Signs that you need help with cash controls

Signs that you need help with cash controls

Most businesses aren’t structured to provide the right kind of help with cash control. They put the accountant on a pedestal, and believe the books are the only place where financial controls need to be in place. This mentality leads to all kinds of bad things; from fraud to not having enough funds to pay your suppliers.

When a business is in need of funds, the common solution business owners think of is to borrow from a bank. Banks are a great source of financing and working relationship but at the same time, they are controlling. A lot of the time businesses get into financial trouble when they don’t keep track of their cash flow effectively.

If you want to keep your business running in the long run, you need to identify these signs before they end up costing you your business:

 

Cash control break-even pointYou don’t know your cash break-even point

You’ve put all your hard work into starting a business, but that doesn’t mean it’s time to coast.

Keeping a close eye on your monthly break-even point is crucial. Why? Because if you don’t know exactly how much cash you need on hand each month to meet expenses and keep your business running, you risk coming up short at crucial times.

So what is the break-even point? It’s the amount of cash you need on a monthly basis to meet your expenses based on your monthly revenue.

That may sound confusing, so let’s break it down: Your monthly revenue is the money you make from sales in the period of time before interest is applied—usually a month. Your expenses are all the costs related to doing business—rent, inventory, payroll, etc.—for that same period of time. If you’re not bringing in enough money every month to cover those expenses, then you’re probably going to end up with some very angry landlords and a lot of disappointed employees.

The best way to find out where your break-even point is and whether or not it’s healthy is to analyze your business plan and see what kind of revenue it projects for the next few months. That should give you a sense of how much money you need to earn from your business in order to make ends meet and continue operating for another day.

 

You have no quarterly cash forecast

As a business owner, if you don’t implement a quarterly cash forecast, you are setting up your business for a whole lot of problems in the future.

Without it, your business will have difficulty getting loans or credit because financial institutions will see that you haven’t been planning for the future and that you don’t know your numbers well enough to make predictions and set goals. In other words, you’re not taking control of your finances. And if you aren’t taking control of your finances, how can a bank trust that you’ll pay back a loan?

In addition, if you’re not doing cash flow forecasting, it’s much more likely that you’ll run out of money and experience unexpected cash flow challenges. This can be devastating for small businesses. According to Fundera, around 82% of small businesses fail due to cash flow problems.

Quarterly cash flow analysis can help prevent this by giving you a look at what’s coming ahead—both good and bad—so that you know when to expect growth and when to tighten your belt.

 

Poorly planned use of long-term debt

Cash control long-term debtSometimes, when you’re in the middle of a growth spurt and need to expand your operations quickly, it’s tempting to use long-term debt to cover short-term costs. That’s because it’s often easier and faster to get money from a lender than it is to raise funds from investors or sell equity shares yourself.

But what happens if you continue this practice over time? You’ll end up with a lot of debt that needs paying off, and that can make your company less attractive to potential buyers or investors. Plus, interest rates are higher on loans than on equity shares or investments in your company’s stock price—which means that you’ll be paying more for the same amount of capital!

So if you’re considering taking out a loan for short-term expenses but don’t have a plan for covering those payments once they come due (like selling off assets), then it’s probably not such a good idea.

 

Cash control tips

Here are some tips to help you get your cash controls in order:

 

Cash flow vs. revenue

When you’re thinking about your company’s financial health, you’ll need to know the difference between cash flow and revenue. These two indicators measure different aspects of your business, so understanding them will help you keep track of how things are going.

Revenue is a function of sales and marketing—how effective your team is at getting people to buy your product or service. Cash flow, on the other hand, is a function of liquidity or money management—how much money you have on hand at any given time.

It’s possible for your cash flow to be negative without it being a problem because sometimes money goes out before it comes in. It’s not possible for revenue to be negative unless something is seriously wrong with your company.

One thing to keep in mind when measuring cash flow: don’t forget to include income from sources outside of your core product or service.

 

Inflow vs Outflows

Okay, you get it. You know that cash control is important.

But how do you actually get more of it?

There are a lot of ways to look at managing cash flow, but the main thing to keep in mind is this: You should identify all sources of business cash inflows and outflows and then work to maximize inflows while minimizing outflows, and to a large extent that means focusing on timing.

To figure out where your money is coming from and going, you should consider things like recurring revenue streams (like monthly subscriptions), one-time payments (like one-time purchases), and other factors like tax deductions or refunds.

Then, once you know how much money is coming in, you can set goals for how much money you want to bring in each month or year—and how much of it comes from recurring (monthly) sources versus one-time sources. Once you’ve set those goals, look at each source individually and see what steps you can take to make sure those dollars stay on track!

 

Have a bookkeeper by your side

Having an experienced bookkeeper to manage and further develop your cash flow strategy is important if you want your business to succeed in the long run. They have the expertise in the field and they also give the added bonus of checks and balances that are needed to ensure proper cash control. If you don’t know any bookkeepers or if you don’t have one, well you’re in luck! Our experienced bookkeepers are ready to help you with your cash control woes, so send us a message today!

Get in touch with us!

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IRS Falls short on their FATCA Reciprocal Plans

IRS Falls short on their FATCA Reciprocal Plans

If you’re reading this, chances are you’re an American. And congratulations: that means you’ve worked within a citizenship-based taxation system your whole life. That’s right! US Citizens and Green Card Holders are required by law to report and disclose their worldwide income to the IRS by filing their federal tax returns yearly.

In the past, this has resulted in American expats being caught up in tax evasion cases. But the impact of this has only been truly experienced by Americans living in the past few decades. In 2010, the Foreign Account Tax Compliance was introduced to battle tax evasion and instigate voluntary tax compliance with the US tax laws. With the introduction of FATCA, financial institutions based abroad and investment firms are obligated to report the account balances and contact information of their American account holders straight to the IRS.

How does the IRS enforce this if the foreign financial institution is miles away? Simple. Whenever foreign financial institutions don’t comply, the US will impose withholdings when the foreign financial institutions decide to trade in US financial markets. However, some foreign financial institutions think that FATCA reporting is too much work with not enough upside for them that they sometimes decline, freeze, or close accounts that are under US citizens, citing that it’s too much of a liability.

 

give and take - IRS reciprocal reporting FATCA IRSFATCA reciprocal reporting – A two-way street

FATCA was always intended as a “you scratch my back, I’ll scratch yours” deal. Foreign governments would give the US financial information on their citizens and corporations, and in return, the US would do the same for them.

But it didn’t turn out that way. Foreign countries have been providing the US with this information since 2014, but the US never held up its end of the bargain.

In a recent interview, the IRS Commissioner said that while he believes in “transparency where transparency is appropriate,” he admitted priorities were a difficult decision to make.

He explained further by saying, “We are forced to make difficult decisions regarding priorities, the types of enforcement actions we employ, and the service we offer.” Scarce resources and friction that’s coming from the American Banking community make reciprocal reporting to be a far-fetched dream, especially when the American Banking community already fought against the proposal of a homeland version of FATCA.

America’s inability to give back what they are getting may create unintended consequences in the near future. Other countries worry that hidden wealth may be placed in the US without their home countries’ tax authority even knowing.

About 100 countries (the US not included) have banded together to create their own solution in solving this problem. They’ve introduced the Common Reporting Standards (CRS), which is similar to FATCA to fend off tax evasion and to protect the integrity of their taxation systems by sharing vital taxpayers’ information across borders.

 

The IRS trying their best

In 2020, $573 million dollars have been spent by the IRS when it comes to FATCA enforcement. Before FATCA was introduced in 2010, the IRS had no way of knowing if US citizens and Green card holders have income generated abroad.

The latest TIGTA report hints that the visibility of American citizens’ foreign accounts is still low. The IRS Commissioner confirmed this in a committee hearing when he was saying:

“Congress enacted FATCA in 2010, but we have yet to receive any significant funding appropriation for its implementation. This situation is compounded by the fact that when we do detect potential non-compliance or fraudulent behavior through manually generated FATCA reports, we seldom have sufficient funding to pursue the information and ensure proper compliance.”

