Tag Archives: small business

4 Easy Ways By Which Glitches In The Cash Flows Of Small Businesses Can Be Fixed

Businessmen who run small business usually worry over their cash flows not being positive even when their sales are running smoothly but somehow there is just not enough cash to make ends meet every month. The only possible cause behind this problem is that your customers are buying stuff from you on credit and they make late payments. But if this is not the case, then take a look at the 4 easy ways for fixing glitches in the cash flows of small businesses.

Don’t Slack When It Comes To Billing Clients

This is especially important if your business operates on credit payments. There is no way you can dilly-dally when it comes to sending out invoices to customers on time. Remember that if you do not send in the invoices immediately when the current month comes to a close, your customers won’t make payments on time which will eventually lead to problems in your cash flow statement. The best way to ensure timely payments from customers every month is to mail the invoice as soon as the job gets completed.

Increasing Prices When Needed

When starting a new business, small business owners have to sell out their products at ridiculously low prices in order to attract customers but by doing this, they barely make any profit. In fact, only the cost of the product is covered in the initial stages of establishing a business. Once you determine that the sales aspect of the business is going strong and customers keep coming in, it is time to increase the price of your product. However, it is important to raise the price gradually so that it does not bring a dry spell for the business in the coming weeks.

Get Hold Of Retainer Clients

Doing business is risky because sales are not guaranteed. There may be times when tons of customers will come barging in and then suddenly there will be days when the business won’t do as well as it should. If you are a lawyer or repair man offering services, you can easily battle the dry spell in doing business by getting hold of retainer clients so that you get fixed monthly payments for the services you render. Getting hold of retainer clients is undoubtedly the best way to tackle irregularities in the cash flows of your business.

Start Accepting Credit Cards

Last but not the least; you can fix your cash flows by accepting credit cards. Even though most small business owners prefer to operate their business on cash only, accepting credit cards is a great way to minimize the risk of receiving late payments. When running a business, it is important to facilitate customers as much as possible since people tend to stick to the businesses that they find convenient and flexible in terms of making payments. With credit cards, you can receive your pending payments within a day or two as compared to 30 days when customers are only asked to pay cash.

If you are having trouble with adjusting and balancing your accounts at the end of the month, contact SK Financial CPA to provide you with CFOs and CPAs on a contract basis to help you with book keeping.

How To Manage Debtors To Keep The Cash Flow Positive

Cash flow management is one of the most important aspects of a business that should never be taken for granted. If the cash flow management of a business is not smooth, it can face numerous financial and reputation-based issues, which just become more complex as the time goes by.

Big businesses that supply goods to their customers on credit mostly go through numerous debtor management issues, which can lead to financial issues for the business and a negative business cash flow.

Following are some tips for such businesses to effectively manage their debtors:

1- Adjust Accordingly

No client is the same. A business has a set of old clients that are trustworthy and new clients who cannot be trusted so much. Therefore, a business should keep the credit allowance and credit terms based on the type of customer it is dealing with.

Moreover, important information of all the clients asking for credit terms, whether they are new or old clients, should be sought which includes credit score, bank history, bank terms and financial transactions. All of this information should be evaluated before deciding the credit terms or thinking about allowing credit to the clients. If the financial information provided by the client seems too risky, the business can run a credit check on the client, just to be safe.

2- Make Everything Clear

While dealing with finances, businesses should not leave a room for doubt for the client. All the conditions should be well-communicated to avoid any future problems. Make sure that you give a precise due date of payment to the clients and stress it over so that it is taken very seriously.

If the payment is scheduled to be received after a few months, bi-monthly reminders should be sent to the client to assure that a thorough follow-up is in practice. Not notifying the client for a few months and then straight away calling them up for payment is a major mistake that most businesses make which results in delayed payments.

All the credit terms should also be well-understood by the client so that future scrutiny can be avoided.

3- Provide Numerous Methods

Businesses that provide their customers a vast range of payment options are more likely to get paid on time as it increases the ease of payment. Methods such as online banking and internet payment methods (for small payments) should be set-up so that the client can make the payment with absolute ease.

4- Installments

 Financial experts suggest that huge payments should be broken down into installments to ensure that timely payments are received and that the clients are not intimidated with paying a huge amount all in one go. This works best in keeping the cash flow positive and also decreases the financial risk in case the client defaults.

