Must Reads

“Chains of habit are too light to be felt until they are too heavy to be broken”-Warren Buffet

The creating of good habit is what makes people successful in work and life. Everything that you are today, and everything that you will ever accomplish, is determined by the quality of the habits that you form. Here are some habits that you can start developing right now.

 

1. Make a Decision for Long Term

Try to think of a situation which requires a decision about your startup. While making that decision you’ll find yourself encountering some possible problems or obstacle that may occur along the way. You may ask yourself questions like what if things will happen? Or If I do this what will be going to happen? The next thing you know, you’ll be creating a solution to avoid or eliminate them.

The habit of making a long-term decision helps you determine the direction of your startup. It’s like a roadmap where you plot your goals and find ways to achieve them. It helps you to be prepared and gives you an overview to layout your business plan. With this habit, you will be able to see the bigger picture and it will help your business become more successful.

 

2. Be Motivated By The Right Thing

Generally, people started to build their business because they want to make a profit. But particularly, there are different reasons why they chose that type of business.  Maybe it is something that they love to do or passionate about or maybe because it is a popular type of business. Whatever it is, every reason is relevant to make a business successful.

The habit of motivating yourself with the right thing is like knowing your purpose in life and connecting it with your business. It is the basic foundation that will help you strengthen your startup. Whenever something goes wrong and you feel discouraged, go back to that very foundation and you will be reminded of the purpose that you set for your business. Being motivated with the right thing will help you turn your negative thought into a positive one. Be optimistic. Be motivated.

 

3. Use Your Support Network

Surround yourself with people that will support you. They can be your friends, family, relatives or professionals. Make sure that they support your business, support what you are trying to achieve, and understand the problems and issues you are facing along the way. You can get advice from them, learn from their mistakes, and get wisdom and knowledge based on their experiences.

Be a visionary. Be successful. Try these habits and it will help you make your startup more successful.

 

If you need support for your business’ financial and tax services needs, contact us today at admin@fas-accountingsolutions.com or (832)-437-0385.

A loan is often needed when growing the business but to get your loan approved is difficult especially for small business owners. However, it is not impossible not unless you prepared for it.

 

Here are the steps to getting a small business loan:

• Determine Why You Need A Loan

Ask yourself why do you need this loan? Is it necessary for the business? These will be asked to you by the lenders but without good reason, lenders won’t approve your request.

Common Reasons Why Business Owners Get A Business Loan

• To start a business
• To grow or buy a business
• To manage your working capital – Working capital is your day-to-day cost.
• Equipment Financing
• Refinancing debt

 

• Know Your Credit Score

If you are a small business or if it is your first time applying for a business loan, make sure that you have a good personal credit score. It is a good measure of how responsible you are in paying the business loan.

 

• Determine How Much You Need

Know how much you need and what you can afford. It is very tricky because these two should balance each other. Lenders won’t approve unrealistic loan amounts and even if they do, you will eventually get caught under a file of debt. It is also not good to underestimate the loan amount because it can negatively impact your business operations or you can miss opportunities. Have detailed research and financial projections done with supporting documents. You could hire a financial professional to aid you.

 

• Do Your Research On Lenders

There are different types of lenders like banks, microlenders, and online lenders. You should find a lender that is suitable for your needs.

• Banks usually lower have an annual percentage rate (APR) but have a strict requirement like having collateral and good credit score.
• Microlenders offer short-term loans for small businesses like The Lending Club.
• Online Lenders are applicable to those who lack collateral, have insufficient documents or needs urgent funding. The annual percentage rate (APR) for this is higher than the banks.

 

• Prepare Paperwork

The lenders want to know if you have the capacity to pay so they will ask for various documents. These are the documents you need to submit depending on the lender. You could ask for the help of a financial professional to aid you, especially with the financial projections.

• Financial reports
• Business plans
• Financial projections
• Business and personal tax returns
• Business documents (articles of incorporations, contract of lease)
• Bank statements

 

• Wait

Make sure to prepare the supporting documents before asking for a loan so that the lender can approve your loan quickly. Once you provide all the necessary documents, the lender will need time to assess your qualification.