When FATCA was being conceptualized by Congress, thinking that it could generate about $8.7 billion in untapped revenue over the next 10 years. However, the IRS is a few billion short of the expected collection. For the last 12 years, the IRS was only able to collect less than $14 million.

 

You've got time to still be compliantStill got time to be compliant

Did you feel that? That’s the pressure to make a change.

The IRS has already agreed to work on some of the key recommendations from TIGTA:

  1. “Establishing follow-up procedures and initiating action on error notices with the FFIs
  2. Continuing efforts to systemically match Form 8966 and Form 8938 to identify non-filers and underreporting related to U.S. holders of foreign accounts and to the FFIs
  3. Informing taxpayers how to obtain global intermediary identification numbers
  4. Strengthening overall compliance efforts directed toward improving the accuracy of reporting by Form 1042-S filers.”

Since the IRS still working on making FATCA more robust, American expats still have some time to keep up with their taxes that are past due!

Don’t have an idea on how you can catch up with your past-due filing? Send us a message today and our Enrolled Agent will help you in no time!

Get in touch with us!

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Cash Flow Management tips and tricks

Cash Flow Management tips and tricks

As a business owner, you know that cash flow is the lifeblood of your business. But it’s so much more than that: it’s the difference between succeeding and failing in business. That might sound extreme, but it’s true. After all, if you find yourself unable to pay your bills or employees, then you’re out of business—even if you’ve got incredible products and customers that love you. So while it’s important to keep an eye on every aspect of running your business, make sure to never lose sight of your cash flow.

 

Cash Flow Definition

It’s like breathing. In… and out.

Cash flow, simply defined, is the movement of money into your business (that’s called inflow) and the movement of money out of your business (that’s called outflow).

Cash inflows can come from sales of goods or services to customers, but it only counts as an inflow when we collect cash from the sale. It’s the actual money that matters! Other examples of cash inflows are borrowed funds, income derived from sales of assets, and investment income from interest.

On the other spectrum is the Cash outflow. Cash outflows are the business expenses that you pay by giving up cash. Examples of cash outflows include paying employee wages, purchasing inventory or raw materials, purchasing fixed assets, and paying back loans.

An experienced Bookkeeper and Enrolled Agent can help you understand and see your cash flow statement.

 

Cash flow management tips and tricks #1:

woman holding proitProfit vs. Cash Flow – Know the difference between

Profit and cash flow are different concepts. Profit is income minus expenses over a certain period of time. Cash flow is the actual amount of money flowing in and out of your business on a day-to-day basis.

Cash flow, on the other hand, looks at a business’s inflows and outflows of cash over time. This is more of an operational figure—it helps you understand how your business is actually functioning, giving you insight into whether or not you have enough money to pay your bills and when you can expect to receive payment for your services.

Both profit and cash flow are important figures for understanding your business’s financial health, but they represent entirely different aspects of that health.

It seems pretty intuitive that a company that is not profitable can go bankrupt, but what about a company that is profitable? Is it possible for a company to go bankrupt even though it’s making money?

In theory, this is possible. It would take a lot of negligence and total disregard for cash flow—but it is possible. If you’re making money but spending more than you have on hand, you could end up with no assets or negative equity.

A cash flow gap caused by slow payment cycles can cause problems for your business, including missed profit opportunities, damaged credit ratings, and the need to take out loans and create debt. If you continue to make these mistakes, you may go bankrupt.

 

Cash flow management tips and tricks #2

Analyze your Cash Flow

analyzing cash flowLearning how to manage your cash flow can help you survive difficult business climates and protect your company’s short-term financial reputation.

To get a handle on your company’s cash flow, you must analyze the components that affect its inflow and outflow. A thorough examination of these factors will reveal problem areas that lead to cash flow gaps in your business. Narrowing–or better yet, closing–these gaps is the key to cash flow management.

Here are the most important cash flow components that you should examine:

  • Credit Terms

    Your credit terms are the time limits you set for your customers’ promise to pay for their purchases. The credit terms you choose will affect the timing of your cash inflows, which can have a major effect on your business’s cash flow. A simple way to improve cash flow is to get customers to pay their bills more quickly so that the money you have coming in isn’t stuck waiting around for customers who may or may not pay.

  • Accounts Receivable

    Accounts receivable represent sales that have not yet been collected in the form of cash. An accounts receivable balance sheet is created when you sell something to a customer in return for his or her promise to pay at a later date. The longer it takes for your customers to pay on their accounts, the more negative the effect on your cash flow.

For example, let’s say you sell a set of golf clubs to a customer who promises to pay in 30 days. You record the sale on your revenue statement and then create an account receivable entry on your balance sheet under assets. If the customer pays in full within 30 days, you can remove the entry from your balance sheet and replace it with an entry on your cash flow statement under cash from operations.

However, if your customer does not pay as promised, you will have an overdue account receivable entry on your balance sheet that is adversely affecting your cash flow. To make matters worse, if the customer does not have enough money to settle this debt, you may decide not to extend further credit to them until they are able to pay off their existing debt. Even if they do eventually settle their debt with you, by that time you may have lost other potential business from other customers who would otherwise have dealt with.

  • Inventory

    Inventory is just a fancy word for the extra merchandise or supplies your business keeps on hand to meet the demands of customers. It’s important to keep this stuff on hand, but it can hurt your cash flow if you have too much of it.

See, when you buy inventory, you’re using up money that could be used for other cash outflows—like paying off loans and investing in your business. If you have too much inventory on hand, it’s sitting in your warehouse or cupboard and not being turned into profits. This is why it’s important to keep your inventory as low as possible.

The best way to make sure your inventory isn’t excessive is to estimate how much you think you’ll sell each month and always leave room for error by rounding down. For example, if you sell 10 units of a product each month, get 10 units of inventory so that at least one unit will hopefully be sold before your next order!

  • Credit Policy

    A credit policy is what you use to decide to extend credit to a customer. The correct credit policy—neither too strict nor too generous—is vital for a healthy business cash flow.

A good credit policy makes it clear to who your company will extend credit, and how much. That helps you avoid giving away too much product without getting paid, which can lead to financial instability for your business and even bankruptcy. At the same time, you don’t want your credit policy to be so strict that it drives away potential customers who need credit to make a purchase.

When there is no clear or consistent credit policy, you risk losing money by extending credit to customers who can’t and won’t pay you back, or who will only pay after a long struggle. When that happens, your company’s ability to get new inventory can be affected because suppliers will not want to work with businesses that do not pay on time.

If your current procedures are not working well enough, it’s time to re-evaluate your credit policy. Start by identifying the reasons why some customers are unable or unwilling to pay on time. You may find that certain customers should never have been extended credit in the first place.

  • Accounts Payable

    Accounts payable are the amounts that you owe to your suppliers but are not due for payment until 30 to 90 days out. If you didn’t have accounts payable and trade credit, you would have to pay for your goods and services immediately upon purchase, which could damage your cash flow.

To make sure that you are managing your cash flow optimally, examine how much you owe when it is due, and when you need to order more products. Determine if there are ways to improve the timing of your purchases and payments.

Bottomline

Even with all of these cash flow management tips and tricks, some cash flow gaps are created deliberately by a business. For example, it buys extra inventory because it wants to take advantage of quantity discounts or spend extra cash on a business expansion.

Other companies may have unavoidable revenue and cash flow gaps. For example, a company involved in seasonal business may have revenue and cash flow gaps during the low season and then cash surpluses during the peak season. To deal with these gaps, some companies seek outside financing. One of the options is to use a revolving line of credit to cover the gaps.

To keep your business healthy, closely monitor your cash flow. The first sign of trouble appears in your cash flow statement—giving you time to plan a strategy before the problem gets too big. Do this on a regular basis and you can head off potential problems before they become major issues. Moreover, when you carefully manage your resources, you’ll be able to take advantage of opportunities that may arise.

If you want to stay on top of your cash flow, get in touch with your bookkeeper and Enrolled Agent. Don’t have one? Well, you’re in luck! Our experienced Bookkeepers and Enrolled Agent can help you out in a jiffy!

