Acountingways.com

02/26/2023

Bookkeeping Bytes By Alexbookkeeping shows you how to add a product or service in Waveapps. https://youtu.be/t2y0BV4_jKg

Bookkeeping Bytes By Alexbookkeeping shows you how to add a product or service in Waveapps. ...

02/14/2023

05/31/2022

People ask me all the time what the differenceis between a bookkeeper and an accountant. This infographic best explains it. https://acountingways.com/bookkeeping

05/25/2022

WHICH ACCOUNTING SYSTEM IS BETTER FOR YOU, CASH OR ACCRUAL?

When you start a business, there are several decisions you need to make. One of them is Cash or accrual system for your accounting. How do you know which one is right for you? I will show you the pro’s and con’s of each system.

What is Cash Accounting System and How Does It Work?

When you use the cash system, you only record the transaction when cash exchanges hands. So you’ll record income when you receive a payment through cash, card or check. The same for expenses, once you pay a bill you record it. Cash accounting is better for small businesses especially if they have little or no debt. Drop shippers, some lawn services and cleaning services.

The Pro’s are:

1. Easy to use

2. Exists in the present

3. Potential tax advantage

The Con’s are:

1. Doesn’t show the full picture

2. Restricted use

3. Potentially difficult to switch over

What is Accrual Accounting System and How Does It Work?

It is better for more complicated businesses or businesses who sell or purchase on credit, such as car dealerships and appliance stores.

Which Accounting Method Should You Choose?

Most businesses use accrual method of accounting, since most businesses sell or purchase on credit. If you sell or purchase on credit too, you should also use the accrual method of accounting. If you only deal in cash sales, you should use cash accounting system to record your business consulting services.

When you file for business tax returns for the first time, the IRS requires you to mention the type of accounting method you use in your small business. Make sure you’re clear about the type of system you want to use and follow the good practices to smoothly maintain your accounts.

The Pro’s are: Of Accrual Accounting

1. Realize True Profit

2. Easy Forecasting Future expenses and revenues are taken into account with accrual which makes for simple business planning. Creating budgets from these predictable sales and expenses allows companies to be the most efficient when it comes to proper staffing and maintaining a sufficient inventory of goods. Staying ahead of future business financials is a key benefit with accrual accounting.

3. Tax Expenses Can be Accounted for Immediately

The Cons are

1. Cash Flow Uncertainties

2. Difficult Calculations

https://acountingways.com/bookkeeping

05/24/2022

5 Must-Have Money Management Apps for Small Business Owners

Do you need help with your financial situation? Here are 5 Apps that help you with that.

The five apps that can make you a more financially-savvy business owner:

Waveapps Invoicing

This create and manages your invoices on the go. It makes it easier for you to be the sales rep at the same time as being the business owner, especially if you are out on the field with a customer. You can make edits to invoices and even collect payments and collect payments. DM me if you need a free lesson on how to set it up.

Financial Calculators by BishiNews.

Raising financing is just a part of life as a business owner. Sometimes, you need to get financing in a hurry. In that rush, you may not actually take the time to fully understand the terms of the loan. This top ranked financial calculators app deals with both present value and future value of money. It has the following calculators: TVM Calculator, Currency Converter, Loan Calculator, Compound Interest Calculator, Retirement/401k Calculator, Credit Card Pay Off Calculator, Tip Calculator, Annual Percentage Rate (APR) Calculator, Return on Investment (ROI) Calculatorand Auto Loan/Lease calculator.

All Currency converter

As many drop-shippers do, they deal with many different countries and different suppliers. So it is hard to get an accurate price for the goods they are selling and for them to cover costs and make a profit. This app gives you live exchange rates for most currencies.

Expensify

With Expensify, you simply take a picture of your business receipt. The app then turns the picture into an easy-to-read expense report. With the push of the button, you or your team can then submit the report to your accounting team. It’s free to use for individuals and $5 per month per user for businesses. However, businesses get two free accounts to start and are only charged for additional accounts if the app is actually used. That means that if you have a salesperson that doesn’t submit a report in one month, you don’t have to pay for their subscription.