5- Default Cases

In cases of big payments, there is a higher chance that the debtors default in which a business can choose to hire a debt collection agency, if all the negotiations fail.

The 3 Most Effective Tax Planning Strategies for Small and Medium Scale Businesses

The prime focus of tax planning is to arrange one’s financial activities for the year in such a way so that the lowest possible amount for tax payment is incurred. Undoubtedly, the most difficult time for small and medium enterprise owners is the tax season in which they have to pay a taxable amount on all the income they’ve earned during the previous financial year.

Most business owners end up paying more than they should because they are not well aware of the legal tricks they can use to minimize their tax burden. But now, you can save up on taxes by following the three awesome tax burden reduction strategies mentioned in this blog.

Reduce Your Income

One of the key determining factors in figuring out the taxable amount is adjusted gross income also called AGI in short. Your tax rate and different tax credits also rely on AGI. Since the AGI play a vital role in the entire journey of determining and making tax payments accordingly, it is best to pick the adjusted gross income as the starting point of your tax planning process. If you are not sure what AGI exactly is, it is actually the entire income collected from all resources minus the adjustments made to the aggregate income.

Ideally, if your total income is high, your AGI will also follow the higher trend and if you make less income, your AGI for the year will decrease automatically. Therefore, the most effective method to minimize the tax load is to slash down your income. But how exactly can you reduce your income? The answer is pretty simple. Just set aside a large chunk of your income for your retirement plan by following the conventional IRA plan or 401k at work plan.

Boosting Your Tax Deductions

You can also smooth out your tax situation over all by focusing on your taxable income. Now the taxable income actually is the left over amount that is calculated once all the deductions and exemptions are cut off from AGI. Itemized deductions is what you should aim for in various categories such as interest on mortgage, charity, health care, tax planning and preparation expenses, local as well as state taxes and expenses linked to investments.

The best way to do this is to record all your itemized expenses incurred throughout the year in an excel spreadsheet and review it from time to time. By recording all these expenditures, you can easily compare your standard deduction with the itemized expenses incurred within the one year time frame. Remember to always consider the higher of your standard deduction or itemized deduction. When itemizing your expenses, make sure you pay more attention to three main categories; donations to charity, state taxes and interest on mortgage.

Using Tax Credits To Your Advantage

Once you have adjusted your taxable income to reduce your tax burden, the next step is to take full advantage of the tax credits. Some tax credits that can help in minimizing the taxable amount considerably are going to college, adopting a child or setting aside money for retirement.

SK Financial CPA is where you should get help from when filing for taxes by letting professional CPAs and CFAs give you advice on how to present your accounting statements for the year.

Effective Accounting and Payroll is Crucial for a Booming Business

Many of you might not exactly know the true essence of accounting and payroll, especially to those who are starting up a new business. An idea and a business plan are important to start a business and a strategy is paramount for building a business. However, no one has ever thought of accounting, which is the building block to a booming business.

Why is Accounting Important

Accounting provides entrepreneurs with a clear picture of the business, the rate of success and failure. Though entrepreneurs are not a fan of going through heaps of financial documents, though they are the most important and informative documents of a business. Effective record keeping is essential and helps keep owners informed of the expenses and revenues.

Owners also keep copious records for legal and tax purposes. Accounting is a collective term comprising of various types like cost, management, finance etc. Accounting helps focus on costs of running a business, which involves production and non-production costs, and management. For a new business, focusing on and managing costs is the key to success.

Payroll in Relation to Accounting

Another factor crucial to managing a business is payroll. It is a branch of accounting, which relates with production units, time or a fixed salary. It is the financial record of employees, their wages, salaries, net pay, bonuses and deductions. It is very important to pay your employees on time, no matter what size of amount is paid. Effective payroll calculations and timely transfer might not be as important to employer as it is to the employee.

Employers can also lose huge amounts if execution of the payroll process consists of errors. In small companies, an accountant will deal with all of the financial statements like, payroll, journals etc., whereas in large companies, different individuals are hired to perform different roles. A company’s payroll system influences the morale of its employees and motivates them to work harder especially if bonus payments or share options are linking to the basic pay.

