Small Business Owners: Accounting Is for Profit Planning, Not Just Tax Preparation

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One might be led to believe that profit is the main objective in a business but in reality it is the cash flowing in and out of a business which keeps the doors open. The concept of profit is somewhat narrow and only looks at expenses and income at a certain point in time. Cash flow, on the other hand, is more dynamic in the sense that it is concerned with the movement of money in and out of a business. It is concerned with the time at which the movement of the money takes place. Profits do not necessarily coincide with their associated cash inflows and outflows. The net result is that cash receipts often lag cash payments and while profits may be reported, the business may experience a short-term cash shortage. For this reason, it is essential to forecast cash flows as well as project likely profits. In these terms, it is important to know how to convert your accrual profit to your cash flow profit. You need to be able to maintain enough cash on hand to run the business, but not so much as to forfeit possible earnings from other uses.Why accounting is neededHelp you to operate better as a business owner

Make timely decisions

Know when to hire a team of employees

Know how to price your products

Know how to label your expense items

Helps you to determine whether to expand or not

Helps with operations projected costs

Stop Fraud and Theft

Control the biggest problem is internal theft

Reconcile your books and inventory control of equipment

Raising Capital (help you to explain financials to stakeholders)

Loans

Investors

What are the Best Practices in Accounting for Small Businesses to address your common ‘pain points’?

Hire or consult with CPA or accountant

What is the best way and how often to contact

What experience do you have in my industry?

Identify what is my break-even point?

Can the accountant assess the overall value of my business

Can you help me grow my business with profit planning techniques

How can you help me to prepare for tax season

What are some special considerations for my particular industry?

To succeed, your company must be profitable. All your business objectives boil down to this one simple fact. But turning a profit is easier said than done. In order to boost your bottom line, you need to know what’s going on financially at all times. You also need to be committed to tracking and understanding your KPIs.What are the common Profitability Metrics to Track in Business — key performance indicators (KPI)Whether you decide to hire an expert or do it yourself, there are some metrics that you should absolutely need to keep tabs on at all times:

Outstanding Accounts Payable: Outstanding accounts payable (A/P) shows the balance of cash you currently owe to your suppliers.

Average Cash Burn: Average cash burn is the rate at which your business’ cash balance is going down on average each month over a specified time period. A negative burn is a good sign because it indicates your business is generating cash and growing its cash reserves.

Cash Runaway: If your business is operating at a loss, cash runway helps you estimate how many months you can continue before your business exhausts its cash reserves. Similar to your cash burn, a negative runway is a good sign that your business is growing its cash reserves.

Gross Margin: Gross margin is a percentage that demonstrates the total revenue of your business after subtracting the costs associated with creating and selling your business’ products. It is a helpful metric to identify how your revenue compares to your costs, allowing you to make changes accordingly.

Customer Acquisition Cost: By knowing how much you spend on average to acquire a new customer, you can tell exactly how many customers you need to generate a profit.

Customer Lifetime Value: You need to know your LTV so that you can predict your future revenues and estimate the total number of customers you need to grow your profits.

Break-Even Point:How much do I need to generate in sales for my company to make a profit?Knowing this number will show you what you need to do to turn a profit (e.g., acquire more customers, increase prices, or lower operating expenses).

Net Profit: This is the single most important number you need to know for your business to be a financial success. If you aren’t making a profit, your company isn’t going to survive for long.

Total revenues comparison with last year/last month. By tracking and comparing your total revenues over time, you’ll be able to make sound business decisions and set better financial goals.

Average revenue per employee. It’s important to know this number so that you can set realistic productivity goals and recognize ways to streamline your business operations.

The following checklist lays out a recommended timeline to take care of the accounting functions that will keep you attuned to the operations of your business and streamline your tax preparation. The accuracy and timeliness of the numbers entered will affect the key performance indicators that drive business decisions that need to be made, on a daily, monthly and annual basis towards profits.Daily Accounting Tasks

Review your daily Cash flow position so you don’t ‘grow broke’.