Hubstaff

Hubstaff is a time tracking app that has a wide range of features that make it an incredibly useful tool beyond measuring your team’s productivity. It shows you not only the total number of hours your team has tracked, but also how much you’re spending on each team member, project, and client.

application to manage project budgets

With its project budgeting feature, you can see a detailed overview of your team’s active projects, who’s working on what, and how much you’ve spent so far. You will be notified as budgets are approached so you can make adjustments as needed.

Hubstaff has a payroll feature that automates sending payments to your team. The app can calculate the amount based on your team members’ pay rates and total hours worked, or you can manually send fixed amounts. https://acountingways.com/bookkeeping

05/20/2022

Part 5 of my 5 part series on maximizing profits. Identify ALL of your costs to open and operate your company for 12 solid months in a written organized manner.
Set a reasonable salary for you (and your spouse or partner)
Establish an appropriate benefits package for YOU (and your employees if you like)
Discover the correct hourly rates for the type of jobs you sell
Correctly set the hourly rates for each and every piece of equipment you own, lease or rent.
Teach you how to apply fat, juicy profits to each and every job you bid.
Project the exact amount of money you need to retire comfortably at the time you choose.
Reduce the chances that you over-price your bids, quotes or proposals on every job that you pursue.
Clearly establish your 12-month sales goal that will help you meet your personal income goals once and for all.
Set a clear profit goal for your company.
Identify the bad jobs and avoid them like poison ivy in the summer time.
Protect you from over-paying taxes and making poor business decisions.
Improve your insurance plans and LOWER the costs of your commercial insurance policies.
This is why having a good bookkeper os so important.

We will help you manage operations by recommending process improvements and introduce tools that can save you time and money

05/19/2022

Part 4 using a Cash back debit card.

All small business owners want to boost their bottom line. One simple way to do this is by changing the payment method you use for expenses.

Choosing a debit card that earns rewards is essential for scaling small businesses. Selecting a card with cashback rewards can add to your bottom line as you invest in your company.

You might see these advertisements and recognize the value of a cash-back debit card. You might even use one in your personal life. Many small business owners do not connect the benefits of a cash-back card to their business.

Cash-back debit cards for businesses pay you back a percentage of the money you spend on business-related expenses. This includes expenditures on supplies for the office, gas and accommodations for business-related travel, vendor services and more.

The amount of cashback varies by card. Most companies offer a cash-back rate ranging from 1.5 percent to 5 percent. Such a refund might seem small, but the money you receive adds up when you consider how much you spend on your business.

Recouping money from a cash-back program directly offsets a portion of the money you spend on your business. This is money that goes straight to your bottom line without requiring extra work or expenditures on your part.

I use Privacy cards, they allow me to not only get 1% back on all my purchases, they allow me to have one card for one expense. Say your you spend a $300 a week in gas. Now $1.50 a week doesn’t sound like much, but when you add up the $3 x 52 = 156 and you add up insurance, vehicle payments and payment on equipment. You have a nice chunk of change. Then invest that money in series I bonds paying about 9%.

Small businesses have a number of choices for credit cards with cash-back programs that are specially designed for business owners. When considering a cash-back credit card, evaluate the following:

Cash-back rate

Minimum purchases

Spending categories

Cap-on rewards

Bonuses: The attraction of cash-back credit cards is not limited to the extra money you earn on purchases. Programs vary in their incentives, but you may be able to take advantage of bonus cash after your spending reaches a certain level, $0 annual fees and more.

Ultimately, businesses with a lot of purchases can add at least a thousand dollars to the bottom line without having to work harder or hire more people.

We will help you manage operations by recommending process improvements and introduce tools that can save you time and money

05/18/2022

Part 3 Failure to Maximize Your Section 179 Deduction

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment &/or software purchased or financed during the tax year. You can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves. Invest in YOUR COMPANY GROWTH and lower your taxes.