Send us a message today!

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Spring Cleaning for your Bookkeeping: bookkeeping clean-up tips post-tax day.

Bookkeeping clean up tips post-tax day.

For a lot of people, tax time is the absolute worst. But for small business owners, this period is when you can really get a lot of cleaning done. After months of bookkeeping work — invoicing, paying vendors and employees, etc — you’ll have stacks of paperwork to clean up! This can be overwhelming if you don’t know where to start. Well, here are some tips to help make spring cleaning for your bookkeeping easier.

 

Embrace being paperless

paperless small business bookkeepingIt’s the 21st century, get out of the 20th! So here’s a bookkeeping clean up tip that might not seem obvious but a lot of small businesses are still using papers for billings, checks, and proposals. Some small business owners think that it saves them more, but it’s the contrary. Sticking with literal paper when doing your business paperwork costs small business owners more time, and money, and increases the chances of financial data leaking out to unscrupulous individuals.

Most people think that going paperless means you have to get rid of all your papers and then scan them into some fancy technology system, but that’s incorrect. To go paperless, you just have to stop creating new papers, not eliminate existing ones. That can be done by simply switching to digital records instead of paper ones.

You may be thinking it’s easier just to keep on doing what you’re doing because it doesn’t seem like it takes that much time or effort for someone to pick up the phone, call the office supply store, and order more toner for the printer. But if you look deeper, you’ll see there are a lot of hidden costs associated with keeping physical copies of all your documents.

The cost of printer cartridges isn’t cheap, and that’s just one of the costs associated with printing everything out. You also need to consider the cost of space in your office, both in terms of square footage as well as energy use.

Once you switch your business over to being paperless, you will experience these benefits right away:

  • Reduction in office expenses
  • Efficiency is improved
  • Your financial documents are better secured

Going paperless also gives you the benefit of being able to access all of your documents at anytime and anywhere! A benefit you can get by acquiring cloud-based services for your business.

Credit card and Bank Statements

If you’ve already moved to online banking and credit card statement downloads, it’s easy to go a step further with electronic bank statements, check copies, and credit card statements.

E-statements are great for the environment and can make your financial life easier. They’re also free! And if you’re concerned about privacy or security, electronic documents are more secure than paper.

An added benefit of online banking is its ability to integrate with most paperless bookkeeping systems such as QuickBooks Online. It’s like hitting two birds with one stone!

Bills, Invoices, and Payroll

Sending bills and invoices to your clients or customers is one of the biggest paper muncher in your small business operation. Bills and invoices carry a lot of information with them, which requires a lot of paper for printing. Not to mention the paper envelope it’s enclosed in!

Aside from that, you still need to remit payments to your vendors. These payment remittances cost a lot when you think about it. The checkbook cost, mailing cost, stamp cost, and of course you also have to make several copies of the payment for good measure.

You can avoid all of the costs and hassle by transitioning to simple click payments or automated scheduled payments that are offered by online payment providers like Bill.com. Transitioning to this paperless method of paying your vendors is a great way to lower expenses and at the same time reduce your small business’ carbon footprint.

Your small business payroll is another area where you can go paperless to further decrease administrative costs! Timesheets, paychecks, and other incidental use of paper can be eliminated by using going digital!

Financial Reports and Spreadsheets

financial report sorting after tax dayBookkeeping clean up is easier if your business has embraced being paperless, you can start transitioning to a cloud-based bookkeeping system like QuickBooks Online! You will experience the benefits of switching to this new bookkeeping system immediately. Not only will cloud-based bookkeeping services cut your use of paper, but it also makes your life easier because most of these services have the capability of being integrated with your bank!

Cloud-based bookkeeping systems let you manage your entire bookkeeping operation wherever you are—at home, at the office, or on the road—giving you access to reports and key performance indicators (KPI’S) from your laptop or smartphone. You can pass control of your financial data to non-bookkeeping staff without compromising security or having to leave your briefcase behind.

 

Strat Talk, Strut Walk

Now that tax season is behind us, it’s a good time to step back and take a look at the long-term picture when it comes to your finances.

The process of managing your finances is more than just keeping track of your day-to-day gains and expenses—it’s as much about planning for the future as it is about looking back on the past.

In fact, we find that our clients who engage in strategic financial planning tend to benefit from having a clearer view of their priorities and goals than those who don’t.

So, what does strategic financial planning look like? There are many ways you can do this. You might hire a contract CFO to help you with a short-term project, such as helping you expand into new markets or creating succession plans for leaders who are transitioning into new roles. Or maybe you’ll want to set aside some time to simply discuss your goals with a professional.

For example, one way our clients have benefitted from strategic planning is by improving their cash flow forecasting. This allows them to manage their resources more effectively and plan for opportunities down the road.

 

Think Tech!

small business owner thinking about bookkeeping technologyAre you happy with the technology your business is currently using? It might be time to take a look at your small business’ tech setup.

If not, now is the time to start testing alternatives. Identify any shortcomings and plan ahead. I’ve seen plenty of questions crop up last-minute on social media from practitioners fed up with their current solutions, simply because they’re just not doing what they need them to do.

Once tax season kicks in, you’ll be running at full speed. Don’t let yourself get bogged down by inadequate tools and technologies.

Also consider other tools which could help you out even if you haven’t been using them yet – document-sharing solutions, or platforms that allow online submission of expenses and documents directly to you, for example. These could be a great win! You may also notice that some of your clients will need to make a few tweaks and/or updates to be in line with your technology stack.

 

 

Talk with your Bookkeeper

All of these bookkeeping clean up tips can be combined into one solution! Talk with your bookkeeper. They know a lot about your business, not only on the financial side but also on the operational side. They know this because they see your financial records in real-time. Bookkeepers know if your operational expenses are getting out of hand or if cash flow is on the negative. They can help you identify the areas that need improvement and provide suggestions that you can take.

Don’t have a bookkeeper yet? Don’t worry our experienced bookkeepers are always at the ready to help you out! Send us a message today and we’ll help you run your business smoother!

Get in touch with us today!

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Have you requested a Tax Filing Extension?

tax filing extension form

Have you requested a Tax Filing Extension?

Were you able to request a tax filing extension this year? The request for a tax filing extension must be submitted to the IRS on or before the April 18 deadline. If you were able to file before the deadline, you must remember that being granted an extension by the IRS doesn’t necessarily mean that you’ll have more time to actually pay your taxes!

Even though you can get an extension on your tax filing, you still have to pay your taxes when they’re due. This means that if you don’t know the exact amount of taxes you owe, you’ll need to make an estimate and pay that tax estimate by April 18th .

But if you weren’t able to request an extension this year, here are the things that you need to know about the tax filing extension for next year:

 

how is the tax filing extension requestedHow is the tax filing extension requested?

Requesting a tax filing extension can be done either electronically or by mail by using IRS Form 4868, which you can download from the IRS website. You need to request an extension before April 18 in order to avoid a late-filing penalty from the IRS.

If you don’t know which tax software to use, the IRS offers a free online filing service, Free File, and also partners with a nonprofit organization called Free File Alliance, which provides people who make less than $73,000 of adjusted gross income access to free name-brand tax-prep software. Are you making more than the threshold specified? Don’t worry, everyone can use it, but it might not be free.

But if you are using a tax preparation software, you might be able to request an extension from there. Just make sure that your tax preparation software supports the submission of IRS Form 4868. If your tax preparation software does support it, all you have to do is follow the instructions provided and request a tax filing extension electronically. Make sure that you get an acknowledgment from the IRS after submitting the IRS Form 4868 from your tax preparation software.

Ain’t tech-savvy enough to file for an extension electronically? Don’t worry, you can also request a tax filing extension by manually filling out IRS Form 4868 on paper and having it mailed to the IRS. Just make sure that you get the proof that you did send the IRS Form 4868 to the IRS mailing address.

 

How long does a tax filing extension give me?

If you were able to request a tax filing extension this year, the IRS will give you until October 17, 2022, to prepare and file your tax documents.

