn’t cashed the check yet. So you need to factor it into your balance. The true balance in the account is not $20,000. It’s $12,000 since the $8,000 is already promised to someone.

If the owner forgot about the outstanding check and withdrew $15,000 from the company’s account, the check would bounce.

A bank reconciliation also helps you identify transactions that went through the bank but weren’t recorded in the company’s accounting system. As more businesses opt to pull in direct bank feeds for their companies, this is less of an issue. But even direct pulls from bank accounts can have glitches that leave some transactions unrecorded.

To reconcile the bank, your company should compare the transactions. With bank reconciliation, you compare your bank statement against the transactions in your accounting software to ensure that everything is recorded.

Bank reconciliation terms to know

There are several commonly used terms in bank reconciliations that you should be aware of.

Deposit in transit: Deposits that have been sent to the bank (either electronically or through a visit to the bank) but that have not been posted to the company’s account at the end of the period. This does not include payments expected to be received in the future from customers.

Outstanding checks: Outstanding checks are any checks written by the company prior to the end of the reconciliation period. They have not been cashed by the recipient yet.

Not sufficient funds (NSF): A check may be rejected if the account does not have sufficient funds to cover the amount of the check. An NSF check may show up as being cashed by the bank with a reversal of the amount when the check is flagged for NSF. Most banks charge fees for NSF checks and these need to be recorded as well.

Stale Checks: A stale check is one that has gone uncashed for a long time, usually over six months. Depending on the purpose of the check, the company may consider voiding it. Some checks, such as payroll checks cannot be voided and need to be remitted to state agencies.

How often should you do bank reconciliation?

While bank reconciliation can be performed at any time, it is usually a monthly task. Your bank generates a monthly statement anyway, so each month you should compare your bank statements to your internal accounting records.

The process of bank reconciliation is nothing more than confirming that what appears on your bank statements matches what you see in your accounting software. But, how does bank reconciliation work?

How To Do a Bank Reconciliation

Each month, your business will conduct several transactions, so you’ll see money coming in and going out. Those transactions should all be tracked in online accounting software like QuickBooks or Xero.

Also, you should see those transactions in your bank account (or accounts), usually a day or two after they occur.

The details of doing a bank reconciliation will vary from software to software, but the basic process is the same across the board.

1. Download your bank statement

The very first step of any bank reconciliation is locating your bank statement. The bank statement gives you the beginning and ending bank balances along with the activity for the period (which is usually one month).

2. Locate reconciliation in your software or spreadsheet

If you are using accounting software such as Xero or QuickBooks, there is a section of the software designed specifically for bank reconciliations.

Once you open up the bank reconciliation module, you will find a list of all the deposits and withdrawals that are in your books. If you are using a spreadsheet to reconcile your bank, create a new copy of your template for the current period.

3. Reconcile the deposits

If you have already recorded all of your deposits in your accounting software, you should be able to match each deposit to a line item on the bank statement.

Bank statements will list cash and electronic deposit separately. Deposits from different electronic sources (credit cards, Paypal, Zelle, wires, etc) will show up as separate deposits on the bank statement. It will also try to include a description (although it’s sometimes a bit vague) of the deposit.

4. Reconcile checks

Reconciling checks is the easiest step in a bank reconciliation. Your bank statement will list each check in numerical order. For each check that appears on the bank statement, you cross off the check number in your accounting software or spreadsheet.

Once you’ve checked off all the cleared checks in your accounting software, you can verify the total amount of checks paid.

5. Reconcile any electronic payments

Though most companies are diligent about recording checks written to vendors and employees, electronic payments are more often overlooked within the company’s records.

Electronic payments include ACH payments, merchant fees, bank fees, and interest payments. If any of these payments have not been recorded, they should be recorded during the bank reconciliation process.

6. Compare the cleared balance to the bank balance

Once you’ve checked off all the cleared checks, electronic payments, and deposits, you will have calculated a cleared balance for your books. This balance should match the bank statement at the end of the reconciliation period. If the balances don’t match, you’ll need to go back and investigate the source of the discrepancy. If the balances match, you’ve completed your reconciliation.

