Blog Topics

Are you an entrepreneur or small business owner looking for valuable resources to help you grow and succeed? 🏆

If so, then you need to check out SCORE! Here are just a few reasons why SCORE is such a great resource: 👇👇👇

✅Expert mentorship: SCORE provides free and confidential mentoring from experienced business professionals who can help you navigate challenges and opportunities, whether you're just starting out or looking to take your business to the next level.

✅Educational resources: SCORE offers a ton of online resources, including webinars, courses, and templates, to help you develop your skills and knowledge in areas like marketing, finance, and operations.

✅Networking opportunities: SCORE connects you with other entrepreneurs and small business owners in your area through local workshops, events, and virtual meetups, giving you the chance to learn from and collaborate with others who share your goals and challenges.

So if you're looking for support and guidance , make sure to explore SCORE and all they have to offer. Do you have any questions regarding SCORE? Drop them in the comments section or DM and I'd be happy to answer

https://www.score.org/sponsor/us-small-business-administrati...

#VideoChallenge

#Smallbusinessloans

#Gettingbusinessloans

#businessloanhelp

#entrepreneurship

#smallbusiness

Ready to take the first step toward securing the funding you need? 💵💵💵

It all starts with building strong relationships with lenders - here's how to do it. 👇👇👇

✅Attend conferences and networking events where lenders are present. This is a great way to meet lenders face-to-face and learn more about their lending criteria and processes. TIP: Be sure to come prepared with a clear elevator pitch and plenty of business cards.

✅Post about your business on LinkedIn. Lenders are active on LinkedIn and often use the platform to find potential borrowers. Make sure your LinkedIn profile is up-to-date and professional, and post regular updates about your business and its growth.

✅Follow up with lenders after initial meetings. If you've met a lender at a conference or networking event, be sure to follow up with them afterward to keep the relationship going. Send a personalized thank-you note and keep in touch with updates on your business.

Do you have any tips for building relationships with lenders? Share them in the comments below and let's start a discussion!"

#VideoChallenge

#Smallbusinessloans

#Gettingbusinessloans

#businessloanhelp

#entrepreneurship

#smallbusiness

IWant to increase your chances of getting approved for a business loan? 🎯

The answer is simple: get organized.

In this post, we'll explore the top reasons why organization is key to securing funding for your business.

Here are three actionable steps you can take to maintain financial records and stay organized: 👇👇👇

✅Invest in accounting software: There are many affordable, user-friendly accounting software options available that can help you keep track of your income and expenses, create invoices and receipts, and generate financial reports. QuickBooks Online can help with this.

✅Set up a filing system: This can be paper or digital files. Creating a clear and consistent system for organizing receipts, invoices, and other financial documents can save you time and headaches down the road . Consider organizing by date, category, or project/customer to make it easy to find what you need when you need it.

✅Schedule regular check-ins: Make it a habit to review your financial records on a regular basis (e.g., weekly, monthly, quarterly) to ensure accuracy and identify any potential issues or opportunities. Use this time to reconcile your bank statements, update your budget and cash flow projections, and assess your overall financial health.

By taking these steps to maintain financial records and stay organized, you'll be better equipped to make informed decisions about the future of business. Could you use some help? DM me or ask questions in the comments section and I'd be happy to answer your questions.

#VideoChallenge

#getorganized

#businessloans

#businessloanhelp

#entrepreneurship

#smallbusiness

Are you aware of the impact of your personal credit on your business credit? 💵💵💵

As business owner, your lender may evaluate your personal credit report to determine your creditworthiness. Therefore, it is important to take necessary steps to review and improve your personal credit history before submitting a loan request

Here are some actionable steps to help you optimize your personal credit: 👇👇👇

✅Review your personal credit report for any issues before applying for a loan.

✅Dispute any items that have already been paid.

✅Check your credit report annually from all three credit bureaus. You can visit AnnualFreeCreditReport.com, which is the only authorized website by the federal government to provide free credit reports. Alternatively, you can contact the trade bureaus directly.

✅Pay your bills on time to avoid a negative impact on your credit score.

✅Try to pay down high balances on your credit cards as soon as possible.

✅Avoid opening new credit, which can lower your credit score.

Before applying for that business loan, review and optimize your personal credit using these actionable steps to increase your chances of approval.

#VideoChallenge

#businessloans

#personalcredit

#businessloanhelp

#entrepreneurship

#businesscredit

#smallbusiness

Your Personal Credit

Hopefully you are not surprised by this, but did you know that your personal credit plays an important role in your business credit?