By requesting an extension, the IRS will give you approximately six months to file your return. A tax filing extension doesn’t mean that you’ll be able to file your taxes 6 months from now. If you haven’t met the April 18 tax filing deadline, you’ll have to estimate your tax bill and pay that amount as soon as possible. What the tax filing extension does is give you more time to properly prepare and file your tax return – not an extension on tax due payment.

If the tax estimate you paid is lower than the actual taxes you have to pay after the extension, the remaining amount will be subjected to the applicable late payment penalties and interests deemed by the IRS – even with an extension.

However, there might be a possibility that you won’t incur any late payment penalty or interest if you settled at least 90% of your actual tax bill.

 

automatic tax extension benefit for american expats and military personnelTax Filing Extension for American expats and military personnel

Some taxpayers enjoy the benefit of not having to request a tax filing extension because it is given to them by the IRS.

  • US citizens or Green card holders who lived and worked outside of the country are given a two-month extension by the IRS. This helps American citizens and Green card holders ample amount of time to prepare and file their taxes despite the geographical barrier.
  • Americans who were directly affected by naturally occurring disasters may automatically get their tax filing deadline extended. However, if you were affected by a naturally occurring disaster, it’s best to check with the IRS first if you fall under this category.
  • A number of military personnel are also qualified for an automatic tax filing extension. However, their qualification will depend on where they are stationed and what they are doing. As a rule of thumb, it’s best to check with the IRS first!

 

Things to remember about tax filing extensions!

When requesting for an extension before the April deadline, make sure that you include a check for your estimated tax due payment or indicate that you don’t owe any taxes that year. If you don’t make an estimated tax payment of at least 90 percent of the original liability on your return, interests and penalties could apply.

If you have requested for an extension, remember that your last chance to submit your tax documents to the IRS is in October, there are no more extensions after that. So don’t forget to submit your tax documents by October.

We understand that this might be too much to digest. But luckily, an experienced Enrolled Agent from our team is more than willing to help you out! If you feel like this is too much work for you, then fret not! Send us a message today and let our Enrolled Agent handle the grunt work for you!

Get in touch with us today!

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Small Business Bookkeeping Problems and Solutions

options to choose between bookkeeping problem or bookkeeping solution

Small Business Bookkeeping Problems and Solutions

If you own a small business, then you know the feeling of being pulled in a million different directions and one of those directions might be bookkeeping problems. However, it’s vital that you pay attention to the financial aspects of your company and find solutions to your bookkeeping problems. Otherwise, you may miss out on opportunities to maximize your profits, and you could end up making costly mistakes. Especially if you don’t find a solution for your bookkeeping problems.

So, how can you make sure that this doesn’t happen? Are there ways to protect yourself from common bookkeeping pitfalls? Yes! Check out these common bookkeeping problems and solutions so you can avoid costly mistakes and excel at your business.

Incorrect bookkeepingBookkeeping Problem #1: Incorrect Bookkeeping

When it comes to bookkeeping, small businesses sometimes get the short end of the stick. As a small business owner or manager, you’re expected to know everything and do everything. And when it comes to proper bookkeeping, it’s no different. You need to keep close tabs on your finances, but you also need to understand what records are included in your bookkeeping process and why they’re important.

All businesses need to keep proper financial records. It’s especially important for small businesses to keep a close watch on their documentation so that transactions are well-documented.

The main reason small businesses fail to maintain proper records is that they don’t have time or know which documents to track. Failing to maintain proper records becomes a much larger bookkeeping issue when tax season rolls around.

Bookkeeping Solution: Establish bookkeeping procedures to stay organized

It’s important to have the right information ready so that you can be prepared for what might come up. Here are some of the documents businesses typically track:

  • Purchases and Expenses

All purchases and expenses must be filed for tax purposes. This includes everything you purchase or spend money on and any appropriate forms or receipts you possess. You should keep these documents for at least three years from the tax year in which you file your income taxes.

  • Employment Tax Records

To ensure you are in compliance with IRS regulations, please keep a log of all employee details and payments. Include employee names, addresses, social security numbers, dates of employment, absences, and all income tax withholding allowance certificates.

  • Cash Flow

To keep better track of your finances, it’s a good idea to get a receipt or invoice for any income you receive. Then add that information to your accounting system, and keep a copy as confirmation.

  • Assets

Sale of business assets, purchase of business assets, and depreciation of business assets are three items that are important to recordkeeping for your business. If you sell an asset for more than you paid for it, it is often a taxable event.

 

wrong data entry as a bookkeeping problemBookkeeping Problem #2: Wrong data entry

When JP Morgan Chase took a $6.2 billion trading loss in 2012, the company quickly conducted an internal investigation to find the cause. They found that the faulty risk model used by the company’s traders had been operating through a series of Excel spreadsheets that had to be completed manually through a process of copying and pasting data from one spreadsheet to another.

These days, despite improvements in technology over the last 30 years, this kind of human error is still all too common. More than a quarter of professionals (27.5%) reported that inaccurate data had been manually input into an enterprise system at their firms, according to the software products team at Bloomberg.

The consequences can be serious: Errors can lead to extremely expensive bookkeeping issues, especially when they lead the company to make bad business decisions or issue an improper forecast.

Bookkeeping Solution: Create a system of checks and balances

You’re probably aware that human error is unavoidable. But while it’s one thing to make a mistake in your personal life, making an error in a business can have serious financial consequences. In fact, the more complex regulatory and compliance requirements become, the riskier it is for everyone to have access to all parts of a business.

If you’re not proactive about identifying and resolving problems, you’ll never get ahead. Set aside some time to review your data and identify weak areas or past mistakes. Start by focusing on these areas first, and then build a robust plan with checks and balances.

 

miscaculation of cash flowBookkeeping Problem #3: Miscalculated cash flow

As a business owner, you’re probably familiar with the term “cash flow”. It’s the amount of money going in and out of your business, and poor cash flow can spell doom for the future of your business.

One way to avoid that doom is to predict your business’s cash flow—and to know how much money you will earn and spend (on growing your business and beyond).

But it turns out that this can be easier said than done. According to a survey by Insights West, nearly half of small business owners consider profit and cash flow their main source of stress. And according to a study by U.S. Bank, 82 percent of businesses fail due to cash flow mismanagement.

Bookkeeping Solution: Revisit your cash flow projections regularly

Cash flow projections can look very different from the actual numbers you’re seeing. In fact, this is a common problem for small businesses. The best way to combat this issue is to revisit your cash flow projections every few months, and to pay close attention to any discrepancies you might find. If there’s a large difference between what you projected and what actually happened, you can use that knowledge to make better projections in the future and keep your business on track.

You should aim to project no farther than 12 months into the future because there are too many variables at play beyond that point—the economy could dip, or a new competitor could open up shop down the street. Make sure your business is projecting its cash flow monthly, whether that means delegating this task to your bookkeeper, using basic accounting software, or tracking it yourself.

 

Undervalued time of small business ownerBookkeeping Problem #4: Undervalued time and effort

We know that many small business owners spend their time doing their own bookkeeping. We understand that sometimes it can seem easier to just do it yourself: you know your business, and keeping track of everything feels like a natural part of the work.

But what’s the cost?

Time is money. It’s a phrase we’ve all heard before—but few business owners place enough value on their own time. How much of your time is lost to payroll, bookkeeping, and issues surrounding them? This is time that you could have spent training your employees, networking or building your business. And then there are mistakes – small bookkeeping errors result in big fines. Mistakes are easy to make when you do your own bookkeeping, and they can be costly in the long run. We believe that your time is valuable, and we want to help you save it!

Bookkeeping Solution: Hire a bookkeeping professional

We get it-you’re busy. Your time is valuable, and there are some things you just have to do yourself. But when it comes to managing your finances and bookkeeping, you’re probably better off handing that task over to the professionals.

Bookkeeping can be tedious, time-consuming, and downright boring (not to mention stressful!). If you’re not a bookkeeper or financial expert, it can seem like a huge waste of your time and energy. Why not hire someone whose sole job is knowledge of accounting standards and keeping up with all the regulations?