To make it even easier, we created a free bank reconciliation template here.

How to use a bank reconciliation template

First, to edit this bank reconciliation Google Sheet, you’ll need to go to “File”, then “Make a copy”. You’ll be able to edit the copy for your purposes.

The bank reconciliation template has three tabs.

Template – This shows you how to use the template. It has the instructions and explanation for each row of the bank reconciliation.
Bank Rec – This tab includes an example of bank reconciliation to show you how to reconcile a bank account.
Checks – In this tab, you can track checks written during the period of time you are tracking.

Update dates and balances

To get started, update the dates for the period you are reconciling. For simplicity, we’ll use the month of January 2021 as an example.

Start by inputting the bank balance as of December 31, 2020, into Cell B5 and Cell C5. Take the ending bank balance and put the figure in C9.

Continue grabbing numbers from the bank statement for the deposits (input into B6), checks that cleared the bank (input into B7), and other transactions such as electronic withdrawals (input into B8). Once you’ve entered these numbers, the template should calculate the ending bank balance in Cell B9. The calculated value in B9 should match the ending bank balance you input directly from the bank in C9. If these figures don’t match, go back and review the inputs in B5-B8.

Review your deposits

The next step is to review the deposits in your books. Identify any deposits in January 2021 that your bank has not received. This might include check payments or electronic deposits that are in pending status as of January 31, 2021. Total these payments and put the value in B10.

It often takes vendors a while to cash checks. You should have a list of checks written prior to January 31, 2021, and note which ones have not been cashed. (See the Checks tab of the workbook for an example of how to track this.) The total of these outstanding checks should be entered in C11.

In B12, you’ll want to identify any other pending transactions. These may include debit and ACH payments that are in pending status as of January 31, 2021.

After you’ve entered these figures, calculate the cash available in B13. These are the funds in your bank that are free for your company to spend.

How to record bank reconciliations

In your accounting software, each bank transaction should show up as “cleared” once the bank processes it. In electronic systems, once you’ve processed a bank rec in the system, a “cleared” tag will appear. For manual systems, you will have to manually identify the cleared transactions. See the Checks tab for an example of how to track cleared checks.

A journal entry

You may need to make journal entries to record missing transactions that are in your bank account but recorded (yet) on your books. A common example is the interest payment from the bank each month. You won’t know exactly how much interest the bank has paid you until you have your statement. As a result, you should record the interest income during the bank reconciliation process.

If your bank paid you $3.64 of interest in the month of January 2021, you would make the following entry:

1/31/2021	Debit	Credit
Cash in Bank	$3.64
Interest Income		$3.64

Other common entries made during the reconciliation process are electronic payments, deposit adjustments, and bank fees.

A bank reconciliation statement

When you complete the bank reconciliation process, you’ll create a statement.

A bank reconciliation statement is a summary of the reconciliation. It will highlight the reasons for any discrepancies between the bank balance and the cash balance in the accounting system.

A bank reconciliation statement may include:

Bank balance – The balance provided on the bank statement will be noted, along with the date of that balance.
Additions and deductions – Any deposits in transit or checks going out that have not yet reached the bank will be noted on the statement and adjusted from the bank statement balance.
Bank activities – Events that occurred on the bank side and that have not yet been accounted for in the company’s books will also be shown on the reconciliation statement. Bank fees and charges that you owe the bank should come out of the account.
Adjusted cash balance – This is where the bank reconciliation statement shows that the books are in order – the adjusted cash balances should match when all outstanding transactions have been included.

Why is bank reconciliation important?

It’s easy to take bank reconciliation for granted and believe that your accounts are going to match up properly each time. Hopefully, most of the time, they do, but that’s not guaranteed.

The bank reconciliation process spots issues that directly impact your business’s health and future. Examples of why your business needs bank reconciliation include:

1. Fraud

Perhaps the most important reason to reconcile bank statements regularly is to track and prevent fraud. If you see a deposit in your accounting software, but it never lands in the bank, where did it go?

You want to spot this kind of issue right away so you can look into it further. A legitimate, honest mistake may lead to a missing deposit—or someone could have stolen the money.

