Insights

“Let’s talk about your business financial reports…”

… Not exactly an exciting sentence, right? 

But you may be surprised at all the great information hiding in those long columns of dates, dollar amounts and invoice numbers.

For example, did you know that your financial reports can give you hints on how to improve your profit margins?

Or that they can help save you from negative bank balances and overdraft fees?

If your bookkeeping is up to date, and you know how to read your reports, you can learn SO much that will both protect AND grow your business!

Now you’re probably SUPER excited and running right to the “Reports” tab in your financial software, right?

Probably not.  Maybe it is just financial nerds like us that get that excited about this stuff, but when you do get ready to check out your financials– don’t get overwhelmed! 

There are dozens of possible reports you can run, but you only need to focus on three to get started:

Income Statement (also called a P+L or Profit & Loss Statement)

Balance Sheet

Cash Flow Report

These 3 are so important, that they’re actually nicknamed “the holy trinity” in accounting!

“Why do I need a bookkeeper?  I’ve already got a QuickBooks subscription – that’s enough, right?”

That’s a fair question.

And the answer is?

“NO – QuickBooks alone is not enough.  You, and your business, need a great bookkeeper!”

We know you think an accounting business is biased, but it’s really true!  Here’s a couple of things QuickBooks will fall short on, without a good human bookkeeper managing it correctly:

1.QUICKBOOKS IS ONLY AS GOOD AS ITS USER

Every hear the phrase “Garbage in, garbage out?” QuickBooks has some amazing automations … but QuickBooks is still just a tool, not a fact checker.  It will organize or automate your info any way you tell it to … but it won’t alert you if it’s correct or not.  This could quickly lead to compounded mistakes over time, with expensive consequences in tax payments (and corrective forensic accounting later).

“Why do I need a bookkeeper?  I’ve already got a QuickBooks subscription – that’s enough, right?”

That’s a fair question.

And the answer is?

“NO – QuickBooks alone is not enough.  You, and your business, need a great bookkeeper!”

We know you think an accounting business is biased, but it’s really true!  Here’s a couple of things QuickBooks will fall short on, without a good human bookkeeper managing it correctly:

1.QUICKBOOKS IS ONLY AS GOOD AS ITS USER

Every hear the phrase “Garbage in, garbage out?” QuickBooks has some amazing automations … but QuickBooks is still just a tool, not a fact checker.  It will organize or automate your info any way you tell it to … but it won’t alert you if it’s correct or not.  This could quickly lead to compounded mistakes over time, with expensive consequences in tax payments (and corrective forensic accounting later).

Last week we discussed in a FB post the idea of co-mingling.  Today we are going to get into more detail about this important subject! 

As a reminder, co-mingling funds is when you combine or otherwise entangle your personal funds with your business funds. Some common examples of this is paying personal bills with the company credit card or drafting personal house expenses from the company account or visa-versa. Using personal funds to pay business bills directly. 

Keeping your business and personal finances SEPARATE by using the proper accounts for your business income and expenses is VERY important. Among the best benefits of this is increased clarity in your business finances, as well the protection of your personal assets in the event that your business was sued. Many business owners do not realize that they can (in effect) negate the protection of their LLC by choosing to co-mingle funds. There are many precedents where the courts decided that because the business was co-mingled with personal finances, the personal assets were up for grabs too! 

What you can do instead of co-mingling funds when you need to pay a personal bill from business funds or pay a business bill with personal friends? There are a couple of ways.

Did you know that according to a NSBA survey the average business owner is spending over 8 hours a MONTH working on federal business taxes and finances? That doesn’t even include the other financial tasks like state taxes, invoicing, accounts payable, receipt management and the million other smaller financial tasks you have to do EVERY day!

Let’s do the math…. That’s over 100 hours a year! OR the equivalent (assuming a 50 hour week!) of letting your business run itself TWO WEEKS per year!

Two weeks! That’s a pretty good amount of vacation time, or time to do that extra project around the house you’ve been wanting to do, or time to learn that new skillset or attend that conference or seminar you’ve been thinking of, or ________________________ you fill in the blank!

What would YOU do with TWO WEEKS OFF every year? How would that change your life?

On top of that, just imagine a life with:

No more spreadsheets on Saturdays!

No wondering if you’re making a profit!

No stressing at tax time to pull together financials at the last minute!

Organized and consistent bookkeeping.

