The Top 5 Benefits of Catch Up Bookkeeping
Whether they coach chess players or sell organic puppy food online, every small business owner shares a common driving force: a passion for growing their business. Increasing sales and gaining new customers is one part of the equation. Consistent bookkeeping provides the financial insight needed to strategize for long-term success. With so many obligations resting on the business owner’s shoulders, it can feel like there are not enough hours in the day to accomplish every task, and eventually the books may fall behind. Even if the books are only behind a few weeks, up-to-date records are crucial for the financial well-being of every business. Catch up bookkeeping accelerates business growth by increasing financial visibility, which enables business owners to make decisions based on accurate information and remain tax-compliant throughout the year! In this blog post, we are exploring the top 5 benefits of catch up bookkeeping! Reliability in Your Opening Balance The Opening Balance is the amount of money in your bank account at the beginning of a new financial period, such as the start of the month. Be aware that your bank account does not necessarily reflect the exact amount of cash that is available to spend. For example, if your Opening Balance states that you have $50,000, but $20,000 worth of checks have not cleared yet, the actual balance is $30,000. The best practice is to consult your updated accounting software or financial statements, which provide insight into your true financial position. The financial statements report revenue, expenses, and profitability, all of which contribute to the Opening Balance. They also guide decision-making and reveal opportunities for business growth. The more up-to-date your books are, the more reliable your financial statements (and Opening Balance) will be! If your bookkeeping is behind, there will be little to no financial data for that time period, which means you will not know your true Opening Balance for today. For example, if your account was reconciled in January, but February was skipped, the Opening Balance would be incorrect for March. This could skew your numbers going forward, and costly choices could be made based on inaccurate data. This could also affect future bank account reconciliation, as well as the balances in your revenue, costs, and expenses. It is a vicious cycle. Catch up bookkeeping corrects these issues and provides clarity and accuracy in your financials. Once your books are caught up, keeping them up-to-date becomes second nature. Financial Accuracy Through Bank Account Reconciliation A bank account reconciliation is performed to confirm that your accounting records match the information in your bank account. It is an opportunity to identify and correct any bookkeeping errors before the financial statements are finalized, as well as detect and prevent fraudulent activity in your bank account. Bank account reconciliation also ensures that you are accurately reporting your income to the IRS. The best practice is to reconcile your bank account once a month. Proper bank account reconciliation can only be accomplished when the books are up-to-date. By getting your books caught up, you can ensure the reliability and accuracy of your financials each month. Cash Flow Management Catch up bookkeeping can have a significant impact on cash flow. When your books are caught up, you can pinpoint how and when cash enters and leaves your business each month. This delivers a deeper understanding of your cash needs, so you can create a plan for cash flow management. For example, as your books are caught up, you may uncover past due invoices, or find that you are sending out vendor payments before you receive the cash needed to cover them. With this insight, you can monitor your Accounts Receivable to ensure you are paid in a timely manner going forward, and find solutions for the timing of your own payments. You can also forecast future cash needs to be confident you have what you need for continued operations. Click here to learn more about cash flow. Insight into Net Income Keeping your books up-to-date plays a vital role in calculating your bottom line, or Net Income, which is the profit that remains after all costs and expenses are subtracted from revenue. In order to know your true Net Income, all business expenses must be accounted for through accurate and timely bookkeeping. This understanding of your Net Income provides the opportunity to increase your bottom line. Getting your books caught up is also essential when applying for loans. Creditors and investors examine Net Income when deciding to invest in a business, as it highlights the business’s ability to pay back loans efficiently. Catch up bookkeeping determines your bottom line, so you can understand and increase the profitability of your business, meet loan requirements, and secure funding for your next venture! Click here to learn more about Net Income. Tax Compliance As tax season draws closer, a concern that many business owners have is under or over reporting their earnings, and missing out on deductions. They may also experience a back and forth with their Tax CPA over missing documents and gaps in their financials. Breathe a sigh of relief – catch up bookkeeping takes the headache out of tax season! By getting (and keeping) your books caught up, you can identify the deductions you qualify for, maximize your tax return, and stay compliant all year long! Get Your Books Caught Up with xendoo Behind on your bookkeeping? You are not alone! 25% of business owners are behind on their books. Get a fresh start with catch up bookkeeping services from xendoo, so you can take your time back and focus on the future of your business. Let’s chat! We would love to get to know you and your business. Click here to schedule a free consultation.