2. Missing checks and vendor payments

For example, if you send a check to a vendor, you want to be sure that they received that check in an appropriate amount of time. If a check still hasn’t cleared your bank a couple of weeks after you sent it, follow up to confirm that the vendor received it. Without bank reconciliation, you would miss it and may receive a past-due notice from that vendor.

3. Bank errors and financial statements

Though the main purpose of reconciling your bank is to calculate the cash your business has available, it also gives you the opportunity to verify that the bank has not made any errors. Since most banking is done electronically and through computer systems, bank errors are rare, but not unheard of.

Common bank errors include checks that clear for the wrong amount or incorrect deposits.

By checking the bank activity each month, you can contact your financial institution in a timely manner when there is still an opportunity to correct the error.

4. Cash flow management

Running a small business means ensuring that your company has the funds to continue its operations. A bank reconciliation lets you calculate the cash available to cover expenses. Simply checking the bank does not give you the full picture. The balance may not include payments (and deposits) that the bank hasn’t processed yet.

There are many reasons why an accountant is important, and performing regular bank reconciliations is high on that list.

Top tips for bank reconciliation

Before we wrap up this discussion, we’d like to pass on three quick tips to help make bank reconciliation a useful part of your accounting process.

Do it regularly. You should do bank reconciliations at regular intervals. For most small businesses, that is going to mean once per month – but you can adjust this schedule based on your needs.
Keep your books up to date. Performing a bank reconciliation will take much longer if you need to update your internal books from the previous month before you can compare those records to the bank statement.
Take your time. If performing the reconciliation on your own, set aside enough time so you don’t need to rush through the task. Doing it quickly is going to greatly increase the chances of a mistake.

Understanding the importance of bank reconciliation and making time in your schedule to complete this task are two different things. All the motivation in the world can’t magically open up time for you to spend going over bank statements and clearing up any issues.

This is where Xendoo comes into the picture. Bank reconciliation is just one of our many bookkeeping services, so we can take this and more off of your plate each month.

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

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

August 30, 2021/in Accounting, Bookkeeping /by Johanna Raspolich

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.

In Q4 2021, Xendoo will launch XendooPayroll, powered by Gusto.

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!

Best Counties in Florida for Small Businesses

July 22, 2021/in Small Business Tips /by Team

At Xendoo, we love small businesses. We believe in the power of small businesses to not only create a living for their owners and employees but also to make communities better.

Unfortunately, not all cities and counties are equally hospitable to small businesses. In Florida, there are some counties that offer more opportunities than others, and we’d like to highlight some of those locations in this post. This information can be helpful if you are planning to start a new business in Miami or Orlando, or if you are hoping to expand your current business into new locations. Let’s get started!

Plenty of Options

The good news here is this – as a prospective small business owner in Florida, you are going to have plenty of great choices available. Whether you want to set up shop in a small town or a metro area like Miami or Tampa Bay, you can take your time to select an ideal location for the products or services you plan to sell.

To select some target counties for Florida small business opportunities, we turned to this informative piece of research. Based on their Small Business Index calculation, the top five counties in Florida are as follows –

Miami-Dade
Monroe
Walton
Franklin
Broward

Just from this list of five counties, we can quickly see an example of the diverse possibilities available in this state. Miami-Dade County, of course, is a huge population center home to more than 2.5 million people. On the other end of the spectrum, Monroe County covers the Florida Keys and has fewer than 75,000 residents. The third entry on the list, Walton County, is another relatively quiet location, located in the Northwest corner of Florida with a similar population to Monroe County.

What Type of Business Do You Have in Mind?

The lesson so far is clear – both big cities and small towns can be friendly to small businesses in the right situation. But the right setting for your business may depend on what you will be selling and who you have in mind for your ideal customer.

For example, a new restaurant may need the population base of a big county like Miami-Dade or Broward to find its footing and build a following. The same could be said for businesses in the health and fitness space, as well as retail outlets.

Rather settle into a small town to run your new venture? Plenty of business types can find a home in such a setting, including eCommerce, healthcare, and other professional services. Of course, there are no hard and fast rules here, so it’s essential to create a detailed business plan and think about what location will give you the best chance to execute that plan.

