5 Key Strategies to Maximize Savings
When it comes to taxes, small business owners often think about planning in January. But waiting until the new year to act could mean missing out on critical opportunities to save on 2025 taxes. According to Louis Goldenberg, Director of Tax at xendoo, effective tax planning begins in 2024. Taking action before the year ends ensures you maximize deductions, reduce liabilities, and start 2025 on strong financial footing. Here are five key strategies to help small business owners save on 2025 taxes while staying ahead of the game. 1. Spend Strategically Before Year-End to Save on 2025 Taxes Tax planning can help reduce your taxable income by taking action now. Since taxes are calculated on a cash basis, any 2024 expenses can directly impact your 2024 tax return. Here’s how to save on 2025 taxes through year-end spending: Prepay expenses: Pay for early 2025 costs, such as vendor invoices or office supplies, to offset 2024 income. Invest in assets: Purchase equipment or machinery before December 31 to take advantage of the 60% bonus depreciation available in 2024. For more tips on end-of-year expenses, visit our Tax Planning page. 2. Prepay Taxes to Avoid Penalties and Maximize Savings Avoiding penalties is an essential part of tax planning. Overlooked estimated tax payments can lead to unnecessary fines. Here’s how to stay penalty-free and save: Make your final 2024 payment: Submit by January 15, 2025, to avoid penalties. Pay 110% of last year’s liability: This ensures coverage even if your 2024 income increases. Managing tax payments proactively helps protect your business from late fees and interest charges. 3. Leverage Depreciation for 2025 Tax Savings Depreciation offers a valuable opportunity to reduce your taxable income. With the 60% bonus depreciation rate available for 2024, now is the time to make strategic investments. Purchase long-term assets: Buy tools or equipment to improve operations and qualify for deductions. Optimize your strategy: Take full advantage of depreciation to save on 2025 taxes. Planning asset purchases carefully allows you to maximize your savings while upgrading your business. 4. Hire Family Members for Tax-Free Benefits Hiring family members is a creative way to reduce your taxable income while supporting your family. Louis Goldenberg suggests these steps: Set up a family LLC: Pay your children under 18 for tasks like office work or organizing inventory. Stay below the tax threshold: Payments within the threshold are often tax-free for your child while deductible for your business. This strategy benefits your family and provides meaningful tax savings. 5. Optimize Inventory Management Inventory-heavy businesses can leverage inventory purchases as a tax-saving strategy. Deducting inventory expenses for 2024 purchases can lower your taxable income: Buy inventory in December: Deduct costs for supplies or stock you plan to use in early 2025. Review unsold inventory: Depending on your tax strategy, consider expensing unsold 2024 inventory now or deferring it to next year. Strategic inventory management can lead to significant savings and smoother financial planning. Proactive Tax Planning Starts Now Don’t wait until the new year to think about taxes. Small actions now can lead to big savings when you save on 2025 taxes. Staying organized, prepaying taxes, and leveraging deductions can help reduce liabilities and set your business up for success. Looking for expert help? xendoo offers personalized tax strategies and real-time insights to help small business owners maximize savings. Schedule a FREE 15-minute consultation today to start planning for 2025.
Why You Should Schedule a Tax Planning Call for Your Business Now (And Not in January)
Schedule Your Tax Planning Call Now | Maximize Year-End Savings As the year draws to a close, small business owners face countless priorities, from meeting financial goals to preparing for the new year. However, one task that shouldn’t be overlooked is tax planning. Schedule your tax planning call now to maximize year-end savings and avoid missing out on key opportunities to reduce tax liability. Proactive planning sets your business up for success when the new year begins. January to March Is for Tax Preparation, Not Tax Planning Tax preparation and tax planning serve very different purposes. From January to April, accountants focus on gathering financial documents, reconciling accounts, and meeting tax filing deadlines. This leaves little time for detailed planning. By acting now and scheduling your tax planning call, you can create strategies to lower your tax burden before year-end and reduce stress during tax season. Maximize Year-End Savings by Prepaying Expenses One of the easiest ways to maximize savings is to prepay certain business expenses before the year ends. Since taxes operate on a cash basis, spending in 2024 can lead to immediate deductions. Prepay upcoming costs: Expenses like inventory, equipment, or subscriptions planned for early 2025 can be deducted in 2024. Lower taxable income: This strategy keeps more money in your business. Scheduling a tax planning call now ensures you leverage every deduction to maximize your year-end savings. Reinvest Tax Savings Back Into Your Business Saving on taxes means more resources for growth. Tax breaks can return 20 to 30 cents for every dollar spent, adding up significantly over time. These savings can be reinvested to: Fund expansion efforts. Hire new staff. Upgrade essential tools and technology. By planning now, you ensure those savings work for your business. Schedule Your Tax Planning Call Now | Don’t Wait for January Proactive tax planning is essential to reduce liabilities and optimize expenses. By scheduling your tax planning call now, you can access expert advice and strategies that maximize your year-end savings. Waiting until January means losing opportunities to lower your tax bill and prepare effectively for the new year. Contact xendoo today to schedule your tax planning call and take control of your financial future.
The Backbone of Growth: Why Bookkeeping is Essential for Scaling Your Business
Small Business Owners are almost always forced to balance various aspects to ensure their operations run smoothly. Apart from taking care of day-to-day chores and making growth plans, business owners always have a lot on their plates. However, one aspect worth highlighting is bookkeeping. While often overlooked and sometimes seen as routine by small business owners, it is the foundation for growth. Bookkeeping is the backbone of growth for small businesses. This article delves into the role of bookkeeping in scaling up small businesses and the benefits of outsourcing this task to professionals like xendoo.com. Understanding the Importance of Bookkeeping In reality, bookkeeping is more than just keying in transactional data; it involves financial analysis to ensure that the business remains healthy financially. Good bookkeeping will ensure that small businesses have accurate, current reporting of financial statistics on a company. It provides a platform to record revenue, control outflows, maintain up-to-date liquidity, and make well-grounded decisions for the future of the business. Bookkeeping is essential and even more critical for small businesses attempting to grow. It lays the groundwork for the financial plan and the budget. Through these tools, one can dedicate time to expansion and areas affected by risks. There must be sufficient information for businesses to address their opportunities and overcome challenges with an enterprise account. Challenges Faced by Small Business Owners Although it is undeniably vital, keeping accurate bookkeeping records for small businesses can be challenging for many owners. The reality is that most small businesses face these challenges: limited time, resources, and skills are among the factors that make it difficult to have accurate and complete accounting records. An issue that small businesses also face is the intricate tax laws and regulations, which make things more complicated. All small business owners, however, have to be wary of poor bookkeeping practices and their consequences. Only complete or reliable financial documents may result in missed chances of taking tax deductions and due date penalties, discouraging the firm from pursuing the tax deductions. Moreover, it can also cause legal problems. It can also be challenging to raise funds or find a pool of investors; thus, the business may need to improve its growth mission. Outsourcing Bookkeeping: A Smart Solution Handing over bookkeeping tasks to a third party can be a very effective way for a small business with bookkeeping struggles to cope. Outsourcing provides the owners with the freedom to run the business and allows experts to manage the financial records. Money is conserved, and resources are utilized efficiently because the books are always up-to-date and accurate. xendoo.com helps small businesses run by providing accounting services according to their specific requirements. Whether you need help with daily bookkeeping duties or catching up on your past-due debt, xendoo.com is always available to help you. Their team of veteran professionals who are aware of the distinctive problems affecting small businesses and may even provide you with all the support that you need to grow. Along with expanding a business comes the escalating number of bookkeeping tasks. Delegating financial reporting to xendoo.com is a sure means of ensuring that the balance of your business’s size and efficiency remains. xendoo.com has helped several small enterprises save time and money by outsourcing their bookkeeping to xendoo.com. Partnership with xendoo.com has resulted in improved operations, the allocation of fewer resources, and, ultimately, better financial outcomes for these companies. xendoo.com Your Partner in Financial Success xendoo.com is not confined to mere bookkeeping services; it is your companion for better business dealings. xendoo.com has a team of experienced professionals actively assisting small businesses’ success. They offer a broad range of services to streamline financial management and enhance growth. The strength of xendoo.com lies in its capability to develop unique and personalized solutions for businesses of all sizes. Whether you’re a start-up business aimed to secure a sound financial basis or a well-established one endeavoring to go big, Xendo.com’s experts plan thoroughly with you, considering your business specificity and defining a roadmap of the firm’s goals. The Spine of xendoo.com‘s services lies in effectiveness and reliability. At xendoo.com, we use current technology and standard accounting procedures to provide timely and accurate financial reports that are always compliant. Besides the function saving you time, it minimizes the chance of mistakes, and you avoid penalties. From identifying cost-saving opportunities to boosting future sales, the experienced Xendo.com advisors are here and ready to offer guidance to help you grow. Besides being just a bookkeeping company, xendoo.com also offers various services catering to all your financial requirements. Whether you need tax preparation CFO services or a catch-up service to repair your finances, xendoo.com can help you. The website xendoo.com allows small enterprises to succeed in this challenging world through custom solutions, strategic advice, and broad services. Are you a business owner seeking profitability and success at the next level? Give xendoo.com a try and experience the difference. Conclusion: Invest in Your Business’s Future with xendoo.com In summary, records management is a default for scaling your business. You can get a snapshot of the financial state of your business if you invest in the art of correct bookkeeping, which will help you make the right choices regarding the future of your business. Through xendoo.com, you can only relax and be sure that there is no possible threat your records might face. About xendoo We share your passion for small businesses and are inspired by your dedication to making your dreams a reality. That’s why we’re committed to providing you with the financial visibility and support you need to thrive. More Than Just Numbers It’s more than simply crunching numbers. It’s about building meaningful relationships with our clients and understanding their needs. Our people-first mentality ensures you receive personalized attention and expert guidance throughout your financial journey. A One-Stop Solution xendoo offers a comprehensive suite of services, including: Full-service bookkeeping and accounting team to free up your time and resources. Hassle-free tax preparation and filing Fractional CFO Services to work with you
The Simple Guide to Sales Tax for E-Commerce
Starting and running an e-commerce business has many fun and exciting aspects, like seeing your target customer segment latch onto your newest product offering or receiving glowing reviews. One less fun aspect of e-commerce is sales tax. This blog post explains e–commerce sales tax and provides a compliance guide. However, dealing with this administrative hassle from the beginning is crucial. Otherwise, it becomes a major hassle that bites your bottom line. But never fear. This guide will simplify what online sellers need about sales tax, minus all the complicated jargon. (We’ll have to use a little jargon, but we’ll explain it along the way.) What is sales tax? When most business owners think of tax, they think of their annual tax return due to the IRS. But the sales tax is a different animal altogether. Sales tax is a small percentage of a sale charged at the time of the transaction. E-commerce sellers and brick-and-mortar retailers must charge a specified sales tax rate to the customer and then turn around and remit it to state (and sometimes local) tax authorities. States and local areas, such as cities and counties, use the sales tax collected to pay for budget items like road maintenance and public schools. Because states rely on these funds, they are very invested in e-commerce sellers and meet their legal obligation to collect and remit sales tax. And it’s important to note that the federal government or the IRS has nothing to do with sales tax. Instead, states make their own sales tax rules and laws. Forty-six states and Washington DC all have a sales tax. For that reason, e-commerce sellers must consider each state when recognizing where they’re required to collect sales tax. When is an e-commerce business required to collect sales tax? An e-commerce business is required to collect sales tax from customers when they meet two criteria: They have a sales tax nexus in a state(s) They sell items that are taxable in their nexus state(s) Sales Tax Nexus Having “sales tax nexus” in a state means your business is tied to that state. For example, you always have a sales tax nexus in the state where your business is located. But sometimes your business has sales tax nexus in other states as well. This can include: Having a location such as a store, office, or warehouse Having personnel such as employees, contractors, salespeople, or installers Storing inventory in a warehouse (even if you don’t own it) A drop shipping relationship with a supplier in a state Having an affiliate in a state who sends you sales in exchange for a percentage commission Doing temporary business, such as selling taxable items at a tradeshow or craft fair Economic nexus – making over a certain sales or transactions threshold in a state E-commerce businesses can be complex. Something like hiring your sister in another state to perform customer service duties for you or storing inventory in a warehouse in Nevada