Category Archives: Finance
Startup growth isn’t always easy to achieve. Even with a great idea and a proven need for your product or service, it can still be difficult to boost sales and make a profit when you’re first starting out. Growth can and does plateau, too, leaving more established businesses wondering how to break that next barrier.
For some companies, the answer to overcoming these challenges is to seek the help of an accelerator — a highly selective, intensive program that offers the funding, mentorship, education and networking necessary to jump-start growth, typically in exchange for equity in the company. If you’re thinking about applying to an accelerator program, here’s what you need to know and some options to consider if you decide it’s the right path for you.
Accelerators versus incubators
You may have heard the terms “accelerator” and “incubator” used interchangeably, and it’s true that they are similar. Both are interested in helping startups and small companies achieve growth, and may even offer some of the same perks, like office space and a powerful network of mentors and advisers. However, businesses interested in these two options should be aware of some important differences between them.
Accelerators usually invest money in their selected participants in exchange for a share of equity. They work to speed up the business development process during a restricted period of time, typically three to four months. Incubators, on the other hand, are less structured, and are generally focused more on building viable ideas and business models. In a TechRepublic article on the subject, author Conner Forrest wrote, “If an accelerator is a greenhouse for young plants to get the optimal conditions to grow, an incubator matches quality seeds with the best soil for sprouting and growth.”
Who should apply to an accelerator program?
The startups best suited for accelerators are the ones that want to grow by learning and sharing experiences with others, said Mark Lawrence, co-founder and CEO of on-demand parking app SpotHero and a graduate of the Techstars Chicago accelerator program.
“You have to be willing to talk not only about your successes but your struggles,” Lawrence said. “You also need to have a solid idea for a product or service and understand where you want to take your company and what goals you want to achieve.”
The typical applicant is in the early stages of business development and has either just launched or is getting ready to do so. Many companies have a finished product or concept, and may have even raised capital; others may only have an idea and no funding whatsoever. These startups can benefit greatly from the resources and assistance an accelerator can provide, and the program mentors work with them to get their product ready for customers and investors.
But don’t think that you can’t participate in an accelerator if you’re beyond the “startup” phase. In fact, there are numerous programs designed specifically for companies that have overcome the initial hurdles of starting up and want to take their business to the next level. One such program is Interise, a nonprofit organization that accelerates small business and economic growth.
“Small businesses achieve first-stage growth by focusing on quality and direction,” said Jean Horstman, CEO of Interise. “Second-stage growth [is about] management and leadership. As a second-stage growth accelerator, we work with businesses that have hit a wall, and what worked before isn’t working now. In a peer learning group, [Interise participants] acquire the know-how and management techniques to achieve second-stage growth.”
What are the requirements for applying?
Each accelerator has its own set of requirements, and some are more selective than others — the most competitive ones have an acceptance rate of less than 5 percent. The application process usually includes a lengthy series of questions about your business idea, your market and competitors, the work you’ve done so far and potential challenges. Specific qualifications — such as a certain development stage, whether you’ve raised funding before and intellectual property agreements — vary greatly by program.
If an accelerator is interested in your company, you’ll be asked to come in for an interview. Chris Tsai, founder and CEO of preordering platform Celery, said that when his team was applying to the popular Y Combinator accelerator, conducting mock interviews with program alumni was immensely helpful.
“[Y Combinator holds] rapid-fire, short, intense interviews,” Tsai said. “We practiced, [and then] interviewed with four partners in a short period of time — about 10 to 15 minutes. We found out that day that we were accepted.”
Opening a business bank account is a critical task for a new business owner. Even if you are a sole proprietor, having a business account is the best way for you to keep track of your finances and your business records. Putting this simple barrier between your personal and professional finances helps to make day-to-day transactions easy to follow and document.
“It is just good accounting practice to keep your business [finances] separate from your personal, and setting up a business checking account is the first step to making this possible,” said Kevin Ravenscroft, president of Timberwood Bank in Tomah, Wisconsin. “You can track your income and expenses for IRS filing purposes, more easily identify potential business deductions from the IRS, maintain clear records for potential audits, and you may be able to limit your personal liability.”
Choosing a bank and account services
Business banking is different from consumer banking, so the bank where you have your personal checking account may not necessarily be the right one for your business. When deciding where to open your business account, consider the financial institutions in your area. Talk with each of them to discover their specialty and see if it is a fit for your company. Some banks are small business specialists, whereas others focus on property or equipment loans.