Since cash is the fuel for your business, you never want to be running near empty. Start your day by checking how much cash you have on hand.Weekly Accounting Tasks2. Record TransactionsRecord each transaction (billing customers, receiving cash from customers, paying vendors, etc.) in the proper account daily or weekly, depending on volume. Although recording transactions manually or in Excel sheets is acceptable, it is probably easier to use accounting software like QuickBooks. The benefits and control far outweigh the cost.3. Document and File ReceiptsKeep copies of all invoices sent, all cash receipts (cash, check and credit card deposits) and all cash payments (cash, check, credit card statements, etc.).Start a vendors file, sorted alphabetically, (Sears under “S”, CVS under “C,”etc.) for easy access. Create a payroll file sorted by payroll date and a bank statement file sorted by month. A common habit is to toss all paper receipts into a box and try to decipher them at tax time, but unless you have a small volume of transactions, it’s better to have separate files for assorted receipts kept organized as they come in. Many accounting software systems let you scan paper receipts and avoid physical files altogether4. Review Unpaid Bills from VendorsEvery business should have an “unpaid vendors” folder. Keep a record of each of your vendors that includes billing dates, amounts due and payment due date. If vendors offer discounts for early payment, you may want to take advantage of that if you have the cash available.5. Pay Vendors, Sign ChecksTrack your accounts payable and have funds earmarked to pay your suppliers on time to avoid any late fees and maintain favorable relationships with them. If you are able to extend payment dates to net 60 or net 90, the better. Whether you make payments online or drop a check in the mail, keep copies of invoices sent and received using accounting software.6. Prepare and Send InvoicesBe sure to include payment terms. Most invoices are due within 30 days, noted as “Net 30″ at the bottom of your invoice. Without a due date, you will have more trouble forecasting revenue for the month. To make sure you get paid on time, always use an invoice form that contains the right details such as payment terms, itemized charges, and your payment address.7. Review Projected Cash FlowManaging your cash flow is critical, especially in the first year of your business. Forecasting how much cash you will need in the coming weeks/months will help you reserve enough money to pay bills, including your employees and suppliers. Plus, you can make more informed business decisions about how to spend it.All you need is a simple statement showing your current cash position, expected cash receipts during the next week/month and expected cash payments during the next week/month.8. Executive Dashboard (weekly review)This dashboard gives you a ‘snapshot’ of your operations on a weekly basis.It consist of Cash on Hand, Cash burn rate, Account Receivables, Accounts Payable, Items sold, Inventory on Hand, inventory turns, outstanding issues in the business, and gross profit margin, new sales wins, customer losses, customer service performance, on time delivery rate and product quality performance.Monthly Accounting Tasks9. Balance Your Business CheckbookJust as you reconcile your personal checking account, you need to know that your cash business transaction entries are accurate each month and that you are working with the correct cash position. Reconciling your cash makes it easier to discover and correct any errors or omissions-by you or by the bank-in time to correct them.10. Review Past-Due (“Aged”) ReceivablesBe sure to include an “aging” column to separate “open invoices” with the number of days a bill is past due. This gives you a quick view of outstanding customer payments. The beginning of the month is a good time to send out overdue reminder statements to customers, clients and anyone else who owes you money.At the end of your fiscal year, you will be looking at this account again to determine what receivables you will need to send to collections or write off for a deduction11. Analyze Inventory StatusIf you have inventory, set aside time to reorder products that sell quickly and identify others that are moving slowly and may have to be marked down or, ultimately, written off. By checking regularly (and comparing to prior months’ numbers), it’s easier to make adjustments so you are neither short nor overloaded.12. Process or Review Payroll and Approve Tax PaymentsWhile you have an established schedule to pay your employees (usually semi-monthly), you need to meet payroll tax requirements based on federal, state and local laws at different times, so be sure to withhold, report and deposit the applicable income tax, social security, Medicare and disability taxes to the appropriate agencies on the required dates.Review the payroll summary before payments are disbursed to avoid having to make corrections during the next payroll period. A payroll service provider can do all this to save you time and ensure accuracy at a reasonable cost.13. Review Actual Profit and Loss vs. Budget and vs. Prior YearsEach month, take the time to review your budgeted expenses and compare them to what you have actually spent. Are you spending above or below budget? Discuss the variances and take action as neededYour profit and loss statement (also known as an income statement), both for the current month and year to date, tells you how much you earned and how much you spent. Measure it against your budget every month (or quarter). Comparing your actual numbers to your planned numbers highlights where you may be spending too much or not enough, so that you can make changes.If you have not prepared a budget, compare your current year-to-date P&L with the same prior-period year-to-date P&L to identify variances and make adjustments.14. Review Month-End Balance Sheet vs. Prior PeriodBy comparing your balance sheet at one date-June 30, 2015, for example-to a balance sheet from an earlier date (December 31, 2014), you get a picture of how you are managing assets and liabilities. The key is to look for what is significantly up and/or down and understand why. For example, if your accounts receivable are up, is it due to increased recent sales or because of slower payments from customers?Quarterly Accounting Tasks15. Prepare/Review Revised Annual P&L EstimateIt’s time to evaluate how much money you are actually making, whether your net assets are going up or down, the difference between revenues and expenses, what caused those changes, how you are spending profits, as well as identifying trouble spots, and making adjustments to improve sales and margins.16. Review Quarterly Payroll Reports and Make PaymentsYou have been reviewing your semi-monthly payroll reports. However, the IRS and most states require quarterly payroll reports and any remaining quarterly payments. Again, it’s best if your payroll service provider completes these reports and files them. Your job is to review to make sure they appear reasonable.17. Review Sales Tax and Make Quarterly PaymentsIf your company operates in a state that requires sales tax, make sure you comply to avoid serious penalties. The U.S. Small Business Administration (SBA) can help you determine your state tax obligations.18. Compute Estimated Income Tax and Make PaymentThe IRS and states that have income taxes require you to pay estimated income taxes. Review your year-to-date P&L to see if you owe any estimated taxes for that quarter. Your tax accountant can assist if necessary.Annual Accounting Tasks19. Review Past-Due ReceivablesNow it’s time to check significant past due receivables and decide whether you think customers will eventually pay, whether to send past due bills to a collection agency or whether to write them off for a deduction.20. Review Your InventoryReview your current inventory to determine the value of items not sold. Any write-down of inventory translates to a deduction on your year-end taxes. If you do not write down unsellable inventory, you are overstating your inventory balance and paying additional taxes that you don’t owe.21. Fill out IRS Forms W-2 and 1099-MISCThe IRS has a January 31 deadline that requires you to report the annual earnings of your full-time employees (W-2s) and most independent contractors (1099s). This deadline includes mailing copies of the tax forms to the people who worked for you. Note: A 1099 form is not required for any contractors who earned less than $600. Consider saving time and avoiding errors with an e-filing service.22. Review full-year financial reports for tax reporting