to be near a centralized West Coast shipping hub can give your business nexus, and thus the obligation to collect sales tax, in new states. It’s important to note that when you have nexus in a state, you’re required to collect sales tax from buyers in that state. Say you have nexus in North Carolina (where you live), Iowa (where your sister who does your customer service lives), Kentucky (where you store your goods), and New York (where you have many customers and thus economic nexus.) If you make a sale to a customer in any of those states, you are required to collect sales tax from those buyers. Taxable Items Most tangible items are taxable, so as an e-commerce seller, you’d be required to collect sales tax from buyers in most cases. However, some items are frequently non-taxable. This includes groceries and medications. A handful of states exempt clothing or textbooks from sales tax, too. Things get more complicated when it comes to digital goods. Most states didn’t require sales tax on digital items such as e-books or downloaded songs for a while because they were intangible. But as physical media began to pass by the wayside, states realized that they were losing out on revenue and began requiring sales tax on digital products and also software. As the retailer, you determine what items are taxable in each of your nexus states. I have sales tax obligations. What do I do now? Once you realize you’re required to collect sales tax, it’s time to get sales tax compliant by doing the following: Registering for a sales tax permit (or permits) Setting up sales tax collection on your online shopping carts and marketplaces Registering for Sales Tax Because sales tax is governed at the state level, you must register for a sales tax permit with each state in which you have nexus. Register with the state’s taxing authority. This is usually called the [State] Department of Revenue, but it might go by another name, such as the Texas Comptroller or the California Department of Tax and Fee Administration. Collecting Sales Tax Once you have registered for a sales tax permit, your next step is to make sure you are collecting sales tax from your buyers in your nexus states. These days, most online shopping carts like Shopify or WooCommerce allow you to set up sales tax collection directly. Note: If you only sell on large online marketplaces such as Amazon or Walmart, you may not need to collect sales tax directly from buyers. Due to “marketplace facilitator laws,” marketplaces like Amazon, which host your goods on their site, are generally considered to be the seller of record. However, some states still require marketplace sellers to register for sales tax permits, even if the marketplace collects and remits on your behalf. How do I remain sales tax compliant? Once you’ve identified your nexus states, registered for a sales tax permit, and collected sales tax, it’s time to file and
7 Last-Minute Tax Tips: Quick Actions Small Business Owners Can Take to Meet the April 15th Deadline
As the April 15th tax deadline approaches, small business owners are on a tight schedule to get their financial books in order and finalize their tax filings. Timely tax preparation ensures compliance with the Internal Revenue Service (IRS) and can maximize potential tax savings. This becomes a critical period in business, and specific strategic actions must be taken so that small businesses remain compliant, maximize returns, and minimize liabilities when filing taxes. This article provides seven actionable tax tips to help small business owners navigate the crunch time effectively. Organizing Financial Records Gathering Necessary Documents and Receipts As one of the basics for filing taxes, small businesses must gather all pertinent financial documents, such as invoices, bank statements, expense receipts, and payroll details. Gathering these documents helps small businesses aggregate and systemize these records to afford a vast, complete record base for use in tax preparation and filing. Utilizing Accounting Software for Efficient Record-Keeping Accounting software simplifies record-keeping, facilitating easier tax preparation and real-time financial tracking. Nowadays, small business owners are privileged to have several programs dedicated to clientele and account record-keeping management. Up-to-date accounting software helps your business to integrate seamlessly with other leading accounting software platforms. It offers you direct access to ensure your business’s financial data is accurate and up to date for filing taxes. Thanks to such tools, financial data can be structured and sorted according to the classification rules in preparation for tax filing. Creating a Checklist to Ensure Nothing Is Overlooked For small business owners, a broad checklist will guard against the usual omissions and assure the inclusion of all required documents and information, which are requisites during the preparation to file taxes. A checklist should comprise the fields of income, deductible expenses, tax documents, and any specific information related to their unique business type. At the end of this financial review, the business owner should have a checklist covering all financial records. Maximizing Deductions and Credits Identifying Eligible Business Expenses Understanding what makes up a deductible business expense helps ensure small businesses make the most of tax-saving opportunities. From home computers and vehicles to social networking-related expenditures to staff and benefits, all business owners should be careful to keep relevant documentation as this will enable them to use the deduction system to the utmost extent. Identifying eligible business expenses helps small business owners take advantage of all possible deductions. Exploring Available Tax Deductions and Credits for Small Businesses The tax code gives an array of deductions and credits meant to support small businesses. Alongside typical business expenses, SME proprietors must check for available pertinent deductions to their sector. For instance, the Small Business Health Care Tax Credit, the Research and Development Tax Credit, and several state and local incentives are all geared towards the same purpose: promoting small businesses. We guide you to strategically employ the most recent tax benefits to lower your taxable income and increase your tax savings. At xendoo, we also keep up with the latest tax benefits to ensure that businesses signed with us get the most out of the benefits. Strategizing to Maximize Tax Savings Strategic tax planning is essential to optimizing small business outcomes. With a thorough knowledge of eligibility for deductions and credits, entrepreneurs can now employ tactics that help them minimize tax liability. This could involve reformatting certain parts of the business systems or making good use of the timing of investments and purchases by aligning them with tax compliance. Our bookkeeping services include expert professional advice on the structure of transactions and operations to maximize available benefits and opportunities by saving more on your tax bill. Navigating Tax Law Changes Highlighting Recent Changes in Tax Laws Affecting Small Businesses Tax laws are constantly changing, and they significantly affect small businesses. Significant updates and modifications are made to initial tax laws as often as monthly. Business owners should consider keeping themselves updated with recent amendments that may frame their filing of return of income, which otherwise can be detrimental to the company due to delayed payments and, in some extreme cases, penalties. Let us help you stay updated with all the changes to ensure your business stays compliant and takes advantage of new opportunities the tax law updates might create. Understanding Implications and Opportunities Presented by Tax Law Updates Effective tax planning considers the implications and impacts of the changes in tax laws and their applicability. Each tax legislation change has pros and cons because of its diverse impacts. Both partnerships and LLCs need to be fully informed about these impacts regardless. These changes bring about essential tax savings if carefully considered. Our book-handling services provide you as a business owner with expert analysis on how changes in tax laws impact your business and alert you to opportunities that will see new provisions for tax savings. Consulting with a Tax Professional for Personalized Guidance Most tax law changes require interpretation. Accounting for complicated tax laws and the high rate of environmental changes leaves small companies with only one option: to reach out to experienced tax lawyers or accountants. These professional consultants can offer personalized advice and tailor it to the specific needs and circumstances of the business so that any unclaimed deductions and credits are discouraged and errors are avoided. Our people-first mentality ensures you receive personalized attention and expert guidance throughout your financial journey. We share your passion and your dedication to making your dreams a reality inspires us. That’s why we’re committed to providing you with the financial visibility and support you need to thrive. We build meaningful relationships with our clients and understand their needs. Utilizing Technology for Efficiency Overview of Tax Preparation Software Options The right tax preparation software can greatly increase efficiency and accuracy during tax filing. In the digital era, small business owners have many tax preparation software applications that can facilitate filing by shortening the time to prepare the returns. Be it user-friendly tools designed specifically for small businesses or more comprehensive solutions covering complex tax scenarios,
7 Common Bookkeeping Mistakes (And How to Avoid Them)
Running a small business means juggling lots at once, but quite possibly, the most important one is keeping meticulous financial records. Bookkeeping is an essential part of organized financial management and paves the way for the business to maneuver through the complications of financial control. However, with all these activities, the primary activity that usually goes unsung by an entrepreneur is bookkeeping. It is not just a recording of transactions but the creation of a system of openness and accountability towards finances. Without the right approach and right tools, however, of reliable accounting software such as Xero, QuickBooks, or is important and will turn cumbersome work into swift and effective procedures. These platforms help businesses with monotonous tasks, keep a record of expenses easily, and help develop elaborative financial reports, which makes it like a roadmap for success for small businesses. Neglecting Reliable Accounting Software Failing to invest in sound accounting software is a regular oversight with small businesses. Buying systems such as Xero, or QuickBooks, provide benefits to different aspects of your business, ranging from mere bookkeeping activities to expense tracking. This measure translates to the software facilitating the financial process that includes invoicing, tracking expenses, and reconciling bank records by saving time and effort. Second, the provision of detailed financial reports at the touch of a button is invaluable and, in return, empowers one with the decision-making processes within the business. It only means that these kinds of software are integrated into business operations and, therefore, enable accurate records and analysis of transactions related to finance. Failure to Establish Dedicated Business Accounts The most common error of small businesses is mixing the finances of a business and personal finances. Without a clear separation of business accounts, finances may be mixed up, possibly leading to distorted bookkeeping and clear visibility of where your business stands. It is critical to have dedicated business accounts, where entrepreneurs streamline their finances and bolster credibility and trust within the marketplace. Clear separation of personal and business finances leads to compliance and sound tax reporting and lays a solid foundation for financial health and growth. Irregular Reconciliation of Accounts Consistently reconciling bank and credit card accounts would seem a rather mundane exercise in maintaining financial integrity, but it is one of the most important. Regular checks help ensure that the financial records reflect the true picture of your business’s finances, and minimizes the risk that an error or discrepancy will go unnoticed. It also considers any possible financial pitfalls in discovering irregularities or unauthorized transactions in good time. Timely reconciliation presents a clear view of the cash flow so proactive decision-making may increase, ensuring visibility in financial matters. Disorganized Financial Records Good bookkeeping largely depends on the systematic organization of financial records for small businesses. A systematic approach toward invoices, receipts, bills, and other important documents is paramount for small businesses. An organized set of financial records will give business owners easy access to important information within a very short time. This measure could easily avoid the risk of negligence of critical financial data and improve the efficiency in the overall financial management process of any business Inadequate Expense Tracking Lack of proper expense tracking is a major issue for most small businesses, it leads to spending patterns getting obscured and potential lost opportunities to optimize finances. Inefficiencies and lack of visibility may affect business profitability without a proper expense categorization system. A good expense tracking mechanism ensures that companies know the cost areas where savings could be made, resulting in saving costs in several areas and budgeting accordingly to allow businesses to make informed decisions. Ignoring Cash Flow Monitoring Monitoring cash flow regularly is necessary to maintain the financial stability of small businesses. Cash flow influences almost every activity in an organization, from day-to-day expenses to long-term investments. Lack of cash flow visibility in this area means that the business may be asleep at the switch when unforeseen opportunities strike or financial crises. This technique paves the way for making proactive decisions and making strategic plans once the financial health of the business is highlighted. Invoicing Best Practices Efficient invoicing is more than sending out bills and is really about ensuring smooth sailing processes so that all payables are made on time, leading to good client relationships. Invoice automation through online software allows for organization and ease of the invoicing process, streamlining the workflow and removing any friction that billing may have. Automated processes can then follow up on the status of overdue invoices, allowing faster collections and lessening the risk of a gap in cash flow. With robust strategies and modern services like xendoo, businesses will avoid complexities in managing finances. With xendoo, you have access to a dedicated team of financial experts ready to assist you with your bookkeeping and accounting needs. Our innovative solutions ensure the accuracy and organization of your books, reducing errors and discrepancies. From monthly bank reconciliation to the meticulous tracking of expenses, xendoo offers services that relieve the time and stress involved in managing finances for your company, leaving you more time to work on growth for your business. Schedule a free consultation today to find out how xendoo can free up your time so you can do what you love and grow your business.
