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Virtual Bookkeeping Company - Your Administrative Solutions http://youradministrativesolutions.com Setting Business People Free! Fri, 14 Feb 2014 12:43:06 +0000 en-US hourly 1 https://wordpress.org/?v=3.8.26 Create a Theme for a Prosperous and Meaningful New Year http://youradministrativesolutions.com/business/create-a-theme-for-a-prosperous-and-meaningful-new-year/ http://youradministrativesolutions.com/business/create-a-theme-for-a-prosperous-and-meaningful-new-year/#comments Mon, 23 Dec 2013 23:32:16 +0000 http://youradministrativesolutions.com/?p=1357 It’s almost 2014, and at this time of year, it’s natural for us to pause and reflect on where we’ve been and where we want to go.  For business owners, it’s especially important to raise our minds above the daily fires for a moment, take in some fresh air, and elevate our perspective.  Creating an annual theme is an easy and fun vehicle to do just that.

officeDeciding on a theme for the year will give you a focus and a new perspective on your work and your routines.   It can be highly rejuvenating to look at things through the lens of your new theme.

Ideas for themes are limited only by your imagination.  Some possible themes include:

  • Organizing, detoxing, or cleansing.   Consider cleaning out your garage (or your office), upgrading your systems, re-designing your filing system, or going on a cleanse or a vacation or a retreat that will leave you feeling clutter- and worry-free.
  • Growth.  You might want to consider a growth-related theme, such as productivity or profitability.  You might also want to develop a new skill such as learning a new language, developing your computer skills, or taking a philosophy class at your local junior college.
  • Abstract themes, such as abundance, creativity, or diversity.  At the risk of sounding a little fluffy, an esoteric theme might be just what you need in 2014.  A theme with abundance will allow you to think big, be abundantly generous with others, and search for large contracts.   A theme with diversity will challenge you to be more open-minded.  You may also want to consider forgiveness, gratitude, humility, or service.
  • Relationships.  Your year might be dedicated to meeting new associates and building business relationships.  Your action item might be to spend more time networking, participating in groups, or going to your industry conference.
  • A new service.  Perhaps you’re launching a new service and need to focus on developing this new line of business.
  • Giving back.  On a personal note, you might value volunteering and decide to organize your year around a couple of volunteer opportunities.
  • Exploring.  If you’ve retired or the business is starting to run smoothly without your day-to-day input, it might be time for that trip around the world.

As you choose you goals for 2014, make sure the majority of them support your theme for the year.  Themes can bring an overarching focus to our practices and our lives.

What’s your theme?  Let us know what your theme is and we’ll share ours!

Your Administrative Solutions is a bookkeeping (full charge and À la carte) and tax prep firm. We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation. If we can assist you in your business in any way or if you just need to consult with someone to determine which way you should go with your business, please call 866-363-5580 or email fran@youradministrativesolutions.com for a free consultation today.

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QuickBooks 2014 Simplifies, Accelerates Common Tasks http://youradministrativesolutions.com/bookkeeping/quickbooks-2014-simplifies-accelerates-common-tasks/ http://youradministrativesolutions.com/bookkeeping/quickbooks-2014-simplifies-accelerates-common-tasks/#comments Thu, 12 Dec 2013 16:21:19 +0000 http://youradministrativesolutions.com/?p=1338 New version of desktop QuickBooks accomplishes goal of speeding up, refining your workflow.

If Intuit named its desktop versions of QuickBooks by the version number rather than the year, we’d be in version 20-something by now. QuickBooks, still the preferred software for small businesses, keeps getting smarter in its annual upgrades. Rather than pile on tons of new features in its upgrades, Intuit – for many years – has concentrated on making it easier for you to access the tools and data that are already there.

QuickBooks 2014 is no exception. Its combination of small-but-effective changes makes it easier to get in and do what needs to be done quickly, and then get out and move on to activities that will help build your business.

A Superior View

If you do upgrade to QuickBooks 2014, head first to the new Income Tracker (Customers | Income Tracker). QuickBooks offers numerous reports and other tools for following the progress of your incoming revenue, but this new feature provides the best we’ve seen in the software.

 QBC1113image1_zpsb0114bb3

Figure 1: QuickBooks 2014’s new Income Tracker gives you real-time access to the status of your receivables.