Get organized

Collect and store important documents (use apps and calendars for help)

Create email folders to store bank statement and receipts

Store contracts and agreements

Track miles and vehicle expenses

Store all required documents for your business type.

Tax Preparation

Tax preparation is a historical view and not a profit planning event

Capture all relevant events

Identify all deduction categories

Capture all meals

Meetings —-whatever was discussed/calendar

Try not to go over industry average industry cost for meals.

At tax time, carefully review your company’s full-year financial reports before giving them to your accountant. Before you sign your return, be sure to review it for accuracy based on your full-year financial reports. Remember if IRS audits due to underpayment, they will deal with you not your accountant for any additional taxes, penalty and interest.If you don’t have the bandwidth to do all this yourself, a great strategy is to partner with a monthly accounting service. Outsourcing your accounting to an expert will simplify your life and give you more time to focus on running your business operations.A monthly accountant will provide you with a profit and loss sheet, balance statement, and accurate account reconciliation every month, ensuring that you have the financial information you need to make the best choices for your company.

Finding The Best Furniture For You: Domain Furniture and Mirrored Furniture

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Those searching for home furnishings may wish to consider choosing pieces that have a distinct period feel to them, as this is an ideal way in which to ensure that one’s furniture will have its own original attractiveness, different from that seen in other homes. Regardless of one’s personal taste, the addition of mirrored furniture to a home is an excellent way in which to use the home’s space to its best advantage.Going Mod with Mirrored FurnitureCurrently experiencing an increase in popularity in the home interiors market, mirrored furniture is a great choice when one wishes to make his or her home truly unique. Such furniture is also an excellent way in which a feeling of spaciousness can be added to the room. Whether one chooses mirrored consoles or dressing tables, he or she will find that such items fit well into any room’s decor.In order to make certain that one’s home will still look modern even when vintage pieces are used, he or she should choose neutral, rather than bright colors. In this way a seamless look can be created through the blending of both old and new pieces.Distressed Furniture–Decorating Shabby ChicAnother popular trend in home decor is the look of shabby chic. Pieces that fit into this category have a worn and aged look and the colors and shapes are often reflective of the past. This result of this look is a welcoming and informal appearance that both the homeowner and his or her visitors will enjoy.The addition of regency furniture is a nice way in which this look can be updated, and since classic furniture never go out of style, there are many options from which one can choose when selecting these types of pieces.Incorporating furniture styles from various periods into a modern home is a great way to add a personal touch and a unique flair to any room in one’s home. If a person finds that he or she cannot afford new furniture or authentic antiques, contemporary reproductions are a great cost-effective alternative.Domain furniture is a popular retailer that has been in business since nineteen eighty-two. It is now at the top of the market, since it sells various styles in both commercial and personal. New, stylish designs in every price range can be found at both outlets and retail stores. You also have the option of choosing between simple and extravagant. You can even get personal designs made to suit your space and budget requirements. Whatever your needs, whether commercial or personal, Domain furniture offers something for you.Sun-Room FurnishingsSun rooms are common in the south, but are rapidly becoming more so everywhere else. Domain offers such a wide variety of styles, colors, and prices that each and every buyer is sure to find something appropriate to them. There are material options which include wrought iron, raw wood, panacea and timber. Wicker is also a popular choice in indoor/outdoor furniture. Along with the choice in material, the buyer has options on how, and where, to buy. Besides going to a retail store, there are outlets that offer domain furniture. If your tastes run further from stores, you can also go onto their website or order from a catalog. domain produces sunroom furniture that is durable, reliable, and beautiful. You are sure to find the perfect balance between functionality and art.ExclusiveIf you desire something more unique than you can easily get at a store, domain offers exclusive furniture. For some, the option of designing their own furniture outweighs the slightly higher price that goes with it. If space is an issue, you can find people to help you choose furniture that will fit perfectly inside the space you have available. Domain offers full service help along with the do-it-yourself way.

