More and more people are thinking about the freedom that comes with owning their own business. With shows like Shark Tank ranking highly and glamorizing successes, sometimes the downsides of owning a business are often glossed over.
Starting a business requires dedication, commitment, and the right mindset. One that's not going to throw in the towel when the going gets tough. However, if you're ready to take the plunge for a more rewarding lifestyle, and willing to overcome obstacles, here are some tips that it may be the right time to start a business.
Do you really despise your current job?
In today's world, opportunities abound, and holding down a job for 20 years or more is barely done anymore. There aren't any guarantees with a so-called steady job, so if you are dissatisfied and it's affecting your quality of life, there's never been a better time to strike out on your own.
What is your WHY?
Everyone has different reasons for starting their own business. Perhaps you can identify with some of these:
How can I start?
Thankfully today, you can start many businesses with little or no money. Starting an online business is fairly straightforward and almost anyone can pull off an e-commerce business with a bit of research. The main points to focus on from the start are:
Service based businesses:
You don't need to sell a product to start a business. In fact, there are hundreds of ways to monetize your expertise. Keep in mind though, that if you are selling a service, you're trading your time. If you're ok with that, or have plans to scale and outsource, these are some ideas you could start with practically no investment but your time:
When's the right time to start?
If you wait and put off starting a business until the conditions are just right, you'll never be a business owner. The right time to start is today. Start researching, brainstorming, and learning. Take the first step and see where it leads you. One of the best things a new business owner can do is get their books in order from the start. Consulting with a bookkeeper will save you endless hours of frustration. If you need help or advice on your new start up, give us a call! The owner of The Bean Counters Bookkeeping has a book that will help you in your journey as well. Knowing the common mistakes made in the beginning, Kaylin gives step by step advice to new entrepreneurs in Putting the Puzzle Together.
Many business owners think that they're saving money by doing their own bookkeeping because that's one less expense. If you're one of them, keep reading to find out why you're putting your business at risk and NOT saving money by doing your books yourself.
1. MONEY VS. TIME
You think that it doesn't take you much time or hassle to handle your own books. Why spend money on something you don't need? Well, have you considered what else you could be doing to grow your business? If you can be increasing revenue during those hours you're handling your books, wouldn't that be a better way to spend your time? If you spend 3 hours a month on your bookkeeping, a professional bookkeeper could do it in half the time. That's what they do. Wouldn't you be better off focusing on what you do best? Besides, bookkeepers also know things you don't, such as:
2. STREAMLINING PROCESSES & MAXIMIZING PROFITS
You probably have systems in place in your business that seem automatic to you now because you've created them to streamline and make things go smoothly. The Bean Counters Bookkeeping team does the same. After many years of doing the books for all kinds of businesses, bookkeepers know how to do things EFFECTIVELY, QUICKLY, and LEGALLY.
3. LEGAL OBLIGATIONS
Most business owners aren't keeping up with the constant changes with tax laws and deadlines. Do you know what due dates, stipulations, requirements, and obligations are to a T? Why mess with the IRS when you could be making better use of your time? Not to mention the stiff fees and fines that come with missing a deadline or legal obligation. Bookkeepers know exactly what your specific business needs to follow to comply with the tricky and complicated world of taxes. Everything will be prepared and ready for your accountant.
4. KNOWING YOUR UNIQUE SITUATION
You probably know your business inside and out, but are you missing the big picture when it comes to your financial situation? Professional bookkeepers can give your business a fresh set of eyes, and show you where you could be maximizing profits and deductions and minimizing your expenses. If you're not already making changes to stay compliant or save money, they can show you what to do.
Handling your own books may SEEM like a great way to save money, but why did you start your business? Unless you own a bookkeeping business, you probably don't want to spend hours on doing your own books. What else SHOULD you be doing?
What is your time and peace of mind knowing you're staying compliant to the IRS worth to you? If you're reading to stop slaving over constant tax obligations and tracking your expenses and revenue, give our team a call or book directly from the tab at the top of this page for a free consultation.
Companies big or small normally have a lot of financial transactions. They need to keep track the flow of their money. The activity of recording and tracking all the financial transactions performed and done by the company is bookkeeping.
Bookkeeping is not only for big companies and corporations. Single individuals and home businesses also need to do bookkeeping. Although small business bookkeeping is a lot simpler than that of large companies, it is nevertheless important.
Just like in big companies, small business bookkeeping involves keeping records of what it sold, bought owed and owned. It is up to the owner to track of the money the business receives, releases and saved.
In small business bookkeeping, it is important to be aware of some simple bookkeeping principles.
Just like big companies, income acquired from small businesses is still considered taxable income by the IRS. So in small business bookkeeping, the owner must keep accurate records of the company's income and expenses.
Another thing to keep in mind when doing small business bookkeeping is that tracking and recording financial transactions is relatively simple with Quickbooks online. However, if the small business owner doesn't want to spend the time or have the ability to keep accurate financial records, outsourcing their bookkeeping will usually save them money.
Sometimes small business owners will try to use spreadsheets for their bookkeeping because it doesn't require a lot of knowledge to work with. All that is needed is to put all income in one column and put all expenses in another column. We don't recommend this however, because many errors can be made and it's hard to reconcile when multiple accounts are involved.
Even simple bookkeeping can be difficult. Therefore, it's a good idea for the owner to pay someone to do his bookkeeping for him. Small business bookkeeping is usually a headache for an owner. Owners have other things to do such as marketing their product and services, increasing sales or running the operation. Having someone to do the bookkeeping for him usually eases off the pressure. For an owner who has just established his business, hiring someone to keep track of financial transactions is an easy, beneficial, and smart move.