The bottom line here is knowing what loan your business needs and how much you can take and choosing a lender that suits best to your needs. You need to do your research to come up with a good plan.

If you need assistance on bookkeeping, tax preparation or your loan application, contact us today at admin@fas-accountingsolutions.com or 832-437-0385.

If you’re conscientious about financial reporting, you may already have a sense of your company’s worth, but in some instances, you might need a formal business valuation, such as:

• Certain transactions: Are you selling your business? Planning an IPO? Need financing?
• Tax purposes: This includes estate planning, stock option distribution, and S Corporation conversions.
• Litigation: Often needed in cases like bankruptcy, divorce, and damage determinations.

There isn’t a single formula for valuing a business, but there are generally accepted measures that will give you a valid assessment of your company’s worth. Here are three tips that you can use to give your business a more accurate valuation.

1. Take a Close Look at How your Business Operates. 

Does it incorporate the most tax-efficient structure? Have sales been lagging or are you selling most of your merchandise to only a few customers? If so, then consider jump-starting your sales effort by bringing in an experienced consultant who can help.

Do you have several products that are not selling well? Maybe it’s time to remove them from your inventory. Redesign your catalog to give it a fresh new look and make a point of discussing any new and exciting product lines with your existing customer base.

It might also be time to give your physical properties a spring cleaning. Even minor upgrades such as a new coat of paint will increase your business valuation.

2. Tangible and Intangible Assets.

Keep in mind that business valuation is not just an exercise in numbers where you subtract your liabilities from your assets, it’s also based on the value of your intangible assets.

It’s easy to figure out the numbers for the value of your real estate and fixtures, but what is your intellectual property worth? Do you hold any patents or trademarks? And what about your business relationships or the reputation you’ve established with existing clients and in the community? Don’t forget about key long-term employees whose in-depth knowledge about your business also adds value to its net worth.

3. Choose your Appraisal Team Carefully.

Don’t try to do it yourself by turning to the Internet or reading a few books. You may eventually need to bring in experts like a business broker and an attorney, but your first step should be to contact us. We have the expertise you need to arrive at a fair valuation of your business.

If you need a business valuation for whatever reason, contact us today at admin@fas-accountingsolutions.com or (832)-437-0385.

Among the fastest ways for a business to fail is because of mismanagement or malfeasance by ownership. On the other hand, among the slowest ways is an ineffective or dysfunctional sales department.

Companies suffering from this malady may maintain just enough sales to stay afloat for a while, but eventually they go under because they lose one big customer or a tough new competitor arrives on the scene. To ensure your sales department is contributing to business growth, not just survival, you’ve got to ask some tough questions. Here are four to consider:

1. Does our sales department communicate customers’ needs to the rest of the company? 

Your sales staff works on the front lines of your industry. They’re typically the first ones to hear of changes in customers’ needs and desires. Make sure your sales people are sharing this information in both meetings and written communications (sales reports, emails and the like).

It’s particularly important for them to share insights with the marketing department. But everyone in your business should be laser-focused on what customers really want.

2. Does the sales department handle customer complaints promptly and satisfactorily? 

This is related to our first point but critical enough to investigate on its own. Unhappy customers can destroy a business — especially these days, when everyone shares everything on social media.

Your sales staff should have a specific protocol for immediately responding to a customer complaint, gathering as much information as possible and offering a fair resolution. Track complaints carefully and in detail, looking for trends that may indicate deeper problems with your products or services.

3. Do our salespeople create difficulties for employees in other departments? 

If a sales department is getting the job done, many business owners look the other way when sales staff play by their own rules or don’t treat their co-workers with the utmost professionalism. Confronting a problem like this isn’t easy; you may unearth some tricky issues involving personalities and philosophies.

Nonetheless, your salespeople should interact positively and productively with other departments. For example, do they correctly and timely complete all necessary sales documents? If not, they could be causing major headaches for other departments.

4. Are we taking our sales staff for granted?

Salespeople tend to spend much of their time “outside” a company — either literally out on the road making sales calls or on the phone communicating with customers. As such, they may work “out of sight and out of mind.”

 

Keep a close eye on your sales staff, both so you can congratulate them on jobs well done and fix any problems that may arise. Our firm can help you analyze your sales numbers to help identify ways this department can provide greater value to the company.

