Why Small Businesses Should Outsource their Bookkeeping

We all get 24 hours in one day. But between answering texts, emails, filling staffing holes, attending meetings, networking, attaining funding and trying to have a personal life, how do business owners also run a successful company with 24 hours in a day?

Working with outsourced accounting and bookkeeping firms, you can surround yourself with experts, provides sound counsel, allows for business owners to focus and, and ultimately, increases profits. They are a trusted source of deep knowledge in an aspect of business and can quickly identify risks facing the operation and understand common pain points.  In addition to  bringing  solutions, best practices and efficiencies to quickly get to the desired solution.

Working with outsourced  accounting and bookkeeping firms also encourages owners to get answers to pertinent and sometimes not yet considered questions to prevent a sticky situation down the road. These questions also encourage decisions  to help get to a good consideration.

Most small business owners start a business to give themselves an outlet for their passion, not to meddle with bookkeeping, payroll and tax compliance. With outsourcing your accounting and bookkeeping it saves time and resources to keep your business needs rolling so you can invest in your passion.

A good accounting and bookkeeping firm will work to increase a company’s profitability.  While it’s true partnering with an accounting and bookkeeping firm requires an initial investment.  Accounting and bookkeeping firms offer turnkey services.  These add efficiencies lowering operation expenses, giving a leg up on the competition, an ultimately maximizing profits.

Ultimately, outsourcing your bookkeeping to experts is worth it.  Accounting and bookkeeping firms invest in making your business better and, in the end, provide efficiencies that add to the bottom line.  In addition, you’ll be able to grow your business, focus on what you do best, and lower your stress.

T. Williams & Associates believes when our client wins, our firm wins.  We will invest as much of ourselves to see your business succeed.  In the past 10 years, T. Williams & Associates have helped many small businesses get a handle on their accounting and bookkeeping needs by automating their back office finances, so they can increase cash flow, grow faster, and save more money on their returns.  You can use this link to reserve some time to chat: https://twilliamsassociates.youcanbook.me    Or just call us directly at 816-251-4527.

In the meantime, you can learn about our firm here: https://www.twa-accountingservice.com/

Deciding What Business Structure Is Right For You

When you start a business, there are endless decisions to make. Among the most important is how to structure your business. Why is it so significant? Because the structure you choose will affect how your business is taxed and the degree to which you (and other owners) can be held personally liable. Here’s an overview of the various structures.


Sole Proprietorship

This is a popular structure for single-owner businesses. No separate business entity is formed, although the business may have a name (often referred to as a DBA, short for “doing business as”). A sole proprietorship does not limit liability, but insurance may be purchased.

You report your business income and expenses on Schedule C, an attachment to your personal income tax return (Form 1040). Net earnings the business generates are subject to both self-employment taxes and income taxes. Sole proprietors may have employees but don’t take paychecks themselves.


Limited Liability Company

If you want protection for your personal assets in the event your business is sued, you might prefer a limited liability company (LLC). An LLC is a separate legal entity that can have one or more owners (called “members”). Usually, income is taxed to the owners individually, and earnings are subject to self-employment taxes.

Note: It’s not unusual for lenders to require a small LLC’s owners to personally guarantee any business loans.


Corporation

A corporation is a separate legal entity that can transact business in its own name and files corporate income tax returns. Like an LLC, a corporation can have one or more owners (shareholders). Shareholders generally are protected from personal liability but can be held responsible for repaying any business debts they’ve personally guaranteed.

If you make a “Subchapter S” election, shareholders will be taxed individually on their share of corporate income. This structure generally avoids federal income taxes at the corporate level.


Partnership

In certain respects, a partnership is similar to an LLC or an S corporation. However, partnerships must have at least one general partner who is personally liable for the partnership’s debts and obligations. Profits and losses are divided among the partners and taxed to them individually.


Five Keys to Success For A Small Business

Statistics indicate 80% of small business make it through their first year, but only 55 percent make it to five.   So how can you increase your chances of being among the 50 percent of businesses that make it for at least five years? With this in mind, you can improve your odds with careful planning, knowing the best method of running your business successfully and a detailed strategy.

Here are the five keys to a small business success:


1. Budget the Costs
Launching and running a small business requires a thorough accounting of costs, both financial and personal. Not creating a budget, is one of the top reasons for business failure.  Therefore, make sure you have a detailed budget that includes not only startup costs but the living expenses you’ll have to take on before your business can start paying you.  In addition to anticipate major equipment purchases and real estate investments so you have a realistic estimate of your needs and costs for the upcoming year.

Numbers don’t lie, they’re not emotional and they don’t make excuses.  It’s best to assume it will cost more and take longer than you initially think it will.  If the numbers show you are in a steep decline, take action and make changes before you crash.  It’s better to overestimate the costs and be pleasantly surprised than to project an overly rosy scenario and end up bankrupt.

2. Consider Your Profit Goals
To allow your business to run successfully and earn a profit, it helps to calculate your expenses and consider your customers, goals and amount of profits you ultimately want to bring in.  From there you can determine roughly what range your profit margins should be in so that you can support all of your operations and still grow your business.

3. Outsource Your Accounting
Growing a small business is physically demanding work.  Nobody wants to end their day prepping books, especially when it some to payroll and tax preparation.  Having a monthly accounting service on your team allows you to concentrate on your business and the daily activities of managing employees, increasing your customer base, and maximizing your profits. Smart business owner knows how to lead and when to delegate.  Defining and sticking to your role provides stability for your small business.  Don’t try to be the owner and the accountant.  Expert monthly accounting services go beyond the numbers.