Bookkeeping in the Digital Age: 10 Modern Solutions for Business Owners
In today’s fast-evolving business world, digitizing financial processes has become imperative for competitiveness and managing financial health. All the tools and approaches with modern technology presented for keeping books enable an owner of a business to make decisions well-informed. Here are ten tips and tactics for innovative digital bookkeeping strategies and insights on how xendoo will address your financial needs. 1. Embrace Cloud-Based Accounting Software The benefits of migrating to cloud-based accounting software for small businesses are tremendous. Some platforms, such as Xero and QuickBooks Online, allow real-time access to financial data from practically any device that can get online. Intuitive user interfaces and automation features handle routine tasks like invoicing, expense tracking, and financial reporting. They may also integrate smoothly with other business applications to improve efficiency and productivity. 2. Utilize Digital Receipt Management Digital receipt management solutions revolutionize the way businesses handle expenses. Receipts captured through a smartphone camera in apps such as Receipt Bank and Expensify ensure that they are automatically extracted with all the needed details to categorize and reconcile expenses. Going digital with receipts would ensure that paper clutter is eradicated, manual data entry errors are reduced, and processes on reimbursing employee expenses are made smoother and more manageable. 3. Implement Automated Bank Feeds Automated bank feeds make reconciling transactions from the bank and credit card statements with the accounting software much easier. One would be able to sync financial data from bank accounts directly and, in this regard, do away with manual data entry with reduced errors and ensure records are exact. Feeding the information into the accounting software by the automated bank feeds would prompt the accurate and real-time retrieval of all information regarding transactions from the bank. Reconciliations are facilitated, saving the company time and effort on behalf of the business owners and accounting staff. 4. Explore AI-Powered Bookkeeping Solutions AI bookkeeping-powered solutions operate via machine learning algorithms to do repetitious work and provide insightful data about financial performance. They help classify transactions, detect anomalies, and even customize reports, making bookkeeping more efficient. Leverage the power of AI to do away with manual intervention, reduce errors, and make some strategic decisions. 5. Adopt Digital Payment Solutions Digital payment solutions like PayPal, Stripe, and Square offer numerous business advantages, including faster payment reception, less paperwork, and better cash flow management. Accepting payments speeds up the process of invoicing and quickens receivables when done digitally, increasing liquidity for the business. Moreover, these digital payment solutions are easily connected with accounting software and impact transaction reconciliation, providing a clearer real-time picture of the financial position. 6. Leverage Blockchain Technology for Transparency Blockchain technology offers a decentralized and transparent ledger system that can change financial record-keeping. Applying blockchain-based platforms will help increase the security level of financial transactions and bring out transparency and immutability. Blockchain technology can increase tamper-proof record-keeping, decrease fraud risk, and ensure the integrity of all available data. More importantly, the ability of blockchain solutions to offer real-time visibility into transactions makes it possible to track assets, simplifies auditing procedures, and creates trust among the relevant parties. 7. Implement Multi-factor Authentication for Security Multi-factor authentication is one of the core security measures in the wake of growing cybersecurity threats. This security measure has to be implemented since it requires so many levels of identification of one’s self by a person before access to an account or system is granted. MFA reduces the risk of unauthorized access, data compromise, and financial fraud. Apart from the increased compliance with the regulatory bodies, MFA also increases the confidence of the customers and stakeholders. 8. Stay Abreast of Regulatory Changes Regulatory compliance remains a moving terrain for businesses in the digital era, which they must keep a keen eye on, whether it concerns tax laws, accounting standards, data privacy, or the delivery of goods and services. Being updated on regulation changes really is a long way to helping businesses make sure they are legally compliant, take minimal risks, and do not attract penalties, which could be very costly. This notion means ensuring the proper up-to-date information is received from government agencies, industry associations, and legal experts and seeking professional guidance occasionally. 9. Leverage Data Analytics for Insights Data analytics helps businesses get insights into financial performance, identify trends or patterns, and identify key performance indicators. In return, the analysis of financial data equips one with the basis that they can make well-informed decisions, optimize processes, and boost growth. Using advanced features of data analytics tools like predictive modeling, trend analysis, and scenario planning will help businesses anticipate changes in the market and build new opportunities out of them. Further, data-driven decision-making would instill innovation and agility. Hence, businesses remain fitter for the long haul in the digital economy. 10. Invest in Continuous Learning and Development As technology continues to evolve, investments in the continuous learning and development of business managers should be made to keep in line with the developments. This measure involves going to workshops, webinars, and online courses that expand one’s knowledge and skills in the digital way of keeping books. In addition, businesses have to support employees in certification, areas of personal development, and training related to the industry. Investments in continuous learning and development kindle the culture of innovation, adaptability, and excellence that makes the business relevant to the dynamic digital space. Embracing modern bookkeeping solutions can transform how you manage your business finances. Equipped with such few tools, which include dependable accounting software, dedicated business accounts, and proactive financial practices, your business will be well set, ready, and positioned for success in this era of the digital age. From expert bookkeeping to financial management, xendoo is with you every step of the way. It involves staff dedicated to handling your business books, accountants, and CPAs with a complete package for you. From preparing and reconciling monthly statements to detailed expense management and tax preparation, xendoo has you covered with professional, expert oversight. Schedule a call with xendoo today and take
8 Benefits of Online Bookkeeping
You’ve put your heart and soul into your business. So why does it feel like you’re spinning your wheels, trying to keep up with your core business and your administrative overhead at the same time? When you first started your company, it might have made sense to try to handle your own bookkeeping and accounting needs. After all, it kept costs down. But it may not have taken long to realize that you could use some help. Why not rely on an online accounting service to take these tasks off your plate so you can focus on your business? Today, we’ll take a closer look at the business benefits of online bookkeeping and see how these services can help you to get your head out of the books and back in the game. Business Benefits of Online Bookkeeping Traditionally, businesses would hire a staff member to handle their books. They might even consider hiring a full-scale accounting department, depending on the size of their company. But these days, more and more companies are going digital, opting to use online accounting and bookkeeping services to handle their needs. This is happening for good reasons, as online bookkeeping offers a host of benefits. We’ll explore some of these benefits in depth below. 1. Specialized Experience Today’s businesses require specialists, not generalists. Increased regulation and the unique needs of individual businesses often demand a specialized set of skills. It’s rare that a staff accountant has experience in the kinds of niche areas that your business needs. Conversely, an online accounting firm can often provide experience in such areas as: Personal financial planning and assistance Forensic Accounting Managerial Accounting IT auditing Non-profits Tax Preparation Some of these tasks tend to be cyclical, such as your annual tax preparation. It makes sense to consult with an online accounting firm that can provide the services you need when you need them without the overhead of hiring a full-time CPA. 2. Accurate Books and Low Cost One of the greatest business benefits of online bookkeeping is a reduction in cost. According to the Journal of Accountancy, the average salary for a full-time CPA is over $100,000 per year. The cost of a full-time bookkeeper is cheaper, but your business may still be looking at paying over $40,000 per year for their services, according to the U.S. Department of Labor Statistics. Don’t forget that these salaries are only a starting point. Hiring a full-time employee also demands that you provide employment benefits. You may even have to make adjustments to your facilities in order to provide an office or similar workspace. Time is another factor to consider. Who will be in charge of hiring and managing your employees? Unless you have a human resources department, these responsibilities might fall on your shoulders as the business owner. Sure, hiring a CPA means you won’t be handling the books, but instead, you’ll have the task of hiring an additional employee. Why swap one responsibility for another, when you can simply outsource your needs to an accounting firm? Online bookkeeping services can be surprisingly affordable, eliminating the overhead associated with hiring a regular employee. By relying on an online solution for your financial needs, you won’t have to worry about diverting valuable space to set up an office or workstation,, allowing you to cut costs in every imaginable capacity. 3. On-time Reporting Staying on top of the details is a full-time job in and of itself. But the more information you have about your business, the better. As a business owner, you want access to trends like: Losses Profits Tax information Personnel and payroll data Insurance payments Procurement Online bookkeeping ensures that you have access to the latest information, with reports available with unparalleled speed. This data is useful for highlighting areas of your business that could stand to be improved, which is why you need access to these reports in a timely manner. Since these reports are generated online, you’ll also save on paperwork. In addition to internal reporting, online bookkeeping services can speed up your invoicing process. By streamlining your entire financial department, you’ll be in a better position to send invoices to clients and maintain your overall cash flow. Faster reporting can accelerate this process even further by monitoring your income and alerting you to clients that have outstanding payments that need to be collected. In addition, virtual accounting services can help you to manage your inventory. xendoo, for example, can help you integrate your platforms and inventory with software like Xero, which has a number of basic inventory management features, as well as other third-party platforms that can help you optimize your ability to keep track of your inventory. These tools can be a great help when it comes to keeping your shelves stocked and your orders flowing. This increased efficiency doesn’t just save you a headache; it can help grow your business, too. Having access to the latest data increases the rate at which you can invoice clients and receive payments. The data you receive from an online bookkeeper can even help you plan for the future, which can be helpful when it comes to tasks like managing your inventory and looking for ways to expand your business. 4. Accurate Books While CPAs typically have an advanced degree in addition to their certification, there are no advanced professional standards when it comes to bookkeeping. That’s not meant to be a slam against bookkeepers, as many of them do an excellent job. But if you try to cut corners by hiring a junior accountant or a financial novice, you could end up with errors creeping into your books. That’s also true if you try and handle the books yourself, especially since it’s unlikely you’ll be able to give your books your full, undivided attention. Why is accuracy so important? For starters, accurate books can eliminate accounting errors. Maintaining accurate books can be essential for the efficient management of your business. But when it comes to tax
What happens if you get audited and don’t have receipts?
Most small businesses are unlikely to go through an IRS audit, but it’s possible. What happens if you get audited and don’t have receipts to back your expenses? It’s a common question and concern for many business owners. The best way to avoid headaches during an IRS audit is to keep accurate business records and bookkeeping year-round, including tracking receipts. Receipts are a paper trail for your business transactions and taxes. Without them, it’s harder to prove your tax deductions and other records are accurate. However, forgetting or misplacing receipts happens, especially when you’re busy running a business. The IRS regularly deals with missing receipts, so there are guidelines for what businesses can do if they don’t have receipts. xendoo’s bookkeepers and CPAs have years of experience managing business records. Below, learn everything you need to know about IRS audits and receipts. Table of contents Why do businesses need receipts? Receipts are records and proof of payment for the income and expenses your small business claims on tax returns. Without receipts, you may not be able to prove that a business transaction took place. Businesses should keep receipts for record-keeping, but also to claim tax deductions and credits. For example, if you’re traveling away from home for a business trip, you could deduct travel expenses, which would save you money on taxes. However, you’ll need to prove that the travel was for business purposes and keep receipts for items like: Receipts businesses should keep Receipts aren’t the only records businesses should keep; they help you track your income and expenses. Companies track a lot of receipts. Some examples of costs that you’ll need receipts for include: Since this isn’t an exhaustive list, it’s best to track all your business receipts and update your records regularly. To make the process simpler, many small business owners use business expense tracking and receipt apps. A bookkeeping service can also advise you on which records and receipts to track (and in some cases, do it for you). What happens if you get audited and don’t have receipts You have several options if you’re audited and don’t have receipts. Because the IRS regularly deals with missing receipts, there are standard steps businesses can follow. In most cases, you can track down receipts or provide other documents, which we’ll outline later, to prove an expense. The worst-case scenario is that the IRS may remove some business tax credits and deductions you claim. Audits aren’t as big a deal as movies and the media make them out to be, especially if you keep organized business records. There are many reasons the IRS might audit a business, but most happen due to random selection or tax errors. If the IRS audits you, you’ll receive a notification letter. From there, you’ll communicate with your auditor and provide the documents they ask for. The IRS doesn’t always share what triggered an audit, but these are some red flags: Although tax professionals and CPAs are familiar with tax laws and can help you navigate an audit, they focus on avoiding audits first. Business tax services prepare and file taxes for you, so they’ll catch inaccuracies and mistakes before you send tax returns to the IRS. What to do when you don’t have receipts If you don’t have receipts and you’re worried about an IRS audit, you have two options. If you don’t do either of the above options, you’ll likely take the loss of deductions or credits. Depending on your situation, you may need to pay IRS fees. Let’s look at the steps you can take when you don’t have receipts. 1. The Cohan rule Missing receipts are so common that since the 1930s, a legal rule has outlined options for taxpayers who don’t have them. It’s called the Cohan rule, and in some cases, you can use it to claim deductions if you’re missing receipts. In a nutshell, the Cohan rule says that: The Cohan rule has helped many small business owners prove their expenses when missing receipts. However, the IRS can reject your deductions even if you follow the Cohan rule. For example, you can’t claim the Cohan rule if your deductions include certain expenses like entertainment. You’ll also need to explain and document the: 2. See if vendors will provide invoices and receipts To provide the IRS with documentation, you can reach out to vendors to request duplicate receipts. Since most vendors use online invoicing and billing systems, they’ll have copies of your records. Keep in mind that some vendors might charge a fee for their time to retrieve past invoices, receipts, and other statements. 3. Find checks, credit card, or bank account statements If you’re unsure where you made a purchase or can’t contact them to provide copies, search through old checks and bank and credit card statements. Going through these documents can tell you: You can use this information to reach out to vendors and ask them for receipts or use it to prove your expense is legitimate. Getting copies of the receipts is ideal though, since it will show exactly what you spent money on to count as a tax-deductible expense. 4. Review your calendar and emails Reviewing your calendar and email will help you narrow your search for receipts. When you make a purchase, companies often send payment confirmation and a copy of your receipt to your email. If you know the company’s name, purchase date, or other details, you may find it by quickly searching your inbox. If you don’t, looking through your calendar could reveal where you were on certain days. It’s especially helpful to find when you travel for business so you can claim those travel expenses. Although this method helps you find transaction details, the IRS doesn’t accept calendars or emails as proof of business expenses. 5. Look at location data and maps on your phone A similar method for searching for transaction details is to use location data on your phone. Your phone stores a lot of information