Fallen Behind on Bookkeeping? Here’s How to Catch Up
Tax season can be stressful, especially if your books are behind, inaccurate, or both. We estimate that roughly 25% of small businesses seek information on how to catch up on business taxes and get their financial records in order. The benefits of clean, accurate books extend far beyond tax season. When your books are up to date, your business will be better equipped to make strategic financial decisions, analyze expenses, and manage cash flow. Conversely, when you get behind in your books, it doesn’t just make it harder to prepare and file taxes. Outdated or inaccurate books can limit your ability to cover your expenses, pay your employees, or secure a small business loan. You’re probably reading this because you already know you’re a little behind on books. The biggest decision to make is whether to try to get your books caught up on your own or secure the assistance of a catch-up bookkeeping service. We’ll help you decide by covering the pros and cons of both approaches in this article. The Pros of DIY Catch Up Bookkeeping When you’re considering how to catch up on business taxes, you might decide to handle your own books. That’s not a bad strategy, really, since DIY-bookkeeping offers the following advantages: Costs Less Let’s face it: today’s business owners need to cut corners any way they can. Rather than hire an in-house bookkeeper or outsource your bookkeeping needs to an accounting firm, you can simply catch up on your books yourself. If you’ve already got some experience in filing taxes and managing your accounting needs, this can be an area where you can minimize expenses. For a full overview of the costs of catch up bookkeeping, check out this post here. Intimate Knowledge of Your Business No one knows your business better than you do. When you handle your own books, you’ll have an intimate knowledge of your income and expenses and will be in a better position to make updates and correct errors as you proceed. This consideration might be especially true if you’ve collected a lot of receipts and paperwork on your own. Having these documents on hand can make it easier to record income and business expenses as they happen, and by handling your own bookkeeping, you’ll be better able to identify expenses. Privacy As a business owner, you might be reluctant to hand over your sensitive financial data to a third party. By handling your own books, you eliminate all possible breaches in your data security, and you keep your business information limited to your eyes only. The Cons of DIY Catch-Up Bookkeeping There’s a reason that so many small businesses outsource their needs to a catch-up bookkeeping service. While there are many business tasks that you can handle on your own, bookkeeping isn’t always one of them and there are so many benefits to catch up bookkeeping. Business owners often discover that the bookkeeping process can be: Time-Consuming Stop and think about this for a minute. How did your books get so behind in the first place? For a lot of entrepreneurs, it comes down to a lack of time. But if you didn’t have time to maintain your books, how likely are you to find time to catch up on your books? This contemplation actually brings us back to the question of money. Sure, handling your own books will cut down on your administrative expenses, but at what cost? Your efforts are better spent on the revenue-generating activities of your business, not the administrative details of your back office. Confusing It can be a challenge to get books caught up in time for tax season. Accounting terms and software tools aren’t always easy to navigate, especially without some degree of specialized training. And that’s to say nothing of the jumble that can occur when you get behind in your books. This confusion is why it’s best to rely on an accounting professional who knows how to catch up on business taxes. They can sort through the mess on your behalf and bring clarity to your books, so you don’t have to sweat the process when it comes time to pay your taxes. Inaccurate The more tasks you’re juggling, the easier it is to make mistakes. But errors in your books can cost you, especially when it comes to tax preparation. Reporting errors can change the actual amount of taxes you owe, and if you underreport, you could be subject to penalties. Having access to a team of financial professionals can ensure that your books are fully up-to-date, as well as free from any inaccuracies that can cause problems for your business. Plus, a financial professional may be able to help you maximize your deductions, saving you money and enhancing your profitability. Get Started Now If we’re honest, most of us make a plan to get started “tomorrow.” But by the next day, we put it off once again. The best time to get started is now. With tax season looming on the horizon, you can’t afford to wait for another “tomorrow.” In fact, the more you put it off, the more your overdue books can snowball into an even messier problem. This time crunch means that whether you plan on catching up on your own books or relying on a professional service to provide catch-up bookkeeping for small business, you’ll want to get a plan in place so you’ll be prepared for tax season. How to Catch Up on Business Taxes Faster Than Ever The expert team at xendoo has already provided catch-up bookkeeping for small business owners across the country. We can bring your books up-to-date so that you’ll be prepared for tax season and put you on the road to greater financial control. How much does catch-up bookkeeping cost? Your final price depends on how far behind you are, but xendoo can provide catch-up services starting as low as $295. The real value is found in the peace of mind you get, knowing your
When Can You File Small Business Taxes in 2022?