Getting the Right Help

Few businesses are truly a one-person operation. Regardless of the type of business you plan to open, it’s nearly certain that other people will be involved in making this venture a success. So, picking the right Florida county for your small business will also involve considering the available pool of employees.

Of course, operating in a big county is going to give you more potential employees to pick from, but costs in these population centers are likely to be higher. Whether to keep costs down or to find help that can easily scale with you, consider outsourcing to off-site freelancers and other service providers for help with some tasks.

Here at Xendoo, we help small business owners by handling their online bookkeeping, accounting, and tax filing work. This is a great way to minimize employee costs while simultaneously freeing up some of your own time. You can apply this same outsourcing concept to other parts of running your business, as well.

Growing Throughout Florida

There is a lot to like about doing business in Florida, but perhaps nothing is as tantalizing as the tremendous opportunity to be found in The Sunshine State. Florida is small enough geographically for a small business to consider expansion throughout the state as a feasible and realistic goal. At the same time, the state is home to more than 20 million people, so the market is enormous. Starting with the counties that are welcoming to small business ventures may give you the footing necessary to one day find your business operating from Tallahassee to Miami and everywhere in between.

Conclusion

No matter which Florida county you decide to call home for your business, Xendoo is here to help. From bookkeeping and accounting services to tax prep and more, our team is excited to serve you. By taking these core functions off your plate, you will be free to focus on what it is you do best – deliver value to your customers. Contact us today to learn more.

A white, red-head female business owner stands proudly in her office, surrounded by packages

Top 7 Requirements to Secure Ecommerce Funding (Hint: They’re Not What You Think)

July 14, 2021/in eCommerce /by Team

In the past, online sellers often had to dig into their own pockets to fund their eCommerce business dreams.

Since small or growing businesses are technically high-risk investments, banks and other financial institutions were reluctant to part with their cash to help eCommerce sellers.

But times have changed.

Today, there is a growing number of funding options eCommerce entrepreneurs can tap into to make even their biggest, hairiest goals reality. Great news, given that 9.5% of businesses without financial capital say it negatively impacts their profitability.

Yet, many eCommerce sellers are stuck in their ways, seeking capital from red tape-heavy banks or going without any funding support at all. In fact, a staggering 50% of UK SMEs don’t look beyond traditional funders—and the tunnel vision can definitely cost them.

The good news? It doesn’t have to be this way.

To prepare you to face your next funding application with confidence, let’s jump into some of the requirements you’ll need.

***Ready for a flexible funding solution?* *Learn more about how we help eCommerce owners improve their cash flow.***

Secure ECommerce Funding the Simple Way

How to Fund an Ecommerce Business: Know Your Options
What Do I Need to Secure Ecommerce Funding?

1. Proof your business is on the right track

2. Know what eCommerce funding you need (and what for)

3. Showcase your good moral character

4. Get your paperwork in order

5. Show off a little

6. Clean up your credit, stash away cash, and get collateral (but not for the reasons you think)

7. Be mentally prepared to move on

The Blueprint for Getting Your Ecommerce Business Funded

How to Fund an Ecommerce Business: Know Your Options

Ecommerce funding has come a long way since its inception, and there is now a potential capital source to suit every business size and budget.

Here’s a quick rundown of the most common eCommerce funding options:

Working capital: The seller receives funding to cover gaps in cash flow for day-to-day business expenses like shipping costs, supplies and utilities, or invest in a new product line, ad campaign or additional inventory for peak sales seasons.
Cash advances: The seller receives a lump sum and agrees to pay a percentage of their monthly turnover to the lender until the advance is paid in full—note: cash advances aren’t loans.
Invoice factoring: The business owner sells their accounts receivables (due invoices) to a factoring company at a discount with fees added on top. The factoring company then releases the funds to them.
Crowdfunding: The entrepreneur pitches their idea on a dedicated online platform to the masses, and individuals can choose to invest. There are three kinds of crowdfunding: debt, donation, and equity crowdfunding.
Peer-to-peer lending: Usually facilitated through an online platform, the individual receives funding from a person instead of a financial institution.
Angel investing: The business owner sells a stake in their business to a high-net-worth individual in return for capital.