If you are a new business and a sole proprietor, the lender may pull your personal credit report to assess your credit worthiness. This is because your personal credit history is often considered a good indicator of your ability to manage your finances responsibly.

What if your personal credit history is not that great? Below are some steps you should take prior to submitting the loan request:

Actionable Steps:

Review your personal credit report prior to applying for the loan. Examine the report for any issues.

Dispute any items that have been paid.

Annually check your credit report for all three credit bureaus. AnnualFreeCreditReport.com is the only website authorized by the federal government to provide free credit reports.

Alternatively, you can contact the trade bureaus directly:

1. Equifax - 1-800-685-1111
2. Experian - 1-888-397-3742
3. TransUnion - 1-888-909-8872

Pay your bills on time – late payments have an adverse impact on your credit score

Pay down high balances – if you have high balances on credit cards, try to pay these down as quickly as possible

Avoid opening up new credit – which can lower your credit score.

Before you apply for that business loan, take steps in advance to review your personal credit. This in turn will increase your chances of getting business credit.

Are you a new(ish) small business owner and tracking your receipts and bills in a 📊notebook or on Google Sheets? Would you like to track these items in a better format but just don’t quite have enough funds to warrant the cost associated with Accounting Software like QuickBooks Online?

Here’s some help 👇👇👇

QuickBooks Online's free 🆓fillable financial templates with instructions!

These templates will help you keep track of your income and expenses and enable you to make informed business decisions based on accurate financial data. One of the keys 🗝️ to running a successful business is having a clear understanding of your company's financials. These financial statements 📊can help you monitor your cash flow, 💵identify areas of growth, 📈and make informed decisions about the future 🌞of your business.

https://quickbooks.intuit.com/accounting/reporting/income-st...

https://quickbooks.intuit.com/accounting/reporting/balance-s...

A

What if you get turned down for a business loan? 🏦

There are many reasons why you might be turned down for a business loan, here are some of the top reasons:

❌Industry Risk (ex. Businesses involved in gambling)

❌Credit issues (overextended, poor credit score, defaulted on loan payment, bankruptcy)

❌Poorly prepared or inadequate financial statements, Incomplete application, lack of a business plan

❌Not enough credit history

Actionable Steps to Take: 🚀🚀🚀

I can’t help with issues 1 or 2 in this post and if #3 is an issue by all means find a vetted professional (like me) to help you. This focus will be on issue #4.

✅Get a copy of the lender turn down report; sometimes it is called “Adverse Action Report”

✅Get a copy and review your D&B Report (Dunn & Bradstreet)

✅Offer to provide a Vendor Payment Verification History to establish credit

✅Try to negotiate with the lender – try a micro commitment – open credit for 30 days and fully repaid monthly

✅Additional mitigants to risk: offer additional assurances such as additional collateral (such as equipment if free of liens), a personal guarantee, and Key Man Life insurance

✅Don’t despair. Remain committed. Remain confident. If you are a new or growing business, paying your bills as agreed, then you can try in 6 months.

✅In the meantime, take steps to accelerate receivables collection and consider larger retainers; collect final payment a day or two prior to completion of project.

Are you considering applying for a business loan? 🏦

One of the most popular business loans is a working capital loan – a short term loan that provides cash when the business experiences cash shortfalls, 📉 😔in particular with its receivables obligations. Many small business owners have boot 🥾strapped their business when starting out. Historically, bootstrapping can only last so long, revenues and growth are not sustainable without cash injection. 😔 📊Cash 🤑 can come in one of two ways: a) additional owner or partner 🫅 contribution or b) external finance sources such as lenders or investors 🏦

Many small businesses owners are carrying their receivables and cash flow can sometimes extend 30, 45 even 90+ days! 😧

Example:

Say you own a landscape 🌱 business and secure a $10,000 job which includes flower beds, some fruit trees, and a fountain. Additionally, the customer wants new sod. The estimated time to complete is 5 man hours with two employees that you pay $15 hour. You’ve collected a 50% retainer up front with balance due at completion. You’ve purchased the supplies, and paid your two employees $15 an hour to complete the work. Here’s summary so far:

Are you considering applying for a business loan? 🏦

One of the most popular business loans is a working capital loan – a short term loan that provides cash when the business experiences cash shortfalls, 📉 😔in particular with its receivables obligations. Many small business owners have boot 🥾strapped their business when starting out. Historically, bootstrapping can only last so long, revenues and growth are not sustainable without cash injection. 😔 📊Cash 🤑 can come in one of two ways: a) additional owner or partner 🫅 contribution or b) external finance sources such as lenders or investors 🏦