Year-End Bookkeeping and Accounting Checklist for Small Business Owners
The end of the year is a hectic time for small business owners. Between catching your breath after tax season and managing holiday sales, year-end bookkeeping and accounting tasks understandably fall to the bottom of the to-do list. xendoo is here to help you avoid the year-end scramble. Check out our year-end bookkeeping checklist to organize your finances and successfully wrap up the year. 1. Get Your Books Caught Up The first step is to make sure that your books are up-to-date. You can do this by: Accounting for all bills and invoices, even if they haven’t been paid yet. Reviewing bank and credit card statements to confirm that they match. Recording any expenses that you paid for with personal funds. Accurate records ensure reliable financial statements. If your books are behind a few months, or even years, you are not alone—25% of business owners are behind on their books. xendoo’s online bookkeepers provide catch up bookkeeping services, so you can focus on the future. 2. Collect the Necessary Forms Once January arrives, your accountant will request certain forms to close your books and file your small business taxes. Be sure to collect them as soon as possible to ensure a smooth start to the new year. Here are common forms and their deadlines. Form W-2 Business owners use form W-2 to report salary information for their employees. It also helps businesses report the taxes they withhold from paychecks. Employees need this information to file their personal tax returns. Business owners are responsible for sending this form to the IRS. Employers must provide the form to their employees no later than January 31st so that employees have enough time to file their taxes. Form W-9 If you worked with an independent contractor or vendor and paid them $600 or more, you will report those payments to the IRS using Form 1099-NEC. The information you need to complete this form is on Form W-9, which you can collect from your contractors. If any W-9s are missing, reach out to your independent contractors and have them complete the form before the end of the year. Schedule K-1 CPAs provide the Schedule K-1 or Form 1065. The Schedule K-1 must be sent to shareholders and partners by March 15th. S-Corporation shareholders and partnership members use it to report their share of the business’s profits and losses. They’ll also include the form with your personal tax return. Form 1099-K The 1099-K tracks the payments received through third-party payment networks, like eBay, Stripe, Shopify, PayPal, and others. You should receive one 1099-K from each of the Online Payment Networks you use by January 31st. You are required to complete each one. Your gross receipts must be at least as high as the amount that you report on your 1009-K. The 1099-K shows gross sales, which is the amount before fees are deducted. What appears in your bank account is the Net Amount, the amount after fees are deducted from the Gross Amount. The sales from each vendor must be reported as the Gross Amount, which is what appears on the 1099-K. If you use freelancer platforms like Upwork or Fiverr to hire independent contractors, they may also send 1099-Ks to your freelancers instead of 1099-NECs. Since they are considered Online Payment Networks, these platforms typically send 1099-Ks to freelancers that make over $20,000 a year and have at least 200 transactions. However, if you paid freelancers more than $600 outside of their platforms, then you will need to send out a 1099-NEC. Click here to download our Tax Documentation Checklist. 3. Follow Up on Past-Due Invoices Review past-due invoices to see what you are owed. If there are any outstanding payments, reach out to your customers before the end of the year to successfully close your books. 4. Account for Inventory If your business stores inventory, perform an end-of-year inventory count to make sure your totals match your Balance Sheet and your books. This review will provide insight into waste and loss management, as well as reduce inaccuracies in inventory counts and receivings. Consider utilizing inventory management software to streamline inventory creation and order fulfillment. 5. Review Your Financial Statements Once you or your bookkeeper completes your bookkeeping, review your financial statements to confirm your numbers are correct. You can also take that time to review how your business grew over the course of the year. Was there a steady increase in profits? Can you identify connections between your costs and sales? The financial statements provide visibility to confirm that you are on track to meet your goals, make projections, and prepare for the future. Click here to learn more about the key financial statements. 6. Reach Out for Help Everyone deserves a supportive team of people who care. If you feel overwhelmed with year-end bookkeeping, reach out to an online bookkeeping service. xendoo’s bookkeeping and accounting team provides monthly bookkeeping and accurate financial reports. We’ll give you financial visibility throughout the year and deliver insights to make strategic business decisions. Ring In Success Juggling the holidays with running a business can be hectic. Although this year-end bookkeeping and accounting checklist can help you prepare for tax time, you don’t have to do it alone. xendoo has a range of plans with flat monthly fees. You can get certified, professional online bookkeeping, accounting, tax, or CFO services to help you manage your finances and grow your business. Schedule a call with one of our online accountants to get started.
What Is Bank Reconciliation: Template and Step-By-Step Guide
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
Free Small Business Expense Tracking Spreadsheet
Small business expense tracking can be tedious, but it’s one that all companies–from “mom and pop” shops to international enterprises–must do. Fortunately, business expense tracking apps make the job easier. An app is ideal if you have a business with many employees, sales, and tax considerations. For some small businesses, however, paying a subscription fee for an expense tracker may not be feasible in the beginning. In this case, they can use a free business expense tracker or template. While expense tracking will remain manual, it will keep their finances organized in one place. We’re sharing a free business expense tracking spreadsheet that you can use. You can jump to the spreadsheet here and scroll further to learn how small businesses can keep track of expenses for free or at little cost. Why do you need to track small business expenses? What are common business expenses? What is the best way to track expenses for small businesses? Small business expense tracking spreadsheet Why do you need to track small business expenses? As you may know, you’re required to file taxes each year. Come tax time, no one wants to sift through old receipts to account for each expense. Once you start expense tracking regularly, you can eliminate such hassles. Moreover, up-to-date records ensure that you file tax returns accurately. Therefore, should the IRS audit your company, you won’t have anything to worry about. Besides saving you time, you’ll also want to track expenses to take advantage of tax deductions and better financial health. Tax Deductions Everyone has to deal with taxes every year–companies and individuals. You may be eligible for tax deductions for certain expenses or activities. If you qualify for a deduction, you can lower the tax amount you owe and use the savings to grow the business. While it may surprise you, many small business expenses qualify for tax deductions. However, only a small proportion of small business owners benefit from them. This is primarily due to inadequate expense tracking practices and not knowing how much you can save. With reliable accounting software, you’ll have expense reports. These will give you a complete picture of your spending and tax deductions. If you’re unsure what counts as a deduction, you can review our list of over 20 tax deductions for small businesses. Financial health Data from the Bureau of Labor Statistics (BLS) shows that 20% of small businesses fail within the first year. This figure rises to 50% by the fifth year. But there’s a silver lining. Most of these businesses do not fail because there’s no market. Surprisingly, some companies make a lot of money and still fail. Some of the reasons for this include: Financial mismanagement Cash flow issues Unsustainable growth Poor planning As you can see, all those factors are related to finances. By ironing up your expense tracking processes, you can significantly increase the chances of success for your business. You’ll be able to quickly spot unnecessary, unusual, and fraudulent activity that may bring your business down. This way, you can limit business expenses to necessary expenses and prevent costs from going overboard. In addition, you can learn how to read and interpret financial statements. What are common business expenses? Businesses in varying industries have different expense profiles. Even still, there are expenses that almost all businesses have. In the expense tracking spreadsheet, you’ll find areas to record each of these expenses, including: Advertising and marketing – Costs associated with hiring a marketing agency or a consultant. Auto expenses – If you use your car for business, you can expense repairs and mileage. Bank charges – Fees and costs for a business bank account and credit cards. Commissions – They will be recorded here if you pay out sales commissions. Contract labor – This is for businesses that hire freelancers or contract employees. Interest – If you have a business loan, its interest is considered an expense. Legal & professional – Consult with lawyers, accountants, and other professionals. Merchant fees – These are costs that merchants like Shopify and Amazon charge. Payroll, payroll taxes, and processing – Expenses related to paying employees and processing those payments. Recruiting & HR – Costs associated with finding and hiring employees. Training & Education – Expenses related to furthering your or your employees’ business education. Software and tools – Many tools you use for your company are expenses (and tax-deductible). Rent or lease – If you have a physical store or office, you can add it as an expense. Utilities – Many utilities, including the Internet, are business expenses. These are just a few examples. You’ll find more inside the small business expense tracking spreadsheet. What is the best way to track expenses for small businesses? At this stage, you know why it’s important to track business expenses, but how do you do it? You have two options: business expense tracking spreadsheets or apps. 1. Business expense tracking apps The best options for business expense tracking are expense tracker apps. These solutions sync to your bank accounts and business credit cards and categorize your expenses. This eliminates most of the manual work and automates inputting the costs yourself in a spreadsheet. As a result, the only expenses you usually add manually are those you pay for in cash. Such solutions generate expense reports in addition to maintaining expense records. These reports help you understand your spending habits and how they impact cash flow and financial health. You don’t have to set time aside for this. You can review your expenses using a mobile app while on the go. Overall, they reduce the amount of time you spend on expense records. Some business expense tracking apps include: Mint Quickbooks (integrates with xendoo) Xero (integrates with xendoo) Zoho Expense Expensify To learn more about each app and if it’s a good fit for your company, you can view our guide to expense tracking apps here. 2. Business expense tracking spreadsheets While business expense tracker apps may be ideal, they’re sometimes
The Top 5 Benefits of Catch Up Bookkeeping
Whether they coach chess players or sell organic puppy food online, every small business owner shares a common driving force: a passion for growing their business. Increasing sales and gaining new customers is one part of the equation. Consistent bookkeeping provides the financial insight needed to strategize for long-term success. With so many obligations resting on the business owner’s shoulders, it can feel like there are not enough hours in the day to accomplish every task, and eventually the books may fall behind. Even if the books are only behind a few weeks, up-to-date records are crucial for the financial well-being of every business. Catch up bookkeeping accelerates business growth by increasing financial visibility, which enables business owners to make decisions based on accurate information and remain tax-compliant throughout the year! In this blog post, we are exploring the top 5 benefits of catch up bookkeeping! Reliability in Your Opening Balance The Opening Balance is the amount of money in your bank account at the beginning of a new financial period, such as the start of the month. Be aware that your bank account does not necessarily reflect the exact amount of cash that is available to spend. For example, if your Opening Balance states that you have $50,000, but $20,000 worth of checks have not cleared yet, the actual balance is $30,000. The best practice is to consult your updated accounting software or financial statements, which provide insight into your true financial position. The financial statements report revenue, expenses, and profitability, all of which contribute to the Opening Balance. They also guide decision-making and reveal opportunities for business growth. The more up-to-date your books are, the more reliable your financial statements (and Opening Balance) will be! If your bookkeeping is behind, there will be little to no financial data for that time period, which means you will not know your true Opening Balance for today. For example, if your account was reconciled in January, but February was skipped, the Opening Balance would be incorrect for March. This could skew your numbers going forward, and costly choices could be made based on inaccurate data. This could also affect future bank account reconciliation, as well as the balances in your revenue, costs, and expenses. It is a vicious cycle. Catch up bookkeeping corrects these issues and provides clarity and accuracy in your financials. Once your books are caught up, keeping them up-to-date becomes second nature. Financial Accuracy Through Bank Account Reconciliation A bank account reconciliation is performed to confirm that your accounting records match the information in your bank account. It is an opportunity to identify and correct any bookkeeping errors before the financial statements are finalized, as well as detect and prevent fraudulent activity in your bank account. Bank account reconciliation also ensures that you are accurately reporting your income to the IRS. The best practice is to reconcile your bank account once a month. Proper bank account reconciliation can only be accomplished when the books are up-to-date. By getting your books caught up, you can ensure the reliability and accuracy of your financials each month. Cash Flow Management Catch up bookkeeping can have a significant impact on cash flow. When your books are caught up, you can pinpoint how and when cash enters and leaves your business each month. This delivers a deeper understanding of your cash needs, so you can create a plan for cash flow management. For example, as your books are caught up, you may uncover past due invoices, or find that you are sending out vendor payments before you receive the cash needed to cover them. With this insight, you can monitor your Accounts Receivable to ensure you are paid in a timely manner going forward, and find solutions for the timing of your own payments. You can also forecast future cash needs to be confident you have what you need for continued operations. Click here to learn more about cash flow. Insight into Net Income Keeping your books up-to-date plays a vital role in calculating your bottom line, or Net Income, which is the profit that remains after all costs and expenses are subtracted from revenue. In order to know your true Net Income, all business expenses must be accounted for through accurate and timely bookkeeping. This understanding of your Net Income provides the opportunity to increase your bottom line. Getting your books caught up is also essential when applying for loans. Creditors and investors examine Net Income when deciding to invest in a business, as it highlights the business’s ability to pay back loans efficiently. Catch up bookkeeping determines your bottom line, so you can understand and increase the profitability of your business, meet loan requirements, and secure funding for your next venture! Click here to learn more about Net Income. Tax Compliance As tax season draws closer, a concern that many business owners have is under or over reporting their earnings, and missing out on deductions. They may also experience a back and forth with their Tax CPA over missing documents and gaps in their financials. Breathe a sigh of relief – catch up bookkeeping takes the headache out of tax season! By getting (and keeping) your books caught up, you can identify the deductions you qualify for, maximize your tax return, and stay compliant all year long! Get Your Books Caught Up with xendoo Behind on your bookkeeping? You are not alone! 25% of business owners are behind on their books. Get a fresh start with catch up bookkeeping services from xendoo, so you can take your time back and focus on the future of your business. Let’s chat! We would love to get to know you and your business. Click here to schedule a free consultation.