Another important thing to keep in mind in small business bookkeeping is to determine the kind of records the owner needs to keep. It is important to keep track of all the income and income-related expenses that the company incurs. These expenses include office supplies, postage, phone bills, internet bills, utility bills, and others.
Finally, it would also be a good idea for the owner and his hired bookkeeper to attend business-related seminars, especially those that discuss on tax, accounting and inventories. Such seminars are useful, paving way for more efficient and accurate bookkeeping. Not only that, but these seminars are tax deductible and a great way to network with other business owners. If you need help with your bookkeeping, the first step is giving us a call. We will determine your rates based on your backlog, unique business needs, and future goals. Reach out to us any time at 912-376-9918, or email us for a quote: firstname.lastname@example.org.
Freelancers and solopreneurs have a lot of freedom when it comes to their business pursuits. This is one of the reasons that many people are ditching the typical office job for a life lived on their terms. While the cons of working for yourself are few and far between, there is one thing that can cause confusion and stress, and that is taxes. No longer can you wait for your W-2 and know exactly what to do. Freelancers and solopreneurs are faced with having to do their own taxes. Receiving an unexpectedly large tax bill is not fun for anyone, so we're going to present the top tax tips to make things easier.
1. Find a tax pro
If you work for yourself, it makes sense to find a knowledgeable bookkeeper who can assist and advise on taxes. Someone who has eyes on your business and can catch errors AND find overlooked deductions for you. When you're looking for a bookkeeper, make sure you explain your business inside and out so they know how best to serve you. Look for someone with a degree in accounting, and it's also helpful to have someone who knows cloud accounting systems well. This will reduce time and costs on your part and make outsourcing your bookkeeping tasks one of the best business decisions you've made.
2. Pay your estimated taxes quarterly.
Ask your bookkeeper or accountant to estimate what your tax burden could be for the year based on your income. If you don't understand taxes, you will probably miscalculate this and be subject to penalties. Don't forget, you now have to pay taxed for self-employment, so as a freelancer or solopreneur, your tax bill will be higher than a traditional employee.
3. Send digital copies of your receipts to your bookkeeper
If you get into the habits of keeping your receipts for each week and then sending them digitally to your bookkeeper, you won't get behind or miss something. Receipts can get lost, damaged, faded, and torn, so it's best to immediately record them in the cloud. Your bookkeeper can then attach them to expenses in Quickbooks or another system. One less thing you need to worry about come tax time.
4. What to do if you also have a W-2
Many freelancers do what they do as a side gig in addition to being an employee, perhaps with several W-2's. If this is the case, or if you're filing a joint return as a married couple, you might get away with quarterly taxes by increasing withholding for W-2(s). For example, if you previously claimed 2 exemptions on your employee job, reduce it to 1 or 0. Better safe than sorry, so put at least 15-25% of your earnings in a separate bank account (or don't spend that reserve) so you have money available when it's time to pay.
5. Expenses for training, seminars, and improving skills are deductible.
Many freelancers and solopreneurs are familiar with online courses. Conferences, seminars, and any work-related training can be deducted if certain requirements are met. Basically, it must be directly related to your industry (so if you're a freelance graphic designer, you can't deduct a course on reupholstering furniture).
6. Record and systematize
Setting up a system for recording your expenses and income will save you untold hours in re-reviewing everything over the past quarter or even, year. No only that, you'll be spending a large amount of time and money if you happen to be audited due to incomplete or inconsistent records. Hiring a bookkeeper to handle your paperwork can be a lifesaver in terms of wellbeing and allowing you to focus on your business.
For most small business owners, getting audited by the IRS is their biggest nightmare. However, just a small percentage of tax returns are actually audited. Are you at risk? Your chances of being audited depend on several factors, including your revenue, what you're deducting and claiming, the nature of your business and if you own foreign assets. To avoid an audit by IRS, take a look at these 5 commonly flagged issues.
1. Entry Errors
This may not seem fair, especially if it's an honest mistake, but if prepare a tax return that doesn't match up with the numbers the IRS has, this can put you at risk. If you're not comfortable and/or sure that you can accurately keep your books in order, outsourcing your bookkeeping is a wise move.
2. You forget to enter a form
From 1099 forms to W-2 forms and beyond, if you lose or forget to show the IRS that you've made money or paid money, they will know. This is especially important for business owners who may receive multiple forms of income from various sources.
3. Taking higher than usual deductions
If your return's deductions seem extremely large when compared with income, this could be a reason to audit. This also holds true for charitable deductions. But as long as you have documentation to back it up, you should be safe. It's important to keep every receipt and accurately record what expenses are used for.
4. Claiming a vehicle for 100% business use when no other vehicle is available
Most people aren't using a vehicle all the time for only business if they don't have another form of transportation. This can vary depending on your business, but be careful about buying a vehicle late in the year as a write-off and then stating that you'll use it 100% of the time for business purposes.
5. Your business is a sole-proprietorship which deals with cash
If you're frequently accepting and paying cash, the IRS can get concerned about skimming and other practices involved with not reporting all income. If your business looks more like a hobby, and you're claiming deductions for things that aren't legitimately business related, you are at risk for being audited.
The best way to avoid an audit by the IRS is, to be honest, report accurately, and don't try to sneak in unqualified expenses. If you think your business may be at risk, one of the best things you can do is hire a bookkeeper to accurately track, record, and prepare tax forms on your behalf. The team at The Bean Counters Bookkeeping hold accounting degrees and are well versed in how to handle business finances properly.