This year, make things easier on yourself by planning ahead. You’ll thank yourself for filing business taxes according to the prescribed deadlines. Not only will this save you from sweating over a shoebox full of receipts, but making on-time tax payments will save you from any late fees or interest payments. To help you with this process, we’ve put together this complete guide for filing business taxes in 2022. You can use the information and the dates we provide to form a strategic plan for preparing and filing your taxes in 2022. What Is the Business Tax Filing Deadline for 2022? You may have already marked April 18, 2022, on your calendar to remind you to pay your personal income taxes. This date is a slight change from previous years since April 15 (the common tax deadline) happens to fall on Good Friday. But what about your small business taxes? The deadlines for filing business taxes depend on how your business is structured. Here are the deadlines for common business types: Sole Proprietors, LLCs, and C Corporations April 18, 2022, is the tax deadline for sole proprietors, limited liability companies (LLCs), and C corporations. They all must all file their taxes by this common April due date. These businesses can also file for a tax extension, and this extension must also be received by April 18. Once your extension is approved, your new tax deadline becomes October 17, 2022. It’s important to remember that your tax return must be at least postmarked by the due date. If you choose to send a paper return through the mail, take this into consideration to ensure you comply with the April tax deadline. S Corporations and Partnerships Some business types must file their taxes earlier than the April 18 tax deadline. For S corporations and partnerships, the deadline is March 15, 2022. These businesses can also file for a six-month tax extension, which places their final deadline at September 15, 2022. As with the return itself, applications for a tax extension must be postmarked by March 15, 2022. Estimated Tax Payment Deadlines It’s quite common for business owners to make estimated tax payments. These payments are made in each quarter, though the deadlines don’t always fall at precise intervals. For the 2022 calendar year, businesses must adhere to the following quarterly tax payment schedule: April 18, 2022 (for income received from Jan through March) June 15, 2022 (for income received from April through May) September 15, 2022 (for income received from June through August) January 16, 2022 (for income received from Sept through Dec) Keeping these estimated tax payment deadlines on your calendar can ensure that you meet your tax obligations. Keep in mind it’s better to overpay than to underpay, as the latter can result in a penalty if your payments are too low. When Can I Do My Taxes for 2022? We recommend that business owners not wait until April 17 when filing business taxes. Some entrepreneurs may be particularly eager to file their taxes, hoping to take advantage of deductions based on careful planning on their previous year’s taxes. Generally, the IRS will begin accepting electronic tax returns by late January. In 2021, the IRS didn’t begin accepting returns until February 12, though this seems to be an anomaly. By January 24, you’ll likely be able to file a business tax return. This date, of course, assumes you’re ready. Some business owners prefer to have a financial professional or tax services give their tax return a final check before filing to verify its accuracy and ensure that they received all of the deductions and credits to which they’re entitled. Key Dates Ready to mark your calendars? Here are all of the important dates for filing business taxes in 2022. You can bookmark this page for future reference or transfer this data to your personal or company calendar, so you never miss a deadline. January 20, 2022: Employees who earned over $20 from tips in the month of December must report this income to their employers using Form 1070. January 15, 2022: Your fourth-quarter estimated tax payment for 2021 is due on this date. January 31, 2022: Employers must send W-2 forms to their employees and 1099 forms to their contractors for earnings from 2021. February 10, 2022: Employees who earned over $20 in tips during the month of January must report this income to their employers using Form 1070. February 15, 2022: Financial institutions must send Form 1099-B (sales of stocks/bonds/mutual funds through a brokerage account), Form 1099-S (real estate transactions), and Form 1099-MISC unless the sender is reporting payments in boxes 8 or 10. February 28, 2022: Businesses must mail Forms 1099 and 1096 to the IRS. March 1, 2022: Farmers and fishermen must file individual income tax returns (unless they paid 2021 estimated tax by Jan 18, 2022). March 10, 2022: Employees who earned over $20 in tips during the month of February must report this income to their employers using Form 1070. March 15, 2022: Corporate tax returns (Forms 1120, 1120-A, and 1120-S) for the tax year 2021 must be filed by this date, or you may file for a six-month extension using Form 7004 (for corporations using the calendar year as their tax year), or Form 1065 (for filing partnership tax returns). March 31, 2022: This is the deadline to e-file Forms 1099 and 1098 to the IRS (but not Form 1099-NEC). April 11, 2022: Employees who earned over $20 in tips during the month of March must report this income to their employers using Form 1070. April 18, 2022: Household employers who paid $2,300 or more in wages in 2021 must file Schedule H for Form 1040. April 18, 2022: Individuals must file their personal tax returns for 2021, or Form 1040 or Form 1040-SE. Form 4868 must also be filed by this date in order to request an extension. May 10, 2022: Employees who earned over $20 in tips during the month of
What Type of Accountant Does Your eCommerce Business Need?
Running an eCommerce business can sometimes feel like a juggling routine. You’ll have to stay on top of your transactions, inventory, administrative fees, and more. Chances are that your accounting and bookkeeping needs are low on your list of priorities, but that can come back to bite you. Managing your own books may seem like a cost-saving strategy, but many online merchants lack the time or expertise to stay up-to-date and in compliance. Your eCommerce business requires the attention of an eCommerce accountant. Today, we’ll show you how partnering with an accountant that specializes in eCommerce can help your business to thrive. Types of Accounting for Your eCommerce Business One of the first financial decisions you’ll need to make is the accounting method you’ll use for your online business. There are two types of accounting practices to choose from: cash basis and the accrual method. Determining which method is best for your company depends on several factors, which we’ll explore below. Cash Basis Accounting Cash basis accounting is the simpler of the two methods. In this method, you add an accounting entry every time money enters or leaves your bank account. Basically, you’ll be keeping a record of all your transactions, and this record will largely mirror your sales records and bank accounts. The simplicity of this system is its greatest appeal, since it doesn’t require a lot of accounting knowledge or expertise. It’s actually a