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/

Tax Reform Raises the Use of The Cash Accounting Method.

The Tax Cuts and Jobs Act accounting method provisions are allowing businesses greater use of the cash method of accounting and exemption from complex tax rules. An accounting method is the set of rules that apply to determine when an item or deduction is taken into account for tax purpose. The two most common methods are cash and accrual. Once an accounting method is established, it generally must be used consistently from year to year.



The cash methods available to only small business are generally simpler than the accounting methods required to be used by larger businesses. Under the cash method of accounting, income is generally recognized in the year cash is received and deductions are generally taken into account the year an expense is paid. Under the accrual method of accounting, income and expenses is generally recognized when earned or incurred, even if payment is received in a later year. Prior to December 31, 2017, limitations applied to corporations and partnerships with corporate partners. These taxpayers were prohibited from using the cash method of accounting for tax purposes unless their gross receipts were $5 million or less.  Beginning December 31, 2017, the threshold has increased to $25 million.



The IRS guidance ,released August 3, 2018, is allowing small businesses with annual grow earning of $25 million or less in the prior three-year period to use the cash method of accounting.  Business taxpayers are permitted under the Tax Cuts and Jobs Act may obtain an automatic consent to change accounting methods starting after December 31, 2017.

Under the new law, allows more taxpayers to use the cash method of accounting.  Taxpayers switching from the accrual method to the cash method is required to complete Form 3115 to make this change. Businesses must apply the gross receipts test each year to determine whether it continues to be eligible to use the cash method.

Tax reform has dramatically changed US federal income tax rules. Consult your accountant or tax advisor to develop a tax strategy to determine whether a change in accounting method is consistent with that strategy.


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.



Are You Protecting Yourself From Tax Identity Theft?

The IRS has thwarted some identity theft attempts, but thieves are still stealing billions of dollars every year from taxpayers.

Another annual income tax deadline has come and gone. Maybe you had to pay in, but perhaps you were owed a refund. If the latter is true, did you receive it?

A lot of taxpayers didn’t because hackers swooped in and stole their sensitive tax-related information. Tax identity theft is a serious problem, despite the IRS’s efforts to stop it.

But there are steps you can take to keep from being a victim, some of which are simply a matter of common sense. For example, consider the security of any wireless network you use when you’re working on your taxes. Don’t ever do so on a public network, and make sure your home or office wireless is password protected.



Offline Risks

You don’t have to be online to be at risk for tax identity theft. Hackers can grab your personal information in other ways. For example, do you ever carry your tax-related papers back and forth to work or some other location? Know where they are at all times; don’t ever leave them laying around where someone can copy your Social Security number and other details.

Always be aware of your surroundings. If there are other people around when you’re working on your taxes—if you’re in a coffee shop or library, for example—make sure no one is reading over your shoulder.

Phone calls can be risky. A good rule of thumb is never provide someone who calls you with any sensitive personal data – unless you can verify it was a call you were expecting, like one from your bank or a medical office. When you place a call to a legitimate number, it’s generally okay.

Other Traps

You’d think that a call from the IRS would be safe. In reality, the IRS doesn’t ask for personal information over the phone. They send letters through the U.S. Mail. If you ever get a phone call from someone who claims to be from the agency and is demanding some sort of payment immediately, hang up. This is a popular phone scam. You can always contact the IRS directly to see if there is some sort of issue.

Don’t make a practice of carrying your Social Security card with you. Keep it in a safe place unless you absolutely need it away from home for some reason. Also:

  • File your return early to keep a hacker from getting in line for your refund in front of you.
  • Reduce your refund by adjusting your withholdings at work. It’s nice to get that big payment after you file, but couldn’t you use that money throughout the year?
  • Request direct deposit of your refund. That way, no one can steal your check out of your mailbox or somehow re-route a paper payment.



Online Thieves

Be especially careful if you’re preparing your taxes on a website. Before you even begin, investigate the publisher’s security protocols to ensure that your very sensitive tax-related data will be treated with great care. Also, update any applications that will be involved, including your browser and antivirus/anti-malware tools.

The IRS will never send you an email out of the blue asking you to click a link or download an attachment or fill in fields to update personal information. In fact, it’s a good idea to avoid taking those actions anytime unless you’re expecting an email and can verify the sender’s address.

Finally, use a very strong, unique password, one you don’t use anywhere else. You’re probably tired of hearing that piece of advice, but it’s absolutely critical when you’re working with a tax preparation application.

Take Action Quickly

It’s possible to get stung by a tax identity thief even if you’re being careful. If it happens to you, you’ll need to complete and submit IRS Form 14039, Identity Theft Affidavit, and watch for responses from the agency. Contact your credit bureaus and financial institutions to apprise them of the situation. Tax identity thieves sometimes try to open new credit cards, for example. You should also file a report with the FTC.

Recovering from tax identity theft isn’t a quick process nor an easy one. If you have questions about it or simply want to talk to us about your year-round tax planning and preparation process, be sure to contact us.