Are you struggling to decide between cash advances and working capital loans? We can help.

What Do I Need to Secure Ecommerce Funding?

Thanks to the flexibility of some of the newer, more modern funding options, today’s funding requirements for growing eCommerce businesses tend to be much more flexible than those of traditional funders.

While most alternative eCommerce funders won’t throw out your application for lacking things like management expertise, collateral, or credit, there are some standards you’ll have to meet.

Let’s break these down:

1. Proof your business is on the right track

Alternative funding providers are all about businesses with results that prove they’ve got a promising future.

No matter who you acquire eCommerce funding from, there’s one thing your provider will want to know: that they’ll get their money back plus a fair return.

While you don’t have to be the next overnight Amazon sensation to prove your worth, you must show you’re a viable business and a low-risk investment.

Here are some things you can provide to show your business is worth the investment:

Calculations that demonstrate your business has a high ROI, net operating income, and Debt Service Coverage Ratio (DSCR). (More on this in a minute 😉).
Documents proving your business consistently turns a profit.
Store reports showing sales volume and minimal product returns.
Statements demonstrating you have sufficient liquidity to repay a loan, plus its interest and charges.
Records showing you’ve been in operation for at least 12 months.

If you meet these requirements, securing funding becomes a win-win situation for everyone, and you’ll have better chances of getting approved.

Looking for a faster solution? Find out how you can pre-qualify for up to $1,000,000 in less than 5 minutes.

2. Know what eCommerce funding you need (and why you need it)

By the time you’re ready to start sending applications to prospective funding providers, you should have concrete answers to these things:

Your reason(s) for applying for external funding.
The intended purpose of the cash injection.
How much capital you need.

Not only will this help narrow down the type of funding you need (and suitable providers), it’ll also show you’ve done your due diligence.

Taking on funding is no child’s play, and mistakes in this area can cost you. Funding providers want to know you understand the risks involved and are prepared to take on this commitment.

Here’s how to show eCommerce funders you’re ready, step-by-step:

Create a documented breakdown of the capital amount you need for each task (adjusted with a buffer for unplanned bills).
Work out your return on investment (ROI). Are you making enough returns to make funding feasible? Note long term debt reduces ROI.
Analyse your net profit income. How healthy is it? Will you have enough liquidity in your business to operate once you start to repay successfully?
Assess whether any existing debts will inhibit you from making repayments. Calculate your Debt Service Coverage Ratio (DSCR) to help you with this task.

These are the three equations you’ll need:

1. ROI % = (Net profit) / Cost Of Goods Sold (COGS) * 100

I.e. $20,000 / $10,000 *100 = 200%

2. Net Operating Income = Revenue – Cost of Goods Sold (COGS) – Operating Expenses

I.e. $50,000 – $20,000 – $10,000 = $20,000

3. Debt Service Coverage Ratio (DSCR) = Net Operating Income / Annual Debt Obligation

Not a fan of calculations? Try this DSCR calculator.

And, there you have it! A summary of your most important figures that prove your eCommerce business is good to go.

💡 Top tip: For best results, submit funding applications during peak seasons. When your sales volume spikes, you’ll be able to cover the repayments with plenty left over. This extra wiggle room helps funders feel more comfortable funding your business, and removes the stress of worrying about repayments.

3. Showcase your good moral character

Most traditional funders will expect you to show good moral character—but some of the newer funding providers take a fresh angle on what this actually means.

Here’s what a funding provider might look for:

Overdue bills: Zero overdue bills (like student loans or credit card debt).
Missed payments: If you’ve gone rogue on payments to another funder, a credit check will reveal this to your prospective funder.

Note: If you have slipped on paying existing debts, don’t beat yourself up. According to Experian, US credit card debt stood at $756 billion. It’s a problem for many. Take active steps to get back on track with your payments and reduce your debt balance before applying for additional funding.

Get your paperwork in order

It may seem like an old-school requirement, but being organised can pay off big time in your eCommerce funding journey.