One of the other benefits of hiring a professional bookkeeper is that they’ll likely save you money in the long run. They’ll know exactly what information you need for tax season, making sure that you file on time and minimize any penalties or fees. They’ll also make sure your books are accurate, preventing any potential audits from the IRS.

Place a higher value on your time as a small business owner by focusing all of your time and energy on the things that matter to the success of your business. Let our experienced bookkeepers handle your bookkeeping needs from now on!

Want to see if we’re the right fit for you?

Get in touch with us today!

Bookkeeping quote

Reasons why you need Bookkeeping Service for your Small Business

cubes that spell out the reasons why you need bookkeeping service for your small business

A small business owner thinking about the reasons why she needs a bookkeeper for her small businessReasons why you need Bookkeeping Service for your Small Business

Small business owners have a lot on their plates. So, it can be easy to feel overwhelmed when you realize bookkeeping is another task on your list. However, there are a few reasons why every business owner should know a little bit about bookkeeping. Here we enumerate the reasons why you need a Bookkeeping Service for your Small Business.

You’ll have a better understanding of how your business is doing. If you’re not tracking your income and expenses, then you’ll have no idea if your company is profitable. But, if you’re keeping track of your day-to-day transactions, you’ll be able to get an idea of where your money is coming from and going to.

You’ll be able to handle taxes more easily. Once tax season comes around, you won’t have to stress about finding all of the receipts that prove how much money you made or spent throughout the year. Plus, having good records will help ensure that you don’t miss any deductions that could save you money at tax time.

Bookkeeping will help make budgeting easier. Having good records will help you understand where all of your money goes so that you can create a realistic budget that works for your company.

 

Bookkeeping is crucial for small business success

Bookkeeping service providers make it easy to track the money your company makes and spends. For example, if you have an online flower shop, you can use bookkeepers to track the sales of your flowers. You can also use them to track the cost of your supplies, like vases and bouquet holders. Bookkeeping services will also help you track expenses like rent and employee wages. If you want to know at a glance how much money you’re spending on each area of your business, bookkeepers are a great way to do that.

By keeping those records organized, bookkeepers make it easy for you to analyze the data they contain. If you notice that the amount you spend on rent is steadily rising from month to month, you’ll be able to take action immediately before it becomes a problem for your business. If you notice that the number of roses sold is decreasing steadily from year to year, it might be time for a change-up in strategy. The best thing about bookkeepers is that they give you more time and energy to grow your small business even more!

 

Ways Bookkeeping Services help Small Businesses

Now that you are aware of why bookkeeping is important for your small business, let’s take a look at the ways bookkeeping services can help you:

  1. Making financial decisions
  2. Organizes your records
  3. Provides accurate financial records
  4. Tax filing
  5. Budgeting
  6. Getting Investors/loans
  7. Saves you time

 

Making financial decisions

Bookkeeping Service for Small Business: Reason #1

Making Financial Decisions

Bookkeeping service for small businesses allows owners to get a clear picture of their finances.

You don’t have to be an expert in accounting or finance to maintain a basic understanding of your company’s financial records and draw insights from them. And as long as you have access to all the information you need, making decisions about your company’s future becomes less intimidating. You’ll be able to look at your financial data and determine if the decision you’re considering makes sense for your business.

Here are some small business financial decisions that bookkeeping service providers can help with:

  • Loan Applications
  • Employee Hiring
  • Grant Applications

The list goes on and on but the bottom line is that bookkeeping service providers can help you make informed decisions regarding your business. For example, you may be wondering whether your company is financially in a position to hire employees. A bookkeeping service provider can help you determine that by looking at the specific numbers and making sure they’re accurate.

 

Bookkeeping Service for Small Business: Reason #2

Organize your Records

Regardless of what’s going on in your company, the organization of your financial records is key. When the time comes to budget, apply for loans or grants, or see if you’re turning a profit, bookkeeping allows you to find the information you need quickly.

With bookkeeping, you have an organized system that enables you to record financial transactions as they happen. This means there are no outstanding expenses and you can track how much money is coming in and going out at any given time, which can help you be more proactive about where your money is going.

 

Bookkeeping Service for Small Business: Reason #3

Provides accurate financial records

The decisions you make in business are only as good as the information you have available. By having organized information, you can create accurate financial records. Those records allow you to perform a variety of tasks.

You can manage your investments and loans. You can analyze the profitability of your products or services and make adjustments for the better. You can manage your inventory and pay your bills on time. You can also review costs and expenses to stay within budget and use the data to plan for future growth.

Organized information is vital to the success of any business, whether you’re a one-person consulting firm or a large manufacturing plant.

 

reasons why your small business needs a bookkeeping service - tax filing

Bookkeeping Service for Small Business: Reason #4

Tax Filing

Taxes are a pain in the butt. And they’re even more of a pain if you own a business. But we’re here to help. And by help, we mean to give you one less thing to worry about as an entrepreneur.

If you’ve been manually filing your taxes (or if you’ve just been putting it off), we have some good news for you: setting up bookkeeping is the first step toward not only tax filing, but also getting paid faster and getting paid more.

We know what you’re thinking: “Uh, yeah, but bookkeeping sounds like a nightmare.” We get it! That’s why bookkeeping service providers make it easy for you to track expenses and income, send invoices, and pay your employees and contractors.

And if you’re going to work with an accountant on taxes? Great! Bookkeeping records are essential for that process too—which means less time spent sorting through papers and receipts, and more time doing what actually matters to your business.

 

Bookkeeping Service for Small Business: Reason #5

Budgeting

You know what they say: if you fail to plan, you plan to fail. When it comes to budgeting and financial planning for your small business, you need a clear picture of how your business is performing.

Without that picture, you’re shooting in the dark—and not only that, but you’re likely to run out of money and go under right when you were expecting a flourishing year. Ouch!

The best way to make sure that doesn’t happen is by having good books that you get by having a good bookkeeper. Period.

When your books are organized, accurate, and up-to-date, it’s much easier for you to review what happened in the past and make a plan for the future. You can see exactly how much money was coming in throughout the year, which lets you see what’s going on with your sales trends. You can see how much money was going out—and to whom—so you can tell if your suppliers increased their prices or if there are other cost-saving measures you could be implementing. When it’s time to create a budget for the next year, all of that information is readily available so you can work on accuracy instead of guessing whether or not your numbers make sense (or even add up).

 

Bookkeeping Service for Small Business: Reason #6

Getting Investors/Loans

Businesses need funding to succeed, and that can come from a variety of places: owner’s equity, grants, business loans, or investors. But when you’re looking for an investor to back your company, they need up-to-date information about your business in order to make a decision about whether or not they want to invest in you.

Bookkeeping records help potential investors see the success of your company. If you don’t have those records readily available, you won’t be able to get a clear picture of what’s going on with your business. Investors want to see your books! They want accurate and accessible information if they’re going to consider putting money into your venture.

If bookkeeping isn’t part of your business plan, it should be. Up-to-date bookkeeping records are essential to the success of any small business! Don’t let yourself miss out on an opportunity because you don’t have the data at your fingertips when it matters most!

 

Bookkeeping Service for Small Business: Reason #7

Bookkeeping Service saves you time

Bookkeeping is an essential part of business, but that doesn’t mean it has to be painful. If you’re feeling stressed out by the tedium of keeping track of your company’s finances and want to find a way to create more balance in your life, consider hiring a professional bookkeeper.

It’s easy to assume that you should keep your recordkeeping in-house to maintain control over the process, but it takes time and attention away from other aspects of your business. Hiring a professional bookkeeper means that someone else will take care of all those boring details for you. They’ll make sure it’s all done accurately, so you can spend more time focusing on what matters most to you.

You don’t have to do everything yourself! Getting some help with your bookkeeping will bring peace to your life and balance back into your workweek.

Are you ready to grow your business further by focusing on driving its growth instead of the books? Well then send us a message today!

Let our experienced bookkeepers manage your bookkeeping for you!