Today’s business banking customers can also find lines of credit and cash management services in addition to checking accounts. Starting a relationship with bank personnel familiar with your field or industry gives you another resource for inquiries and the ability to tap into their experience and expertise when it is needed. They may have suggestions or be aware of programs that you did not know about to make your business bigger and better. However, be aware that some bankers might try to encourage you to use their products and services — even if you don’t necessarily need them — just to make more money. Be sure to do your research and ask questions so that you understand what you’re signing up for.
Business banking costs
Many banks offer business checking accounts for free, with a minimum balance requirement and a limited number of transactions. At JPMorgan Chase & Co., for example, business owners with revenues of up to $10 million can open an account with just $25. At First National Bank of Omaha, business owners can take advantage of a Business First Free Checking account that requires a $100 minimum opening balance but has no minimum balance requirement.
As your business grows, you may need to change the type of checking account your business uses. While enhanced accounts might also charge a fee, the benefits of being able to handle an increased number of transactions efficiently and having access to more bank services offsets the cost. However, David Ely, professor of finance at San Diego State University, cautioned business owners to keep the total cost of balance requirements and fees in mind.
Stock trading, once the sole domain of Wall Street, has become easily and affordably available to all in the last 20 years, thanks to online brokerages. Prior to online trading, people relied on the services of a stock broker, who would make buy and sell orders on the customer’s behalf. Today, individuals are able to execute buy and sell orders themselves in a fraction of a second using computerized trading services.
While buying and selling stocks — which are shares of ownership in a company — can make you a fortune, it’s just as easy to lose that money. To become a successful trader, it is crucial that you become familiar with the tools of trading, the theory behind it and the daily reports that drive market shifts.
Stock market basics
Like all businesses, the stock market operates on a system of supply and demand. When you purchase stock, your hope is that other traders become more eager to own a share of that company over time. When the stock’s popularity increases, traders will compete to own it and bid up the sale price. In theory, a rising share price is the result of improvements in the firm’s value and potential, also known as its fundamentals. In reality, stock prices change for any number of reasons, only some of which investors are able to predict.
Researching and choosing stock
There are two main schools of thought regarding how to choose stocks. The first, called fundamental analysis, relies on the use of a company’s financial reports and public statements to analyze the health of the business. Balance sheets, income statements, yearly and quarterly earnings, and news releases from the company are all important tools for a fundamental analysis. Fortunately, those reports are easily searchable online, as are tutorials on how to read them, such as those offered by the SEC. Market and industry trends, media publications and historical analysis also play a role.
The second school of investing is called technical analysis. Technical analysts believe that swings in stock prices follow patterns that traders can learn to detect and profit from. Technical analysis is not as widely accepted or practiced as fundamental analysis. However, many traders use a combination of the two techniques to choose stocks. Choosing a company with sound fundamentals and then occasionally trading on a technical indicator is a safer strategy that relying only on technical indicators.
Before deciding to buy or sell any stock, you should thoroughly research the company, its leadership and its competition. Sites such as Yahoo! Finance offer excellent compilations of news stories, financial statements and stock price histories (called charts) that provide insight into the company. Stock sites also display professional analysts’ ratings of a given stock, indicating whether that analyst advises a trader to buy, hold or sell a stock. Examining the records of those analysts may help you assign value to their opinions.
Personal stock-trading services
Before you can begin buying and selling stocks, you need to decide which online trading service you want to use. Rob Beauregard, director of public relations for Fidelity Investments, says choosing your brokerage partner carefully can directly affect your bottom line.
“The best piece of advice for an online trader is to choose your brokerage partner with open eyes,” Beauregard told Business News Daily. “Know their pricing, service, investment choices, education and research resources, and securitypractices. No one should just rely on their gut instincts or the tip from their friend or neighbor anymore. The resources easily accessible to them to generate and validate investing decisions are too valuable not to utilize.”
When you’re looking for an online broker, consider the costs of each service the brokerage provides and the level of support you will need from qualified brokers. Business News Daily’s sister site Top Ten Reviews offers an overview of a number of trading services, with ratings for their fees, research tools, mobile access and investments offered.
Credit cards don’t process themselves. This is where merchant accounts come in. A merchant account is essentially the middleman that lets businesses accept credit and debit cards in person and online.
Usually provided by banks and other financial institutions, a merchant account processes electronic payments by transferring funds between customers’ and merchants’ banks. During a sale, the merchant account works behind the scenes to withdraw funds from the customer’s bank and deposit them directly into the merchant’s checking account. The process works the opposite way during a refund.