Being an entrepreneur means wearing multiple hats. Some of these include marketing, recruitment, operations, etc. However, the most challenging is tracking your profits and balancing your books.

Here are some of the challenges a small business owner needs to overcome to stay on top of your finances:

 

1. Cash Flow

Managing cash flow is one of the most challenging realities a business owner must face.  An important consideration in maintaining a healthy cashflow is billing and collecting on time. Also, negotiating reasonable payment terms with your vendors help your cashflow.

 

2. Disaster Preparedness

A contingency fund is necessary for a small business in case a natural disaster hits your business.

 

3. Taxes

As a business owner, it is vital to know about taxes to make the right decision and stay compliant.  Surrounding yourself and your company with a tax professional like an Enrolled Agent is extremely important when dealing with business tax compliance.

 

4. Managing Payroll

Keeping up with compliance regulations can be a daunting task for a small business owner. It is essential that your business not only comply with the legislation but also with other employee-related requirements. Aside from that, the process is time-consuming, which lessens the valuable time a business owner could put into managing business affairs.

 

Need assistance in handling these common challenges? Contact us today at admin@fas-accountingsolutions.com or (832)-437-0385.

Like most business owners, you’ve probably been urged by industry experts and professional advisors to identify the most important key performance indicators (KPIs) for your company. So, just for the sake of discussion, let’s say you’ve done that. A natural question that often follows is: Now what? You know you’re supposed to keep an eye on these metrics every day but … how?

The right technology has you covered. There’s a specific type of software — commonly referred to as a “business dashboard” — that allows business owners to create customized views of all their chosen KPIs. And these applications don’t just lay out numbers like a spreadsheet. They provide an easy visual experience that allows you to keep your eyes on the prize: a cost-controlled, profitable company.

Cloud-based Knowledge

Business dashboards have been around for a decade or two in various forms. But today’s solutions have the advantage of being cloud-based, meaning the data driving them is typically stored on a secure server off-site. And you can access the dashboard from anywhere at any time on an authenticated device. (You can also still run a dashboard from your company’s own servers, if you prefer.)

If you’ve never used a dashboard before, you might wonder what one looks like. The name says it all. Ideally, a dashboard is a single screen of data — like the panel of gauges in your car — that displays various KPIs in the form of pie charts, bar graphs, and other graphic elements.

A Few Must-Haves

When shopping for a product, there are a few “must-haves” to insist on. The software should:

• Support your chosen KPIs,
• Present itself in a visually pleasing, logical manner that allows you to easily, intuitively follow those KPIs, and
• Update itself in real-time, enabling you to react quickly to sudden swings in your company’s financial performance.

Be wary of vendors that over-promise “otherworldly” knowledge of your industry or try to upsell you on bells and whistles. The simpler the dashboard, the better. There will always be more complex financial issues regarding your business that can’t be put into simple terms on a dashboard.

Also, the rise of artificial intelligence (AI) is causing many to question the long-term viability of business dashboards. AI gathers and shapes data so quickly, and in such massive amounts, that some experts argue that a business owner’s chosen KPIs can rapidly become outmoded.

Nonetheless, dashboard software is still widely used in many industries. Just be prepared to regularly reassess and, if necessary, update your KPIs.

Shop Carefully

If you decide to invest in a business dashboard (or upgrade your current one), you’ll need to go about it carefully. We can help you set a budget and compare prices and functionalities to get an optimal return on investment.

Many business owners reach a point where managing the financial side of the enterprise becomes overwhelming. Usually, this is a good thing — the company has grown to a point where simple bookkeeping and basic financial reporting just don’t cut it anymore.

If you can relate to the feeling, it may be time to add a CFO or controller. But you’ve got to first consider whether your payroll can take on this generally high-paying position and exactly what you’d get in return.

The Broad Role

A CFO or controller looks beyond day-to-day financial management to do more holistic, big-picture planning of financial and operational goals. He or she will take a seat at the executive table and serve as your go-to person for all matters related to your company’s finances and operations.