How Do I Pay Myself and My Taxes as a C-corporation?
When businesses are first created, every responsibility falls on the business owner. As they juggle increasing sales, customer service, marketing, and even bookkeeping and accounting, two questions come to mind – how do I pay myself? How do I pay my business’s taxes? Self-payment for small business owners is far from simple. There are certain requirements for the amount you pay yourself, and even how you receive payments. That is why the xendoo team has created this guide to help you navigate self-payment and taxes as a C-corporation owner! How to Pay Yourself as a C-corporation: Salary or Dividends The payment you receive depends on your role within the company. C-corporations are made up of the following roles: Directors, officers, and employees in a C-corporation take a salary, which is subject to payroll taxes. Shareholders can take a salary and dividends, which are allocations of stock from retained earnings, if the company chooses to distribute profits. Some shareholders opt not to take dividends, which will be discussed shortly. In smaller C-corporations, one person can act as the shareholder, director, officer, and employee. Shareholders can also be involved in the day-to-day operations of the company, and are referred to as shareholder-employees. How Do I Pay My Taxes as a C-corporation? C-corporations are considered separate legal entities from their owners. This means that the business is taxed at the corporate level, with dividends being taxed again at the shareholder level, resulting in double taxation. Smaller companies may choose to avoid dividend payments for this reason. C-corporations file their taxes using Form 1120, which reports the business’s income, losses, credits, and deductions. If shareholders take dividends, they use Form 1099-DIV to report the amount that was distributed to them. To ensure that your C-corporation taxes are filed correctly and on time, you can partner with an online CPA. They will help you to maximize your tax savings and enjoy peace of mind during the most stressful time of the year. Are Salaries and Dividends Tax-Deductible? Dividends are not tax-deductible expenses, but shareholder-employee salaries are – as long as they are reasonable. Some business owners may take high salaries in order to reduce the company’s taxable income. However, if the salary is too excessive, it could be reclassified as a dividend payment, taxed at the shareholder level. The company would then lose that excess salary as a deduction. On the other hand, if the salary is too low, it can be considered an attempt to avoid employment tax liability, which could draw scrutiny from the IRS. Every business is different, so the salaries that business owners take will vary. To get started, you can take a look at the factors the IRS uses to determine a reasonable salary for shareholder-employees in C-corporations: What comparable businesses pay for similar services. If an employee’s salary falls in line with what similar businesses pay for that position, the salary will be considered reasonable. Character and condition of the corporation. If the company is performing exceptionally well, an above-average salary can be considered reasonable. The role of the employee within the business. The IRS considers the hours the employee works, the duties they perform, and the contributions they make to the success of the business. If the employee receives a raise, they must also receive an increase in responsibility for their salary to be considered reasonable. Internal consistencies in establishing compensation levels. Inconsistencies in the compensation of other employees can suggest that the employee’s salary is unreasonable. Conflicts of interest in setting compensation levels. Conflicts of interest occur when there is a clash between personal interests and professional obligations. For example, if a shareholder attempted to disguise dividends as a deductible salary, the IRS would deem the salary unreasonable. You do not have to figure your salary out on your own. Discuss your options with an online C-corporation accountant at xendoo today! xendoo is Here for You Every business owner deserves an accounting team that is dedicated to their financial success. xendoo provides online bookkeeping and accounting services to C-corporation owners, so they can make the most informed decisions for their business! We would love to get to know your business. Click here to schedule your free consultation. Want to learn more about the different business entity types? Click here.
How Do I Pay Myself and My Taxes as a Partnership?
Every partnership owner faces the unique challenges of self-payment, tax filing, and maximizing their tax savings. Although they would rather focus on growing their business, taxes and payroll often take up too much of their valuable time. If the self-payment struggle is all too familiar to you, xendoo is here to help. We have created this guide to help you pay yourself and maximize your savings as a partnership owner! How to Pay Yourself as a Partnership Owner: The Owner’s Draw or Guaranteed Payments Partnership owners pay themselves by taking an owner’s draw or a guaranteed payment, with profits distributed to each member based on the partnership agreement. Note that partnership owners are not permitted to take a salary, as the IRS states that you cannot be both a partner and an employee. The Owner’s Draw An Owner’s Draw differs from a regular salary in that you can take money from the company’s earnings as needed, rather than on a scheduled basis. Depending on how well your business is performing, you can draw more or less, allowing for flexibility in your payments. If your business is profitable, subtract liabilities (any debt your company owes) from assets (items of value the company owns). The remaining amount is referred to as ownership equity, which is what you will take your draw from. This amount is reflected on the Balance Sheet, under Owner’s Equity. Once you determine the amount you want to take, it can be transferred from your business bank account to your personal account. Because the Owner’s Draw is taken from ownership equity, it reduces the funds that can be used for operating or growing the business. Partnership members must balance how much they need to support themselves and what the business needs to thrive. Guaranteed Payments What if your business is in the early stages, and not producing profit yet? The solution lies in guaranteed payments. Guaranteed payments are a minimum amount that is guaranteed to be paid to a partner regardless of business profitability. The payments must be made even if the result is a loss for the business. They provide a consistent income to partners as the business grows and becomes profitable. Note that if the business is operating at a loss and providing guaranteed payments to partners, that loss must be funded through debt or investments (equity) to ensure that the necessary expenses of the business can be paid. Discuss your options with an online partnership accountant at xendoo. They will provide the financial insight needed to make the most informed decision regarding self-payment in your partnership! How Do I Pay My Taxes as a Partnership Owner? Partnerships file their taxes using Form 1065, which determines that each partner is reporting their income correctly. Each partner must complete an accompanying Schedule K-1, which breaks down their share of the profits and losses. They also report this information on their individual tax return (Form 1040), with a Schedule E attached. The owner’s draw is not subject to payroll taxes, but it is considered personal income and is taxed accordingly. If partnership members take the owner’s draw, they must pay estimated taxes, which helps decrease their tax bill. Guaranteed payments are tax-deductible to the partnership, and are treated as self-employment income for the partnership members. They are reported on the Schedule K-1, and noted as income on the Schedule E. If the partnership members choose to take guaranteed payments, they will pay both income tax and self-employment taxes as individuals. What are the Tax Advantages of Filing as a Partnership? No Double Taxation The partnership itself does not pay income taxes. Partnerships are considered “pass-through entities”, meaning that profits and losses “pass through” the business to the partners, with each paying a portion of the total income tax of the business’s earnings. In this situation, profits and losses are only taxed at the personal level, which allows partnerships to avoid double taxation. Even with a significant tax advantage, taxes can still be stressful. Talk to a small business CPA at xendoo. We provide online accounting for partnerships, as well as online bookkeeping services so you can stay tax-ready all year long. xendoo is Here for You You are not alone as you navigate self-payment, tax filing, and all the financial ins and outs of your partnership. xendoo is here to help! Our online bookkeeping and accounting team provides partnership owners with the financial insight needed to make the most informed decision regarding self-payment and partnership taxes! Are we a fit for your partnership? Get started today with a free consultation. Want to learn more about the different business entity types? Click here.
How Do I Pay Myself and My Taxes as an S-corporation?
When businesses are born, business owners are likely not daydreaming about taxes and payroll. Yet, they still face the unique challenge of figuring out how to pay themselves, file their taxes, and maximize their tax savings. As their business grows, many business owners opt for S-corporation Election due to the tax advantages it presents, but they must be mindful of how much they pay themselves, in order to remain compliant in the eyes of the IRS. Unless they moonlight as an experienced accountant, self-payment and tax filing can be confusing and stressful for small business owners – understandably so! Like most things involving taxes, it gets complicated. That is why we have created this comprehensive guide to help business owners pay themselves and maximize their savings as an S-corporation! How to Pay Yourself as an S-corporation: Salary and Distributions Under other business structures, you simply take a share of company profit as your payment. In an S-corporation, you have the option to pay yourself in two ways: Salary, your wages or reasonable compensation. This is considered taxable income to the payee by the IRS. Distributions, the earnings that are paid as distributions to you as the owner. These are not employee wages and are not taxed as self-employment income in an S-corporation. For example, if your business produced $100,000 in profit, you could take a reasonable salary of $40,000, and the remaining $60,000 as a distribution. It may seem strange to receive payment in two different forms, but it comes with significant tax savings, which will be discussed shortly. How Much Do I Pay Myself as an S-corporation? The short answer is, it depends. S-corporation shareholder-employees are required to receive a reasonable salary, which is generally defined as at least what other businesses would pay someone in that role for similar services. Every business is different, so the exact amount that business owners pay themselves will vary. To determine your reasonable salary, you can start with the U.S. Bureau of Labor Statistics, which provides insight into compensation across different industries. This will give you an idea of what you should be paying yourself based on your field and the profit you produce. Some of the factors the IRS considers to determine a reasonable salary are: Training and experience Duties and responsibilities Time and effort devoted to the business Distribution history Payments to non-shareholder employees Timing and manner of paying bonuses to key people What comparable businesses pay for similar services Compensation agreements Use of a formula to determine compensation You must be careful to pay yourself a reasonable salary. Paying yourself a salary that is too low (or none at all) can draw scrutiny from the IRS, as it is considered an attempt to avoid paying self-employment taxes. The good news is that you do not have to figure it all out on your own! The xendoo team is more than happy to help you determine your reasonable salary. Speak to one of our online accountants to learn more. How Do I Pay My Taxes as an S-corporation? The first step is to elect to be taxed as an S-corporation. To qualify for S-corporation status, your business must meet the following requirements: Your business must be incorporated in the United States. Your business may only have certain types of shareholders, including individuals, and certain trusts and estates. They may not be partnerships, corporations, or non-resident alien shareholders. Your business cannot have more than 100 shareholders. Your business can only have one class of stock. Your business cannot be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations). If your business meets all of this criteria, you can move forward by filing Form 2553, and sending it to the IRS. If your company has multiple shareholders, each of them must sign and submit this form as well. Once approved by the IRS, you will file your S-corporation taxes using Form 1120S. To minimize error and maximize tax savings, partner with an online Tax CPA at xendoo. We file your taxes for you so you can focus on growing your business. What are the Tax Advantages of Filing as an S-corporation? No Double Taxation C-corporations are taxed twice, with the business paying corporate income taxes, and shareholders paying taxes on their share of the income. On the other hand, S-corporations are not subject to corporate income tax. Instead, shareholders file a Schedule K-1 along with Form 1120S, which reports their share of the company’s profits or losses. This allows S-corporations to avoid double taxation. No Self-Employment Taxes (on Distributions) Another key advantage of S-corporations Election is that the distributions owners receive are not subject to self-employment taxes! Every small business must pay self-employment taxes to fund social security and medicare. If your business operates as an LLC, you are required to pay self-employment taxes on your entire share of the profit, regardless of how you use the money. On top of that, you will also be taxed at your personal income tax rate. As the owner of the S-corporation, you only pay self-employment taxes on your reasonable salary. The distributions you take are exempt from self-employment tax! To illustrate, let’s revisit the example from earlier: Your business makes $100,000 in profit. As a single-member LLC, you will pay $15,300 in self-employment taxes. If you file the S-corporation Election, you pay yourself a reasonable salary of $40,000. The remaining $60,000 is taken as a distribution from profit. You will pay $6,120 in self-employment taxes only on your salary. The remaining $60,000 is exempt, resulting in a tax savings of $9,180 compared to the LLC! For quick reference, take a look at the chart below: S-corporation Election is a simple, yet effective, way to maximize your tax savings. Are you ready to take the next step? Schedule a free consultation with a xendoo accountant today! xendoo is Here for You You are not alone as you navigate the waters of self-payment and tax filing. xendoo Online Bookkeeping, Accounting,