Bookkeeping service quote

When to Hire a Bookkeeper for your Small Business

placards with the word 'when' asking small business owners when should they hire a bookkeeper

When to hire a bookeeper for your small businessWhen to Hire a Bookkeeper for your Small Business

When to hire a bookkeeper? Well, when you’re just getting your small business off the ground, it’s easy to think you can handle most of the tasks yourself. After all, you can learn how to do anything on the internet, right?

But while that might be true, it’s also true that there are some things in life better left to other people. When it comes to keeping your books and preparing for tax season, it might be worth considering hiring a bookkeeper, but you need to know when to hire a bookkeeper for your small business.

Bookkeeping can be tedious and difficult if you don’t know what you’re doing. Plus, keeping accurate records is essential for long-term growth and success. If you wait until your business starts generating enough money that it can have a dedicated bookkeeping service provider, chances are that you’ll wish you had hired a firm sooner so that they could get a head start on organizing your finances. If any or all of these scenarios depict your current situation as a business owner it might be time for you to hire a bookkeeper for your small business.

 

Doing your own bookkeeping can be a time-consuming task.

Nobody wants to waste their time doing bookkeeping. If you’re a writer, you’d rather be writing. If you’re a business owner, you’d rather be doing things that are more directly related to your business. But if you want to make sure your taxes are done right and your financials are in order, you’ve got no choice but to do it at some point.

A recent poll shows that 39% of small business owners spend more than 60 hours a week doing their bookkeeping and taxes.

If you’re spending hours each week on bookkeeping, are you really getting the most out of your time?

Not only does overworking lead to burnout, but every minute you spend on a task has a dollar equivalent. First, start tracking how much time you spend per week on bookkeeping. Then, using an online calculator, determine how much your time is worth, and figure out how many “dollars” you spend on bookkeeping per month. Compare your “salary” as your own bookkeeper against the price of professional bookkeeping. Once you treat the time you spend bookkeeping as an actual expense in cash, you’ll have a better idea of whether you should keep doing it—or if hiring a pro is actually a bargain.

 

struggling with bookkeepingStruggling to keep your books up to date?

So what’s the big deal?

When you fall behind on bookkeeping, your books stop reflecting the actual state of your finances. That makes it harder (sometimes impossible) to understand cash flow and accurately gauge the health of your business.

When you don’t have accurate data, you can’t make good business decisions. For example, if you don’t know how many customers found your website last month, you can’t determine whether your marketing efforts are effective or not. Another example is if your Cost of Goods Sold (COGS) hasn’t been updated in six months, you can’t subtract it from your revenue in order to determine how much profit you’ve earned in that time.

This can be a real problem when it comes time to do your taxes because you can’t just make up numbers to put on your tax forms. The IRS wants proof of every expense and income statement, so if you’re missing documents, they aren’t just going to give you a pass. And if you’re found guilty of tax evasion or fraud, you could wind up paying huge fines or even serving prison time!

We know that keeping your books up to date can be a tough thing to prioritize. It’s a bunch of extra work, and you’re busy running your business, so it’s easy to put it on the back burner. But if you don’t keep up with your bookkeeping, it can actually make the things you want to do (like grow your business or expand into new markets) more difficult. If you don’t know where your money is going or what your profit margins are, you won’t know whether or not it makes sense to invest in that new opportunity.

What’s more, if your books aren’t up to date, you’ll have a ton of catch up bookkeeping to do during tax season, making a typically stressful time of year even more difficult. With a bookkeeping service provider, you can expect to receive monthly financial statements, so you’ll know where your money is going to and coming from.

It’s important to have a clear picture of where your company’s money is going and coming from, but not everyone has time to do their accounting themselves. If you’re looking for a way to access this information without sacrificing too much time or energy on the task, try hiring a bookkeeping service. A good one will be able to provide monthly financial statements so you’ll always know what your money’s doing.

 

Tired of high professional fees?

If you’re looking for a bookkeeper, you may be offered services from a Certified Public Accountant (CPA). While you can certainly go this route, you’ll likely end up paying more than you need to.

Bookkeepers generally charge less per hour than CPAs and are able to perform the same tasks that don’t require the specialized skill set of a CPA. Bookkeepers are also more likely to be available during extended hours (and even on weekends), whereas CPAs tend to be busier during tax season and might charge more if they work outside of the hours they’ve designated as “normal.”

If you need to look back on your month-to-month financial records, an accountant won’t necessarily provide you with retroactive month-to-month financial records. Definitely a downside of having an accountant since your business records are essential if you want to secure loans, bring investors, or sell your business!

 

Tax Filing = Arm Wrestling?

We’ve all been there. You’re getting ready to send in your taxes, and you have to email your tax preparer with a few questions. And then you realize you have a lot more than “a few” questions! Suddenly it’s three days later, and you’re still sending them questions.

This scenario is often caused by handing off messy or incomplete books to your tax preparer. You’ll probably be caught in a web of emails and phone call as the two of you puzzle your way through a year’s worth of uncategorized expenses, income, and business loans.

Filing your taxes should be a breeze, not a lengthy arm wrestling match between you and your tax preparer. A comprehensive full charge bookkeeping service provider can help you make tax season a breeze.

 

Missing out on tax deductions because the small business has no bookkeeperMissing out on tax deductions?

Being able to deduct certain expenses as a business owner is one of the perks of entrepreneurship. But it’s not always easy to know what you can and can’t claim—and it’s certainly not always easy to keep track of everything.

A bookkeeper’s job is to take every business expense you incur and categorize it properly. In the process of doing so, they’re able to spot obvious deductible expenses such as mileage, which you can use when you’re traveling for work.

But they can also help identify deductions that are less straightforward—such as the cost of business meals, or even the annual fee for your credit card if you use it primarily for business purchases. Having the right bookkeeper can help you avoid missing out on applicable tax deductions and tax write-offs.

 

 

 

In the dark with your cash flow?

It’s a strange feeling, isn’t it? You know you’ve got money coming in from your clients—but you don’t know how much it is or when it will arrive.

It’s enough to give anyone the jitters. And if you’re a small business owner, that uncertainty can be downright maddening.

As a business owner, you need cash flow statements. A cash flow statement tells you how much money other people owe you, and how much money you owe other people. It’s kind of like a crystal ball that shows you the future of your bank account.

Here’s why cash flow is so important:

  1. It shows how much money is coming in and out of your company, and why. You see exactly where all your money is going, and how it really adds up to a certain amount that you can expect to be in your bank account at a certain time. Like a little glimpse into the future of your bank balance.
  2. You can make more informed decisions about the future of your business—what to do with extra capital, the best time to make an investment in equipment or hire more employees, etc.
  3. Forecasting is easier—you can make projections based on data you already have access to (exactly how much do we spend on inventory each month? How much revenue do we expect to get from this new client?)

Having a bookkeeper can help you stay on top of your cash flow statement so you never have to plan for the future in the dark. You will always be equipped with the right information to plan your business expenses in the now.

 

Bottom line won’t budge?

When you’re trying to grow your business, it’s easy to focus on just the top line: revenue. But what about your bottom line? Revenue and profit are not the same thing—if you want your business to be successful, you need to think about both of these numbers, and how they interact.

If your revenue is on the rise but your bottom line won’t move, it means you need to increase your profit margins. That’s where tax-ready financial statements from a bookkeeper can help you recognize where you need to cut costs in order to make your business more profitable.

 

Concerned about financial data securityConcerned about your sensitive financial data security?

When you use your office computer or your personal computer to record, track, and store your financial information, you must be 101% certain that your computer is secure from fraudulent activities.

Ransomware attacks are a threat that can potentially cause you to lose years of sensitive financial information. In 2017, a ransomware called ‘WannaCry” infected over 230,000 computers in more than 150 countries. The ransomware encrypted the data of its victims making it inaccessible.

Latest research reports that over 90% of home computers have been infected by spyware at some point in time. This means that if you’re doing your bookkeeping on your home or office computer, there’s a good chance someone else has or eventually will have access to your personal and business financial data.

Bookkeepers like FAS Bookkeeping and Tax Services use the latest encryption software available in the market to ensure that the financial data it handles and stores are safe and secure from prying eyes.