You may find yourself spending a lot of time on this screen because it gives you a birds-eye view of your receivables that isn’t available anywhere else in the program. You can click on any of the four colored bars that run across the top of the screen – Estimates, Open Invoices, Overdue and Paid Last 30 Days — to change the data that appears below. Within each bar is the number of related transactions and their total dollar amount.

You’ll use the drop-down lists directly below these navigational bars to set filters that define a subset of transactions. These are CUSTOMER:JOB, TYPE, STATUS and DATE.

The last column in the table is labeled ACTION. Once you’ve earmarked a transaction or transactions that you want to work with by checking the box in front of each name, you can select an action you want to take. If OPEN INVOICES is active, for example, you can receive payment for the transaction(s), print or email them. Where applicable, you can open a drop-down menu in the lower left of the screen and batch-produce invoices, sales receipts and credit memos/refunds.

More Descriptive Email

If you regularly send invoices through email, you may have wondered how many of them actually get opened by your customers in a timely fashion. QuickBooks 2014 contains a new tool that makes the details of each invoice available within the body of the email itself.

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Figure 2: You can modify this template or leave it as is: QuickBooks 2014 will fill in the relevant details for each customer.

To access this template, open the Edit menu and select Preferences. Click on the Send Forms tab, then Company Preferences. Open the drop-down list to select the type of form you want to view or modify (pay stub, sales receipt, credit memo, etc.). Click the Edit button to see the actual template, and open the Insert Field drop-down menu to see your options. When you email a form, QuickBooks will replace the text and numbers in brackets with the correct details for each recipient.

This is what’s called a mail merge. They’re fairly simple to use, but one error will throw your message off. We can help you get set up with these.

Smaller Changes

Intuit has made many small-but-useful features to QuickBooks 2014, all designed to help you work faster and smarter, and simply to support more convenient operations. For example, the Ribbon toolbars on transactions now include a tab or menu that lets you open related reports.

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Figure 3: You can now access reports directly from the Ribbon toolbar on transaction screens.

In addition:

  • QuickBooks’ color scheme has been changed.
  • The program runs faster.
  • You can now copy and paste lines within forms.
  • We can communicate with you (and vice versa) via an email window that’s been embedded into the software. This tool even auto-pastes the transaction in question into the email window.
  • There’s been some retooling of online banking (now called “Bank Feeds”), making it more accessible and understandable.

Upgrading to a new version of QuickBooks can be challenging, so we encourage you to let us know if you’d like to explore the process. New functionality and usability that improves your workflow and your understanding of your finances can be worth the time and trouble.

 

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Five Tips to Get Ready for a Pain-Free Tax Time http://youradministrativesolutions.com/tax-preparation/five-tips-to-get-ready-for-a-pain-free-tax-time/ http://youradministrativesolutions.com/tax-preparation/five-tips-to-get-ready-for-a-pain-free-tax-time/#comments Thu, 05 Dec 2013 15:17:09 +0000 http://youradministrativesolutions.com/?p=1307 file0001283991055With the holiday season just around the corner, it’s a perfect time to get your financial records in order.  Tax moves you make now can mean finding more “green” to spend on family gifts and festivities.  Here are five quick tips for you to feel more prepared about your financial status as you go into year-end.

Avoid Penalties

This time of year is ideal to double-check your tax payments to make sure enough has been paid in, and even more important, to avoid overpaying so your money is not tied up unnecessarily. If you’re not sure of your 2013 tax liability, check with your tax preparer.

Balanced Books

Rather than wait until the busiest time of year for accountants and bookkeepers, you can get a head start now on catching up your books  You’ll have more of their attention and you may even avoid a rate increase if you get your books done early.  Completed bank reconciliations are a very important part of catching up.

Forms

It’s not too early to get your orders in for the forms you need at year-end like your W-2s, W-3s, 1099s, and 1096s.  That way, your forms will be onsite when you’re ready.

Records

Information that’s missing at the last minute can take up extra time and be costly.  It’s a great idea to do an audit now of W-9s to grab missing addresses and tax ID numbers of your contractors.  Also do a scrub of your employee payroll records so that your W-2s will be complete and accurate.