Learn When You Should Outsource Your Accounting
Business owners have a ton of demands on their plate, from bringing on the right staff members to marketing their products and working to improve the customer experience. But as your business starts to take off, it can leave you with a difficult choice. Should you focus on growing your core business or continue to focus on the administrative side, like managing your accounting and bookkeeping needs? When your business was small, it was easy to handle both. But now that you’re growing, it may be more difficult to adequately cover your administrative tasks. Getting behind in your books can leave you frantically preparing for tax season. Without accurate financial records, it can be harder to secure funding and prepare for the future, too. Outsource accounting services can help you stay up-to-date on your books, compliant with regulations, and firmly in control of your company’s financial future. With that in mind, here are some of the reasons why you should consider partnering with an online accounting firm. Scaling as Your Business Grows Your profitability depends on your ability to generate revenue and sustain growth over time. Outsource accounting services can help you accomplish this, providing a set of benefits that can help to cover back office responsibilities as you and your team focus on your core business tasks. Specialized Skills for Every Step of Your Journey While in-house accountants tend to be generalists, online bookkeeping firms can offer a specialized experience for every phase of your business journey. Outsource accounting firms can often provide experience in unique areas such as: Personal financial planning and assistance Forensic accounting Managerial accounting IT auditing Non-profits Tax preparation Additionally, the financial professionals found at today’s top firms often have experience in your respective industry, providing actionable advice that can optimize your company at every step of your journey. Tax Planning The specialized skills of an outsourced accountant typically include experience in tax planning and preparation. Outsource accounting services can not only ensure that your company has set aside sufficient funds to pay your annual income tax, but they can also help you to take advantage of the existing tax code to enhance profitability while staying in compliance with regulations. This can be crucial for growing businesses. As your business expands, you may discover that rising revenues and a changing customer base can place you in unique tax situations. These needs can best be addressed by a professional accountant. Outsource accounting teams can enable you to navigate the confusing world of tax law. Financial Reporting and Planning Growing businesses often rely on small business loans for tasks like: Increasing inventory Hiring new employees or contractors Investing in new technologies Expanding retail or office space Other overhead costs But in order to secure a small business loan, most lenders will want to see the basic data about your financials. If your books are “a little behind,” this can jeopardize your ability to secure the necessary funds to grow your business. Top-quality outsource accounting services can provide catch-up options designed to bring your books completely up-to-date. Best of all, with accurate reporting, you’ll be in a better position to secure additional funds as your business expands. Taking Your Time Back Your time is too valuable to spend on your books. And accounting doesn’t usually fall under your team’s core competencies. A core competency is a unique skill or advantage that is ultimately responsible for your company’s growth. Any business process that’s not a core competency should be outsourced, allowing your team to focus on their respective areas of specialty. That’s why bookkeeping and accounting rank among the top tasks to outsource for growing companies. Outsource accounting services can help you with these administrative processes so that you and your team can stay focused on your core business. Here are just a few of the additional benefits that you can expect when you partner with high-quality outsource accounting services: Saving Time While Staying in Control Running your company is job number one. Relying on outsourced online bookkeeping services to handle your books can liberate you from the tyranny of administration and put you back in a position to make data-driven decisions. Some business owners are reluctant to do this since it naturally means surrendering control. But letting someone else handle your books can actually mean greater control over your company—not less. For instance, most accounting firms rely on the latest cloud-based technology, offering access to your financial data 24/7 from anywhere in the world. And at xendoo, our professional team is never more than a phone call, text message, or email away. You save time and benefit from up-to-date, easy-to-access information about your company’s cash flow and financial forecasting, giving you confidence that you simply can’t match by juggling your own spreadsheets and flow charts. Keeping Your Employees Focused Of course, you may already be wise enough to delegate these responsibilities to another team member. But think about how much more your team could accomplish if they weren’t spending time clicking around in QuickBooks. Your office staff could divert their attention to revenue-generating tasks as: Social media management Marketing Contacting customers Pursuing new leads Negotiating with vendors Outsource accounting services reduce the burden on your staff as a whole, allowing you to direct your team’s attention to the key processes that go into running your business. Spending Less Time Hiring New Staff Members When you pursue outsourced accounting for small business needs, you won’t have to interview, hire, and onboard your own staff accountant. That means you’ll spend less time assembling a job description, posting a job ad, reviewing resumes, onboarding a new employee, setting up benefits, or securing an office space. With an outsourced accounting firm, you can rely on a partner that will be around for the long term. You’ll benefit from the reliability of a dedicated team that understands your needs and provides ongoing support. A Fast, Reliable Turnaround What happens if your in-house accountant needs to take a sick day or goes on
Celebrating Women’s Small Business Month: Thoughts from xendoo CEO and Founder, Lil Roberts
National Women’s Small Business Month celebrates women’s achievements in business, and highlights what they bring to their communities as small business owners. We took a moment to interview xendoo founder and CEO Lil Roberts, to get insight into what it takes to be a successful entrepreneur, and the importance of women leading in business. Build Up Your Team What encouragement do you have for women who are in male-dominated industries? Shift your mindset. Do not let who dominates the industry define your role within it. Succeeding in business is all about excelling at what you do best, and building up a team that compliments the areas that you lack experience in. A multifaceted team is what makes a business thrive. When your team is growing their skills and knowledge, when your customers are happy, that is where you will find true success in your business. It is crucial to focus on the problem that needs to be solved, and build a team that is as passionate about solving that problem as you are. That is what success looks like in every industry, no matter who it is dominated by. Inclusive by Nature What is the importance of women leading in business? Lil smiled and recalled a moment in which she had the opportunity to speak to Frances Frei, Senior Associate Dean for Executive Education at Harvard Business School. Frei shared her experience of solving problems with a team of women and immigrants, referencing studies that prove that when women lead, everyone wins. That is not to say that people and businesses cannot thrive under male leadership – they do. It simply highlights that women tend to be inclusive by nature, and adept at empowering those around them to do and be their best. This leads to the creation of supportive, passionate teams and therefore, successful businesses. Hats Off to You To all female business owners and entrepreneurs, we are rooting for you. Happy National Women’s Small Business Month from your friends at xendoo! Take time to celebrate your business and your amazing team this month. Focus on what you love – growing your business. xendoo has your online bookkeeping covered. Schedule a free consultation with one of our accountants. We would love to get to know you and your business, and partner with you as your bookkeeping, accounting, and tax team! Watch the full interview with Lil below: https://youtu.be/XNhPisxJZAs
How Franchisors Can Build a Strong Item 19
How Much Money Can I Make? As franchisors work to sell franchises, one question they will always be asked is, “how much money can I make?”. The answer to this question can be found within one section of the Franchise Disclosure Document: Item 19. In order to create a compelling Item 19, franchisors need financial data on the performance of each franchise location. Typically, it is up to the franchisees to keep their books up to date and share that data with the franchisor. But, like many small business owners, they juggle countless responsibilities, may not understand the complexities of accounting, and bookkeeping understandably falls by the wayside. An Expert Team Without the right tools, building a strong Item 19 can feel like a massive undertaking. But, with the support of a franchise bookkeeping team, franchisors can receive timely, accurate information that will help them build a compelling Item 19! What is Item 19? Item 19 is a section in the Franchise Disclosure Document (FDD), a document that must be presented to individuals who want to purchase a franchise. The purpose of Item 19 is for franchisors to lay out the financial performance representations (FPR) of the franchise. It paints a picture of how potential franchisees can expect to perform and estimates how much money they could make should they join the franchise. Why is Item 19 Important? Item 19 is more than just a rundown of financial performance. It is a powerful tool that aids in decision making, builds trust between the franchisor and potential franchisee, and sets realistic expectations. Decision Making. A strong Item 19 helps franchisors attract and select the ideal franchisee candidates. It also ensures that a franchise brand is a solid investment, and helps the franchisee compare their options to determine if they are joining a successful business. Trust and Transparency. Item 19 signifies financial transparency and creates trust between the franchisor and potential franchisee. It shows that a franchisor knows their numbers, and has no issue disclosing them. The more information that can be provided on financial performance, the better. This transparency creates strong relationships between franchisors and their franchisees. Realistic Expectations. Item 19 allows the franchisor to set realistic expectations for financial performance. While a franchise may be profitable as a whole, individual success can vary. An Item 19 that contains data-backed projections of how much potential franchisees could realistically make provides the clarity they need to make an informed decision. How to Build a Strong Item 19 What do franchisors need to build a strong Item 19? Put simply, clear, accurate financials. The key elements that create a powerful Item 19 are: Average Gross Profit Average Gross Sales Cost breakdowns of goods and services Operating cost insights EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) Industry-specific data points (number of customers served, number of services provided or products sold, etc.) These metrics provide financial insight into the franchise, clearly lay out the costs and obligations of a franchise purchase, and set realistic expectations for financial performance. The amount of information franchisors are able to share in Item 19 largely depends on the information their franchisees deliver. How can franchisees provide reliable, accurate information to their franchisors? It comes down to consistent monthly bookkeeping. The Necessary Resources Franchises have unique needs when it comes to bookkeeping and accounting, such as tracking royalties and advertising fees, and sometimes, multi-currency support. All of it needs to be properly recorded in accounting software so monthly reports can be produced. Franchisors need a team of trusted experts with knowledge of the franchise space, so they can receive accurate data from their franchisees. Consistent Monthly Bookkeeping. In order for franchisors to build a strong Item 19, they need up-to-date financial records for each franchise location. A bookkeeper can provide visibility into financial performance on the franchisee’s behalf, so franchisors have access to the information they need across all locations. An online bookkeeping service is particularly helpful in this situation. Instead of hiring multiple bookkeepers, the franchisor can rely on a single provider who delivers uniform services for each location – no matter where they are located. Accurate, Up-to-Date Reports. Accurate monthly reports are crucial to creating a solid Item 19, as all information is legally required to be accurate, truthful, and backed by numbers. A well-documented financial history showcases franchise growth and profitability and helps franchisors create a compelling Item 19. Expert Bookkeeping for Franchise Businesses xendoo Online Bookkeeping is a leading provider of online bookkeeping and accounting services for franchise businesses. Our franchise-focused team provides franchisors with timely report delivery and visibility into financial performance for each location. Are we a fit for your franchise? Let’s talk! Schedule your free consultation today.