Many small businesses owners are carrying their receivables and cash flow can sometimes extend 30, 45 even 90+ days! 😧

Example:

Say you own a landscape 🌱 business and secure a $10,000 job which includes flower beds, some fruit trees, and a fountain. Additionally, the customer wants new sod. The estimated time to complete is 5 man hours with two employees that you pay $15 hour. You’ve collected a 50% retainer up front with balance due at completion. You’ve purchased the supplies, and paid your two employees $15 an hour to complete the work. Here’s summary so far:

• Today's Topic: Break-Even Analysis
• Every small business owner needs to know their break even. 💵 It is simply the intersection where profit less expenses = zero. We calculated the “average expenses” yesterday and this is break even. In other words, your business must make at least the “average expense” we calculated yesterday, or it will start to lose money. 💸
  Financial analysts love this number and so should you. They use this number to create “What if” scenarios or sometimes it is called “stress testing”, “shock testing” or “sensitivity analysis”. Well, whatever they want to call it, I usually call it “stress testing” because that is what I use this number for. 📝
  
  With break-even as my gauge, I can now stress test gross incomes to say, what will happen to my net income if gross drops % next month.
  What will happen to my net if Cost of goods sold increases 2%, etc. You get the idea. 💡
  
  I’ve dropped a stress test template in the comments section if you’d like to start stress testing some components of your income statement. 👇👇👇
  
  #VideoChallenge
  #HealthyFinancials
  #smallbusiness
  #stresstest
  #sensitivityanalysis
  #shocktestn t

• Happy Easter!
  
  In this week's series, I'll be talking quick quality checks ✅ you can take today, to ensure you have sound financial statements. Each day, there will Actionable Steps 🚀 you can take to so that you'll have healthy 🍤 financials.
  
  Today's Topic: Break Even as a KPI
  I love break even! 💟 It is such a useful number. But have you ever used it as a KPI? 💡This is a great KPI to use if you have net income that varies widely from one month to the next – profit in January followed by loss in February and March (also resulting in cash flow shortfalls)
  
  Actionable Steps 🚀
  Use BE as a KPI
  ✅ Use the formula BE + X (X meaning the lowest gross profit number your company can tolerate)
  ✅On the about the 15th (the day you are testing your KPI) pull up a P&L. Look at your gross. Now compare the income statement to your KPI and divide it by two (because the KPI is based on a full 30-day month you are looking at this on the 15th day).
  ✅If you’re short, start taking some steps to bring in some cash – like offering incentives for prepayment on receivables or contact your vendors asking you can delay payments a few days this month)
  ✅Then at month end, if you are still going to have an operating loss, at least you’ve mitigated some of those cash flow shortfalls by the cash injection you did earlier in the month.
  
  #videochallenge
  #breakeven
  #understandyourfinancials
  #healthyfinancials
  #learnwhatyournumbersmean
  #smallbusinessowners
  #helpforsmallbusinessownersbusinessHelping small 

• Today's Topic: Break-Even Analysis
  
  Every small business owner needs to know their break even. 💵 It is simply the intersection where profit less expenses = zero. We calculated the “average expenses” yesterday and this is break even. In other words, your business must make at least the “average expense” we calculated yesterday, or it will start to lose money. 💸
  Financial analysts love this number and so should you. They use this number to create “What if” scenarios or sometimes it is called “stress testing”, “shock testing” or “sensitivity analysis”. Well, whatever they want to call it, I usually call it “stress testing” because that is what I use this number for. 📝
  
  With break-even as my gauge, I can now stress test gross incomes to say, what will happen to my net income if gross drops % next month.
  What will happen to my net if Cost of goods sold increases 2%, etc. You get the idea. 💡
  
  I’ve dropped a stress test template in the comments section if you’d like to start stress testing some components of your income statement. 👇👇👇
  
  #VideoChallenge
  #HealthyFinancials
  #smallbusiness
  #stresstest
  #sensitivityanalysis
  #shocktest

We've been looking at ways to increase cash flow. The following topics are more difficult to achieve, but you might have some luck with some of these tactics: Today let's look at inventory

Actionable Steps to take now

✅️ Meet with your vendors to see if you can get better payment terms. A lot of business owners are hesitant to do this, but the worst possible outcome is being told no; it doesn't hurt to ask. Reality Check: In 2023 this might not be a valid option; in some cases I've seen vendors raise their prices 4x over the last 12 rolling months.

✅️Consider finding other vendors. When was the last time you "shopped" for vendors. In recent years it is surprising how many new entrants participate in the sale of goods.