We can give you that! At Abacus, we stress the numbers so you don’t have to. We take care of our client’s financial needs and give them the peace of mind that they deserve.

Last week we discussed three of the most commonly missed tax deductions that business owners often forget to deduct (or maybe don’t realize they are tax deductible) and this week, we are going to the final three that in our opinion, consist of the top missed deductions.

Again, we like to remind our readers that they should always consult with a tax expert to ensure that their taxes are done properly and that they have maximized their deductions to the fullest.

ICYMI (common blog/social media lingo for in case you missed it) here is the link for last week’s blog where we review the first three. https://chooseabacus.com/dont-miss-the-boat-and-no-you-cant-deduct-that-boat/

Continuing the list from last week:

4.Car & Truck Expenses

A lot of times business owners think it’s not worth the hassle to deal with mileage if they are not
consistently using their vehicle for work purposes but even just a few trips a month can add up to a large deduction at the end of year.

There are two methods for deducting vehicle expenses- actual or standard mileage. With actual you keep track of the actual amount you have spent for gas, repairs, car payments, etc. and use the % for business vs. personal miles to calculate the deduction.

The financial world tends to spend a lot of time discussing taxes- there’s a reason for that! The IRS tax code is complex and confusing for many business owners. To further complicate things, often financial experts disagree on its interpretation creating LOTS of room for confusions and mistakes. We recommend making sure you have a great tax expert on your team to help you navigate through the muddy waters of tax time. (We partner with an expert-OR we can provide a referral if you need one, etc)

In the meantime, we can provide some tips for you as you go about your daily business deciding what is (or isn’t) a tax deductible expense.

In our blog today, we want to share some of the most commonly missed tax deductions.

1.Education and Conferences

Did you go to a business conference? Take a course or coaching program? Buy an instructional book? Anything educational that is related to your field of work is tax deductible.

Just be sure to keep a copy of the receipts and a description of the conference or workshops you attended in case there is ever a question of legitimacy.

Today’s topic is business burn-out. As a small business owner, we often wear many (sometimes, too many!) hats and this can lead to burn-out.

Burn-out can cause us to lose motivation and passion for our work and affect our business in a negative way.

Today I’d like to discuss some signs of burn-out and some things you can do when you recognize you are experiencing burn-out.

● Having no to low energy, being exhausted emotionally or physically
● Feeling uninspired, unmotivated, passionless
● Lacking usual confidence in your abilities or decisions
● Being overly tired
● Feeling stressed, anxious, or depressed

If this sounds familiar, you’re not alone, SmallBiztrends.com reports that over 77% of small business owners feel the effects of burnout at work- at least some of the time. 77%! That’s the majority of us. So know that this is usual, and that you are not alone in this hard time you are facing.

Here are a few tips to help you comeback (or avoid!) burnout!

Are you a spender or a saver? The answer to this question is likely to influence if you follow a budget or not! Savers are more likely to follow a budget because they tend to be more disciplined than spenders in the area of money.

Now before you get too upset at me, and think I am being unfair, let me say there is nothing wrong with being either type of financial person! But you must know which one you tend towards so that you can know your financial strengths and weaknesses when it comes to budgeting.

Not sure which you are? Take this fun quiz and find out! Are You A Spender or a Saver?

Now that you know which you are, let’s talk about some of the common pitfalls I’ve seen over the yearsfor the spender and saver when it comes to budgeting and then we’ll discuss a few tips on how you can overcome these things to make a budget work for you. Whether in business or personal, these tips will help you if you desire to follow a budget.

This may seem like a simple question, but it is so important to any business that has a petty cash system. We’ve discussed in previous blogs how small businesses is a target for theft. Employee theft unfortunately is no exception and petty cash is a common way for this to occur. In today’s blog post, I want to cover what petty cash is (and what it shouldn’t be!), why it is important to have a good accounting system in place for petty cash and alternates to petty cash.

First, let’s discuss what it is. Petty cash is typically a small amount of cash that is held in the office for any miscellaneous purposes that may came up throughout the daily operations of our business. Typically, a supply run, or a last minute unplanned office lunch, or some other small item is purchased with this cash. Petty cash SHOULD NOT be money taken from a register (if you own a store, etc) nor should it be monies that are unaccounted for within the accounting system. What do I mean by this? You should have a petty cash “check” register in your chart of accounts and this register should reconcile (aka “match”) with the activity that has happened with the cash. This is so important to having a good
accounting system in place for your petty cash.