Not only can getting your ducks in a row make the application process go smoother and faster, it may also earn you brownie points with the people reviewing your application.

As the saying goes, ‘how you do one thing is how you do everything’.

Remember, despite your funder being a financial institution or VIP, you’re still dealing with people—so first impressions count.

Here are the docs you’ll need to prepare as standard:

Proof of address
Articles of Association (and the names of directors and associated persons)
Company bank statements
Financial accounts, i.e., Income Statements, Profit and Loss statements
Financial projections
VAT returns/ Tax returns
Business plan

Show off a little

To stand out, you need to get comfortable with a pinch of humble bragging. Opportunities to show off about your business only come around rarely, so when they do, grab it with both hands.

For example:

Do you have a business degree or business-related qualification(s)?
Have you worked in retail, sales, or management for X amount of years?
Is your team excellent at drumming up funds through pre-launches?

These details will let potential funders know you care about success and are willing to invest in yourself to excel.

Clean up your credit, stash away cash, and get collateral (but not for the reasons you think)

An increasing number of funding providers are choosing to overlook bad credit or a lack of assets at first glance—but there’s often a catch, and if you’re not careful you might end up with crappy interest rates, terms, or fees.

Having good credit, savings, and assets will put you in a better position to choose funding types and providers as well as negotiate terms. Plus, it’ll demonstrate to your potential funding providers that you:

Are in a stable financial position.
Have an alternative source of funding and aren’t in dire straits (desperation is never a good look).
Have a concrete backup plan should things take a turn for the worst.

Now you know why it pays to clean up your credit, here’s a game plan to go ahead and straighten up your finances:

Start your credit-building journey by getting yourself and your business a credit card to build credit history and pay off existing debts. The debt avalanche and snowball methods are the most commonly used systems for clearing debt fast.
Analyse your progress through a credit score tracker.
Build a saving pot for your business by putting away a slice of your profits into a business saving account. Treat it like a bill you must pay no matter what.
Finally, work on securing assets for your business, like better equipment and storage units. They’ll impress funding providers and help you optimise the running of your business.
If you hit any road bumps, motivate yourself by picturing how impressive you’ll look to prospective funders with savings and good credit. 💪

Be mentally prepared to move on

Having the relevant paperwork, collateral, and credit is essential—but it’s only part of the story to secure eCommerce funding.

So what’s missing? Resilience.

You’ll likely hear a lot of no’s on your journey, so be prepared to pick yourself up, keep your goal in sight, and move on to the next.

Compared to traditional loans, eCommerce funding is still a new game—that means funding providers are continuously adapting their rules and approaches, and many are yet to catch up with eCommerce’s speed.

Does this make life as an eCommerce owner more complex? You bet.

But don’t forget you have a ton of options that give you the advantage. If you’ve tried to secure funding through traditional avenues before, and it’s just not working—move on.

Your dream funding option is out there, and your perseverance will pay off. After all, only 20% of US-based small businesses don’t use external funding.

The Blueprint for Getting Your Ecommerce Business Funded

Thanks to a sharp rise in alternative modern solutions, business leaders can now overcome traditional funding requirements and opt for more flexible terms.

But you aren’t entirely off the hook. 🎣

Today, eCommerce funding is a whole new ballgame with a new set of requirements to fulfill.

So, learn what you need to get approved by each, then execute with precision. Who knows, you may end up with more funding options that you know what to do with!

At Sellers Funding, our application process focuses firmly on sales performance, not credit history or collateral. If you’re not sure which funding option is right for your business, we can help.

Partnering With Gusto Today Means a Better Tomorrow for xendoo Customers

June 30, 2021/in Small Business Tips, Xendoo /by Team

Sunshine Tax: Taxes for Small Business in Florida

May 31, 2021/in Small Business Tips, Taxes /by Team

Florida is among the most tax-friendly states in America. 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.

Two business woman smile discuss accounting at a desk

Why You Should Hire an Experienced Florida Accountant

May 19, 2021/in Accounting, Small Business Tips, Taxes /by Team

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.