✅️ Manage your inventory- perform regular inventory audits with an accounting software system. This ensures you're not overstocking or understocking - both cause major financial headaches.

When you understand your inventory levels and can effectively gauge and measure demand and get better payment terms from your suppliers, then you'll be able to improve your cash flow.

#accounting #software #businessowners

How to increase cash flow

How to improve profit margin and cash flow 🤑 💰

Imposter Syndrome

✅️ I Took a few days off this week to spend spring break in St. Augustine, Florida with my husband and family.

I had an opportunity to meet with Elizabeth Greene, Co-Founder of Junglr recently. She is amazing and an expert with Amazon PPC. We talked about simple ways to monitor profit margins. Here's a highlight of that conversation:

https://youtu.be/gbBZIb3lViA

Why I love my virtual business

I segueing today from the IRS Inflation Reduction Act topics to talk a little bit about myself and something more personal but still very important today.

I took off work today to take my husband to a doctor's appointment and some out patient work. He needed a driver and someone to sit with him and pray with him in that cold waiting room. (The cold thermostat setting matched that of receptionist).

When the process was complete, I drove my husband back to our home so that he could rest.

Why am I mentioning this? Because I'm a human, too, a wife and a mom,too. And sometimes I need to take time off to help my loved ones.

Having my own business provides the flexibility to take some time off now and then. I can recall my corporate banking days, and it literally took an act of congress to get time off approved. It was especially difficult when my daughter was a baby and a toddler (gosh there were so many appointments!).

As business owners we are always working to do better, compete fairly and generate profit 📈.

But, as I was reminded today, one of the best reasons for owning my business is to help me take care of my 👪 family, too and be there when they need me.

Now, I've got to get back to work...thank goodness for auto emails that I can send between 9-5!

What are your top reasons for being self-employed? 🤔

Payroll theft..don't let this happen to your business 😠

Have you heard about the latest payroll scams? These scams are even happening with large payroll service providers.

Scammers contact the payroll processor posing as employees " I am getting divorced and need to change to this new account"

They're posing as CFO's "I don't have time to go through standard protocol; I'm changing my accounts to this new account and need it done now".

And then poof! The funds vanish.

How?

Criminals are using prepaid re-loadable Visa gift cards; they come with routing numbers and account numbers!

Actionable steps you need to take

Do not text or email the "employee " or CFO. Instead call the person and confirm the information. Call several numbers; verify this person us who he says he is

Always be on ⚠️ alert.

Today’s topic – more 1099 bookkeeping nightmares… New rules require payment processors (Venmo and Zelle) to issue 1099-K’s to anyone who receives more than $600 during 2022.

The 1099s will be coming our way so today I wanted to talk about one interesting scenario – when a 1099 is NOT income. For instance, say that Sally and Jane meet for lunch weekly during calendar year 2022. Each time, they split the check ; Sally pays for the check with her credit card and Jane Venmos her portion to Sally.
At the end of the year, Sally receives a 1099-K from Venmo in the amount of say $700 for this example. Is this income?

The answer is no, of course, it is simply her friend’s portion of meals that they shared over the course of 2022. What Jane should have done, was indicate on Venmo that these were personal (non-business ) expenses.

Unfortunately, the IRS will assume that 1099-K is gross income to Sally; it will be up to her demonstrate that this was a personal expense and non-taxable.

Here are some best practices when accepting personal Venmo payments:

Ø Have the Payee indicate that funds being sent are for personal reasons

Ø Save a copy of the receipt. On the back of the receipt write the following:

Ø Who (the person paying you)

Ø What (what they paid you for ex – split lunch tab, soccer shirts for a fundraiser)

Ø When (the date of the transfer)

Ø Why (why they are using Venmo – convenience, don’t carry cash, etc.)
Save the receipt in electronic form. You don’t need to invest in a scanner – use a free app, like Adobe Scan – just take a picture of the receipt, front and back. The app saves the file as PDF. Rename the file to correspond with the date of the Venmo transactions. A simple format to use is:
Year/Month/Date – Purpose - $XX.XX

Store the PDF receipts in an annual electronic tax folder. The name of the file could simply be: 2023 Taxes. Then, each time you have a Venmo transaction, drop the receipt into the folder.

Today’s topic – more 1099 bookkeeping nightmares… New rules require payment processors (Venmo and Zelle) to issue 1099-K’s to anyone who receives more than $600 during 2022.

The 1099s will be coming our way so today I wanted to talk about some interesting scenario – when a 1099 is NOT income. For instance, say that Sally and Jane meet for lunch weekly during calendar year 2022. Each time, they split the check ; Sally pays for the check with her credit card and Jane Venmos her portion to Sally.
At the end of the year, Sally receives a 1099-K from Venmo in the amount of say $700 for this example. Is this income?