 

Bottom line

When one or two things listed above fit you, it might be time to pick up the phone and start searching for the best bookkeeper you can find. Here are the things that a professional and experienced bookkeeper or bookkeeping service provider must offer to you:

Reachability

There is nothing more frustrating than having to wait days, or weeks, for a reply. If your bookkeeper doesn’t answer emails in a timely fashion, it is time to find someone who will.

Adept with taxes

Bookkeeping is closely related to your taxes. If your bookkeeping is also an Enrolled Agent that is certified by the IRS to prepare and file taxes, then you found the perfect bookkeeper or bookkeeping service provider!

High standards when it comes to security

A bookkeeper will have complete access to your day-to-day business transactions. Make sure that your bookkeeper or bookkeeping service provider puts emphasis on data security so you can avoid the risk of having all of your personal and business financial data taken by unscrupulous individuals.

At FAS Bookkeeping and Tax Service, we put security at the top of our priority! With us, you can rest assured that your financial data is securely handled and stored with the latest encryption technology available in the market. Couple that with the experience and expertise of our Bookkeepers and our Enrolled Agent!

Are we the right fit for you? Get in touch with us and find out!

bookkeeping quote

 

What is Full Charge Bookkeeping?

a business owner trying to understand what full charge bookkeeping is

what is full charge bookkeepingWhat exactly is Full Charge Bookkeeping?

Sometimes, your business needs more than a bookkeeper to help manage your finances. If you’re growing and need someone who can take charge of your financials—and take responsibility for them—it might be time to hire what’s known as a full charge bookkeeper. So what is full charge bookkeeping?

Full charge bookkeeping is just like regular bookkeeping, but with more experience and expertise in play. They do all the things a bookkeeper does, such as reconcile accounts and prepare monthly statements, but they also do additional, more complex duties like tax returns and balance ledgers.

Typically, full charge bookkeepers are employed at smaller companies that don’t need the expertise of someone like a Financial Controller or CPA. They’re ideal for businesses that are growing, but not yet ready to employ someone so specialized.

 

 

Responsibilities of Full Charge Bookkeepers

Here are the responsibilities of Full Charge Bookkeepers that will help you grow your business further:

 

full charge bookkeepers handle your bankingHandles your Banking

Full Charge Bookkeepers do what it says on the tin. They’re responsible for the bookkeeping process from start to finish. This means that they reconcile your monthly bank statements, oversee all bank deposits, check your petty cash accounts, ensure that credit card accounts are reconciled, and keep track of your lines of credit, among other things.

For example, say you have a business that sells computers online. A Full Charge Bookkeeper will make sure that all checks and cash you receive every day are deposited in the bank on time and that you get receipts for these deposits. A Full Charge Bookkeeper will also make sure that when you buy parts or materials for your computers, there’s enough money in your petty cash account to pay for them. Then they’ll take care of any invoices those transactions generate so that they’re paid on time! Full Charge Bookkeepers can even help you manage invoice factoring and accounts payable to help maintain your cash position.

In short: a Full Charge Bookkeeper will handle everything related to finance with precision and efficiency!

 

full charge bookkeepers make general ledger adjustments

General Ledger Adjustments

A full charge bookkeeper’s responsibilities depend on the size and needs of the business, but they usually include preparing and entering journal entries for fixed assets and depreciation. Full charge bookkeepers also run a trial balance at the end of each month to ensure that your general ledger accounts are in balance. During this process, they may also adjust journal entries to correct any discrepancies they find.

 

 

full charge bookkeepers can prepare tax returnsPrepare Tax Returns

When you hire a full charge bookkeeper for your business, you’re hiring someone who can manage your entire accounting process. This includes preparing monthly, quarterly, and yearly financial statements. They can also help with payroll management and processing.

Unlike a CPA, full charge bookkeepers are not licensed to provide tax advice or do your annual taxes. However, they can prepare all the forms needed to report your income and payroll on a monthly and quarterly basis.

This means that when it’s time to file your taxes, everything will be in order. Your CPA only has to review everything and give you any advice you need before submitting the forms to the government.

This results in a significant reduction in the amount of time your CPA needs to spend working on your taxes, which translates into significant savings for you.

One other bonus of hiring a full charge bookkeeper is if they’re an Enrolled Agent (EA). An EA is someone who has passed a difficult exam given by the IRS that qualifies them as a tax expert. They are able to advise you and handle your taxes for you without having to go through a CPA.

 

payroll and timesheet

Payroll and Timesheet processing

If you’re working with a full charge bookkeeper, one of the perks is that you may have access to payroll services. A full charge bookkeeper will handle the process themselves, or they might supervise a payroll specialist who does the work. In this scenario, your FCB should be managing the relationship with the specialist on your behalf.

When it comes to payroll, there are two main options. You can outsource your payroll to a third party, or you can handle it in-house. Either way, if you use a full charge bookkeeper, they will manage your payroll processing (or oversee someone who manages it).

 

create financial reports

Create Financial Reports

You need to know what’s happening with your business from a financial perspective. But it’s not enough to just have your bookkeeper produce standard financial statements: you need information that helps you make decisions about the future of your business. Full Charge Bookkeepers’ financial planning and budget forecasting services will help you do just that: plan for the future, and forecast where your business is going.

 

 

 

 

Hiring a Full Charge Bookkeeper

You have a lot on your plate; why add more?

When you’re running a business, you have plenty to think about without having to worry about things like complex financial tasks, preparing management reports, processing payroll, or taking a trial balance. We get it!

At FAS Bookkeeping and Tax Services, we can help. Our full charge bookkeeper can handle all of these tasks for you. Plus, when you need your accountant’s expertise for auditing or tax purposes, we’ve got that covered too. Our team has the experience and the skillset to provide you with the quality financial service you need—without any of the hassle.

Get in touch with us today!

Bookkeeping quote

Is Bookkeeping the same as Accounting?

person comparing bookkeeping and accounting

Is bookkeeping the same as accountingIs Bookkeeping the same as Accounting?

So you’ve decided to hire someone to help with your business’s finances, but you’re not sure if an accountant or a bookkeeper is the best fit for your needs. So you ask yourself, is Bookkeeping the same as Accounting?

Luckily, we’ve broken down the difference below so you can make an informed decision about which one is right for your company.

Bookkeeping is the process of maintaining the records of all your business’s purchases and sales—and no, it’s not just something people did in the 17th century with quill pens and wax stamps. It helps you understand where you have been financially so that you can make smarter decisions about where to go next. The two processes are related, but they’re not interchangeable.

An accountant can be considered a bookkeeper, but a bookkeeper can’t be an accountant without proper certification.

This is because a bookkeeper’s duties and skills are limited to keeping records of financial transactions, whereas an accountant’s duties and skills go far beyond that. An accountant is responsible for keeping track of day-to-day financial records and for advising business owners about the best practices for maximizing profit. Accountants also provide auditing services to ensure that businesses are following established guidelines and complying with regulations. Accountants often work at large accounting firms, while bookkeepers typically work within small businesses or on their own.

If you’re having trouble figuring out whether you need to hire a financial professional, answer the following questions:

  1. What’s your business’s current position financially?
  2. Where do you want your business to be in five years? Ten years?
  3. Can you achieve these goals on your own?

 

What do Bookkeepers do?What do Bookkeepers do

Bookkeeping refers to the process of recording all of a business’s financial transactions. The term originally referred to manual bookkeeping, but as technology has advanced, bookkeepers are now more likely to use software to keep records of their daily financial transactions.

Bookkeepers enter every transaction into their ledger, which is a record of all financial activity. It typically consists of two columns: debit and credit. Each transaction is recorded in both columns; assets are recorded on the debit side and liabilities on the credit side. Assets include anything owned by the business, while liabilities include any debts or expenses that must be paid.

Bookkeepers record all financial transactions in the same way and use a standardized system for doing so—this ensures consistency and ease of reading between entries. Typically, they follow the double-entry system: Debits must equal credits at all times, which helps catch errors. All entries must be complete and accurate since they later serve as documentation for accountants’ work when preparing taxes or other reports related to finances

What does a bookkeeper actually do?