Experienced accountants can be used as a resource for strategic decisions and also provide proactive business advice for any stage of your business. In addition to providing accounting and payroll, an outsourced accountant will work with business owners to set clear goals for increasing profits.  In addition, as your small business grow it can present operational challenges with the need to keep expenses in check.  Accountants can identify any expense areas that are tracking above or below industry average, enabling you as the owner to make adjustments, to keep costs contained or to spend additional money in areas that could boost sales.



4. Use an Integrated Accounting System
A small business benefits from using a business-specific and integrated accounting system into its daily business practices.  A good small business accounting system provides many options including appointment control, work-in-progress, point of sale accounting, daily sales reports, invoicing, customer data and history, and report capabilities that include uploading to other software systems such as QuickBooks. This king of integrated accounting software saves money, time avoids duplicate data entry and ultimately prevents those nasty tax-based headaches that occur during tax season.

5. Stay on Top of Your Taxes
Staying on top of your taxes is a full-time job and your income tax obligation needs to be on your mind year-round.  Whether you’re a small business or an individual taxpayer, year-round tax planning is more than just a way to make tax preparation an easier, faster process.  By keeping taxes in mind as you go through every 12-month period, you’ll be able to see where you might take specific actions early that will have impact on what you end up owing.  Your budget can be a tremendous tool as you plan for the current tax year. I f you’ve never created one, an outsourced accountant can help you with this.  In addition to staying ahead of the process by outsourcing your tax planning, preparation and tax filing.



What To Do Before You Start Your Business

Are you interested in starting a new business? Make sure you do plenty of research and have a firm business plan ready before you take the plunge.

Making the Transition

If you have signed a noncompete or confidentiality agreement with your current employer, review it carefully to make sure it won’t hamper your startup efforts. If your new venture is in the same industry, be careful not to burn any bridges when you leave your current job. Scout out your opportunities. Buying a franchise or an existing business is much different than building a new business from the ground up.



Growing Your Business

Where will your customers come from? You may have one or two great prospects, but that may not be enough. Can you count on referrals from current business associates? Take a good hard look at opportunities for expansion that exist.

Figure Out Financing

Even with great prospects, it may take some time until cash starts coming in on a regular basis. Do you have enough of a financial cushion to get you through? If your spouse has an outside job, your spouse’s earnings and benefits may help provide stability during the startup period. If you need funding, where will it come from? Have you considered looking for a partner or investor?

Getting the Word Out

How much marketing and advertising will be required? Put together a comprehensive plan along with cost estimates. And, unless you’re familiar with the less traditional marketing and communication opportunities that today’s new media offer, you may want to enlist the help of someone who is.

Make a Budget

List every expense you can think of: rent, payroll (if any), phone and Internet service, computer equipment, website design, insurance, transportation costs, self-employment tax, etc. Then draw up a budget. Once your venture is up and running, you can use the budget as a guide in managing your finances.



T. Williams & Associates Are Here to Help Small Businesses

Your business is your baby, and your books may be a nuisance. Lucky for you, books ARE our business.

Don’t Stress Yourself Out! Let us be your stress-relief and take the burden off your shoulders so you can focus on what you love.  We’ll work side-by-side with you to not only make sure your books are in order, payroll is processed and taxes meet compliance, but to help you understand what they mean.  We do more than just work with clients.  We build long-lasting relationships.

Click here to schedule a 30-minute phone meeting today to discuss all your accounting needs.



6 Reason Why Small Businesses Should Keep Good Records

Everyone in business must keep records.   Record keeping is not solely about fulfilling regulations or legal requirements.  Record keeping is also about understanding your business, to monitor the progress of your business, now and in the future.   In addition, good records can increase the likelihood of the success your small business.

Here are 6 Reason Why Small Businesses Should Keep Good Records:

Detail Tracking of Business Income Expenses.  As a business owner, you will receive income such as money or property from many sources and business expenses which can range from advertising to utilities and everything in between.  It will require you to track a significant amount of information and documentation, to properly identify your customers, sales, inventory and deductible expenses.  By keeping track of all business expenses, you can take the largest tax deduction you are entitled to.  Without a proper record keeping system, tracking important details of your business may be impossible.

Keep your books up to date.  Small business owners need to know where their company stands daily, weekly, monthly, quarterly and annually.  Without this knowledge you have no control over your business.  Keeping your books up to date and accurate is the best remedy for your business’ financial health.  A bookkeeper can help manage your business and keep your finances on track.



Prepare Financial Statements.   Small businesses need good records to prepare accurate financial statements.  These include income (profit and loss) statement and balance sheets.  These statements can help you in dealing with your bank or creditors and help you manage your business. Financial Statements also can convince lenders, crowdfunders, or investors to fund your small business.

Growth.    Small businesses often operate with plans to eventually grow.  Start by committing time to outlining a  business plan for your business to grow and update your plan on a regular basis to address any changes.  A business plan is a road map and can help you find more growth opportunities and avoid common mistakes.

Legal Compliance.  Numerous federal laws require employers to create and retain various forms of employment records and in some instances, to make filing with governmental agencies.  The more employees a company has, the more record-keeping laws it will be obligated under.  The business owner is responsible for meeting your monthly, quarterly and annual federal, state, and city tax obligations. Your small business must file timely monthly, quarterly and annual tax returns.

Tax Preparation.   You need goods records to prepare your tax returns.  These records must support the income, expenses, and credits you report.  Generally, these are the same records you use to monitor your business and prepare your financial statements.  If the IRS examines any of your tax return, you may be asked to explain the items reported.  A complete set of records will speed up the examination.