The answer is no, of course, it is simply her friend’s portion of meals that they shared over the course of 2022. What Jane should have done, was indicate on Venmo that these were personal (non-business ) expenses.

Unfortunately, the IRS will assume that 1099-K is gross income to Sally; it will be up to her demonstrate that this was a personal expense and non-taxable.

Here are some best practices when accepting personal Venmo payments:

Ø Have the Payee indicate that funds being sent are for personal reasons

Ø Save a copy of the receipt. On the back of the receipt write the following:

Ø Who (the person paying you)

Ø What (what they paid you for ex – split lunch tab, soccer shirts for a fundraiser)

Ø When (the date of the transfer)

Ø Why (why they are using Venmo – convenience, don’t carry cash, etc.)
Save the receipt in electronic form. You don’t need to invest in a scanner – use a free app, like Adobe Scan – just take a picture of the receipt, front and back. The app saves the file as PDF. Rename the file to correspond with the date of the Venmo transactions. A simple format to use is:
Year/Month/Date – Purpose - $XX.XX

Store the PDF receipts in an annual electronic tax folder. The name of the file could simply be: 2023 Taxes. Then, each time you have a Venmo transaction, drop the receipt into the folder.

Don’t get caught off guard! Start preparing now!

Today’s topic is about check writing signature authority and though it is written for small business owners, it is also the same for anyone with check writing authority. I can’t believe someone would actually do this (gasp!) –I’m writing about a business owner that wanted to throw his bookkeeper under the bus and take responsibility for unpaid taxes!

In this case, the business owner, Mr. R., fell behind and filed for bankruptcy protection. He did not pay payroll taxes. Mr. R. contended that he did not have knowledge of day to day processes and that his bookkeeper and bookkeeping assistant should have been paying the payroll taxes.

The IRS held that Mr. R. was clearly the responsible person with the ability to hire, fire and direct which bills to pay. Note: although this case held for Mr. R, the facts and court decision would be the same if it involved a bookkeeper who had signature authority on checks.
The court ruled: “His decision to bury his head in the sand and hope his bookkeeper would be blamed for these failures was at the very least reckless and, therefore, willful as a matter of law.” [U.S. v. Weathers, No. 5:21-cv-05012, W.D. Ark

Working Capital vs. Current Ratio

Do you know what your working capital position is? What is your current ratio? How are these ratios calculated and why you should pay attention to them.

The answer is they are the same – it depends how you are looking at them and what you are using them for.

Working capital and the current ratio, fall under what financial analysts categorize as “liquidity” ratios. Liquidity meaning how liquid or easily can these assets be converted into cash. There are other key ratios or Key Performance Indicators that measure other operating performances including leverage(debt) and efficiency (how well is the business performing) ratios. I’ll talk about other ratios in another post.

Back to liquidity and the simplest ratio-- Working Capital. The definition is Current Assets less Current Liabilities. So, say for instance Cash is $50,000 and Credit Card debt is $40,000. Then $50,000 less $40,000 = Working Capital is a positive $10,000.

Alternatively the current ratio is current assets / current liabilities or 5/4 = 1.25X. So when a lender looks at your balance sheet, they can see that you have 1.25X liquid assets to cover the short term debt obligations.

Why is liquidity important? Because you might need it. If you’ve ever had to come up with cash quickly to cover something unexpected (sell stocks, take out a loan, etc.) you know how difficult this can be. It also part of being a prudent business owner. The smart business owner sets aside a portion of earnings and keeps them liquid. While we’re on the topic of saving, another good idea is to set aside 2 months of operating expenses into a savings account. Why? Just like your personal budgets, you need to consider for the unexpected with your business.

Action Steps and Goals

If your business has negative working capital – don’t despair. Take steps now, to set aside and grow your reserve accounts. Best Practice is set up automatic transfers to another financial institution – that way it makes it more difficult to take out those savings you’ve worked so hard for. And don’t think of this as a waste of your money. It is an investment in yourself! As you increase your cash (assets) your equity grows, too. So it is win / win to set aside those savings.

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

Short post today...I am inundated with 1099s! Remember to get get those W-9s to your bookkeeping professional ASAP.

A good protocol to implement now, would be to request a W-9 every time you take on a new vendor. This makes tax time a lot smoother!

#bookkeeping #tax

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

Today’s topic – more 1099 bookkeeping nightmares… New rules require payment processors (Venmo and Zelle) to issue 1099-K’s to anyone who receives more than $600 during 2022.