Managing Payroll System

Managing payroll system is also important for tax deductions and lowering tax bills. Often companies use accounting and payroll software, who forget to ask themselves these important questions:

  • What are my ongoing annual costs, and what does it include?
  • Can I use the same software as my competitor?
  • Is the software compatible with others I use?
  • What are the limitations in functions offered by the software?
  • Is the support staff experienced enough to provide the technical support needed?
  • Is the software easy for everybody to use at my company?

Businesses spend a lot of time and money in searching for the right software. Integrating unsuitable software in the business system can be costly to replace and disrupt the day-to-day business functions. No software is compatible with every business and not all software covers every function of a specific business.

Outsourcing a business’s accounting and payroll functions is very common these days and effective results are achieved. Large firms often have their own accounts and payroll departments but outsourcing can help reduce costs and time spent, and a test run might help to lock in on your choice.

4 Myths Related To Securing Small Business Loans That Aren’t Really True

Struggling entrepreneurs often have to face great many difficulties in securing small business loans in order to kick start their new business venture. Small business loans are offered by banks as well as other lending institutions. Most business owners give up on their dreams of running their very own business because of the complicated procedures and other myths. This blog will bust the 5 biggest small business loan myths that most people believe in.

Securing a Small Business Loan Is Possible

Most people believe that securing a loan to set up a small business is next to impossible. But that’s not true. Yes, there are many complicated procedures that you will have to follow in order to have a loan successfully approved. With sound advice from small business loan lending experts, securing a small business loan is actually possible. However, it is necessary that the entire business plan is complete along with all the other necessary documents. Loan applications without submitting necessary documents are never entertained by banks and other lending institutions.

Perfect Credit Scores Are Not Necessary

Another myth that has shot down the hopes of many aspiring entrepreneurs is that a perfect credit score is mandatory when it comes to securing a small business loan. Bad credit is never favorable, but having perfect credit scores is not necessary either. Some banks still follow this rule rigidly but there are many lending institutions out there that have relaxed lending policies. Other lending institutions usually look at the performance of the business, cash flows and the type of industry other than credit scores.

Banks Are Not the Only Lending Resources Out There

Those who think that the only place to get a small business loan from is none other than a bank are completely wrong. Struggling entrepreneurs have successfully built their businesses by receiving loans from venture capitalists and angel investors. These are individuals who can very well afford to pool in some money in order to kick-start a new business. However, impressing such individuals is a completely different ball game and only a few can interest them in lending money for a new business setup. Crowd funding is another popular method used to raise funds for upcoming business ventures these days and it is definitely worth a try.

Large Sums of Money Are Never Granted As Loans

This is perhaps the worst hasty generalization you will ever come across regarding securing small business loans. Banks provide loans of various amounts to its customers depending upon their credibility and needs. The best advice one can follow when applying for a business loan is to apply for a loan with an amount that you need to kick start a business; nothing more or less. So if you are thinking that applying for a six figure loan will cloud your chances of securing a loan, you are probably wrong. Loans of bigger denominations are also granted if the business plan is solid.

For all your bookkeeping needs, SK Financial CPA in Tampa is the one firm you should definitely call. The reason why small businesses should contact SK Financial CPA is that accounting services from expert CFOs and CPAs can be availed on contract basis depending on the kind of work.

Human Resource and Performance Appraisal

Performance appraisal is the evaluation of the employees, based on their work done, to assess their future potential and reward them for their work. Performance appraisal usually creates friction between employees and human resource departments because the employees feel judged by the HR managers. This behavior defeats the entire purpose of performance appraisal and if your employees feel resentment towards it, then it means you are doing something wrong.

The main aim of performance appraisal is the development of the employee as a worker. It should be more of an act of constructive criticism than a form of condemnation and punishment.

Clarify the Purpose

The first thing that HR managers should do as part of the performance appraisal is to clarify the employees about the main aim of it. They should clearly convey that the appraisal is going to be done so that feedback could be provided on how the employees can improve their work and can be rewarded accordingly. Moreover, employees should know well beforehand about the criteria along which they will be judged so that they can work accordingly.

Avoid Formal Appraisal Process

The appraisal process should not be very formal either. A formal appraisal process reflects itself as a judgment rather than an improvisation process. Also, an employee should be appraised not only by the ultimate seniors and the HR department but also by their immediate seniors, team members and juniors. This provides an overall assessment of the employee as a worker of the organization. This also ensures that the employee is not only a good subordinate but also a good leader and a co-worker.