great eCommerce accounting strategy for startup businesses. You might consider this method if you: Run a small eCommerce business Run an Amazon FBA store Produce products on demand If your eCommerce store starts to grow, you can always switch to the accrual method down the line, though you may need to consult with an eCommerce accountant to help you with your books. Accrual Method In accrual accounting, you record your income and expenses as the transactions take place, regardless of when the money reaches or leaves your bank account. This may sound confusing, but it actually presents a more accurate picture of your company’s cash flow. The accrual method can also help you make financial projections and better manage your inventory, since you’ll have a regular snapshot of your business activity. That is why the accrual method is generally recommended for larger or growing businesses. It can be particularly helpful when you’re juggling the various moving parts and pieces of running an online business. The biggest drawback is that the accrual method requires a bit more attention to reconcile income and expenses, which is why you will benefit from the attention of an eCommerce accountant. Which of these methods is right for your business? A professional accountant, who can provide guidance about the right accounting method to use for every phase of your business. eCommerce Accounting Best Practices to Remember Online merchants face some unique business challenges. Here are five of the best practices to use when you’re using accounting for Amazon stores and other online businesses. Maintain a Budget A budget is the summary of all of the income and expenses associated with your business. Keeping track of this data is a challenge for any business owner, but eCommerce bookkeeping demands that you keep track of such expenses as: Administrative fees Warehousing fees Shrinkage (inventory lost or damaged) Returns and chargebacks Staying up-to-date with your books is crucial to understanding the financial health of your business. An eCommerce accountant can help you stay current, while also providing reports to optimize your cash flow and help you grow. Distinguish Between Returns and Chargebacks Many online retailers fail to distinguish between returns and chargebacks. The difference is actually quite simple: Returns: A customer may return merchandise for store credit or a full refund Chargebacks: A customer disputes a charge, claiming it was fraudulent If you give a customer store credit, the original transaction should be listed as an expense and added to your accounts payable list. Both refunds and chargebacks should be recorded under “Returns and Allowances.” Chargebacks may include an additional fee, which can be categorized as a business expense. Categorize Your Transactions Categorizing your transactions can help you estimate your monthly revenues, day-to-day expenses, and any one-off transactions, which is why it’s a common practice in bookkeeping for eCommerce businesses. Your transactions will generally fall into one of the following categories: Sales Returns Chargebacks Administrative fees Salary Marketing You may have additional categories, depending on the type of business you operate. The point is that by placing transactions in these specific categories, you’ll be in a better position to do financial forecasting and hone in your business strategy moving forward. This can also be an important step in managing your inventory, as your sales figures can be used to project future demand and show you the best times to order new supplies to keep up with seasonal trends. Stay Current with All Taxes Retailers often have to deal with two different types of taxes: business taxes and sales tax. Sales tax can be particularly important for eCommerce businesses, since you’ll have to deal with unique circumstances when you operate in one state but sell to customers in another state—or even another country. Every state has its own regulations when it comes to filing sales taxes. An eCommerce accountant can help you sort through these details to help you stay up-to-date and in full compliance with all tax regulations. Your business taxes will be paid on your annual tax return, though businesses that anticipate paying over $1,000 in taxes are encouraged to make quarterly estimated payments. Again, an eCommerce accountant can help you with tax planning and preparation, so you can ensure you’re prepared for tax season. Streamline Your Processes with Accounting Software The right accounting software can make a world of difference for online retailers. Many business processes can be automated to save you time. The advanced analytical and reporting features of this software can help with financial forecasting and long-range planning, too. Of course, the best way to have access to
How Do I Pay Myself and My Taxes as a Sole Proprietor?
Where to Begin? Businesses are created because business owners have a passion that needs to be pursued. They may be changing the world and even their own lives. Payroll, however, is most likely not their passion. Yet, every business owner faces the unique challenge of figuring out how to pay themselves. Paying yourself as a sole proprietor can feel daunting. How much do you pay yourself? How do taxes factor in? Unless you have a side hustle as a financial advisor, it can be difficult to know where to start. Self-Payment, Simplified Breathe a sigh of relief. Paying yourself as a sole proprietor is not as complicated as it seems. Tax filing is simplified too! In this blog post, we will walk you through paying yourself as a sole proprietor! How Do I Pay Myself? You can pay yourself as a sole proprietor by taking an Owner’s Draw. An Owner’s Draw differs from a regular salary in that you can take money from your earnings as needed. Depending on how well your business is doing, you can take more or less, allowing for flexibility in your payments. If your business is profitable, start by subtracting liabilities (any debt your company owes) from assets (items of value the company owns that will provide benefit in the future). The remaining amount is referred to as ownership equity, which is what you will take your draw from. Once you decide on an amount to take (more on that in a moment), it can be transferred from your business bank account to your personal account. Because the Owner’s Draw is taken from ownership equity, it reduces the funds that can be used for the business. Sole proprietors must balance how much they need to support themselves and what their business needs to thrive. How Much Do I Pay Myself? To set an appropriate payment for yourself, you have to determine your projected profits. To estimate how much you can draw and when you must: Set up a separate business bank account. As a sole proprietor, you do not need to incorporate or register your business. The business name will default to your legal name unless you file a DBA (doing business as), which allows you to operate under a different name. Once your DBA is set up, you can open a business bank account. This ensures that your personal and business expenses stay separate, and creates an accurate picture of your business’s finances. Keep your books up to date. Keeping detailed records of your income and expenses will help you identify when cash flows into and out of your business, and how