The 1099s will be coming our way so today I wanted to talk about some interesting scenario – when a 1099 is NOT income. For instance, say that Sally and Jane meet for lunch weekly during calendar year 2022. Each time, they split the check ; Sally pays for the check with her credit card and Jane Venmos her portion to Sally.

At the end of the year, Sally receives a 1099-K from Venmo in the amount of say $700 for this example. Is this income?

The answer is no, of course, it is simply her friend’s portion of meals that they shared over the course of 2022. What Jane should have done, was indicate on Venmo that these were personal (non-business ) expenses.

Unfortunately, the IRS will assume that 1099-K is gross income to Sally; it will be up to her demonstrate that this was a personal expense and non-taxable.

Here are some best practices when accepting personal Venmo payments:

• Have the Payee indicate that funds being sent are for personal reasons
• Save a copy of the receipt. On the back of the receipt write the following:
• Who (the person paying you)
  
• What (what they paid you for ex – split lunch tab, soccer shirts for a fundraiser)
  
• When (the date of the transfer)
  
• Why (why they are using Venmo – convenience, don’t carry cash, etc.)
  

Save the receipt in electronic form. You don’t need to invest in a scanner – use a free app, like Adobe Scan – just take a picture of the receipt, front and back. The app saves the file as PDF. Rename the file to correspond with the date of the Venmo transactions. A simple format to use is:

Year/Month/Date – Purpose - $XX.XX

Store the PDF receipts in an annual electronic tax folder. The name of the file could simply be: 2023 Taxes. Then, each time you have a Venmo transaction, drop the receipt into the folder.

Don’t get caught off guard! Start preparing now!

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

A bit off topic today, but noteworthy; January 31, 2023 is the deadline for issuing 1099s.

New for 2022 – Payment processors are now required to file a 1099-Ks for transactions that exceed $600. This threshold is substantially lower than in prior years. The list includes:

Venmo

PayPal

Stripe

Cash App

Stripe and more

As a business owner you should be collecting W-9s from any vendor you are paying by:

Check/Cash

ACH

TIP: It is a great idea to collect a W-9 from all your vendors. This makes it easier at tax time, because all the essential information you need to provide to the IRS is readily available. The IRS issues steep penalties for failure to comply and with the addition of the IRS Inflation Act passed earlier this year, it is recommended to be vigilant and get your documentation compiled now.

Also, this would be a good time to get your records cleaned up and caught up. You can do this yourself using spreadsheets or an accounting software such as QuickBooks Online. And if you still need help, hire a bookkeeping professional. There is no time like the present .

REFERENCES

https://www.irs.gov/pub/irs-pd...

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

Continuing on our topic on expenses to watch – today’s focus is business meals

There seems to be a lot of confusion on business meals and what is deductible. For tax years 2021 and 2022 business meals are 100% deductible. This is confusing because purchasing meals for daily work is NOT deductible. Wait..what?!

For clarity, we have to look at the IRS definition of “business meals”. The IRS defines business meals as ordinary, necessary, and related to the taxpayer's business. Examples include

• The taxpayer and a client or a prospect are present
• The meal is not ‘lavish’
• Meals DO NOT include food purchased from a store and eaten at the place of business.

Use the following checklist to document the event; best practice is to save the receipt. On the back of the receipt write the five following criterion:

• Amount
• Date
• Location
• Purpose
• Who was in attendance.

Retain these receipts for documentation. Use a receipt capture software to save the document. TIP: The best practice is to take a picture at the end of the meal using the receipt capture software or if the receipt is emailed, then email it to your software.

Reference: IRS Pub #463

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

Continuing this topic today’s focus is business mileage – a deduction that is often scrutinized and miscalculated

Tracking business miles should not be complex – and yet this item is often not reported accurately and many business owners are unable to reap the benefits of this deduction. The two keys to record this deduction are: 1) knowing the definition and 2) keeping accurate records

First – what mileage trips can be deducted? Business related trips can be deducted. Some examples follow:

• Running errands to buy office supplies
• Driving to meet customers
• Driving to networking events

Now, what is NOT considered business mileage?

• Regular commutes – that is driving from your home to your place of business
• Driving around town just to show an advertisement on your vehicle.

Noteworthy: The IRS has separate publication for Uber and Lyft drivers (IRS Pub 463)

Second - Once you know what is deductible, now you need to track it. This can be as simple as keeping a paper log in the log in the car, but so many apps make this task so much easier. Here is a list of some “mileage apps” – many are free or low cost.

