Why Budgeting Is The Number One Small Business Skill

Small business owners need to know how to budget. If they are unsure of how to do this, then they need to learn how to quickly. Using proper budgeting techniques will allow a small business to grow and expand longer and to maintain the growth they already have. 

Why The Business Needs A Budget 

The point of budgeting is to make sure that your business has enough to go around for its operations and growth. Businesses need to ensure that they are thinking steps ahead in order to make sure that they can continue to operate going forward. Other reasons for a need for a budget are presented here by Inc.com, 

Bankers and other financiers may want to see a budget when you ask for a loan. Employees should also be privy to the budget so that they understand where the business is going and are motivated to work harder.

How The Budget Should Be Structured 

Your budget needs to have all of the elements that you need to know the health of your company. Cash flow statements are quite important to this as you need to know how money literally flows through the business. Budgets should be broken down into the 12 month increments with blanks left in so you can fill in the actual numbers that come in over time. This gives you the chance to fill in your numbers as time goes on. 

Writing Your Budget 

If you have a budget written up from the previous year, then you need only to use those numbers to make some basic estimations for the year going forward. If you have never written a budget before, then your estimates need to come from whatever information you do have about your income and expense figures. 

In the event that you have never written a budget before, it is a good idea to keep your budget rather conservative. You do not want to get ahead of yourself thinking that you can do better than you actually do. It is best to keep things as conservative as possible and surprise yourself to the upside. 

Contact us for more advice on small business budgeting. 

Eight Facts about Penalties for Filing and Paying Late

April 15 is the tax day deadline for most people. If you’re due a refund there’s no penalty if you file a late tax return. But if you owe taxes and you fail to file and pay on time, you’ll usually owe interest and penalties on the taxes you pay late. Here are eight facts that you should know about these penalties. 

1. If you file late and owe federal taxes, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late.

2. The failure-to-file penalty is usually much more than the failure-to-pay penalty. In most cases, it’s 10 times more, so if you can’t pay what you owe by the due date, you should still file your tax return on time and pay as much as you can. You should try other options to pay, such as getting a loan or paying by credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up a payment plan with the IRS using the Online Payment Agreement tool on IRS.gov.

3. The failure-to-file penalty is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. It will not exceed 25 percent of your unpaid taxes.

4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.

5. The failure-to-pay penalty is generally 0.5 percent per month of your unpaid taxes. It applies for each month or part of a month your taxes remain unpaid and starts accruing the day after taxes are due. It can build up to as much as 25 percent of your unpaid taxes.

6. If the 5 percent failure-to-file penalty and the 0.5 percent failure-to-pay penalty both apply in any month, the maximum penalty amount charged for that month is 5 percent.

7. If you requested an extension of time to file your income tax return by the tax due date and paid at least 90 percent of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the remaining balance by the extended due date. You will owe interest on any taxes you pay after the April 15 due date.

8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for not filing or paying on time.

Expanding your Business by Utilizing Web Design

While you may have a successful business offline, you may be missing out on potential customers because you do not have a website. It is quite common for people to determine the restaurant they go to or company they use for certain professional services based on their website alone. If you are able to engage customers from a website, not only will you instill confidence in people that want to do business with you in the form of buying your product or using your service, but you will reach a new customer-base.

It is beneficial to build a long-term business relationship when you get professional web design, and this is because you can utilize these services for changes on a regular basis. While some companies strictly do website design, there is also the possibility to use certain businesses for doing much more, such as social media, budgeting, marketing, bookkeeping, graphic design, and more. After having an incredible experience with getting a website running for your business, you may be interested in using these services to further improve and expand your business.

Although you may be satisfied with a website, you may still be missing out on an opportunity to gain new customers due to a lack of search engine optimization. It is helpful to use a company that provides web design for optimization in the form of onsite and offsite optimization. When you utilize these services, along with professional web design that understands heat-tracking for the best results in terms of where to place everything on homepages and every other page, you are bound to have incredible success.

In some cases, a business owner may invest into creating their own website to save money, and while this may work okay in the beginning, there are significant differences in terms of appearance and function to websites done by an amateur and websites created by professionals. If you are interested in expanding your business to take advantage of online opportunities, please contact us and we can help you with professional services for web design, marketing, and more.

5 Tips on How to be a Good Client for Your Bookkeeper

As a general rule, a bookkeeper will be more diligent with the clients that they love and respect. So what do you need to do as a client to get the highest level of performance from your bookkeeper? Below are 5 tips for you to remember when working with your bookkeeper.

1. It's Not Their Fault
Bookkeepers can make mistakes - they are human - but not that often. Bookkeepers love what they do because they have great attention to detail and they like to see things add up correctly and balance. Often they are quick, as well as being thorough. As a rule, they are hard wired to do things right.

Most likely the blame for incorrect entries and 'mistakes' are because of miscommunication or misunderstanding. So try your best to understand what your bookkeeper needs.

2. Send Material on Time
We all live with deadlines. Bookkeepers have lots of deadlines for multiple clients so be aware of when they need things such as getting bank statements from you.

If you have specific dates in a month when you want to review your financial statements, let your bookkeeper know. They will let you know what their requirements are to deliver on time.

If you don't know ask. If there is a mix-up, write an email to make your needs clear.

3. Listen to Suggestions
Bookkeepers know what they are doing and they work with lots of clients. They know how to improve processes and how to make things run smoothly. Ask for suggestions, listen, and be sure you understand their suggestions. You will learn a thing or two which will help to improve the bottom line.

4. Pay Your Bills on TimeNo one likes a staler. If you want great service from your bookkeeper then be sure to pay them well and pay then on time. Just do it.