New Tax Changes

Be sure to check with your advisors on new laws affecting individuals and businesses next year.  One of the biggest ones making news is avoiding the fine involved regarding the new health care requirements for individuals.  And there are many more you’ll want to get up to speed on so that you’ll know how they affect your situation.

We know it’s early to be talking about taxes, but we’re also all about saving you money and time.  Try these five tips so you’ll have better peace of mind and be more prepared for year-end.

 

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Hidden Costs of Starting a Small Business http://youradministrativesolutions.com/business/hidden-costs-of-starting-a-small-business/ http://youradministrativesolutions.com/business/hidden-costs-of-starting-a-small-business/#comments Wed, 31 Jul 2013 21:40:13 +0000 http://youradministrativesolutions.com/?p=1023 file7411252893790Hidden Costs of Starting a Small Business

 

It can be costly to start a small business from scratch and most people don’t realize all the hidden costs involved. Being aware of some potentially expensive hidden costs can help a business be more successful in the long run. Be sure to work through a budget and check and recheck prices to pin point the best place to buy your product.

 

Before starting this endeavor, know what needs to be out-sourced. For example if you are not up to date or knowledgeable about web development it might be wise to start by hiring a web developer. In the long run this will be more cost effective than trying to do it yourself.
Here are six of the biggest start-up expenses that are often overlooked and cause the demise of many small businesses:

 

Office Furniture. Desks, filing cabinets, chairs and lamps these are just a few essential items most businesses will need. Spending more in the beginning will help save money in the end by eliminating replacement costs. Buying cheap office furniture will not save money and will cost more time.
Website. Creating and maintaining a website is essential. In today’s world you might as well not exist without a web presence. Paying a web developer, buying a domain name, and regular updates and maintenance are all necessary expenses when starting a small business. Search engine optimization is also required if you want improved traffic to your site. Having a blog, a forum page, and participating in social media marketing is integral as well. Budgeting will help take the sting out of this sometimes over looked expense.

 

Office Supplies. Pens and paper are just the beginning when it comes to office supplies. Don’t forget folders, clocks, water cooler, paper towels, cleaning products, calculators, paperclips, staplers, and so much more.

Printing equipment. Besides the cost of the printer there is toner, paper, software, and more. Do the research.
Promotional material. Putting your company name and logo on pens, t-shirts, and mugs is a simple way to spread the word about your business. Make sure you budget includes appropriate promotional materials for your business.

 

Employees. The most expensive part of running a small business is employees. Making sure you know all the costs of having employees is important so there are no budget surprises. Besides salaries, factor in the cost of managing and scheduling employees. Don’t forget workers’ compensation and employee benefits such as insurance and vacation pay. Purchase payroll software or hire someone to do payroll. Mistakes on quarterly taxes can be quite costly.
Success in business means budgeting start-up costs and careful planning. Knowing start-up and operating expenses as well as cash flow is a must before preparing to make any purchases or bring on employees. Being prepared by researching vendors and supplies, and incorporating these costs in to a budget, is a good way to get started.

You’re most welcome to use this article on your website, blog or in your e-zine if you include this entire blurb, without modification: If you liked this article by Fran McCully, you’ll want to hop on over to www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business.  We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

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Analyzing Business Expenses http://youradministrativesolutions.com/business/analyzing-business-expenses/ http://youradministrativesolutions.com/business/analyzing-business-expenses/#comments Wed, 24 Jul 2013 21:08:00 +0000 http://youradministrativesolutions.com/?p=1010 file0001364717256Analyzing Business Expenses

 

Tracking business expenses is essential for staying profitable and predicting future trends. Besides managing employees, monitoring inventory, and overseeing operational aspects, being concerned with the cash flow is critical. Entrepreneurs should always be looking for ways to save money. Whether the analysis is being done by yourself or you wish to have a better understanding of what the CFO should be doing, following these simple steps helps to explain how to cut costs and increase cash flow.

