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The Zen of Preparing for the Year-End Financial Reports C2online

Each year as summer ends and fall is ushered in, the change in weather is accompanied by year-end preparation for many companies.


Before December 31st arrives, usually sooner than expected, bookkeepers and employees can use this checklist to help track and create year-end financial and tax reports:

 

1. Year-end inventory – Purchase supplies for doing the year-end inventory.  You may need racks, crates or boxes for finished products or labels for the items when doing the physical inventory count. You can even look for temporary storage units if necessary.  Develop a schedule for kicking off your inventory count.  Note the number of staff you’ll need to get this job done.

 

2. Tax Forms – Check to see which tax forms you’ll need for your year-end. Make a list to keep tabs on all the paperwork required.  Take note of all the needed supporting documents.

 

3. Tax and other licensing requirements – Begin a tax and licenses review.  Diarize all important dates for taxes and business licenses renewal or face late penalty charges.

 

4. Ask employees to update all their tax exemption requirements – Did any of your employees get married this year?  Did any employees have a baby or adopt a child?  Ensure their exemption status is updated so that they don’t get over-taxed

 

5. Begin creating next year’s budgets – Start a list of all potential capital expenditures next year and the associated costs.  This is a good way to avoid over-spending. Developing budgets for next year encourages communication between all departments so plans can be made for the upcoming year. 

 

6. Analyze your financial reports for the previous months - The end of the 3rd quarter of the year is the best time to re-assess your financial position to determine if your business will be in a profit or a loss situation at the fiscal year-end.

 

Keep on track with this checklist and be ahead of the game with your year-end!


7 Tax Tips That Can Save You Money C2online

Taxes and death are inevitable. We can’t avoid either of them. But, do we really have to pay so much to settle our tax obligations?

One way to maximize profits is to learn how to reduce taxes effectively. Any tax deduction properly recognized is a dollar saved and a dollar saved……

Below are seven tips that small business owners can implement to save money:

1. Plan ahead

You don’t have to wait until the 11th hour to see the impact your transactions have on your tax obligations. At crunch time, the chances of missing important factors, like the effect of asset acquisitions on your tax declaration, may be forgotten.

Plan ahead so you can analyze how various financial transactions will affect the taxes you pay.

2. Entertainment Expenses

Don’t forget to keep your receipts whenever you dine out with clients. These expenses are 50 percent tax deductible.

Check with your bookkeeper or accountant for exceptions. For example, if you take your entire staff out for dinner (no one is excluded), then the deduction is 100 percent.

3. Home Office Expenses

If you operate a home-based business, you can include some expenses related to your home office for tax purposes. This may include rent, utilities, repairs, etc. The idea is not to charge the full amount but a proportionate amount in relation to the size of your home office within your house.

4. Expenses incurred for doing business

Once you incur any expenses in the course of doing business, no matter how small, be sure to record them and keep all your receipts. Many of those expenses may be tax deductible. Check with your accountant or bookkeeper. Even small tax deductions add up.

5. Pay family members’ salaries

If your teenage daughter does simple administrative tasks, or your spouse helps you manage the business, make sure you pay them a salary. You should be able touse these expenses as tax deductions.

Of course, you should pay them an amount that has a value in direct proportion to what they do. Paying them more than what is reasonable just to get away with paying bigger taxes can cause problems with the taxman.

6. Depreciation expenses

You can amortize most capital expenses by allocating depreciation amount based on the useful life of the asset.

Be sure to talk to your accountant about the best amortization method and how it could impact your income statement and balance sheet in the long run.

7. Hire a professional accountant

If you are thinking about cutting costs you may want to hire a professional accountant. The value of their expertise may far exceed the amount you pay them in the short term.

Keeping your financial statements in order is an important part of your business. Working with an accountant and following their recommendations will help you increase the profitability of your company.

 

Photo credit: forwardcom  


4 Reasons Why You Should Hire a Bookkeeper C2online

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If you are starting a small business it is important to keep expenses to a minimum. Profits will happen eventually but often not within the first few months.

Some business owners will try to cut costs by not hiring a bookkeeper. Instead they will get admin staff to manage the financial records. Although expenses are reduced in the short term this could be a mistake.