• Everlance
• MileIQ
• Stride
• TripLog

Start logging those miles todays to get the deductions this April!

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

Today’s topic is about check writing signature authority and though it is written for small business owners, it is also the same for anyone with check writing authority. I can’t believe someone would actually do this (gasp!) –I’m writing about a business owner that wanted to throw his bookkeeper under the bus and take responsibility for unpaid taxes!

In this case, the business owner, Mr. R., fell behind and filed for bankruptcy protection. He did not payroll taxes. Mr. R. contended that he did not have knowledge of day to day processes and that his bookkeeper and bookkeeping assistant should have been paying the payroll taxes.

The IRS held that Mr. R. was clearly the responsible person with the ability to hire, fire and direct which bills to pay. Note: although this case held for Mr. R, the facts and court decision would be the same if it involved a bookkeeper who had signature authority on checks.

The court ruled: “His decision to bury his head in the sand and hope his bookkeeper would be blamed for these failures was at the very least reckless and, therefore, willful as a matter of law.” [U.S. v. Weathers, No. 5:21-cv-05012, W.D. Ark

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Here a few points you should know as a small business owner* (*annual sales below $25 million) What we know today:

• The IRS will be hiring 87,000 new agents
• Why?
• The IRS is looking for the gap revenue – the difference between what they estimate taxes paid should be compared to what was actually reported
• How much are they spending for this effort? $80 billion
• How much are estimated to find (their return on investment over the next 10 years) $319 billion!

What can you do right now as a small business owner?

We are urging our clients to begin preparing today – being prepared now is so much better than being behind the eight ball when the IRS requests a desk audit.

Steps you can take right now:

• Document your expenses – make sure you have receipts to match credit card and bank statements. Large ticket items, such as the purchase of furniture, equipment, or other capital items, should include the reason for the purchase with the copy of the receipt clearly showing it was used by the business. There are many receipt capture apps including the one included with QuickBooks Online. (We do not use affiliate links).
• Mileage – make sure you use a mileage app when claiming mileage on your income taxes. Many are free and clearly show the distance travelled while working for the business. Mileage app examples are Everlance and MileIQ. (We do not have affiliate links)
• Keep accurate bookkeeping records; use a software product such as QuickBooks Online.

If you still need help, hire a bookkeeping professional, or contact us for complimentary discovery call. We can go over your file and offer solutions you can implement right now to get your business on the right forward path.

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Here a few points you should know as a small business owner* (*annual sales below $25 million)

In this series, we go through steps you can take today to prepare for this monumental event. Today’s topic: Receipt Documentation

The IRS will be looking at your receipts. Make SURE you retain them. Case in point: Eze v. Comm., T.C. Memo. 2022-83

E operated what he said was a home improvement business as a sole proprietor. On his Schedule C, he deducted substantial expenses for construction materials and supplies. The IRS denied all the deductions.

The court noted the following problems:

*Instead of buying supplies at one or two sources, E submitted receipts from at least seven Home Depots.

*The stores were located near the taxpayer’s home—not near the out-of-state projects E said he worked on.

*All receipts were for cash and greater than $5,000. E argued that he with drew cash from ATMs or his bank. E was unable provide bank statements to support the withdrawals.

*The materials and supplies costs greatly exceeded the business’s sales. The court concluded that E did not have the financial wherewithal to buy the supplies—and even if he did, why would he continue to buy supplies when they cost more than what he was paid for the work.

The volume of materials on the receipts greatly exceeded what was claimed to be used for improvements.

IRS and court conclusion: The taxpayer was not the purchaser of the items on the receipts; he obtained receipts of these purchases from other sources.

Take steps today to capture receipts. Many apps are available including Hubdoc and Dext.

If you still need help, hire a bookkeeping professional, or contact us for complimentary discovery call. We can go over your file and offer solutions you can implement right now to get your business on the right forward path.

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022.

Small business owners need to take steps now to prepare for this monumental event.

Continuing the discussion on how you can be prepared, you may be familiar with the expression – “keep your tax records for seven years.” But what you might not know is that if the IRS audits you for tax evasion, the lookback window could be unlimited.

Many people do not realize that there is a difference between tax avoidance and tax evasion. Tax avoidance is 100% legal. We commonly claim interest paid on our mortgages and real estate taxes paid as a tax deduction, which in turn “avoids” us from paying too much on our income taxes.

Tax evasion on the other hand is completely illegal. This is fraudulent. Tax evasion is not reporting all income earned and not paying taxes that you should have paid.