Here is a simple explanation of how a merchant account works, what to look for in a merchant account and how small businesses can get one. For a more in-depth look at merchant accounts, check out our Credit Card Processing Buyer’s Guide, which will also help you figure out whether your business needs a merchant account and how to find the right one for your business.
How a merchant account works
When a credit card transaction is processed, information must be sent to a payment gateway to see if the cardholder has sufficient funds. For traditional transactions, this is generally part of the point of sale (POS) machine, which reads the cardholder’s data and checks with the credit card company to ensure the transaction can go through. This is known as a “swiped” or “card present” type of merchant account, which can include retail, restaurant or lodging merchants.
But in a “keyed” or “not present” transaction, this is done online by a payment gateway, which connects to the credit card company. These kinds of merchants can include mail order companies, telephone order companies or e-commerce/Internet merchants. When merchant accounts are set up, the same company, called the payment processor, can often set up the payment gateway in the same process.
Accounts payable are the bills and other debts that the business needs to pay. As a matter of fact, the only thing that a business pays that is not considered accounts payable is payroll. Everything else falls under the category, making it a critical aspect of your business.
“The accuracy and completeness of a company’s financial statements are dependent on the accounts payable process,” said Harold Averkamp, founder and author of accounting advice website Accounting Coach. “The efficiency and effectiveness of the accounts payable process will also affect the company’s cash position, credit rating and relationship with its suppliers.”
Implementing a dependable accounts payable system will produce accurate financial information you need to plan for both the short and long term. Here’s what you need to know about keeping up with your business debts.
Tracking accounts payable
Accounts payable, sometimes abbreviated as A/P, are tracked monthly for many small businesses, but as the business grows, it is better to make it a weekly task to take advantage of early payment discounts and resolve any credits due to inventory returns. It is handy to keep a record of accounts payable in case there are any payment disputes, to remind the business of current or outstanding invoices, or as proof of spending at tax time. These records can be kept manually or with accounting software. [Best Accounting Software for Small Business]
Working with accounts payable requires a great attention to detail. Each invoice needs to be verified for accuracy, billing date and payment date, and then entered correctly in the general ledger or accounting software. Based on our research, here are some general tips to set up your accounts payable and help the process run smoothly:
Work from the original invoice whenever possible. Some invoices are sent electronically — print once and then file the email away to minimize confusion.
Use the same entering system every time. Each vendor has their own system of invoicing but assigning the invoice number in your system should be consistent. Determine the method, such as using leading zeros, and stick to it.
Enter every invoice individually. This includes multiple monthly invoices from the same supplier. In the event of a dispute, you will want to be able to track it down in your system easily.
Get invoice approval from the appropriate person before entering it. The person approving the invoice should be different than the one entering it. If you are a sole proprietor and do your own bookwork, this may not be possible, but still have a clear process for approval and entry. Keep solid records to support each one.
Look for early payment discounts to save money. It can add up by the end of the year. Some vendors offer a small percentage off the invoice if you pay it within a specified time frame from the invoice date, such as within ten days. If you typically only work with accounts payable once a month, consider a system in which you identify early payment discount opportunities when the invoice is received and pay those separately from the monthly pile.
Cash flow is important to a small business. A solid system of monitoring and paying accounts payable gives you a clear picture of your expenditures against your revenue, enabling better business decisions.
Small businesses live and die by their cash flow and accountability. Accurate recordings of transactions, coupled with proper assessment and processing, give small business owners a firm base on which to make decisions and create plans for growth.
Recording and understanding the sales, expenses and other basic business data should be easy enough for small business owners. But understanding the accounting needs of a business is not always so simple. What type of activity is considered bookkeeping, and when do you need an accountant instead? Is there even a difference between the two?
There is, and it is a simple but important one: Bookkeepers record a company’s day-to-day transactions, while accountants verify and analyze that information.
Bookkeeping versus accounting
A bookkeeper’s territory is daily financial transactions, which include purchases, receipts, sales and payments. Recording these items is usually done through a general ledger or journal. Many small businesses use software such as QuickBooks or Peachtree to keep track of their entries, debits and credits. Their efforts culminate in a trial balance, which means the final total of debits and credits match.
“Bookkeeping is designed to generate data about the activities of an organization,” said D’Arcy Becker, CPA and chairwoman of the Department of Accounting and Finance at the University of Wisconsin. “Accounting is designed to turn data into information.”