Assessment Based on Achievements

Yet another good way of conducting performance appraisals is assessing on the basis of the achievement of objectives. This method is more appropriate for modern times, where innovation and creativity hold more value than following a set of commands. In this method, the employee should be assessed on the basis of how well he or she achieved the objective of the task, how productive they were and how they managed to use the set amount of resources. This allows the employee to really shine through using their set of strengths rather than being forced to do the usual. This also allows the organization as a whole to achieve productivity and innovation.

Encouragement is Better than Criticism

Where, an appraisal resulting in a good evaluation of an employee should be rewarded with appropriate awards and benefits, a bad appraisal result should not be heavily criticized. If you feel that a particular employee failed to prove himself, criticizing him and punishing him is not the right way to do. Instead, you should offer them training and guidance opportunities where they can learn about their strengths and can improve where they lack behind. Being harsh and passing on destructive criticism will not only demotivate the employee but will also create an aura of fear in other employees as well.

Performance appraisal is a sensitive task. It can make or break your business’s entire human resource. The way it is being conducted in the past has given it a negative image of a way to punish and criticize employees rather than an opportunity to improvise.

2013 Year End Update:

2013 was a great year! Here some highlights:

Our Payroll Service: 

One of our client saved more then $100,000 in payroll processing fees by switching to our payroll service.

 If you are using ADP or Paychex or a payroll leasing company for your payroll processing, we can lower your fees by up to 75%.

With our online payroll Service you can:

 1.  Electronically transfer your payroll into your accounting software (QuicKBooks, Peachtree, etc).

2. Automatically allocated payroll to different classes (locations, departments, jobs) in your accounting software.

3. Keep tract of vacation and sick days accruals through our payroll service.

4. Employees have online access to their pay stubs.

If you want to use our payroll service for next year, call us as soon as possible so that we can set you up for the service.

 Please paste the link below into your browser to see a brief demo of our payroll services.

http://www.managepayroll.com/demo/FlashDemo/ACClientFlashDemo.html

 We Welcome Referrals:

 Did you know we can help you or any of your friends, family or acquaintances save time and money with their financial records? Not only is it nice for us to receive your referrals, we LOVE to reward our clients for referrals…!

 Just so you know, we have policy that if an existing client refers two or more new clients, we will reduce your fee by 10% and then progressively higher. Although some existing clients do not want a reduction, we still make it available.

 Year End Business and Individual Tax & Financial Planning Meeting:

 As we are in the last quarter of the year, we would like to schedule a meeting either on phone or in person to discuss year end tax & financial planning opportunities for you and your business. Call or email us to schedule a meeting today.

 Call or email us to schedule a meeting with our Financial Planner today.

 If you want us to look at your investment portfolio, we will be more then happy to do that. It is the best time to have an investment strategy with proper asset allocation  to reduce your investment risks and to maximize your returns. Call or email us to schedule a meeting today.

 In the free one hour meeting with the Financial Planner will cover the following 10 items:

1. Income Tax Planning & Strategies

2. Investing in stocks, bonds, & Mutual funds, Annuities, Oil & Gas programs

3. Investing in Real Estate (in and outside retirement account)

4. Retirement Planning (IRA’s, 401(K) etc)

5. Education planning for children & grandchildren

6. Asset Protection

7. Estate Planning (Need for wills & Trusts)

8. Long Term Care

9. Insurance Planning

10. Business Planning

Free Business Check-Up

 We are so convinced in our superior approach that we invite all prospective clients to come visit our offices and undergo our free no-obligation “check-up” of your business or individual health. We certainly believe that knowledge has a liberating power and sometimes even knowing what the possibilities are, can lead to meaningful change in your personal or business financial health.

We encourage you to call us and make an appointment and see for yourself the difference a perspective can make.

 

Follow SK Financial on Twitter & Friend us on Facebook

Keep up with us as we continually extend and improve our services and publish useful tax and financial planning information on our blog.  We’re now using Twitter and Facebook to connect with our customers, it’s a fun and easy way to stay abreast of the constant changes in our business.  Watch our blog for future updates as we discuss how you can deploy these social media tools to grow your business.