  1. Compare the budget to the actuals.
    Don’t just have a budget, create one! One of the most important financial management tools is the creation and use of a budget. A budget is the examination of all business expenses and the estimation of what they will be next year. Even though estimates may be off target, a budget will show where each expense originates. This leads to the understanding of why a particular item is going considerably over budget and how to fix it.
  2. Analyze the income statement.
    Accounting software (such as QuickBooks) provides a report of operating expenses. For every line item in the operating expenses the dollar amounts and percentages of revenue can be calculated. Compare the numbers of the operating expenses to last month, last quarter, the average of the last three months, average year to date, and the same month last year. By doing this expenses trends can be identified making it easier to see if a particular expense has increased. This provides the chance to find out why before it gets out of control.
  3. Understand the business’ fixed and variable costs.
    Variable costs increase directly in proportion to the level of sales in dollars or units sold. An example of a variable cost would be paying employees more in commission due to increased sales. Fixed costs remain the same regardless of the level of sales. For example, rent would be a fixed cost; if sales go up it does not affect the amount paid for rent. It is important to realize that fixed costs are “fixed” only within a certain range of activity or over a certain period of time. For example, rent is a constant monthly amount until the landlord raises it at the end of the year or sales increase to the point where there is a need to rent additional workplace. In this case the expense might double.
  4. Contribution margin analysis.
    Your company’s contribution margin is the percentage of each sales dollar that remains after the variable costs are subtracted. Knowing your company’s contribution margin can help to make better decisions about whether to add or subtract a product line, about how to price your product or service, and about how to structure any sales commissions or bonuses.
  5. Breakeven analysis.  

    This is the volume of sales needed to cover all costs. A breakeven point can be determined once the variable and fixed costs for the business is known. The following formulas can help determine the breakeven point.

    Sales Price per Unit minus Variable Costs per Unit = Contribution Margin per Unit
    Contribution Margin per Unit divided by Sales Price per Unit = Contribution Margin Ratio
    Breakeven Sales Volume = Fixed Costs divided by Contribution Margin Ratio

To have a strong and successful business it is imperative to have a clear understanding of the financial impact that the most basic business decisions may have. Analyzing business expenses is critical to making informed and profitable decisions for your business’ future.

You’re most welcome to use this article on your website, blog or in your e-zine if you include this entire blurb, without modification: If you liked this article by Fran McCully, you’ll want to hop on over to www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business.  We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

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Stress-Free Bookkeeping http://youradministrativesolutions.com/business/stress-free-bookkeeping-2/ http://youradministrativesolutions.com/business/stress-free-bookkeeping-2/#comments Wed, 17 Jul 2013 20:59:22 +0000 http://youradministrativesolutions.com/?p=1006 file000884219889Stress Free Bookkeeping   

 

Managing your books is a cumbersome but critical task for any business. It can be very time-consuming, frustrating, and could mean working late hours. However, it has to be done to know the worth of your business and to satisfy the government for taxes. You also need to do this on a regular basis to get an accurate idea of your financial health.

 

How do you make this stress-free task work for you?

Some small and medium businesses either employ part-time bookkeepers or do the work themselves. No matter how it is done it is still a mundane task involving shuffling papers and working extra hours. Often there is a twinge of doubt that you are not doing something quite right or are missing important information.

Ask any entrepreneur why they went into business and you’ll get a hundred different answers. Odds are that “do bookkeeping” was not on the list even though bookkeeping is the core of any successful business. It is the way to measure growth, keep cash flow positive and track expenses.

Bookkeeping is like learning to play a musical instrument. The secret is to learn the fundamentals and create a system that works for the company.

Here are a few tips that could prove helpful to make the right decision for bookkeeping and accounting needs:

 

Don’t mix business and pleasure:

Get a business credit card to enable you to separate your business expenses from your personal. By this time you have already started your business checking account. So adding that business credit card will help you establish and build business credit and points. Co-mingling funds between personal and business is not a productive or efficient way of doing business and can prove to be a headache at tax time.

 

Keep it simple:

When creating your business in your accounting software doesn’t create too many categories in the chart of accounts. For example, office supplies will be a sufficient category rather than separate categories for paper, letterhead, printer supplies, etc. This complicates profit and loss and adds time to the day-to-day activities when items are being expensed.

 

Automate your invoicing:

There are many online invoicing services that allow you to schedule invoices for clients who are charged on a regular basis. You will find that most accounting software has the ability to memorize invoices that reoccur monthly. The day of the re-occurrence can even be set such as the first of the month.

 

Use the right accounting software:

There are many accounting software packages out there that you can use to assist you with your accounting and bookkeeping needs. Of course, I highly recommend QuickBooks but there is also a wide variety of Open Source software which is free to download. Additionally there are a wide variety of free manuals and tutorials online.