Starting a Home Health Care Business? Here’s How To Set It Up In 10 Steps.

Opportunities to start a home health care business are more abundant than ever before and is one of the largest growing industries. This is mainly due to the increase in elderly population as well as the baby boomer generation. It is expected by 2020 that nearly seven million people in the US will be over the age of 85. These individuals are preferring to be cared for in the comfort of their own homes. But to do so, many will need help with the daily tasks of living. This is where home health care businesses come to the rescue.

Home Care Related Businesses include:

• Non-Medical Home Care Agency
• Home Health Care
• Home Hospice Agency
• Non-Medical Transportation
• Geriatric care management
• Senior relocation services

No matter which of these entrepreneurial ventures you’re interested in, you can be sure that as baby boomers continue to age, the demand for home health care services will continue to rise.

Here are 10 Steps to set up a Home Health Care Business:

Step 1: Choose a Business Structure

Your home health care business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you chose will impact many factors from your business name, to your liability, to how you file your taxes. You may choose an initial business structure, and then reevaluate and change your structure as your business grows and needs change. Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or an accountant to ensure you are making the right structure choice for your business.

Step 2: Draft and Sign Your Operating Agreement

An operating agreement set out the rules and procedures that will govern the company and its owners. If your business has just one owner, your operating agreement can be short. If it has multiple owners, it likely will be longer and include issues like economic rights, voting rights, management rights, transfer restrictions and more.

Step 3: Register Your Home Health Care Business Name

This is the first step toward making it real. Your business name plays a role in almost every aspect of your business, so you want it to be a good one. Once you chosen a business name, get an Employer Identification Number (EIN) to identify your business. You will also need to get the proper business licenses and permits. There may be city, county or state regulations as well.

Step 4: Plan Your Finances

Starting a home health care business doesn’t have to require a lot of money nor you certainly don’t need to join a franchise to provide in-home care, but it will involve some initial investment. To provide this service, you’ll need to be bonded, if you’re transporting seniors in your vehicle, you’ll need liability insurance, as well as involving some initial working capital to cover ongoing expenses before you are turning a profit. There are a number of ways you can fund your home health care business: family and friends, grants, small business loans, angel investors and crowdfunding.

Step 5: Open a Bank Account

It is important that your business maintain its own bank account separate from your personal accounts to avoid issues with commingled assets. Banks will require your ID, a copy of your Article of Organization and, EIN letter in order to open an account. Some banks will require all or portions of your operating agreement.

Step 6: Choose Your Accounting System

Home health care businesses run most effectively when there are systems in place. One of the most important systems for a small business is an accounting system. Your accounting system is necessary in order to create and manage your budget, track your expenses and profits, conduct business with others and file your taxes. You can set up your accounting system yourself, or hire an accountant to take away some of the guesswork. If you set up your accounting system yourself, you should purchase a subscription to a cloud-based accounting platform such as QuickBooks, FreshBooks or Xero. They will make tracking income and expenses easier and will save you all kinds of headaches come tax season.

Step 7: Hire an Accountant

It is important to understanding the numbers involved to help make smart business decisions and have the expertise of moving your home health business forward. Warren Buffet said “Accounting is the language of business.” Using a software program is a great start to getting your records in order; however, an accountant with expertise in working with home health care businesses will help ensure you are taking advantage of every tax incentive and deduction, as well as keep you in compliance with the latest rules and regulations. You will also have the added assurance of knowing your taxes are prepared accurately and on time to avoid late filing penalties.

Without financial and tax planning, you increase the chances dramatically that you’ll run out of money far quicker than you ever thought. Working with an accountant year-round not only allows for a smoother and more accurate income tax return process, but also to help determine your timeline to profitability through careful budgeting and planning.

Step 8: Set Up Your Business Location

Setting up your place of business is important for the operation of a home health care business whether you will have a home office or private office space, or a brick and mortar location. Make sure your business location works for the type of home health services you will be doing. Although many business mistakes can be corrected later, a bad location is sometime impossible to repair.

Step 9: Get Your Team Ready

Build a staff of key employees. Make sure you take the time to outline the positions you need to fill, and the job responsibilities that are part of each position. Don’t be afraid to hire out the payroll work. Wage and hours laws can be confusing. You aren’t running a home health care business because you want to spend time tracking the employment laws affecting the company, but not following them can put you out of business. If needed, get help from a qualified advisor who can help you navigate these and other complex employment laws to avoid costly mistakes. This will help improve the overall health of the business’s short-term and long-term goals.

Step 10: Promote Your Home Health Care Business

Marketing is critical to your long-term business success and growth. You will want to start with creating a marketing plan and explore many marketing ideas as possible so you can decide how to promote your home care business. Create a plan focusing on strategies that work for home care businesses use as using social media, establishing professional relationships and attending health fairs. In addition to creating your own business materials such as a logo, and business cards.