A woman stress bites a pencil going over her Florida business taxes

How to File a Business Tax Extension in Florida

May 19, 2021/in Bookkeeping, Small Business Tips, Taxes /by Team

With so many day-to-day responsibilities that go into running a small business, such as inventory accounting, staffing, bookkeeping, and marketing, it can be easy to forget about the tax deadline. Yet, before you know it, their tax deadline came and went.

Without a filed return, you may be wringing your hands and asking yourself questions on what to do next. Can you even make payments after a down year? Do you have the necessary paperwork? What do you do now that they’ve missed their deadline? Chances are that you are not alone, but don’t panic. Florida allows businesses to file a tax extension, but you can’t wait too long. Putting it off even further could increase your penalties and put you in financial hardship.

We’ll walk you through the process for filing a Florida business tax extension, so you can keep your business moving without the added stress.

What is the Deadline for the Florida Business Tax Extension?

Different deadlines apply for federal and state taxes. Below are the deadlines for Florida’s state tax extension and the federal tax extension.

State Tax Extension

Tax returns for Florida businesses are due by May 1 (the 1st day of the 4th month following the end of the taxable year). However, Florida allows for a six-month extension, which would move the new deadline to November 1st.

Federal Tax Extension

2021 tax deadlines have the following due dates:

Sole proprietorships and single-owner LLCs: May 17, 2021
Partnerships: March 15, 2021
S Corporations: March 15, 2021
C Corporations: April 15, 2021

A Florida partnership or business has the option to file for a six-month extension, which would move the deadline to the following dates:

Sole proprietorships and single-owner LLCs: November 17, 2021
Partnerships: September 15, 2021
S Corporations: September 15, 2021
C Corporations: October 15, 2021

Be prepared to pay a deposit for the taxes you owe. You will also be expected to pay your first quarterly taxes for your business on this date.

What Forms Do I Need to File to Apply for a Florida Business Tax Extension?

The form you need will depend on the type of business you’re operating. For the Florida business tax extension, you will first need to complete the form for a federal tax extension:

Sole proprietorships and single-owner LLCs use IRS Form 4868
Partnerships use IRS Form 7004
S corporations use IRS Form 7004
C corporations use IRS Form 7004

Please note that if you are filing for a federal tax extension, you must also file for an extension with the state of Florida. However, an approved federal extension will not guarantee an extension with the state.

Can I Pay My Balance When I Submit an Extension?

Businesses will have the option to pay their balance when they file for an extension, but all businesses should be prepared to pay at least a down payment for the taxes that they owe.

How Do I Submit My Forms?

It’s faster and easier to file electronically. Form 7004 can either be submitted electronically to the Florida Department of Revenue through Florida’s “File and Pay” e-service system or through the postal service by mailing your completed form to the following address:

Florida Department of Revenue

5050 W. Tennessee Street

Tallahassee, FL 32399-0135

You do not have to send payment with your tax form, but you should be prepared to pay a deposit, as we already noted. Moreover, you should also account for possible late charges or penalties.

Can I File My Extension Electronically?

You may file Form 7004 through Florida’s “File and Pay” e-service system. Most tax preparation software can interface with this system, though if you have trouble, you may wish to contact your software provider or consider filing on paper.

What Happens if I Don’t Pay My Taxes?

If you pay your taxes late, charges will apply in the amount of 10% of your unpaid taxes. An additional 10% will accrue every month in which your taxes are unpaid, up to a possible penalty of 50% of your total outstanding taxes. Underpaying your taxes could also result in interest being applied, though this number varies.

If you don’t owe Florida taxes, you must still file for this fiscal year. Failing to do so can result in a late charge of $50 per month, up to a possible total of $300.

Can Xendoo Help with My Florida Business Tax Extension?

Our bookkeepers and tax specialists are well versed in Florida small businesses and can ensure that your taxes are filed correctly and on time. Plus, Xendoo’s financial experts can keep your records up to date and accurate, so you aren’t panicking but prepared when tax season comes around. If you’re looking for bookkeeping services in Orlando and the surrounding areas, Xendoo can help you to complete forms, meet deadlines, and more.

Xendoo offers tax and bookkeeping services all over Florida, including:

When you need help, we’re only a click away. Reach out to our team today!