 

Outsource to a virtual bookkeeper:

Outsourcing to a virtual bookkeeper saves time, money, worry, and headaches. Many business owners take two common approaches to tackling the issue of bookkeeping. They try to do it themselves – which is time consuming and can lead to costly mistakes. They pay large firms to do it – which is unnecessarily expensive. A professional bookkeeper has the skills and experience to do the job right. There are many advantages to outsourcing your books. Save money, save time, and the need for extra help. The biggest benefit is your bottom line.

  • Books that are inaccurate do not reflect the true health of the business
  • Being clueless at any level about where the money is going is not being in control of your business.

Business people need to focus on the business:

There are many aspects to running a business and the most important is earning money. Some things just have to be delegated in order to maximize time and productivity. Bookkeeping can be a painful and time consuming process and many business owners do not have the expertise or knowledge to get the job done right. Time spent on bookkeeping activities is time away from making money.

 

You’re most welcome to use this article on your website, blog or in your e-zine if you include this entire blurb, without modification: If you liked this article by Fran McCully, you’ll want to hop on over to www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business.  We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

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How to Classify Workers on Taxes http://youradministrativesolutions.com/virtual-bookkeeping/how-to-classify-workers-on-taxes/ http://youradministrativesolutions.com/virtual-bookkeeping/how-to-classify-workers-on-taxes/#comments Wed, 10 Jul 2013 20:39:40 +0000 http://youradministrativesolutions.com/?p=1002 SONY DSCHow to Classify Workers on Taxes

Did you know that how employees are classified hold serious tax implications with the IRS? Did you know that the IRS checks to see if workers are properly classified? Some employers incorrectly classify their workers as independent contractors to avoid paying payroll taxes knowing they should pay workers as employees. This is a practice to be avoided.

During tax audits of businesses the IRS will look at how workers are treated to determine if the guidelines are being followed. Not following the guidelines means significantly high penalties.
It is important to know how the IRS defines an independent contractor versus an employee. Generally, anyone who offers the same service that your firm offers should be considered an employee. For example, if you have a retail store and have employees who run a cash register and help customers, they should be classified as employees. It’s about behavioral control and financial control. Even if your workers agree to be treated as independent contractors and take responsibility for their own taxes, the IRS will reclassify them as employees and penalize you for not following the rules.

If a bookkeeper is employed to assist with bookkeeping needs from her office via telephone and internet, using her own supplies and computer, and if that person also has a string of other clients, a business license, insurance, or a contract with you, there is no question that they are an independent contractor. However, if you employ that person, tell them to be at your office at a certain time, use your equipment, your phone, your desk, your break times then that person is an employee. That person needs to be paid as an employee.

You own a day spa and you hire a masseuse to work on call. The masseuse has her own business and a set of clients, a business license, and insurance. You agree to a payment of a percentage of completed massages. Sounds like an independent contractor, right? The answer is no. The masseuse offers the same service that your business offers, so they should be treated as an employee.
Recently, the voluntary classification settlement program (VCSP) was set up to provide taxpayers with an opportunity to reclassify workers as employees for future tax periods for employment tax purposes. Employers will enjoy some relief from federal employment taxes if they come into compliance. According to the IRS, “to participate in this new voluntary program, the taxpayer must meet certain eligibility requirements,” apply to participate in the VCSP by filing form 8952, Application for voluntary classification Settlement Program, and enter into a closing agreement with the IRS.

If you are under an income tax audit, not an employment tax audit, and you may feel that the auditor may be scrutinizing outside services or subcontractor expense categories and questioning whether your 1099 recipients should really be classified as employees. This would be a good opportunity to enter the VCSP.

If you are eligible for the VCSP you will be required to pay 10% of the employment tax liability that would have been due on current year compensation determined at reduced rates listed in the IRS Tax code, section 3509 (a). In return the IRS promises not to perform employment tax audits for prior years and you will not be required to pay penalties and interest.
A pretty good deal if you feel you might be crossing the line!