The role of an accountant, therefore, is to verify the data entered, and then use that data to generate reports, analyze the account, perform audits and prepare financial reporting records, like tax returns, income statements and balance sheets. An accountant’s analysis of the financial information can provide information for forecasts, business trends, opportunity for growth and when to restrict spending to manage cash flow.
“Accountants look at the big picture,” wrote John Tracy in his book, “Accounting for Dummies” (For Dummies, 5th edition, 2013). “[They] step and back and say, ‘We handle a lot of rebates, we handle a lot of coupons — how should we record these transactions? Do I record just the net amount of the sale or do I record the gross sale amount, too?’ Once the accountant decides how to handle these transactions, the bookkeeper carries them out.”
Hiring a financial professional
Regardless of the size of your company, it is critical for ongoing success to ensure the financial accuracy of daily transactions and use that data to make decisions for the future of your business. If you feel your business is growing too quickly for a “do-it-yourself” approach to finances, you should look into hiring someone to help you keep track and make sense of your business transactions. Business News Daily has published a guide to choosing a business accountant if you’re not sure where to begin.
While many small businesses hire an accountant outside the company, bookkeeping is more diverse. Some small business owners do their own bookkeeping on software recommended or used by their accountant, providing it to him or her on a weekly, monthly or quarterly basis for action. Other small businesses are large enough to employ a bookkeeper, or have a small accounting department with data- entry clerks reporting to the bookkeeper.
Accounts receivable are the lifeblood of a business’s cash flow. Sometimes referred to as A/R, “accounts receivable” is the accounting term used to refer to the money that the business should receive from its customers for the goods or services it provided.
Your business’s accounts receivable are an important part of calculating your profitability, and provide the clearest indicator of the business’s income. They are considered an asset, as they represent money coming into the company. To determine profitability, add up all of your assets, including accounts receivable, and subtract your total accounts payable, or liabilities, which are what you owe to suppliers and vendors. If the number is positive, the company is profitable. If it’s negative, then decisions must be made regarding how to increase the assets or reduce the liabilities.
Why track accounts receivable?
If you do not keep track of accounts receivable, you may forget to bill certain customers or will not know if you’ve been paid. You may end up providing your product for free and negatively impact your ability to be profitable. The longer it takes to send the invoice, the less likely it will be that your payment will be sent. Keeping track of accounts receivable is also a great way to have documentation supporting proof of income at tax time.
Accounts receivable are best managed on a consistent and routine basis. In retail, each transaction is paid for immediately. With other industries, customers apply for a credit line, and orders are placed against the credit line. The customer is provided an invoice and payment terms with the shipped product, payable at a later date. Regardless of your system, ensuring payment is crucial. Here are five tips to make sure your business stays on top of its accounts receivables:
Communicate. In a 2013 Transworld Business article, Jason Stine, business development manager for collection services company CRF Solutions, advised regular and prompt communication with clients. Stay on top of transactions; more nonpayment errors develop in the first 60 days after delivery because of insufficient or incomplete customer contact, Stine said.
Create a solid internal process. Determine the process for performing accounts receivable, and stick to it. Pick a day of the week to create, print and mail invoices. Choose another day to print an aged accounts receivable report and contact customers who are beyond their payment term window. As your small business grows, you may need to split these tasks among different people to stay on top of all the accounts.
Confirm receipt of invoices. Many companies have had success in contacting the client a week after the invoice was sent, in order to confirm receipt. Things do get lost in the mail or accidentally deleted in an email inbox. A quick inquiry about receipt of the bill also provides the chance to ask for feedback on the product provided, demonstrating your excellent customer service skills as well.
Extend credit with moderate terms. With today’s technological advances, companies can receive payment before shipping an order or starting a service. With service-based companies and high-cost goods, however, that may not always be possible. In those cases, have the client apply for a credit line. You will be able to evaluate their payment ability and set a credit limit you’re comfortable with. It also provides an opportunity to be sure both parties are clear on the terms of payment and what happens if the account goes delinquent.
Document everything. Documentation of accounts receivable helps your bookkeeper with weekly or monthly inputs for financial statements and your accountant at tax time. From first contact, keep notes on the order, conversations and agreed-upon terms. In a worst-case scenario, that documentation will also be important should you have to pursue payment through a collection agency or court.
The funds collected through your accounts-receivable process is the food that fuels the actions of your company. Inconsistent and spotty attention to the task can starve a company’s growth, while a steady and smooth process results in a well-fed machine capable of achieving all of its goals.