Health Supplements-Growing Demand and Credibility

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A growing number of consumers are turning to health supplements as an alternative or addition to mainstream medicine. Today’s consumers are savvy and understand the benefits of the ingredients found in health supplements for good health and well-being. While they are apprehensive of nutritional products, they value brands that offer manufacturing credibility and prefer products formulated under doctor supervision.As more consumers place priority on their health, health supplements are fast becoming a popular choice.This focus is reflected in the booming growth of the U.S. dietary supplement market, presently estimated to be valued at $24-25 billion. In spite of prevailing doubts about the integrity of health supplement manufacturers, the rising cost of raw materials and new regulations, the health supplement industry is projected to rise by 4-6% in the next year. By the year 2010 growth in the global nutraceuticals industry is projected to reach $187 billion.According to NMI’s 2007 Health & Wellness Trends Survey, the top health categories for supplements are weight loss, cardiovascular support, digestion, arthritis or joint pain relief, seasonal allergy relief, vision and eye health, and diabetes.”Customers believe in the industry. A recent study found that 34% of consumers looking to lose weight first turn to a dietary supplement as their adjunct in the battle against obesity,” says Douglas S. Kalman, director of nutrition and applied clinical research at Miami Research Associates and chair of the Nutrition in Complementary Care Dietetic Practice Group (NCC-DPG).According to an annual survey conducted by Ipsos-Public Affairs for the Council for Responsible Nutrition (CRN), Washington, D.C. “Consumers’ use of dietary supplements remained fairly consistent in 2007, with 68% of American adults saying that they take dietary supplements.”Consider these statistics by the Office of Dietary Supplements:* 31.8% of American children use dietary supplements (18 and younger).* 47% of American men use dietary supplements.* 57% of American women use dietary supplements.The most commonly used dietary supplements are multivitamins and minerals (18.3%). A recent study conducted by the NCAAM, shows a list of why people use dietary supplements, the most common reasons are general health, arthritis, memory improvement, to prevent osteoporosis, for energy, recommended by physician, friend, family or through media, for immune health, to prevent colds/influenza, and as sleep aids.Health supplements most commonly purchased are:* 40% vitamins* 29% herbals & botanicals (ginkgo, echinacea, St. John’s Wort, ginseng, garlic)* 10% sports nutrition* 8% minerals* 8% specialty supplements (melatonin, fish oil, amino acids, etc.)(www.snac.ucla.edu)The top supplements used by consumers in 2007, in order of frequency are multivitamins, calcium, vitamin C, fish oil, vitamin E, antioxidants, vitamin B/B complex and omega 3s. (NMI survey).Why are Health Supplements Gaining Credibility?There are more than 20,000 products on the market. Many consumers believe that health supplements can support their bodies to fight disease or improve health. Exactly why are health supplements gaining credibility?One of the reasons is the advances in science and technology. Most credible health supplement manufacturers use strict manufacturing policies combined with a professional team of researchers who develop products based on evidence based scientific research.Through clinical studies and systematic reviews scientist evaluate the health benefits and safety risks of health supplements. This has built consumer confidence.An example of this is omega-3 fatty acid supplementation. There is strong evidence from epidemiologic and clinical trials indicating the consumption of omega-3 fatty acid as being beneficial to people who are at risk of coronary heart disease. The American Heart Association validates this: “Omega-3 fatty acids benefit the heart of healthy people, and those at high risk of – or who have – cardiovascular disease”Consumer interest in health supplements is now reinforced by doctors and healthcare professionals.A report from CRN’s Healthcare Professionals Impact Study states that “more than three-quarters of U.S. physicians (79%) and nurses (82%) recommend dietary supplements to their patients.” As dietary supplements receive more support from clinical trials, there will be a rise in the number of recommendations of health supplements by healthcare professionals to their patients.Another factor which will boost future sales is the recent finalization of U.S. Good Manufacturing Practices (GMPs) rules and requirements for the manufacture of dietary supplements and the new Adverse Event Reporting (AER) law. “The burden of compliance is really key for consumer confidence,” says Daniel Fabricant, vice president of scientific affairs, Natural Products Association (NPA), Washington, D.C. Health supplements are the future in preventive medicine. With DNA diagnostics becoming more common, and the role of nutrition against disease gaining surer footing, the health supplement industry is poised to meet the challenges of the future health industry.