You’re most welcome to use this article on your website, blog or in your e-zine if you include this entire blurb, without modification: If you liked this article by Fran McCully, you’ll want to hop on over to www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business.  We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

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Are You In Your Own Way? http://youradministrativesolutions.com/business/are-you-in-your-own-way-2/ http://youradministrativesolutions.com/business/are-you-in-your-own-way-2/#comments Thu, 04 Jul 2013 00:59:30 +0000 http://youradministrativesolutions.com/?p=998 OLYMPUS DIGITAL CAMERAAre You In Your Own Way?

While some business owners are content with the size of their business and do not care to grow, the majority of the entrepreneurial world is looking for ways to become a bigger and better industry.

Over 35 percent of small-business owners see their challenge as maintaining and growing their business by focusing on generating new business and more customers. Around 25 percent, however, feel they are stretched too thinly across all roles, already, and feel there aren’t enough hours in the day to do more.

While every entrepreneur and every business have specific issues with expansion, many similar issues do exist. Before a business can create a growth plan, for instance, some solid soul searching is a good idea. Take a close look at your business and identify those things that you can change.

 

Here are a few of the obstacles that tend to get in the way of success:

  • Small-business owners often micro-manage. Unfortunately, your business can only grow to a certain size without passing on some responsibilities to other people. Concentrate on the results and benefits that others can achieve by doing it their way.
  • There is an ongoing struggle between time and money. Small business owners are reluctant to make the investment in outsourcing. The result is that they spend 10 or 15 hours a week doing work that could be done by a sub-contractor, thus losing revenue and productivity.
  • Most entrepreneurs are skilled at their individual profession or trade; however, keeping up with current trends and information is necessary. To gain additional knowledge, commit two hours a week to browsing for books on business. Learn techniques and develop your mind with new ideas.
  • Most business owners are not risk takers. They feel anxious and apprehensive about taking out a loan in order to grow their business. Expansion, however, often involves taking some calculated risks.
  • Many business owners are loners, by nature; so when it comes to getting outside help, they hesitate; they don’t want to ask, and they don’t know where to look. This situation creates a major hindrance to business growth and expansion.

Small business owners are often “reactionary” instead of “planners.” That means that there is a tendency to respond to the biggest problem of the moment instead of planning a schedule. Set aside one hour of private time every week to look at your business. Identify problems.

 

You’re most welcome to use this article on your website, blog or in your e-zine if you include this entire blurb, without modification: If you liked this article by Fran McCully, you’ll want to hop on over to www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business.  We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

 

 

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Is Your Business Leaking Money? http://youradministrativesolutions.com/business/is-your-business-leaking-money/ http://youradministrativesolutions.com/business/is-your-business-leaking-money/#comments Fri, 28 Jun 2013 00:41:05 +0000 http://youradministrativesolutions.com/?p=994 Money in handProfits and Sales

Many small business owners are focused on growing sales. When there is cash in the bank and customers coming through the door, a lot of business owners don’t take the time to see how money is being spent. What jobs or products are the most profitable?

It seems the bigger the business, the bigger the potential for waste. One person businesses are likely to find ways to cut costs and thus increase profits as they look closely at what they’ve bought, what they regularly buy and is it contributing to profits?

The biggest money leaks can be yearly or automatically renewing subscriptions. Are you reviewing your credit card bills each month? Check statements to see if there are recurring charges for subscriptions that are not be used consistently.

Other common areas of money loss are goods and services – are supplies being purchased from the most economical supplier? Is it just a convenience and that is why you continue to purchase from that supplier? By shopping around there will likely be a supplier that welcomes your business and has lower prices.

Cash Flow Secrets for Small Businesses:

  • Budget is not a four letter word. Budgets can be a friend. See a budget as a plan to help stay focused on what needs to be achieved.
  • The most powerful number in your business. Knowing only one number should be the breakeven point. The breakeven point is the moment in time when income equals expenses. When income is higher than expenses, it is a profit. If expenses are higher than income it is loss.
  • Customers. It’s easy to get caught up in the search for new customers. But, never forget the ones you already have. What other services or products can be offered to them? How can you get them to refer their friends and colleagues? Build a successful business around a small number of customers by providing them with excellent customer care.
  • Shoeboxes. A successful business is not possible if income and expenses are not systematically tracked; know who owes money, and to whom money is owed. This is absolutely crucial. Keep track of everything with pencil and paper if you like. As long as basic information is tracked in a systematic manner. A computer program such as QuickBooks certainly does a beautiful job.
  • Getting customers to pay. Always remove every possible excuse for nonpayment. Don’t extend credit unless it’s absolutely necessary. Establish credit policies to help determine who will get credit. Get an invoice into the bill payer’s hand as quickly as possible after the work is done or the product is delivered.
  • Why paying taxes causes rejoicing? The strategic approach of many small business owners is to have as little profit as possible by the end of the year. Otherwise, you pay taxes. Some small business owners make decisions in their businesses based on intentional lack of profit. Writing checks to the IRS is most often a painful thing to do but if you’re paying taxes, it means you’re making money. If you’re paying taxes, it means your business is making money. Don’t let the thought of taxes hold you back. Always plan ahead for the tax bill – don’t let it be a surprise!