cash flow may change over time. An online bookkeeping service will be able to take this task off your plate, saving you time and stress. You will also receive monthly reports that give you actionable insights to help you make the best decisions for your business. This will help you determine your projected profits and when you should take your draw. You can start out by paying yourself only what you need to meet your basic needs until your business breaks even. From there, you can increase your pay to your “market value”. You can increase your pay again once your business is producing consistent profits. How often you choose to draw is up to you. Some may follow a bi-weekly schedule, others may draw as needed. It ultimately depends on your personal preference. How to Pay Your Taxes Sole proprietorships are considered pass-through entities, meaning the IRS views your business, personal assets, and liabilities as one and the same. Because of this, you are only required to file a personal tax return. Income and expenses related to your business are accounted for on your individual Form 1040, Schedule C. While the Owner’s Draw is not subject to federal or state income tax, it is also not expense-able. It will appear under the total net income of the business, which is taxable. Be aware that sole proprietors are required to withhold self-employment taxes, which contribute to Social Security and Medicare. As of right now, the self-employment tax rate is 15.3%. So, how can you maximize your tax savings? Business tax preparation and filings are included with almost all of our packages! Your online Tax CPA takes care of filing your Schedule C that goes along with your personal tax return to itemize business deductions. xendoo is Here for You The good news is that you do not have to figure it all out on your own. xendoo Online Bookkeeping is here to help! We move at the speed of business, so you can make informed decisions faster – like deciding how much you should pay yourself as a sole proprietor! Get started with a free trial. Ready to take the next step? Schedule a free consultation with a xendoo accountant today! Want to learn more? Learn the difference between the business entity types here.
xendoo vs. Pilot: Comparing Online Bookkeeping Services for Small Business Owners
Bookkeeping is critical to the financial health of every business, but business owners rarely have the time (or desire) to manage it themselves. To take their time back, many business owners choose to outsource their bookkeeping and accounting. There are many options available, from traditional CPAs to tech-savvy online companies. So, how do you choose the right financial partner for your business? Today, we will take a look at two popular providers: xendoo Online Bookkeeping and Pilot. Both provide quality online bookkeeping and tax services, but there are some key differences in features that will help you weigh your options: Online bookkeeping and tax services Accounting software Accounting methods In this blog post, we will explore these key differences so that you can make the best choice for your business! Online Bookkeeping and Tax Services Most of xendoo’s online bookkeeping packages are tax-inclusive, with prices starting at $295 per month. Plans can be paid monthly or annually, whichever works best for you. We reconcile your books weekly, and deliver your reports as early as the 5th business day of the month, depending on the plan you select! Pilot offers three online bookkeeping plans, with prices starting at $599 per month, all of which are paid annually upfront. Tax services are available at an additional cost and must be purchased separately. If you are behind on your bookkeeping, xendoo and Pilot also offer catch-up services so you can get previous months’ books in order! Accounting Software Most small business owners manage their finances in a variety of ways, the more software options, the better! That is why xendoo works with both Quickbooks Online and Xero. Depending on the nature of your business, one of these options will be able to meet your specific needs. Pilot only offers Quickbooks Online. If you are already working in Xero, they will have to switch you to QBO and leave your history behind. While QBO is a solid option, it may not be the ideal choice. Accounting Methods Accounting methods determine when income and expenses are recorded in your financial statements. They affect how cash flow, profitability, and business performance are tracked. The method used depends on your business and tax needs. xendoo and Pilot use different accounting methods, with one exception: cash basis accounting. Depending on the plan you select, xendoo will use a cash basis or modified accrual basis. Pilot defaults to an accrual basis on all plans, but you can request a cash basis. Cash basis accounting is a method in which revenue is reported only when cash is received, and expenses are noted when money leaves your account. It is often used by small businesses because of its straightforward nature. Accrual basis accounting records income once it is invoiced to the customer and records expenses once the bill is entered (even if it has not been paid yet). This is a complex method, used mostly for businesses with $5 million or more in annual revenue. Modified accrual basis accounting combines the best aspects of accrual and cash basis. It recognizes prepaid expenses and offers accrual for inventory and other Balance Sheet categories. As accrual basis accounting is the most complex method, it is the most expensive and time-consuming method to complete. Even if your business needs to account for inventory and accounts payable and receivable, the accrual basis method may not be necessary. The modified accrual method can meet your business needs in a cost-effective and timely manner. We recommend speaking to your accountant to determine the ideal accounting method for your business. Try Us Out xendoo offers a free trial in which we complete your bookkeeping from the previous month, plus the Profit and Loss Statement and Balance Sheet, so you can experience the xendoo difference for yourself. If you decide that xendoo is not the best fit for you, we will gladly connect you with others in our network so you can find your ideal financial partner. The data and reports are yours to keep in your QuickBooks Online or Xero account. If you choose to partner with us, you will have access to a comprehensive customer portal, with data-driven visualizations, and your financial reports at your fingertips 24/7. At this time, Pilot does not offer a free trial. They do weekly demos where business owners can tour the platform and ask questions. For a brief summary of how xendoo and Pilot compare, check out the chart below: Who is Right for You? It depends! Every business owner needs financial visibility into their numbers for effective decision-making and growth. If you are looking to simplify your books, xendoo is the best choice for timely, accurate, and worry-free bookkeeping, accounting, and tax services for you and your business. xendoo is a team of real people that care about you and your business. Allow us to handle the hassles while you put more money in your pocket, reduce your stress, and get back to doing what you love. So, are we a fit for your business? Let’s talk! Schedule your free consultation today!