Choosing the right point-of-sale (POS) system is key to a business’s success. While factors like type of POS system, features, cost and limitations are all important considerations, it’s easy to overlook one of the most critical aspects of using POS systems: security.
Understanding POS security isn’t for the faint of heart. Not only are regulations complex, but keeping up with changes is a whole other beast. As a small business owner, however, dealing with POS security is a necessary evil if you want the convenience and benefits of accepting credit cards.
To help you make sense of POS security and better protect your business and customers, we asked experts to share their tips on what to look for in a secure POS system.
1. Is the POS system PCI compliant?
The first thing to look for is whether your new POS system meets the required regulations for accepting credit cards.
The first thing to look for is whether your new POS system meets the required policies for accepting credit cards. For instance, new credit card regulations require merchants to have EMV chip-enabled POS systems by Oct. 15. [Learn more about EMV].
There is also a huge change happening soon. Starting June 30, businesses are required to comply with version 3.1 of the Payment Card Industry Data Security Standards (PCI DSS). These new PCI 3.1 standards are mandatory, and any business that fails to comply could face steep penalties. Although vendors have taken the necessary measures, it’s your responsibility to make sure your business is truly compliant.
“Any business that accepts credit card payments for goods or services must be PCI compliant,” said Tony Ciccerone, a Detroit-based territory manager for Heartland Payment Systems. This means that in addition to following the Payment Card Industry Data Security Standard (PCI DSS) rules for credit card processing, your POS itself must meet PCI standards for merchants.
This is important because if your customers’ information is leaked, you could be on the hook for financial damages, even if your company uses PayPal or some other third-party service provider to process your credit card transactions, said Vikas Bhatia, founder and CEO of cybersecurity firm Kalki Consulting. “Make sure to ask your service provider for proof that they passed their PCI DSS evaluations,” he said.
In point-of-sale businesses like restaurants, retail shops and online stores, customers pay for their purchases up front. The only way you won’t get your money is if something goes wrong with your credit card processor. But if your business operates on an invoicing system, you’ll generally need to give customers up to 30, 60 or even 90 days to send in their payments — and, perhaps unsurprisingly, some of them won’t do it.
There are numerous reasons for a late payment or nonpayment: Perhaps the bill got lost in a pile of other papers (or, for email, in the customer’s inbox), or the customer had an unexpected expense and couldn’t afford to pay you by the due date. But regardless of the circumstances, an unpaid invoice can really hurt your business, and eventually you’ll need to take action if you want to receive your money.
It might be tempting to call in a collection agency the moment the due date passes, but doing so right away might make the customer feel threatened and upset. You want to deal with the problem head-on, said Greg Waldorf, CEO of invoicing app Invoice2go, but being straightforward doesn’t have to mean being aggressive. If a client or customer hasn’t paid a bill on time, here are the steps you should take, in this order, to ensure that you not only get your payment, but also maintain a good relationship with the customer.
Reach out to the customer. A friendly reminder that a customer’s bill is past due is the first step in collecting your payment. Most of the time, a late payment was an honest mistake, and receiving that first follow-up will make a client pay as soon as possible. Waldorf noted that the subject of money isn’t always easy to address, so you may want to ease into the topic.
“Use an opportunity to check in on a customer’s satisfaction for your services, and then discuss any approaching or past-due invoices,” Waldorf said.
Resend the invoice. In some cases, clients will try to delay payment by saying they lost the bill, or that they need to reconcile their records to find the correct payment amount, said Hunter Hoffmann, head of U.S. communications for small business insurer Hiscox. If this is the case, Hoffmann advised sending an updated invoice right away — even if you know the customer has the original — to take away this excuse.
Give an ultimatum. When a nonpaying client ignores your emails and calls about his or her invoice, demand payment a little more firmly. Service businesses working with the client on an ongoing basis are in the best position to give an ultimatum, Hoffmann said.
“Set a specific deadline when service will be cut off to light a fire under them,” Hoffmann told Business News Daily. “It’s amazing how quickly they can figure out how to pay when they realize how hard it will be to replace your service in a couple days.”
Waldorf advised requesting a time line for payment and continuing to follow up until the customer pays. If necessary, resend your original contract, indicating that you will escalate the situation if invoices remain past due.
Hire a collection agency. If repeated attempts to contact the customer and collect your payment have failed, it’s time to call in backup. A debt-collection agency is a company that specializes in recovering payments that are typically more than 90 days past due. The company will take the task of following up with the customer off of your hands, using tried-and-true tactics to get the individual to pay. This Business News Daily article contains more information on when and how to hire a collection agency.