One of the best ways to be prepared for a tax audit today is to have your business bookkeeping records in order. In this digital age, it is very easy to scan those old tax returns. Keep those records indefinitely. We recommend doing this right now. Also, this is a good time to clean up and catch up your bookkeeping records. Do it now while you still have time. You can do this yourself or contact a bookkeeping professional to help you with this.

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022.

Small business owners need to take steps now to prepare for this monumental event.

Did you realized that one of the most common triggers for an audit is claiming the home office deduction? Most people don’t realize that in order to claim the home office deduction as of this date, there are two primary caveats that must be met:

• Regular and
• Exclusive

Essentially, this means that home office space must be used on a regular basis – meaning daily, or Monday through Friday or whatever your regular office hours are, that you use this space on a regular basis for your business. Second , office space is used exclusively for business purposes. In other words, the room is not your den or guest bedroom.

I’ve dropped the link to IRS Publication 587 which I you can review and make sure that you 100% meet the requirements before you claim this deduction. Also, because the IRS makes all the time, keep this publication along with your tax documents for the year that you claimed this deduction. That way, if there is ever a concern or you are audited, you’ll have the supporting document to provide the auditors as well. It is also best to check with tax advisor to ensure that your business meets the criterion.

https://www.irs.gov/publicatio...

One of the best ways to be prepared for a tax audit today is to have your business bookkeeping records in order. This could mean catching up and cleaning up now to get those records in order. Do it now while you still have time. You can do this yourself or contact a bookkeeping professional to help you with this.

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022

Small business owners need to take steps now to prepare for this monumental event.

Are you an S-Corporation? Did you know that this is one of the most targeted entities for an IRS audit? You might be surprised to learn more about this topic. S-Corporations come under scrutiny primarily because of the treatment of how officers pay themselves.

It is important to remember that prior to taking any distributions, the small business owner must first pay themselves what is considered a “reasonable compensation”. Reasonable compensation is net of payroll and employment taxes while distributions are not. This is the gap that the Inflation Reduction of Act of 2022 will be targeting.

So, what do you do if you’re a business owner and have been taking a small salary, or no salary and distributions only? Meet with your tax advisor now. Have them create a regular and recurring payroll for you. Stop taking distributions from your business; use them sparingly or not at all.

For further reading, follow the ruling: Sec. 7436; Rev. Rul. 74-44

Also, this would be a good time to get your records cleaned up and caught up. You can do this yourself using spreadsheets or an accounting software such as QuickBooks Online. And if you still need help, hire a bookkeeping professional. There is no time like the present .

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

Continuing on our topic – here are three action steps that small business owners can implement this week:

1. Use Apps to gain immediate access to your receipts

It is so important that business owners have quick access to documents that support their income tax deductions. Make sure that you have systems and procedures in place to access these documents. There are so many apps on the market that perform document capture. Here are some examples (we have no affiliation with these – we are just listing them here):

• Wave
• Dext Prepare
• Zoho
• Shoeboxed
• Quick Books Online
• Review prior tax returns
• Now would be a good time to look over previous years’ returns for errors. You can amend the return and submit to the IRS ensuring that the returns are correct.
• During your review of your prior tax return, be sure to zero in on the areas the IRS will want to examine, in particular:
• Travel and entertainment expenses
• Cash revenue
• Owner Income/distributions
• Any payments made to related parties

Also, this would be a good time to get your records cleaned up and caught up. You can do this yourself using spreadsheets or an accounting software such as QuickBooks Online. And if you still need help, hire a bookkeeping professional. There is no time like the present .

#Inflationreductionact

The Inflation Reduction Act of 2022 was passed and signed into law on 08/16/2022. Small business owners need to take steps now to prepare for this monumental event.

Continuing on our topic – here is another expense category to watch: Business Travel Expenses

Be sure to watch those business travel expenses – the IRS can and does review them! Remember, business expenses must be both ordinary and necessary to the business. Take this recent case: [Luna v. Commissioner, T.C. Summ. Op. 2022-18

Mr. R took two trips to Brazil during the year. He spent two weeks in Brazil and deducted most of the expenses. The IRS would not allow these deductions.

Why Not?

After questioning Mr. R, the IRS learned that Mr. R. took the trips to attend board meetings of a business not related to his own or his own job. Mr. R. had excellent documentation however, without a business purpose, or evidence that any portion of the trip was useful for his job, the IRS would not approve these deductions. In other words, the expenses did not pass the test of being ordinary and necessary to the business.

Now is the time to review your business trip expenses.

Also, this would be a good time to get your records cleaned up and caught up. You can do this yourself using spreadsheets or an accounting software such as QuickBooks Online. What steps are you taking to review these expenses?