  • Recording financial transactions
  • Producing invoices
  • Posting debits and credits
  • Maintaining and balancing ledgers, accounts, and subsidiaries
  • Managing payroll

Bookkeepers are in the business of information—they need to be able to find it quickly and easily so they can spend their time keeping things straight.

That’s where a general ledger comes in. It’s a document that records the amounts from sales and expense receipts, and it can vary in complexity from a sheet of paper to specialized bookkeeping software, such as QuickBooks, NetSuite, or Xero.

A general ledger is basically a record of all the things that bring money into your business, as well as all the things that money gets spent on. It’s used by accountants to create financial statements for your business.

Tracking your sales and expenses over time will help you see when you’re making more than you’re spending, or if there are areas in your business that aren’t working out how you’d like them to.

Every single transaction your business conducts must be recorded in the ledger, and some of those transactions will require supporting documentation. For example, if you hire someone to perform services for your company, they’ll want a record of payment so they can report it on their income taxes. If you buy something from another company, they will probably want some kind of proof that you paid them so that they can account for the income properly. You can find more information about which transactions require supporting documents on the IRS website.

It’s true—anyone can become a bookkeeper! You don’t need any special training or education to get started, but you should be very knowledgeable about financial topics and accounting terms. Good bookkeepers strive for accuracy, and an accountant or owner usually oversees the work of anyone who wants to be a bookkeeper.

 

Bookkeeper CredentialsBookkeeper Credentials

As a bookkeeper, you don’t need to be certified or licensed in order to manage the books for your customers or employer. However, if you want to become a Certified Public Bookkeeper (CPB), there are organizations that can help you do just that. The American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB) both offer accreditation and licensing for bookkeepers.

AIPB certification requires bookkeepers to have at least two years of full-time work experience and pass a national exam. To maintain the credential, bookkeepers are required to engage in continuing education—meaning your bookkeeper stays up to date on important changes in tax law and industry standards that may affect your business.

Certification from the NACPB requires passing tests for small business accounting, small business financial management, bookkeeping, and payroll. Beyond these certifications, the organization also offers a payroll certification which requires additional education.

Becoming a certified public bookkeeper (CPB) is a multi-step process. A CPB has to have at least 2,000 hours of work experience and can take an exam to earn the designation. They must also sign a code of conduct that says they will uphold the standards of their field and its professional ethics.

 

Advantages of having a Bookkeeper

Working with a professional bookkeeper can help you feel confident that your business’s financial records are in good hands. Consider these advantages:

-Cost and time savings: Bookkeepers have the skills, tools, and experience to provide accurate and quick records management. Their time is also typically billed at a lower rate than an accountant or lawyer.

-Improved cash flow: Your bookkeeper will be able to help you more effectively manage your invoices, making it easier for you to get paid on time. They can also help you spot errors and make sure there aren’t any unnecessary deductions from payments made to your business.

-Decreased tax burden: A bookkeeper will ensure that you’re taking advantage of all available deductions at tax time, which means you’ll pay less in taxes overall.

 

What do Accountants do?What do Accountants do

An accountant analyzes the financial data a bookkeeper records and provides business owners with important business insights and financial advice based on that information. These are some typical accountancy tasks:

  • Verifying and analyzing data
  • Adjusting entries
  • Providing information for forecasts, business trends and opportunities for growth
  • Generating reports, performing audits, and preparing financial reporting records like tax returns, income statements and balance sheets.
  • Helping the business owner understand the impact of financial decisions

Accounting is a lot like cooking. No, really!

When you’re making dinner for your family, you don’t just grab all the ingredients and throw them into a pot. You have to make sure you’re using the right amount of each ingredient, in the right order, with the right heat—otherwise, your dinner may be a disaster.

With accounting, it’s similar. You have to combine the right numbers at the right time, with the right methods of measurement and calculation—otherwise, your reports will be completely useless. The accounting process produces reports that bring key aspects of your business’s finances together to give you a complete picture of where your finances stand, what they mean, what you can and should do about them, and where you can expect to take your business in the near future.

 

Accountant Credentials

Accountants need a number of qualifications to do their jobs well.

First, they have to have experience. This helps them be better at their jobs and keeps them from making mistakes.

Accountants also need a license and certification. You can get both by going to school for accounting and doing an internship. This is called getting a bachelor’s degree and it takes 4 years.

There are certifications that accountants can obtain to expand their skill sets and gain positions within organizations. In addition to CPA credentials, other common accounting designations are chartered financial analyst (CFA) and certified internal auditor (CIA).

CPA credentials

The CPA credential is the gold standard for accountants. To earn this designation, an accountant must meet their state’s requirements and pass the Uniform CPA Exam. Then, they must meet ongoing education requirements to maintain their accreditation.

When you’re interviewing for a CPA, look for an accountant who understands tax law and accounting software and has good communication skills. They should understand your industry and the unique needs and requirements of small businesses.

CFA credentials

The CFA certification is one of the most respected designations in accounting, so hiring a CFA means bringing highly advanced accounting knowledge to your business.

Awarded by the CFA Institute, accountants who earn the CFA certification learn about portfolio management, ethical financial practices, investment analysis, and global markets. To complete the program, accountants must have four years of relevant work experience. CFAs must also pass a challenging three-part exam that had a pass rate of only 39% in September 2021.

CIA credentials

A Certified Internal Auditor (CIA) is a great choice if you need an accountant with a focus on risk and monitoring.

Certified Internal Auditors (CIAs) are accountants who have been certified in conducting internal audits. To receive this certification, an accountant must pass the required exams and have two years of professional experience. CPAs can perform some of the same services as CIA’s. However, you might hire a CIA if you want a more specialized focus on financial risk assessment and security monitoring processes.

 

When should you hire a Bookkeeper or an AccountantWhen should you hire a Bookkeeper or an Accountant?

Hiring an accountant or bookkeeper is not always a straightforward decision. It can depend on the size and complexity of your business, what you’re willing to spend, your comfort level with accounting software and math in general, and how much time you want to spend on record-keeping.

Many small businesses hire an accountant as a consultant and do their own books with software their accountant recommends. But other small business owners choose to hire a bookkeeper or employ a small accounting department with data entry clerks reporting to the bookkeeper.

As a business owner, it’s important to have a good bookkeeper. A bookkeeper’s job is to keep the financial records of your business up-to-date and ensure that you are following the tax laws of your state and country. Your bookkeeper should be familiar with these laws so that your books remain accurate.

He or she also prepares documents for your accountant to review. It may take some background research to find a suitable bookkeeper because, unlike accountants, they are not required to hold a professional certification. A strong endorsement from a trusted colleague or years of experience is important factors when hiring a bookkeeper.

Are you still on the fence about hiring a bookkeeper to help you with your business bookkeeping? Here are three instances that indicate it’s time to hire a bookkeeper:

  1. You’re growing! And that’s great—but it means you need help.

If you’re feeling like your business is expanding, but the size of your finance department isn’t keeping up, it’s time to get serious about hiring a professional to help you manage your books. It can be daunting, but it’s absolutely worth it when you find the right person for the job.

  1. You’re spending way too much time on finances—and not enough on the rest of your business.

If you can’t remember the last time you actually paid someone for their services because you were so busy with your financials, it’s probably time to hire someone. Financial professionals can free up a ton of time so that you can focus on other important aspects of your business, and they’ll help ensure that everything is done correctly and efficiently.

  1. Your books are just not being taken care of.

If there are months where nothing gets entered into your accounting software, if all of your receipts are stacked up in a drawer somewhere (instead of in an organized folder), or if you’ve missed paying bills, it’s definitely time to hire someone who will be able to do better than that.

If you encounter any if not all of the instances listed above, then you need a bookkeeper ASAP! Try sending us a message to see if we are the right fit for the needs of your business. Our bookkeepers are equipped with years of experience and expertise in the business and the dedication to help your business succeed by making sure that not even a single cent is out of place in your books!

Send us a message today!

Bookkeeping and tax services Katy, Texas