How To Find The Right Online Accountant For Your Business
Every small business owner should have access to an accountant. A small business accountant can provide guidance at every stage of your company’s development, and they can be invaluable when it comes to tax preparation, succession planning, and more. An online accountant can also deliver these services at a price that fits the limited budget of modern business owners. But finding the right accountant is about more than just cost. Today, we’ll go over the best features offered by online accountants for small business owners so that you can find the right fit for your company. What to Look for in an Online Accountant What should you expect when you’re searching for online accountants for small business needs? We’ve narrowed it down to these five essential features: Industry Experience Online accountants are not hard to find, but the key is to find an accountant whose skill set matches the needs of your business. What type of business do you run? Are you a service provider, a retailer, or exclusively eCommerce? Is your business structured as a partnership, an LLC, or an S Corp? These questions will be critical in finding the right accountant. You’ll need to partner with an online accountant who has clear experience in preparing tax returns and financial documents for companies that have a similar profile to yours. Ideally, you’ll want an online accountant who has worked for companies of a similar size, revenue stream, and industry, too. But don’t limit yourself to accountants that work with companies of your size. After all, most entrepreneurs entertain dreams of growing their businesses. This will also require the assistance of an accountant who has worked for companies that are larger than your own. Finding an accountant who has experience in working with companies your size and larger can set you on a positive trajectory, knowing that your accounting help will scale with your business. Access to Tools The right accountant for small business owners might also need to have some experience in cloud-based systems, especially if your business relies on such software as part of your regular operations. Before committing to an accountant, make sure to go over these requirements, and ask about their prior experience. This will ensure that you hire an accountant whose experience matches the evolving needs of your company. Dedicated Support Some business owners might feel nervous that hiring online accountants for small business needs will deprive them of the personal touch of a regular employee. This concern is perfectly understandable, but the right accounting firm can offer dedicated support in the way that you choose. You need an online accounting service that relies on the latest and best accounting software. You want a provider who can minimize accounting errors and ensure a greater level of accuracy. This is especially important during tax season, where errors can lead to an audit and potentially result in penalties and fines. Online software also means that you’ll be able to access your company’s financial information anytime, anywhere xendoo provides a number of ways to keep clients connected to the process. Our online bookkeeping features include regular monthly reports that will keep you up to date on your cash flow and other financial data. All of our dedicated professionals are available on your terms, whether that be through email, text message, or a phone call. We’ll work with you to communicate when you want and how you want, so you never feel out of touch with your online CPA. Streamlined Processes Modern business owners face a variety of financial needs, including: Bookkeeping Payroll Tax planning Tax preparation Budgeting and planning Personal tax preparation and filing Partnering with online accountants for small business needs such as these can ensure that important processes are completed on time and with total accuracy. Some business owners find that this is a welcome change from trying to juggle their own books. If you find yourself falling behind, some accounting firms offer catch-up accounting services, which can help you bring your books up to date. xendoo, for instance, offers catch-up services to clients who have fallen months or even years behind. By reconciling your books regularly, your small business accountant can ensure that you always have a clear picture of the financial health of your company. Understanding your cash flow can be invaluable when it comes to long-range planning, and it can also save you the hassle and expense of penalties from filing a late tax return. Streamlining your financial processes can even be helpful for obtaining future business loans. Usually, lenders will expect to see a report of your company’s financial status. By having recent reports relating to your income and expenses, you’ll be able to gain access to the funds you need to grow your business. Strong Reviews Once you locate a few online accountants for small business owners, you’ll want to narrow down the field a bit further. What are other customers saying about this accounting service? While every accounting firm will boast of its strengths, the real evidence of its success is found in the testimony of its clients! Typically, you won’t have to look far to find online reviews for an accounting firm, though the best online accountants will feature customer reviews and testimonials directly on their websites. These reviews provide several relevant clues about the nature of the firm. First, it communicates that other business owners have benefited from the services of an online accountant. Second, skimming through these reviews may help you locate companies that operate within your industry, which helps you to know whether an accounting firm “gets” the unique needs and challenges you face. You might also check to see whether an accounting firm has received any third-party awards or certifications. xendoo, for instance, is accredited by the Better Business Bureau and currently holds an “A” rating, the highest rating available. Transparent Pricing Finally, you want to find an accountant that offers transparent pricing. How much does an accountant cost? An accountant for small business
4 Signs Your Business Needs Online Bookkeeping
Bookkeeping is Holding You Back Business owners know their companies like the back of their hands. They are the head of every department and perform the work of multiple people. Of all the roles they play, our customers express that the bookkeeper role is their least favorite. DIY bookkeeping holds business owners back from fully focusing on their business, which is why they decide to outsource it. Is it time for you to do the same? Let’s take a look at 4 signs that it could be time to hire an online bookkeeper! #1. Bookkeeping Takes Time Away from Your Business… and Your Life Assess what bookkeeping is costing you. Is it taking significant time away from running your business? Let’s break it down. Suppose your time is worth $200 per hour, and you spend 10 hours per month doing your books. That costs you $2,000 per month just for bookkeeping! How much could you increase your sales? What else could you accomplish with that time? How does bookkeeping affect your personal life? Before partnering with us, many of our customers were up late at night and missed out on time with loved ones due to bookkeeping. Whether you are closing sales or enjoying a family dinner, your time is valuable. DIY bookkeeping does not make sense when you could be spending your time on the things that matter to you. #2. Your Books are Behind It is impossible to evaluate your business’ financial health when your books are behind. Old data cannot predict cash flow, track your revenue, or indicate if you are profitable. Out-of-date books may prevent you from making the best financial decisions for your business. A professional bookkeeper can bring your books up to date. Bookkeepers input and classify your monthly activity. They also generate vital monthly reports such as Profit & Loss statements and Balance Sheets, which display your total income and expenses and your assets and liabilities, respectively. They also provide actionable insight to the current state of your finances. xendoo bookkeepers reconcile your books weekly to keep you on track for future success. Guess what! You are not alone. 25% of business owners are behind on their bookkeeping. Whether you are behind a few months or a few years, xendoo will bring your finances up to date in no time. To get your books caught up, click here. #3. You are Not Sure if You are Doing Your Books Correctly DIY bookkeeping leaves room for error, especially in the hectic life of a business owner. It is rarely anyone’s area of expertise (or passion). If your numbers are not adding up, do not wait until tax season to figure out why. Bookkeepers connect the dots between your sales, expenses, and profits to ensure business growth. They know how to properly categorize your transactions, keeping your books compliant and ready for tax season. At xendoo Online Bookkeeping, you can rely on your dedicated team of finance experts to deliver accurate statements and financial peace of mind year-round. #4. Tax Season is Chaotic When tax season rolls around, do you drop off a 30-pound box of receipts at your accountant’s office and hope for the best? After all the back and forth, are you disappointed by your tax refund? A chaotic and unrewarding tax season is a surefire sign that it is time to hire a bookkeeper. Your bookkeeper’s meticulous organization of your finances sets you up for smooth sailing during the most dreaded time of the year. Best of all, because your bookkeeper understands your business and your finances, they recognize every opportunity to maximize your tax savings! You will never have to worry if you pay too much in taxes. With a bookkeeper on your corner, you can walk into tax season prepared – and you will walk out knowing you maximized your tax savings! The Importance of Bookkeeping Bookkeeping is vital to the success of every business. It provides insight into your financial health and drives your decisions. When your books are in order, you can strategize effectively and plan for growth. Keeping your books compliant and up to date is crucial throughout the year so that you are ready for tax season. Consistent bookkeeping habits maximize your deductions and make an otherwise stressful time, a breeze. Bookkeeping is preventative care for your business. It puts a microscope on your finances to help you catch small problems before they snowball. A professional bookkeeper can take the stress of bookkeeping off of your plate so you can fully focus on running your business. xendoo Does it for You Bookkeeping does not have to be an uphill battle. Let xendoo’s expert online bookkeeping and tax team handle the hassles so you can have more time for what you love! Schedule your free consultation today! [av_sidebar widget_area=’Blog Post Disclaimer’ av_uid=’av-om2w’]
How Do I Pay Myself and My Taxes as a Sole Proprietor?
Where to Begin? Businesses are created because business owners have a passion that needs to be pursued. They may be changing the world and even their own lives. Payroll, however, is most likely not their passion. Yet, every business owner faces the unique challenge of figuring out how to pay themselves. Paying yourself as a sole proprietor can feel daunting. How much do you pay yourself? How do taxes factor in? Unless you have a side hustle as a financial advisor, it can be difficult to know where to start. Self-Payment, Simplified Breathe a sigh of relief. Paying yourself as a sole proprietor is not as complicated as it seems. Tax filing is simplified too! In this blog post, we will walk you through paying yourself as a sole proprietor! How Do I Pay Myself? You can pay yourself as a sole proprietor by taking an Owner’s Draw. An Owner’s Draw differs from a regular salary in that you can take money from your earnings as needed. Depending on how well your business is doing, you can take more or less, allowing for flexibility in your payments. If your business is profitable, start by subtracting liabilities (any debt your company owes) from assets (items of value the company owns that will provide benefit in the future). The remaining amount is referred to as ownership equity, which is what you will take your draw from. Once you decide on an amount to take (more on that in a moment), it can be transferred from your business bank account to your personal account. Because the Owner’s Draw is taken from ownership equity, it reduces the funds that can be used for the business. Sole proprietors must balance how much they need to support themselves and what their business needs to thrive. How Much Do I Pay Myself? To set an appropriate payment for yourself, you have to determine your projected profits. To estimate how much you can draw and when you must: Set up a separate business bank account. As a sole proprietor, you do not need to incorporate or register your business. The business name will default to your legal name unless you file a DBA (doing business as), which allows you to operate under a different name. Once your DBA is set up, you can open a business bank account. This ensures that your personal and business expenses stay separate, and creates an accurate picture of your business’s finances. Keep your books up to date. Keeping detailed records of your income and expenses will help you identify when cash flows into and out of your business, and how cash flow may change over time. An online bookkeeping service will be able to take this task off your plate, saving you time and stress. You will also receive monthly reports that give you actionable insights to help you make the best decisions for your business. This will help you determine your projected profits and when you should take your draw. You can start out by paying yourself only what you need to meet your basic needs until your business breaks even. From there, you can increase your pay to your “market value”. You can increase your pay again once your business is producing consistent profits. How often you choose to draw is up to you. Some may follow a bi-weekly schedule, others may draw as needed. It ultimately depends on your personal preference. How to Pay Your Taxes Sole proprietorships are considered pass-through entities, meaning the IRS views your business, personal assets, and liabilities as one and the same. Because of this, you are only required to file a personal tax return. Income and expenses related to your business are accounted for on your individual Form 1040, Schedule C. While the Owner’s Draw is not subject to federal or state income tax, it is also not expense-able. It will appear under the total net income of the business, which is taxable. Be aware that sole proprietors are required to withhold self-employment taxes, which contribute to Social Security and Medicare. As of right now, the self-employment tax rate is 15.3%. So, how can you maximize your tax savings? Business tax preparation and filings are included with almost all of our packages! Your online Tax CPA takes care of filing your Schedule C that goes along with your personal tax return to itemize business deductions. xendoo is Here for You The good news is that you do not have to figure it all out on your own. xendoo Online Bookkeeping is here to help! We move at the speed of business, so you can make informed decisions faster – like deciding how much you should pay yourself as a sole proprietor! Get started with a free trial. Ready to take the next step? Schedule a free consultation with a xendoo accountant today! Want to learn more? Learn the difference between the business entity types here.