Automotive AC Machines

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As any mechanic knows, the ability to offer a comprehensive service to customers, being able to offer repairs and care for all aspects of a motor vehicle maintenance program is key to being able to retain customers. Air Conditioning is more or less standard across all models these days, and while in the past, AC maintenance was a highly skilled and niche market, it is now an essential side of the business and key to any workshop’s continued success.In order to ensure that refrigerant is recovered properly from a car’s air conditioning system during servicing, a workshop must use an automotive AC machine. These devices prevent the release through venting of CFC gases. EPA guidelines require that when a car is being serviced, the Freon, or CFC12 that is used as the coolant should be collected and recycled in order that it is not released into the environment where it can potentially damage the ozone layer.The refrigerant used in most motor vehicle air conditioning systems is based on chlorofluorocarbons, which have been linked with causing damage to the ozone layer, and as such, the control of these substances is of particular concern to the environmental protection agency. Whenever a car air conditioning system undergoes maintenance, proper care must be taken to protect the environment from the release of CFCs, and this is best done by using automotive AC Machines.By reusing Freon gas rather than allowing it to be vented into the atmosphere, the environment is protected. However, when the refrigerant is collected from a car’s air conditioning it can be contaminated with water, oil and any of the other liquids that are used in cars. By using automotive AC machines, it is possible to process the refrigerant and remove any of the other fluids from it, allowing it to be reused, either in the same system as it has been drained from, or alternatively, in another car altogether.There are a whole range of different refrigerant recovery machines on the market to suit all types of workshop, from small operations through to large commercial garages that deal with many different types of car, and need to be able to offer a complete service to clients.Choosing the right automotive AC machines for your needs can be a daunting task, and too many people simply opt for the cheapest model available, rather than making an informed decision about the best product for their needs. EPA requirements aside, the most important factor when choosing the correct automotive AC machine for your business, is the capacity of the machine to deal with the range of vehicles that you currently work on. You need to choose a machine that can connect easily with all the different types of car that your workshop deals with, and which has enough capacity to recover and treat the refrigerant left in the system to remove any impurities.Basic automotive AC machines such as the Pro Set Oiless Portable Recovery Recycle Unit are flexible enough to reprocess coolant from a fairly wide range of sources, remove any contaminating oils and other liquids, and release the Freon in perfect condition for reuse.There are other machines in a similar price bracket that are reliable enough for every day use, and yet still compact enough not to require a vast amount of space in your workshop. Automotive AC Machines such as the Inficon Vortex refrigerant recovery machine are ideally suited to occasional use, and are very compact.If offering AC repairs and servicing is key to your business, then having the right tools for the job is essential. Getting it right at the beginning when you choose an AC coolant recovery machine often means choosing a model from the Cool Tech range. These robust and highly regarded specialist tools are at the centre of any serious AC shop, and thanks to their efficiency and great value for money, will pay for themselves over and over again.