How To Find The Right Online Accountant For Your Business
Every small business owner should have access to an accountant. A small business accountant can provide guidance at every stage of your company’s development, and they can be invaluable when it comes to tax preparation, succession planning, and more. An online accountant can also deliver these services at a price that fits the limited budget of modern business owners. But finding the right accountant is about more than just cost. Today, we’ll go over the best features offered by online accountants for small business owners so that you can find the right fit for your company. What to Look for in an Online Accountant What should you expect when you’re searching for online accountants for small business needs? We’ve narrowed it down to these five essential features: Industry Experience Online accountants are not hard to find, but the key is to find an accountant whose skill set matches the needs of your business. What type of business do you run? Are you a service provider, a retailer, or exclusively eCommerce? Is your business structured as a partnership, an LLC, or an S Corp? These questions will be critical in finding the right accountant. You’ll need to partner with an online accountant who has clear experience in preparing tax returns and financial documents for companies that have a similar profile to yours. Ideally, you’ll want an online accountant who has worked for companies of a similar size, revenue stream, and industry, too. But don’t limit yourself to accountants that work with companies of your size. After all, most entrepreneurs entertain dreams of growing their businesses. This will also require the assistance of an accountant who has worked for companies that are larger than your own. Finding an accountant who has experience in working with companies your size and larger can set you on a positive trajectory, knowing that your accounting help will scale with your business. Access to Tools The right accountant for small business owners might also need to have some experience in cloud-based systems, especially if your business relies on such software as part of your regular operations. Before committing to an accountant, make sure to go over these requirements, and ask about their prior experience. This will ensure that you hire an accountant whose experience matches the evolving needs of your company. Dedicated Support Some business owners might feel nervous that hiring online accountants for small business needs will deprive them of the personal touch of a regular employee. This concern is perfectly understandable, but the right accounting firm can offer dedicated support in the way that you choose. You need an online accounting service that relies on the latest and best accounting software. You want a provider who can minimize accounting errors and ensure a greater level of accuracy. This is especially important during tax season, where errors can lead to an audit and potentially result in penalties and fines. Online software also means that you’ll be able to access your company’s financial information anytime, anywhere xendoo provides a number of ways to keep clients connected to the process. Our online bookkeeping features include regular monthly reports that will keep you up to date on your cash flow and other financial data. All of our dedicated professionals are available on your terms, whether that be through email, text message, or a phone call. We’ll work with you to communicate when you want and how you want, so you never feel out of touch with your online CPA. Streamlined Processes Modern business owners face a variety of financial needs, including: Bookkeeping Payroll Tax planning Tax preparation Budgeting and planning Personal tax preparation and filing Partnering with online accountants for small business needs such as these can ensure that important processes are completed on time and with total accuracy. Some business owners find that this is a welcome change from trying to juggle their own books. If you find yourself falling behind, some accounting firms offer catch-up accounting services, which can help you bring your books up to date. xendoo, for instance, offers catch-up services to clients who have fallen months or even years behind. By reconciling your books regularly, your small business accountant can ensure that you always have a clear picture of the financial health of your company. Understanding your cash flow can be invaluable when it comes to long-range planning, and it can also save you the hassle and expense of penalties from filing a late tax return. Streamlining your financial processes can even be helpful for obtaining future business loans. Usually, lenders will expect to see a report of your company’s financial status. By having recent reports relating to your income and expenses, you’ll be able to gain access to the funds you need to grow your business. Strong Reviews Once you locate a few online accountants for small business owners, you’ll want to narrow down the field a bit further. What are other customers saying about this accounting service? While every accounting firm will boast of its strengths, the real evidence of its success is found in the testimony of its clients! Typically, you won’t have to look far to find online reviews for an accounting firm, though the best online accountants will feature customer reviews and testimonials directly on their websites. These reviews provide several relevant clues about the nature of the firm. First, it communicates that other business owners have benefited from the services of an online accountant. Second, skimming through these reviews may help you locate companies that operate within your industry, which helps you to know whether an accounting firm “gets” the unique needs and challenges you face. You might also check to see whether an accounting firm has received any third-party awards or certifications. xendoo, for instance, is accredited by the Better Business Bureau and currently holds an “A” rating, the highest rating available. Transparent Pricing Finally, you want to find an accountant that offers transparent pricing. How much does an accountant cost? An accountant for small business
How Franchisors Can Build a Strong Item 19