Online Bookkeeping Services for Small Business Owners
Author’s Note: This post was updated on February 23, 2022, with new information, links, and resources. Bookkeeping is vital to the success of every business, but business owners rarely have the time (or desire) to manage it themselves. Many small businesses save time by partnering with an online bookkeeping and accounting team. However, there are some key features to consider when selecting online bookkeeping services for your small business. What Is Online Bookkeeping? Online bookkeeping, also called virtual bookkeeping, means managing your bookkeeping remotely. A virtual bookkeeper works directly with your business to manage your company’s accounting and financial reporting. Typically, your company’s financial activity, records, and transactions will be stored in cloud-based accounting software that you are able to easily access. An online bookkeeper will initially undergo a consultation with you to understand the needs of your business and your regular financial activities. Then, they can set up a system to generate sales invoices, manage accounts payable, and process payroll. With the right online bookkeeper, you can regularly view your company’s financials and make strategic business decisions. How do you choose the right financial partner for your business? There are many options available, ranging from traditional CPAs to tech-savvy online providers. Today, we will take a look at two popular options: xendoo Online Bookkeeping and Bench. Both provide quality bookkeeping and tax services, but there are some key differences in features that may tip the scale for you: Online bookkeeping and tax services Additional services Accounting software Free trial In this blog post, we will explore these differences so that you can make the best choice for your business. Online Bookkeeping Services and Taxes xendoo’s online bookkeeping and tax packages start at $395. We reconcile your books weekly, and deliver your reports as early as the 5th business day of the month, depending on the plan you select. What Services Do Virtual Bookkeepers Offer? You may also want to consider what other financial services your business needs. A virtual bookkeeper offers a wide range of services. These may include any of the following: Cash Reconciliation Your company may have many cash transactions throughout the month. These can include payments, receipts, and other items. A virtual bookkeeper can connect your cash and lines of credit with your accounting system to record transactions as they occur automatically. Accounts Receivable Management As a business owner, you likely don’t have a lot of time to chase down overdue payments from your customers. Instead, your focus is on growing and managing your business. A virtual bookkeeping service can assist you with client account collections and ensure that any significantly overdue accounts are brought to your attention immediately. Accounts Payable Management Rather than relying on what you think you have incurred in expenses for the month, you can allow a virtual bookkeeper to record actual and expected expenses. This approach allows you to strategically plan your outgoing cash flow for the upcoming weeks. Cash Flow Management Cash flow management tracks the money that you have coming into and out of your business. Online accounting services should provide a clear picture of your cash flow. Simply put, money coming in from revenue should be greater than money going out for employee pay, vendors, tools, and other expenses. Financial Reporting Accurate financial reports are an important part of the monthly accounting process. xendoo’s financial reports include profit and loss statements and balance sheets. Plus, you can view reports from anywhere with the mobile app. Tax Preparation Frequently, online bookkeeping services will offer tax preparation services. This service can save you a lot of time and effort. You can also make sure that your tax return will be completed by someone who understands your company and its financial performance. What if you are behind on your bookkeeping? Outside of the ongoing subscriptions, xendoo and Bench offer catch up bookkeeping services so you can get previous months’ books in order! Accounting Software There are a number of online accounting software systems available. The most popular include QuickBooks Online and Xero. Both of these services are cloud-based, with modern user interfaces that are easy to interpret. They integrate with a number of third-party applications, which gives them greater functionality. Prices for both systems are much less than you would pay for a full ERP. However, both systems allow for a wide range of reporting tools that are perfect for small business accounting. They have the ability to reconcile cash accounts and provide accurate accounts receivable and payable reports. You may also generate a full set of financial statements for monthly reporting purposes. The biggest difference between xendoo and Bench is the software used to do your bookkeeping and accounting. xendoo works with both Quickbooks Online and Xero. The biggest advantage of these two programs is that you own the software. Working with Quickbooks Online and Xero, you will always have access to your financial records, no matter who does your bookkeeping. Bench only uses its proprietary software, which does not integrate with any other accounting programs. If you ever need to leave Bench, your records will not go with you and your financial history will have to be rebuilt. If you want to be able to hold onto your data, Bench may not be the best choice for your business. Try Us Out xendoo offers a free trial. The online accounting team completes your books from the previous month and provides a Profit and Loss Statement and Balance Sheet. What happens if xendoo is not the best fit for you? In that case, we will gladly connect you with others in our network so you can find your ideal financial partner. The completed books and financial reports are yours to keep in your QuickBooks Online or Xero subscription! If you decide not to work with Bench, you can hold onto the financial reports, but you will no longer have access to the previous month’s bookkeeping as it is done in their proprietary software. We’ve done a detailed xendoo vs Bench comparison, but we’ve highlighted key differences in
How an Online Accountant Can Help Your Business Recover Post-COVID
Everyone was affected in one way or another by the COVID-19 pandemic. Whether it was by contracting the disease, dealing with illness in your family, or just the extended effects of the shutdowns and restrictions, this global event didn’t leave anyone untouched. For business owners, the challenge of keeping the doors open and the lights on has been significant, despite government efforts made through the CARES Act. Depending on your industry, you may have had to operate in a significantly modified capacity – or you may not have been able to operate at all. Sadly, many businesses did not make it through the pandemic and were forced to close. As restrictions start to lift in many areas, business owners need to carefully construct a plan for getting back on track. In this post, we’d like to focus on business recovery. Specifically, we’d like to talk about how your business can lean on an accountant to aid with the various elements of the recovery process. Let’s take a closer look. An online accounting service is always important Before we dive into the specifics of business recovery after the pandemic, we should state the obvious – a good accountant is always important. Whether times are good or bad, the work a reliable accountant does for a business is indispensable. Keeping accurate books, producing financial reports, and paying taxes are all important no matter what is going on in the world. With that said, the road to recovery after such a long and difficult stretch is sure to be challenging. Countless businesses are vying for the attention of consumers and clients, and even more are going to close in the years ahead. You can’t afford to let any advantage slip away, and having a trusted accountant by your side is a big opportunity that can help grow your business. What roles does an accountant play in your business recovery? The list below highlights some of the specific ways an accountant can help guide your business through the months and years ahead. Covering the basics. In difficult times, it’s even more important to make sure the basics of doing business are covered. And there is nothing more basic in the business world than keeping accurate books. With an accountant available, you can make sure bank statements are reconciled, financial statements are prepared in a timely manner, and more. Whether you need to do some catch up bookkeeping or you just want to open up time in your schedule, an accountant is the answer. Collecting every dollar. Okay – so you’ll probably never be able to collect every single dollar that is owed to your business, but a good accountant will work hard to collect on as much of your accounts receivable as possible. In this kind of business environment, every single invoice is important, so you don’t want to let any just slide through the cracks. Chart a recovery timeline. It’s quite likely that your business isn’t in great financial shape at the moment. That’s certainly understandable, and you aren’t alone. With the help of an accountant, you can plan out a path to recovery that is reasonable and attainable based on your financial reports and projects. It will be difficult to plan a recovery effort without an accountant to bring some accuracy to the financial side of things. Seek funding. Finally, your accountant may be aware of some loan options or other funding sources your business could consider. Fewer and fewer resources are going to be available to businesses as the pandemic wanes, so knowing where to look for financial support is important. Why you should outsource your accounting There is a flip side to all this talk about the importance of accountants – they aren’t free. It costs money to hire an accountant, and during such difficult times, you might be tempted to do as much of the accounting work yourself as possible. Fortunately, outsourced accounting and bookkeeping is an affordable alternative and sort of a middle ground between hiring a full-time accountant and taking the DIY approach. When you outsource accounting and bookkeeping, you can bring down overhead costs in the back office while simultaneously getting the expert help and input you require to save time and make decisions. Your business needs you to lead the charge toward recovery, and that’s going to be hard to do if you are sitting in the back with your nose buried in spreadsheets. Conclusion xendoo loves to take the stress out of accounting. We have been serving businesses since long before the pandemic began, and we are proud to be here to help all kinds of business owners make it through this challenging time. With reliable, affordable, and versatile services, you can lean on xendoo to keep your financial house in order.
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.
How Outsourcing Accounting Can Help Grow Your Small Business
Small business owners are notoriously short on time. They manage everything from sales and marketing to employee scheduling and benefits, not to mention being an expert in whatever good or service it is that their business offers. And there are hurdles every step of the way as you try to grow your business. Hiring an outsourced accounting service can help you tackle many of these including ensuring you don’t pay too much in taxes, that you have time to focus on sales and marketing, and that you are able to prepare thorough financial reports for investors. Why is an accountant important in a business? Accountants consider the big picture strategy needed to keep your business strong and growing. They can answer your questions about financial reports, cash flow, depreciation, and more. They can give tax savings advice, such as when to make capital purchases, what you can deduct, and how to reduce taxes on capital gains. They can identify opportunities to improve profit margin and business growth and keep you legal – preventing missed deadlines and noncompliance penalties. When you’re looking to grow your business but don’t have the time or resources to do so, hiring an outsourced accountant or outsourced accounting service like xendoo can free up your time and provide insights and ways into how you can increase your cash flow, strategically prepare for your taxes, and focus on what you do best. How does outsourcing accounting help your business grow? It’s not just keeping track of your financials. Outsourcing an account can help your business grow in the following ways: Accountants help save money We can tackle the reinvestment more in detail here and use the tax preparation anchor here. Accountants help small business owners save money in many ways, including through strategic tax preparation. They help you make smart decisions on your operating expenses, when to make big purchases, and what deductions you can make. Many small business owners spend too much money on taxes – an accountant can help you prevent overspending on taxes and help you strategize on how to cut costs in every area of operation. The money you spend on an accountant is an investment into your business and will help you grow by saving you money in the long run and leaving you with more money to invest back into your business. Accountants help save you time Time can be spent on marketing and other business growth while they look into the books. Small business owners have enough on their to-do list – when you’re looking to outsource some of the work and focus on growing, outsourcing accounting and bookkeeping services are the best choices. Bookkeepers and accountants will do a better job at a quicker pace than a small business owner who is strapped for time and whose talents might lie elsewhere. You’ll be able to focus on sales, marketing, and all of the other ins and outs of growing your business when you aren’t worrying about accounting. Outsourced accounting services are scalable As you grow so can your services without the need to hire FTE. Your outsourced accounting team can easily grow as your small business does. You won’t need to hire a full-time employee to handle your accounting when you have a scalable outsourced accounting team on board. You can skip the hassle of hiring and managing a full-time employee as you grow (and save on the need to offer expensive benefits, too!) by hiring outsourced accounting services like xendoo. Better business analysis Gives you accurate insights into your business strengths and weaknesses, which is important if you want to expand. Investors will want to see accurate books. As you grow you will continuously need better analytics on your business. An outsourced accounting team can provide accurate insights into your business strengths and weaknesses, helping you strategize on how to grow. And when you’re ready to take on investors or apply for a line of credit the banks and investors will want to see accurate and detailed financial reports. By having an outsourced accountant on your team, you will be able to show investors and banks precise, up-to-date records and prove you take your finances and the growth of your small business seriously. Help increase cash flow Keep track of outgoing and incoming money. Can find ways to help you save money long term with paying on time or ahead, and chasing down delinquent invoices. A key strategy to growing your business is taking charge of your cash flow. Outsourced accounting services like the team at xendoo can keep track of your incoming and outgoing money and can help you find ways to save money in the long term – through strategic tax preparation, cutting operational costs, and paying your bills on time or even ahead of time! And they can help you chase down delinquent invoices from clients who are behind on paying you. Your accounts payable and receivable will be closely monitored and managed without you ever needing to worry about it. Outsourcing accounting can help you grow your business. By outsourcing your accounting, you can save money on hiring a full-time accountant, plus, it will give you more time to focus on running your business and creating value for your customers and your employees. xendoo is all about providing timely and accurate financial information to business owners allowing them to make strategic decisions. If your business is struggling, know that there is a better way and xendoo can help. 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Pass-Through Deductions: What It Is and Who Qualifies
One of the best small business-friendly aspects of the Tax Cuts and Jobs Act (TCJA) is the 20% deduction you can take on your income tax if your business is a pass-through entity. Here’s what you need to know about it. What Is the Deduction The TCJA was passed in 2017 and first applied to 2018 tax returns. Provision 199A of that law states that you can deduct 20% of your “qualified business income” which was earned from a “qualified trade or business.” What Is a Pass-Through Entity Any business structure that allows you to receive income as an “owner’s draw” rather than as a regular employee is a pass-through business. The money is “passed through” from the company account to your personal account. You only pay income tax on it with your personal return; you don’t have to file a separate return for the business. Pass-through entities include:• Sole proprietorship• Partnership• LLC (limited liability corporation)• S-Corporation However, there are some restrictions. Taxable Income Restriction • Less than $157,500 (single, married filing separately, head of household) or $315,000 (married filing jointly): you qualify for the full 20% deduction.• $157,500 – $207,500 or $315,000 – $415,000, respectively: your deduction may be less.• More than $207,500 or $415,000, respectively: you are not eligible for the deduction. Specified Service or Trade Restrictions What your business does may disqualify it from the deduction. Here’s the list of excluded fields, as issued by the Treasury Department in August 2018: • Health• Law• Accounting• Actuarial science• Performing arts• Consulting• Athletics• Financial services• Brokerage services• Any business where the principal asset is the reputation or skill of one or more of the employees or owners• Any business that consists of investing and investment management, trading or dealing in securities, partnership interests or commodities But don’t give up if you see your business in one of these categories, because there are numerous exceptions. For example, in the Health category, healthcare providers who provide services directly to patients — such as doctors and dentists — are not eligible. On the other hand, health clubs, spas, medical research companies, and those who sell pharmaceuticals or medical devices may qualify for the deduction. In the case of businesses who both provide services and sell products, eligibility is determined by sales:• Less than $25 million in gross receipts and less than 10% of your business comes from disqualified services; or• More than $25 million in gross receipts and less than 5% of your business comes from disqualified services Employee and Property Restrictions There are two further conditions that could affect how much of a deduction you can take. They are:• Business that pay W-2 wages• Business that owns “qualified property” such as real estate or other tangible assets that can be depreciated If your business fits either of these descriptions, your deduction will be the lesser of:• 20% of qualified business income (or the “tentative deduction”); or• The greater of:o W-2 wages paid x 50%; oro W-2 wages paid x 25% + the unadjusted basis (cost) of your qualified property x 2.5% Still confused about the pass-through deduction? Your xendoo small business expert can clear things up, answer your questions, and help you get every tax break you deserve.