Tag Archives: tricks and tips

Who’s Managing Who? Lassoing The Runaways

Sooo, how do you keep your finances organized? Shall I expect your reply to include a sour look and an attempt to change the subject real fast? Many would rather be stuck in a huge traffic jam or go sit in the dentist’s chair rather than think about organizing their finances. But the truth is, if your costs, both business and personal, are running amok… then perhaps you might be throwing money to the wild, or down the drain.

Have you ever been surprised by that pesky late fee, then again, and again in rapid succession? Have you ever complained to the credit card companies that you never received the bill, only to find months later it had fallen behind the desk?

The cost of disorganization is not only financial, it can waste time and take a toll on our mood (and the unknowing around us). Consider how much replacing lost tools, recreating lost files, or time putting out fires costs your business. And there’s more… consider the losses involved with forgetting to send invoices to customers, paying for overtime labor and dealing with employee turnover. Disorganization costs money and could lead to measurable losses in profitability. It is time to stop the stampede, break in and bridle!

The good news is that it only takes 5 simple steps to help lasso in your business costs. You probably already have heard of that nasty “B” word, budgeting?

  1. Figure out your monthly net income (if it fluctuates, take the previous 12 months divided by 12 for the estimated monthly)
  2. Figure your monthly fixed expenses (rent, utilities, lease, insurance etc.)
  3. Figure variable expenses – commodities that don’t have a fixed price tag each month (office supplies, groceries, repairs and maintenance, meals and entertainment etc.)
  4. Figure a monthly contingency or reserve expense for the unexpected (trust me the unexpected is inevitable)
  5. Review the budget versus actuals monthly and fine tune your numbers

Your budget is a very useful tool to help plan for near and far range, and be able to go the distance. You might think you lack the time to organize your expenses, however, a few hours of organization with a professional accountant/bookkeeper, could spur you on towards being knee deep in clover sooner than later.

Make today be the day for changing horses. Decide to run free and keep up with the finances monthly yourself, contract a professional to saddle up on a regular basis, and/or occassionally opt for a bookkeeping/accounting audit to know that you are on the right track. The important thing is to corral the dark days.

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Does Math Really Count?

Guest Blog by Barbara J. Waite, Your Chief Priority Officer – Projects, Your Way

How many of you have had that experience in high school where you were wondering, “Now how in the world will math be useful to me in real life?” Well it wasn’t until I was asked to tutor a high school student on the fundamentals of algebra did I develop a real appreciation for the language of numbers. The real cool thing about this language is that it ties all humanity together… math is a universal phenomenon whether it is represented by the dollar, euro, yen or peso. As I began to ponder over this implication, I could clearly see how math is so immersed in our daily routine that our life would be chaotic without it! Here are a few examples of what I mean:

  • MATH HELPS US BUILD THINGS: Creating something that will last and add value to our home requires creativity, the right set of tools, and a broad range of mathematics. Having the ability to do minor home improvements will save a lot of money and headache. Armed with math, we will also have the ability to check the work and project estimates, ensuring we’re getting the best value.
  • MATH HELPS US BECOME GREAT CHEFS: More math can be found in the kitchen than anywhere else in the house. After all, recipes are really just mathematical problems or self-contained step-by-step sets of processes to be performed.
  • MATH HELPS US MANAGE OUR TIME: With only 1,440 minutes in a day, we really need help in prioritizing what we need to accomplish and thankfully, with the help of math, we can! By assigning each task a number and the higher the number, the more priority it receives. This mathematical to-do list allows us to dedicate yourself to the most important and time-sensitive tasks first.

And most importantly,

  • MATH HELPS US MANAGE OUR FINANCES: Experts agree that without strong math skills, people tend to invest, save, or spend money based on their emotions. Someone who thoroughly grasps the concepts of exponential growth and compound interest will be more inclined to better manage their finances.

These are but a few ways in which math helps us to make better daily decisions… not only in our personal lives but also our business, where the accounting system is the heart of the operation and the state of its health can mean success or failure. Simply put, math is about solving problems and it plays such an integral part in our daily activities both personally and professionally, it’s no wonder why our high school math teachers were so intent on teaching us this very valuable language skill.

If math makes you squirm or you just want a second opinion, consider an external Bookkeeper/Accountant Doctor for your finances.

Small Business Accounting Pitfalls

There are so many things to keep in mind when you own a small business. Details ranging from inventory to order fulfillment are just the baseline concerns. If you’re a brick and mortar business, your overhead includes a lease, utilities, and maybe additional employees. If you run an online business, your overhead includes the cost of parking your domain somewhere, maybe an email management system. Regardless of whatever kind of business you own, though, you will have to make sure your books are in order.

Keep it separated.