A CFO or controller goes far beyond merely compiling financial data. He or she provides an interpretation of the data to explain how financial decisions will impact all areas of your business. And this individual can plan capital acquisition strategies, so your company has access to financing, as needed, to meet working capital and operating expenses.

In addition, a CFO or controller will serve as the primary liaison between your company and its bank to ensure your financial statements meet requirements to help negotiate any loans. Analyzing possible merger, acquisition and other expansion opportunities also fall within a CFO’s or controller’s purview.

Specific Responsibilities

A CFO or controller typically has a set of core responsibilities that link to the financial oversight of your operation. This includes making sure there are adequate internal controls to help safeguard the business from internal fraud and embezzlement.

The hire also should be able to implement improved cash management practices that will boost your cash flow and improve budgeting and cash forecasting. He or she should be able to perform ratio analysis and compare the financial performance of your business to benchmarks established by similar-size companies in the same geographic area. And a controller or CFO should analyze the tax and cash flow implications of different capital acquisition strategies — for example, leasing vs. buying equipment and real estate.

Major Commitment

Make no mistake, hiring a full-time CFO or controller represents a major commitment in both times to the hiring process and dollars to your payroll. These financial executives typically command substantial-high salaries and attractive benefits packages.

So first, make sure you have the financial resources to commit to this level of compensation. You may want to outsource the position. No matter which route you choose, our firm can help you assess the financial impact of the idea.

Bitcoin and other forms of virtual currency are gaining popularity. But many businesses, consumers, employees and investors are still confused about how they work and how to report transactions on their federal tax returns. And the IRS just announced that it is targeting virtual currency users in a new “educational letter” campaign.

The Nuts and Bolts

Unlike cash or credit cards, small businesses generally don’t accept bitcoin payments for routine transactions. However, a growing number of larger retailers — and online businesses — now accept payments. Businesses can also pay employees or independent contractors with virtual currency. The trend is expected to continue, so more small businesses may soon get on board.

Bitcoin has an equivalent value in real currency. It can be digitally traded between users. You can also purchase and exchange bitcoin with real currencies (such as U.S. dollars). The most common ways to obtain bitcoin are through virtual currency ATMs or online exchanges, which typically charge nominal transaction fees.

Once you (or your customers) obtain bitcoin, it can be used to pay for goods or services using “bitcoin wallet” software installed on your computer or mobile device. Some merchants accept bitcoin to avoid transaction fees charged by credit card companies and online payment providers (such as PayPal).

Tax Reporting

Virtual currency has triggered many tax-related questions. The IRS has issued limited guidance to address them. In a 2014 guidance, the IRS established that virtual currency should be treated as property, not currency, for federal tax purposes.

As a result, businesses that accept bitcoin payments for goods and services must report gross income based on the fair market value of the virtual currency when it was received. This is measured in equivalent U.S. dollars.

From the buyer’s perspective, purchases made using bitcoin result in a taxable gain if the fair market value of the property received exceeds the buyer’s adjusted basis in the currency exchanged. Conversely, a tax loss is incurred if the fair market value of the property received is less than its adjusted tax basis.

Wages paid using virtual currency are taxable to employees and must be reported by employers on W-2 forms. They’re subject to federal income tax withholding and payroll taxes, based on the fair market value of the virtual currency on the date of receipt.

Virtual currency payments made to independent contractors and other service providers are also taxable. In general, the rules for self-employment tax apply and payers must issue 1099-MISC forms.

IRS Campaign

The IRS announced it is sending letters to taxpayers who potentially failed to report income and pay tax on virtual currency transactions or didn’t report them properly. The letters urge taxpayers to review their tax filings and, if appropriate, amend past returns to pay back taxes, interest and penalties.

By the end of August, more than 10,000 taxpayers will receive these letters. The names of the taxpayers were obtained through compliance efforts undertaken by the IRS. The IRS Commissioner warned, “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics.”

Last year, the tax agency also began an audit initiative to address virtual currency noncompliance and has stated that it’s an ongoing focus area for criminal cases.

Implications of Going Virtual

Contact us if you have questions about the tax considerations of accepting virtual currency or using it to make payments for your business. And if you receive a letter from the IRS about possible noncompliance, consult with us before responding.