How Much Money Can I Make? As franchisors work to sell franchises, one question they will always be asked is, “how much money can I make?”. The answer to this question can be found within one section of the Franchise Disclosure Document: Item 19. In order to create a compelling Item 19, franchisors need financial data on the performance of each franchise location. Typically, it is up to the franchisees to keep their books up to date and share that data with the franchisor. But, like many small business owners, they juggle countless responsibilities, may not understand the complexities of accounting, and bookkeeping understandably falls by the wayside. An Expert Team Without the right tools, building a strong Item 19 can feel like a massive undertaking. But, with the support of a franchise bookkeeping team, franchisors can receive timely, accurate information that will help them build a compelling Item 19! What is Item 19? Item 19 is a section in the Franchise Disclosure Document (FDD), a document that must be presented to individuals who want to purchase a franchise. The purpose of Item 19 is for franchisors to lay out the financial performance representations (FPR) of the franchise. It paints a picture of how potential franchisees can expect to perform and estimates how much money they could make should they join the franchise. Why is Item 19 Important? Item 19 is more than just a rundown of financial performance. It is a powerful tool that aids in decision making, builds trust between the franchisor and potential franchisee, and sets realistic expectations. Decision Making. A strong Item 19 helps franchisors attract and select the ideal franchisee candidates. It also ensures that a franchise brand is a solid investment, and helps the franchisee compare their options to determine if they are joining a successful business. Trust and Transparency. Item 19 signifies financial transparency and creates trust between the franchisor and potential franchisee. It shows that a franchisor knows their numbers, and has no issue disclosing them. The more information that can be provided on financial performance, the better. This transparency creates strong relationships between franchisors and their franchisees. Realistic Expectations. Item 19 allows the franchisor to set realistic expectations for financial performance. While a franchise may be profitable as a whole, individual success can vary. An Item 19 that contains data-backed projections of how much potential franchisees could realistically make provides the clarity they need to make an informed decision. How to Build a Strong Item 19 What do franchisors need to build a strong Item 19? Put simply, clear, accurate financials. The key elements that create a powerful Item 19 are: Average Gross Profit Average Gross Sales Cost breakdowns of goods and services Operating cost insights EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) Industry-specific data points (number of customers served, number of services provided or products sold, etc.) These metrics provide financial insight into the franchise, clearly lay out the costs and obligations of a franchise purchase, and set realistic expectations for financial performance. The amount of information franchisors are able to share in Item 19 largely depends on the information their franchisees deliver. How can franchisees provide reliable, accurate information to their franchisors? It comes down to consistent monthly bookkeeping. The Necessary Resources Franchises have unique needs when it comes to bookkeeping and accounting, such as tracking royalties and advertising fees, and sometimes, multi-currency support. All of it needs to be properly recorded in accounting software so monthly reports can be produced. Franchisors need a team of trusted experts with knowledge of the franchise space, so they can receive accurate data from their franchisees. Consistent Monthly Bookkeeping. In order for franchisors to build a strong Item 19, they need up-to-date financial records for each franchise location. A bookkeeper can provide visibility into financial performance on the franchisee’s behalf, so franchisors have access to the information they need across all locations. An online bookkeeping service is particularly helpful in this situation. Instead of hiring multiple bookkeepers, the franchisor can rely on a single provider who delivers uniform services for each location – no matter where they are located. Accurate, Up-to-Date Reports. Accurate monthly reports are crucial to creating a solid Item 19, as all information is legally required to be accurate, truthful, and backed by numbers. A well-documented financial history showcases franchise growth and profitability and helps franchisors create a compelling Item 19. Expert Bookkeeping for Franchise Businesses xendoo Online Bookkeeping is a leading provider of online bookkeeping and accounting services for franchise businesses. Our franchise-focused team provides franchisors with timely report delivery and visibility into financial performance for each location. Are we a fit for your franchise? Let’s talk! Schedule your free consultation today.
Celebrating Women’s Small Business Month: Thoughts from xendoo CEO and Founder, Lil Roberts
National Women’s Small Business Month celebrates women’s achievements in business, and highlights what they bring to their communities as small business owners. We took a moment to interview xendoo founder and CEO Lil Roberts, to get insight into what it takes to be a successful entrepreneur, and the importance of women leading in business. Build Up Your Team What encouragement do you have for women who are in male-dominated industries? Shift your mindset. Do not let who dominates the industry define your role within it. Succeeding in business is all about excelling at what you do best, and building up a team that compliments the areas that you lack experience in. A multifaceted team is what makes a business thrive. When your team is growing their skills and knowledge, when your customers are happy, that is where you will find true success in your business. It is crucial to focus on the problem that needs to be solved, and build a team that is as passionate about solving that problem as you are. That is what success looks like in every industry, no matter who it is dominated by. Inclusive by Nature What is the importance of women leading in business? Lil smiled and recalled a moment in which she had the opportunity to speak to Frances Frei, Senior Associate Dean for Executive Education at Harvard Business School. Frei shared her experience of solving problems with a team of women and immigrants, referencing studies that prove that when women lead, everyone wins. That is not to say that people and businesses cannot thrive under male leadership – they do. It simply highlights that women tend to be inclusive by nature, and adept at empowering those around them to do and be their best. This leads to the creation of supportive, passionate teams and therefore, successful businesses. Hats Off to You To all female business owners and entrepreneurs, we are rooting for you. Happy National Women’s Small Business Month from your friends at xendoo! Take time to celebrate your business and your amazing team this month. Focus on what you love – growing your business. xendoo has your online bookkeeping covered. Schedule a free consultation with one of our accountants. We would love to get to know you and your business, and partner with you as your bookkeeping, accounting, and tax team! Watch the full interview with Lil below: }
How Do I Pay Myself and My Taxes as an S-corporation?