It’s true that you will spend money out-of-pocket to start your business. You’ll also most likely spend out-of-pocket to bolster up your business in the first few years. Until you start turning a profit, pretty much everything you have will go into the business.

In spite of what seems like an endless flow of your personal cash into supporting your business, though, you should still keep your personal finances and your business finances separate. Creating a separate business checking account is a good way to compartmentalize and organize your business. Not only is good accounting policy, it’s also a way to help you mentally compartmentalize and look at your business in a critical and objective way.

Anyone who starts a business has to have passion and drive. Without it, there’s little point to making all the necessary sacrifices. But the truth is, it’s just not enough to be passionate about your business idea. You have to be able to look at the business and make decisions as objectively as possible.

Keeping it as separate from your personal finances as possible is a solid first step towards helping yourself do this.

Pay attention to the kind of business credit you get.

Depending on the kind of business you started, you might need seed money to build inventory, or to float your overhead for the first few months — or longer. There are all kinds of options and all kinds of institutions that might be able to help you., from banks to credit unions to even crowd sourcing. Be sure you pick the one that’s right for you; and, if you can, at all costs, try to avoid seeding your business using a credit card. If you find yourself unable to pay it back, it could seriously hurt your chances to access other kinds of funding.

Keep it organized.

Disorganized record keeping is the death knell of small business. If you’re forward thinking enough, you already set how to organize and store your important records. But even if you didn’t think about that in the beginning, it’s not too late to start now. Take the time to go back through your records and organize them. Yes, it’s a pain. Yes, it takes time, which is a commodity that’s already in short supply. Yes, it means some headaches, depending on how long you’ve put off going through and organizing your records.

But it will be worth it. And, it’s also a good lesson for you that will have more good returns than bad.

Update your books on a regular basis… more than just monthly.

You are the heart and soul of your business. But your books are the blood and bones. Keeping your books up-to-date isn’t the sexiest way to spend an evening; but it will give you the confidence you need to make objective decisions.

It may seem like updating your books monthly would be enough, and it may well be enough for a well-established business. If you’re just starting out, however, the ebb and flow of your business isn’t all that stable. The more you put your eyes on your books, the better chances you have to succeed later. It’s not enough to keep your receipts. Add them in weekly, or even bi-weekly. Keep an eye on your receivables and sales. If your business has heavy overhead, it’s even more important that you update your books regularly.

Don’t confuse sales with profits.

You’ve made a few sales, satisfied a few clients, and gotten a few more. Good for you! But if you’re just starting out, be sure to remember that sales aren’t profits. You don’t get to call it profit until after you take out business expenses – if for no other reason than to take pressure off your personal pocketbook – and quarterly or annual taxes.

It’s good to be passionate and important to be excited about your business. But don’t start trying to roll around in profits before they actually start rolling in.

Don’t be afraid to consult a professional.

It’s okay to admit you’re over your head in certain aspects of your business. That doesn’t mean you have to throw in the towel. A smart business owner knows it’s important to sometimes find someone who knows a little more about some aspect of the business. Because in the end, owning a successful business is as much about learning and evolving as it is relying on common sense.

Last minute tax tips for small businesses

As the April 18th deadline for filing taxes looms on the horizon, you may be in the enviable position of having already filed your tax return. If you haven’t already filed, however, as a small business owner or entrepreneur you are probably working overtime to get it done. Depending on the kind and size of business you run, you might have a tax preparation professional do your taxes for you. But you may be just starting out and want to save the expense; if that’s the case – and even if it’s not – there are a few things to keep in mind.

1. Know what you owe

As a small business, you should probably be paying your taxes quarterly. These payments can be easy to forget, though, especially if you are a sole proprietor working in the creative economy or the gig economy.

If you did make your final quarterly payment on January 15th, make sure you take that into account when you file. Take the time to deduct any levies or account for any late fees and penalties the IRS may impose if you happened to miss a payment.

2. Accelerate or defer.

Many sole proprietors use cash basis accounting – which means they report income when payments are received. Depending on the kind of business you have, you might consider scheduling your billing so clients can pay early in the new year for work you completed late in the previous year.

The advantage to this is that you’re getting income early in the year.

However, if you had a successful year you could accelerate your deductible expenses. There are a few things you can do to help relieve your tax burden if you plan ahead, such as:

  1. making extra charitable donations,
  2. renewing professional journals and licenses before the year ends, or
  3. replacing old business equipment.

If you are in the position to, you might also consider

  1. prepaying your state income tax,
  2. selling an investment property at a loss, or
  3. selling securities at a loss.

If you’re a small business owner or entrepreneur, there’s nothing you can do about taxes. They are as much a part of your business as your customers or client base. The trick to making it all less odious, though, is to be proactive. Think ahead early in the year so the end of the year doesn’t hit you any harder than it needs to.