File a lawsuit. For most small businesses, the time and money associated with suing a nonpaying client are not worth it. However, if that client owes you a large sum of money and refuses to pay you or a collection agency based on the terms of your contract or invoice, a lawsuit may be necessary. For example, Business Insider reported that public relations firm Agency 2.0 recently filed a suit against its former customer, an electronic bike maker that raised more than $5 million on Indiegogo with the firm’s help, for not paying or acknowledging the agreed-upon 10 percent cut of its raised funds. If you do decide to pursue legal action, consult with an attorney to determine how to proceed.
What to do in the meantime
If you’re strapped for cash and don’t know when a customer will send his or her payment, a factoring service may be able help you get the money you need while you’re waiting. With a factoring service, you sell your accounts receivable to a company for a certain percentage of the accounts’ value (usually 70 to 90 percent), and that company will advance you most of that money within a few days. Then, it will collect your customers’ payments and send the rest of the cash to you, minus the service fee.
It’s important to keep in mind that factoring services are not collection agencies, and they will run a credit check on your customers before agreeing to purchase their invoices. If you use a factor for multiple customers’ invoices, the service fees will add up, and you may end up losing money in the long run. To learn more about using a factoring service and how it differs from a collection agency, visit Business News Daily’s guide.
The end of the calendar year is an important time for businesses of all sizes. It’s not only prime sales season for retailers with holiday promotions but also when businesses need to start organizing the year’s financial information for tax season.
Though the April 15 filing deadline may be months away, your company should be thinking about ways to make that period as easy as possible. We spoke with business and financial experts about what small business owners should be doing right now to prepare for tax season.
Automate your tax prep
In today’s world, there are countless programs, apps and services available to help make tax time less of a burden. Jonathan Barsade, CEO of sales tax solution company Exactor, advised looking into tools that allow you to automate any or all of the financial record-keeping process.
“Trying to stay on top of tax rules and rates and then … completing tax returns and filing them on time is a mind-boggling task, especially for small businesses that operate across multiple locations and do business across state lines,” Barsade told Business News Daily. “The way taxes should be dealt with in this modern age of technology is to automate the process. The earlier the business owner proceeds towards automation, the less time they will need to work in tax season, which means more time remaining to focus on your business.”
Richard Milam, office productivity expert and president and CEO of EnableSoft, an automation software company, advised taking a look at your current systems to see what can be updated and optimized between now and the end of the year.
“Get the tools you need … to get ahead of [the year-end rush] so you’re not playing defense,” Milam said. “Identify what systems need to be updated, so when it comes time to close the books, the data is in place and it’s clean. Make sure it’s been reviewed and is ready for audit — in any business, that interruption is costly.”
Review your business expenses
As every business owner knows, tax season means taking stock of the company’s income, expenses and deductions. To get ahead of this task, business owners should do this throughout the year, thus ensuring a smooth ride when it comes time to file taxes.
“The biggest part of preparing for taxes is what should already have been done — that is, keeping track of all business expenses throughout the year,” said Steve Gibson, director of online form builder JotForm. “If everything [has been] entered into your accounting system in a timely fashion, then the hardest part is done. If not, you need to set aside some time to gather and enter everything correctly.”
“Match purchase orders with invoices and shipping notices, and include the customer payment receipts,” added Evan Singer, general manager of small business loan application service SmartBiz. “File these together to make everything easy to locate, and give it to your accountant.”
Implementing a good filing system, whether digital or paper, is key to making sure you can easily locate and organize all of your business expenses, Singer said. He noted that cloud-based accounting software like QuickBooks Online and Xero are affordable options for small businesses looking to sync and track bank account activity, expenses and invoices.
Learn which tax law changes will affect you
Tax laws are constantly changing, and it’s wise to stay alert and up-to-date on changes that could affect your business. For example, Nicole Odeh, a tax and accounting expert for The Neat Company, a business software and services provider, reminded business owners that new reporting requirements for the Affordable Care Act have begun to take effect, and if your company offers health insurance, you’ll need to make sure you’re meeting those requirements.
“Additionally, although it does not affect this upcoming tax season, there have been some filing deadline changes for the following tax season, and this will be a huge change in thinking and planning for many small businesses,” Odeh said. “Calendar-year partnerships [those whose tax year ends on December 31] will be required to file by March 15, which is one month sooner than they are used to.”