The section 179 depreciation deduction is currently set at $500,000. There’s a number of details and limits regarding proper use of section 179, but failure to use this deduction means you may be overpaying your taxes. Let’s look at an example of the math regarding a section 179 depreciation deduction below.

Ivan decides he needs to replace an old truck in his company. He buys the new truck for $55,000 using attractive financing to keep his payments as low as possible. By buying at year end (Dec), he spends little to nothing in 2016. Payments begin in 2017. Ivan is ready for the 2017 season and he enjoys a huge tax deduction on his 2016 tax return. Here’s the math:

Purchase Price of Truck/Equipment – $50,000

Section 179 Deduction – $50,000 (check with your accountant to verify your situation)

Total First Year Deduction – $50,000

Cash Savings Year One @ 35% Federal Rate – $17,500

Actual Cost of the Truck/Equipment – $32,500

Profitable businesses can use the section 179 tax deduction to legally pay Zero Dollars in taxes.

This special tax incentive is designed to encourage you to re-invest in your business. It allows you to avoid paying taxes on up to $500,000 of profits every single year.

First, equipment doesn’t last forever. Failure to update or replace your equipment leads to downtime in the field. Downtime (labor cost) is MUCH more expensive than equipment payments. Just look at your payroll each month and compare that to your equipment payments. Labor is your biggest expense.

Updating your equipment can lead to increases in productivity, employee retention or better positioning in your target markets.

Fact: you’ll rarely recover the cost of a replacement engine or transmission when you sell old equipment. Further, many banks will not finance equipment repairs. And understand this. Banks don’t like to finance USED trucks that are over 10 years old. When equipment gets beyond ten years old, the market for that equipment gets dramatically smaller because the only buyers are CASH buyers. And cash buyers don’t pay top dollar.

A strategy to maximize your tax deductions & lower your equipment costs is to sell your old trucks in year 8 or year 9 to maximize sales price. Use part of the proceeds from the sale for a down payment on the newer equipment or stuff the cash in your pocket. Buy newer equipment & take full advantage of section 179 depreciation as long as you operate a profitable company.

We will help you manage operations by recommending process improvements and introduce tools that can save you time and money

05/17/2022

Part 2 Don't overpay the IRS, our government wastes enough money as it is. Failure to Fund Your Personal IRA, Simple IRA, 401-K or SEP
ALWAYS PAY YOURSELF BEFORE YOU PAY THE IRS! For those of you who run a really profitable business, this may sound like a very elementary tax reduction strategy. But just because you are aware of these tax-reduction techniques, it doesn’t mean you maximize their impact on reducing your taxes. Let me give you a very simple illustration.
Ivan owns a contracting company. He works hard everyday to provide his customers with top-quality workmanship and excellent customer service. His company is profitable at year end. He understands that he has a responsibility to plan for his family’s financial future. Therefore, he opens an Individual Retirement Account (IRA). Ivan makes certain that he places the maximum allowable contribution to his IRA account of $6000. Paying yourself first is a terrific wealth strategy! This becomes a tax-deductible expense reducing his taxable income by $6000.
Here’s the math:
$6000 x 35% federal tax = $2,100 federal tax reduction
Advanced business owners learn that by implementing a Simple IRA, 401-K or a SEP inside your company, can drastically lower your taxes by a factor of 2x to 4x on the numbers above. There are countless rules, regulations and requirements for company sponsored retirement accounts, so consult with your tax professional regarding this strategy. It’s silly to overpay your taxes. As a business owner, the government gives you tools to lower your taxes. Failure to use tools like these is just bad business. You and your family can make much better use of YOUR money than the federal or state government.
Funding your personal IRA account for 10 years puts $55,000 into your retirement account and saves you $19,250 in federal income taxes along the way! PAY YOUSELF FIRST EVERY YEAR!
If you’re a business owner like me (and my loyal clients), you know it’s tough to build up cash when you’re re-investing profits into growing your company. But when you LOWER your tax bill, you can easily afford to pay yourself first! If you’d like help on advanced tax reduction strategies.

We will help you manage operations by recommending process improvements and introduce tools that can save you time and money