Off-the-shelf accounting software may be easy to buy but it isn’t necessarily easy to use - properly. By hiring a good bookkeeper you will avoid some mistakes listed below.

1. Invoicing Incorrectly

Incorrect invoicing may entail a lot of extra time reconciling your products sold or services rendered, thus resulting in inability to collect from your customers on time. Also, if not done on time, invoicing can strain your cash flow.

A good bookkeeper will ensure that invoices are correct and prepared in a timely manner. They can also monitor “aging of accounts” to make sure that receivables are collected from customers on time.

2. Unknowingly Missing Deadlines

There are specific dates for filing your taxes and other requirements to the government. Missing a date,
no matter how unintentional, can cost you penalties and other charges. With a good bookkeeper, the
only thing that you have to worry about is getting all the pertinent information to them on time. They’ll
take care of the rest.

3. Incorrectly Classifying Items for Taxation Purposes

Tax laws are revised and updated periodically. What is classified as an item under a particular tax
bracket or rule may change.

A good bookkeeper is always abreast with the latest tax rules. They also have a clear understanding of
items that may be tax deductible for your business. Trust your bookkeeper and take advantage of their
knowledge. In the long run you will save money and headaches.

4. Lack of Know-How in Using Accounting Software

Inaccuracies in handling the accounting side of the business can potentially lead to more losses than you
think - Not to mention government penalties. It sounds obvious, but accounting software works best if
the correct data is inputted. What you put into the system, is proportionate to the output.

A good bookkeeper understands this perfectly. The advantage for you is that you don’t have to worry at
the end of your fiscal year.

Ensuring proper handling of your company’s bookkeeping needs is paramount to your business success.
Doing bookkeeping by yourself may prove to be not only dangerous, but even fatal, for your business health. 

Photo Credit: psd


5 Tips on How to be a Good Client for Your Bookkeeper C2online

We recently looked at the characteristics of a good bookkeeper. But what about being a good client?

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 Time
No 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.


5 Tips to Choosing A Good Bookkeeper (And a Few Tips on Being a Good Client) C2online

At C2online we occasionally get calls from peole asking us how to choose a good bookkeeper. Here are some tips for you when you are choosing a good bookkeeper.

1. Check References
This may seem obvious but don't skip this step. A good bookkeeper will welcome the opportunity for you to call their clients. Why? Well they know that the reference will be positve. They have no fear.

In contrast, a poor bookkeeper may hesitate to give you any references or more than a couple.

Besides, you want to talk to the bookkeeper's references to see if there is a good fit with your personality, your way of doing business and the culture of your company.

2. Don't Skimp on Rates
Seriously. You pay for what you get. If you want shoddy work with lots of mistakes then pay less than the going rate.

However, if you want to spend less with your accountant (who charges more per hour) then pay more than the going rate. It makes good business sense to pay for a good bookkeeper to do things right on a regular basis than to pay your accounant a whole bunch at the end of the year to fix things.

If you want the financial side of your business to run smoothly and you want to reduce your stress then pay a little more and get a bookkeeper with a solid reputation and who isn't afraid to charge for their value.

3. Good Communication
During your initial interview with a prospective bookkeeper try to determine how well they communicate. If they are genuine, respectful, confident, and pay attention to detail, then you probably have a winner. 

A good test is to see how quickly they respond to emails. Send one after your meeting. A good sign is if you receive a reply by the next business day. 

Dress code shouldn't be an issue because bookkeepers often work from home. But when the person meets with you they should at least present themselves as though they respect themselves and respect you. Again the experience during the first interview or meeting is going to tell you a lot about what your relationship will be like with your new bookkeeper.

4. Reasonable Quote
At some point during your initial conversation you will ask how much the bookkeeper is going to charge every month. Their hourly rate is only one factor. There are a few variables that need to be examined:

  • software used
  • number of transactions each month
  • number and type of reports generated
  • visiting on site or working remotely
  • and number of meetings

Ideally, the bookkeeper has a quick and thorough way of creating this estimate. Many of the bookkeepers we work with use our software called BookkeepersTN Quote. Have a look at our video by clicking on the link.


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