5. Show Your Appreciation
This is obvious but so easy to forget. Show your appreciation for all the things your bookkeeper does and the effort they put in to deliver your books on time - consistently. You don't need to do something special every month but what about every quarter or twice a year.

Your appreciation could be a simple phone call to say thanks or maybe a gift certificate for two at a nearby restaurant. Who doesn't like eating out once in a while?

We hope that these suggestions are helpful to you as a client who has hired a bookkeeper. Make a comment and let us know what you think.

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Bank Reconciliation Is Crucial for Safeguarding Business Assets

As a small business just starting out, there are often some basic tasks that are set aside in order to focus all energy towards securing those initial sales and getting money rolling in. No matter what business you are in, you should never allow the bank reconciliation process to fall behind. It isn’t simply about knowing how much cash you have on hand; it is also about protecting the business from falling prey to identity theft and fraud.

Even if you check in every day without fail on your bank account activity online, you still need to be comparing that to the activity you are recording on your in house general ledger regularly. In a system such as QuickBooks, the reconciliation process is a very simple task that will also assist with posting monthly interest earned and miscellaneous bank fees to your ledger. This will be critical for maintaining customer service because you will be able to rely on your in house records to quickly answer a billing or payment question.

More crucially, bank reconciliations will help you to identify when an attempt is made to access your account fraudulently. One of the fastest growing versions of theft is for someone to mimic the checks drawn from your bank account and present them for payment. Often these counterfeit items are so sophisticated that they pass by initial processing. They normally start with a small amount that most businesses wouldn’t even notice, and if it goes through, then they ramp up the check presentations. If you are not monitoring your bank activity, a thief could literally drain your account in less than a week.

Similar attempts to access your account can also be made through electronic means should someone get access to your direct banking information through a stolen credit or debit card. Since most small businesses do rely heavily on business credit accounts, this is a very common point of attack. Daily monitoring of online banking activity and weekly or monthly reconciliation to ledger postings will provide a critical protection against anything more than an initial attempt at bank theft.

For information on how we can ensure all your financial processes can remain up to date, contact us.

Focus on Generating Revenues

Transitioning your special talent or unique product into a viable business requires focus. Generating revenues and mastering the intricacies of a business operation are challenging goals for the entrepreneur. 

For instance, a specialty cake designer offered distant customers the option for her to personally deliver their cakes to them (they paid airfare).  This worked out fine until TSA requirements made it necessary to ship the delicate designs in small pieces.

An artisan furniture maker in Illinois discovered that shipping to Manhattan environs did not always go smoothly.  After personally traveling to Manhattan and attempting to deliver one her orders; she discovered that items were often left curbside and final delivery into the home was the responsibility of the customer. 

These same owners were forced to eat the cost of one of their large items due to an employee shipping error.  A customer who received the incorrect item would not relinquish it and they incurred costs both in reshipping and building a replacement.

A cake maker received a customer call concerning a missing cake.  After a time-consuming review of the delivery process, she eventually traced the cake to a basement freezer in the customer’s house.  It turns out that a guest attending a family event had accepted delivery and placed it in the freezer forgetting to inform the hostess. 

What do all these stories have in common?  Small business owners who are intensely focused on providing an outstanding product for their customer may lack the experience and the time to prevent profit consuming mishaps.  As a result they spend valuable hours and dollars doing rework.

Using the expertise of professionals who have walked the walk and can focus on the logistics will go far in meshing your creative ability with business success.

With seasoned advice, the intricate cake designer would have been able to modify her delivery protocol to avoid unproductive time.

Solving the curbside abandonment with an option for white-glove delivery might have been recommended by someone with background in shipping company policies.

The employee error that resulted in the profit losing sale could have been avoided with properly recorded shipping procedures. And, that cake would have been on the dessert table where it belonged had delivery instructions been included in the paperwork.

Contact us and let our experienced staff focus on the details, show you how to keep the profits and enjoy the results of your creative venture.  

Social Media Content Is a Branding Tool

More and more businesses are realizing the power of social media as an effective marketing tool. But what many have failed to grasp is that it's not just about creating two or three social media pages and posting ads or other purely promotional material. In fact, that kind of thing really should kept to a minimum. The primary use of social media should be as a branding tool.

The late Diana, Princess of Wales, said;

"I'd like people to think of me as someone who cares about them."

That should be the objective of all your brand building efforts. And the way to achieve that objective through social media is to publish useful content. If you're a small business with limited time and resources, you might not think that's possible for you. But the truth is, it is possible, and easier than you think.

The key is leverage.

As a professional in your field, you probably read a great deal about your particular industry. As you read, give some thought to whether the article you're reading might be of interest to some of your social media followers. If it is, simply copy and paste a short, attention grabbing quote from the article into your social media pages along with a link to the full article. Unlike publishing a blog, which requires you to create original content, sharing other people's online content via your social media outlets takes very little time, and it's perfectly appropriate and legal. In fact, the publisher of the piece will appreciate the referral to their article.

Of course, the content you share has to be relevant to your business. If you're in the hair salon business, it wouldn't be relevant for you to post a link to an article about caring for dogs or cats, even if some of your followers happen to be pet owners. Instead, you should post links to informative articles about hair care and other personal care topics - the common thread of interest among all your followers.

By leveraging content that already exists somewhere else online, you can provide your social media friends and followers with content that can benefit them in some way. People will start to think of you as someone who cares about them. This will lead to increased trust, and that trust will cause them to think of you first when they need whatever it is you sell.

For additional help creating and implementing an effective social media branding strategy, contact us online, or call 813-440-2741.