When businesses are born, business owners are likely not daydreaming about taxes and payroll. Yet, they still face the unique challenge of figuring out how to pay themselves, file their taxes, and maximize their tax savings. As their business grows, many business owners opt for S-corporation Election due to the tax advantages it presents, but they must be mindful of how much they pay themselves, in order to remain compliant in the eyes of the IRS. Unless they moonlight as an experienced accountant, self-payment and tax filing can be confusing and stressful for small business owners – understandably so! Like most things involving taxes, it gets complicated. That is why we have created this comprehensive guide to help business owners pay themselves and maximize their savings as an S-corporation! How to Pay Yourself as an S-corporation: Salary and Distributions Under other business structures, you simply take a share of company profit as your payment. In an S-corporation, you have the option to pay yourself in two ways: Salary, your wages or reasonable compensation. This is considered taxable income to the payee by the IRS. Distributions, the earnings that are paid as distributions to you as the owner. These are not employee wages and are not taxed as self-employment income in an S-corporation. For example, if your business produced $100,000 in profit, you could take a reasonable salary of $40,000, and the remaining $60,000 as a distribution. It may seem strange to receive payment in two different forms, but it comes with significant tax savings, which will be discussed shortly. How Much Do I Pay Myself as an S-corporation? The short answer is, it depends. S-corporation shareholder-employees are required to receive a reasonable salary, which is generally defined as at least what other businesses would pay someone in that role for similar services. Every business is different, so the exact amount that business owners pay themselves will vary. To determine your reasonable salary, you can start with the U.S. Bureau of Labor Statistics, which provides insight into compensation across different industries. This will give you an idea of what you should be paying yourself based on your field and the profit you produce. Some of the factors the IRS considers to determine a reasonable salary are: Training and experience Duties and responsibilities Time and effort devoted to the business Distribution history Payments to non-shareholder employees Timing and manner of paying bonuses to key people What comparable businesses pay for similar services Compensation agreements Use of a formula to determine compensation You must be careful to pay yourself a reasonable salary. Paying yourself a salary that is too low (or none at all) can draw scrutiny from the IRS, as it is considered an attempt to avoid paying self-employment taxes. The good news is that you do not have to figure it all out on your own! The xendoo team is more than happy to help you determine your reasonable salary. Speak to one of our online accountants to learn more. How Do I Pay My Taxes as an S-corporation? The first step is to elect to be taxed as an S-corporation. To qualify for S-corporation status, your business must meet the following requirements: Your business must be incorporated in the United States. Your business may only have certain types of shareholders, including individuals, and certain trusts and estates. They may not be partnerships, corporations, or non-resident alien shareholders. Your business cannot have more than 100 shareholders. Your business can only have one class of stock. Your business cannot be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations). If your business meets all of this criteria, you can move forward by filing Form 2553, and sending it to the IRS. If your company has multiple shareholders, each of them must sign and submit this form as well. Once approved by the IRS, you will file your S-corporation taxes using Form 1120S. To minimize error and maximize tax savings, partner with an online Tax CPA at xendoo. We file your taxes for you so you can focus on growing your business. What are the Tax Advantages of Filing as an S-corporation? No Double Taxation C-corporations are taxed twice, with the business paying corporate income taxes, and shareholders paying taxes on their share of the income. On the other hand, S-corporations are not subject to corporate income tax. Instead, shareholders file a Schedule K-1 along with Form 1120S, which reports their share of the company’s profits or losses. This allows S-corporations to avoid double taxation. No Self-Employment Taxes (on Distributions) Another key advantage of S-corporations Election is that the distributions owners receive are not subject to self-employment taxes! Every small business must pay self-employment taxes to fund social security and medicare. If your business operates as an LLC, you are required to pay self-employment taxes on your entire share of the profit, regardless of how you use the money. On top of that, you will also be taxed at your personal income tax rate. As the owner of the S-corporation, you only pay self-employment taxes on your reasonable salary. The distributions you take are exempt from self-employment tax! To illustrate, let’s revisit the example from earlier: Your business makes $100,000 in profit. As a single-member LLC, you will pay $15,300 in self-employment taxes. If you file the S-corporation Election, you pay yourself a reasonable salary of $40,000. The remaining $60,000 is taken as a distribution from profit. You will pay $6,120 in self-employment taxes only on your salary. The remaining $60,000 is exempt, resulting in a tax savings of $9,180 compared to the LLC! For quick reference, take a look at the chart below: S-corporation Election is a simple, yet effective, way to maximize your tax savings. Are you ready to take the next step? Schedule a free consultation with a xendoo accountant today! xendoo is Here for You You are not alone as you navigate the waters of self-payment and tax filing. xendoo Online Bookkeeping, Accounting,