 

You’re most welcome to use this article on your website, blog or in your e-zine if you include this entire blurb, without modification: If you liked this article by Fran McCully, you’ll want to hop on over to www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business.  We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

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Creating a Company Budget http://youradministrativesolutions.com/business/creating-a-company-budget/ http://youradministrativesolutions.com/business/creating-a-company-budget/#comments Fri, 21 Jun 2013 00:37:57 +0000 http://youradministrativesolutions.com/?p=990 Creating a Company Budget

What is a budget?

A budget is simply a tool that tracks expenditures and helps plan how money will be used. A well planned budget takes the guess work out of both day to day bills and long term goals.

 

Realize that a budget will not solve any financial problems. It is simply a tool to help correct problem areas. Once a problem area is found then necessary changes can be made.

 

Do research. If you are in the process of starting a business and don’t have a previous budget to use, research typical costs and sales trends associated with firms in your sector and determine averages.

 

Keep it simple. There is no need to list every expense in great detail. For example, combine your office supplies into one category.

  • Calculate net cash flow: This is the most critical part of a budget. Calculate the funds the company brings in. Gather every financial statement possible including bank statements, investment accounts, all utility bills, and all sources of income and expenses. The goal here is to create a monthly average, so the more information you can find the better.
  • Record all sources of income: Hopefully, your business is already set up in electronic software such as QuickBooks. If so, this part will be fairly easy. Compile specific reports to get all of the information needed.
  • Review bank and credit card statements: These are all recurring expenses that have fixed amounts. Review the last 3 months in order to obtain a good feel for the pattern of recurring expenses.
  • Create a list of monthly expenses: Write down a list of all the expected expenses you plan on incurring over the course of a month. Then break the expenses into two categories: Fixed and Variable. Fixed expenses are those that stay relatively the same each month and are a required part of a business. Variable expenses are the type that change from month to month.
  • Analyze results: If you have net cash remaining at the end of the month, your financial business life style may be healthy. Total monthly income and monthly expenses. If it shows a higher expense column this means some changes will have to be made.
  • Make adjustments to expenses: Knowing that you have accurately identified and listed all expenses, the goal would be to have the income and expense columns equal. Therefore, all of the income is accounted for and budgeted for a specific expense.

If you are in a situation where expenses are higher than income, look at your variable expenses to find areas to cut.

 

Always review a budget monthly. It is important to review a budget on a regular basis to make sure you are staying on track. After the 2nd or 3rd month compare the actual expenses versus what was created in the budget. This will show where you did well and where you may need to improve.

 

Why is a budget important?

Referring to a budget at regular intervals is a very valuable learning tool. Forecasts can be compared with actual numbers. It is important to revisit the budget on a periodic basis to evaluate these numbers and see whether planned figures diverge from the actual. Try to make this a regular part of running your business.

Be flexible. A budget, although a useful tool for remaining disciplined, is not set in stone. A budget should not be used as an absolute ceiling as to how much can be spent but a tool for making sure business goals are being met and all spending is justified.

 

In the beginning, planning the small business budget may seem like an overwhelming task. However, over time you will begin to see how this simple planning tool actually takes much of the stressful guesswork out of running a business and makes the operations function smoothly.

You’re most welcome to use this article on your website, blog or in your e-zine if you include this entire blurb, without modification: If you liked this article by Fran McCully, you’ll want to hop on over to www.YourAdministrativeSolutions.com where you can find more articles, resources and strategies to help manage the finances of your business.  We also create business plans (with full market analysis and competitor research), do cash flow analysis, and assist companies with budget set up and implementation.

 

 

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