Business Best Practices

Running a small business is demanding, and there’s not always time to manage every task well. If you’re letting some tasks slip through the cracks, or if you want to prevent that from happening, it’s time to consider hiring an accountant. Here’s how your business will benefit if you do:

1. You will save time.

Your number one asset as a small business owner is time. Saving as much time as you can by streamlining tasks, assigning the right employee to the job, and working efficiently are all ways business owners can manage and save time. If you’re currently managing all the accounting and payroll tasks for your company, you might be feeling the pressure of getting everything accomplished. For example, you may need to learn a new accounting software program to keep records, but you likely don’t have time to do that. Leaving bookkeeping, payroll, and other general accounting tasks to a professional saves time and dramatically reduces the likelihood of costly errors.

2. You will save money.

Understandably, you want to cut costs as a business owner. After all, that’s what intelligent owners do – minimize expenses and maximize profits. However, if you think hiring an accountant is just another added expense, think again. It may seem like you’re saving money by doing your accounting at first, but in the long run, an accountant can save your business money in a big way. They can reduce the risk of costly tax errors, provide sound advice on business decisions, and advise you on the most cost-effective choices for running your business. 3. You will gain valuable advice.

An accountant’s advice doesn’t end at how to manage your taxes or payroll. Any business decision you make as an owner involves finances. If you’re hiring new employees, launching a new product, or expanding your operations, you need to know the projected cost, any additional tax ramifications, and your potential return on investment. Your accountant can help with all of that and more, which puts you in the ideal position to make the best decision for your business.

4. You will get business plan support.

This is crucial for new startups or anyone in the early stages of starting a business. Accountants draw on their experience to help business owners understand how much money they should be making in their particular business and project out over those first few crucial years to know what to expect. That information is beneficial when putting together the financial portion of your business plan because it helps you set realistic goals regarding expenses and cash flow.

5. You will reap sound financial advice.

Your accountant is a financial expert. Unless you are as well, they know more than you do about making the most of your dollar. Choose an accountant with experience working with clients in the same business you’re in so that they will know the ins and outs of what you do and what to expect. This is particularly important when it’s time to make significant financial decisions. Your accountant can draw on their experience and help you minimize risk and get a better outcome than if you made uninformed financial decisions.

Remember, rely on the experts to help you with aspects of your business that mean the most, like finances. With a qualified accountant on your team, you’ll garner these benefits and more by freeing your time up for what’s most important – running your business – your stress level with decrease. The chance of errors in vital areas of your business like taxes and payroll will be significantly reduced, and your business will run smoother.

With data breaches becoming more and more common, it’s important to be proactive in protecting your business against cybercrimes. Here are some thoughts on preventing cybercrimes in the first place and having a plan to protect your customers’ information and your reputation should you become a victim.

Test your protection systems. It’s better to have a friend (such as a cybersecurity firm) uncover your weaknesses than a hacker. It’s especially important to run tests after you upgrade software or implement a new technology.

Check your apps. If you’ve created a mobile app for your customers, work with the app’s developers to ensure it’s secure before you release it.

Eliminate third-party risks. You could be exposed to risks via your vendors. Make sure they take security as seriously as you do.

Implement a response plan. Create a step-by-step response to cyber emergencies (e.g., a denial-of-service attack, the loss of a critical laptop, etc.). Hold “drills” to ensure that your plan is effective and that everyone knows what to do.

For more tips on how to keep business best practices front and center for your company, give us a call today.

Businesses that end up on the critical list usually show signs that they are ailing long before they need intensive care. By recognizing these signs and making a concerted effort to tackle the underlying problems early on, owners can often turn their troubled businesses around and return them to good health.

Warning Signs

Signs of distress may include:

• Several quarters of declining sales and lower profit margins
• Persistent cash flow problems
• Inability to meet a lender’s requirements for a working capital line of credit
• Declining productivity
• Poor employee morale
• The loss or failure of one or more significant customers

Don’t Wait

Business owners sometimes make the mistake of waiting too long to act on bad news. While a bad quarter or two often can be explained away, a persistent problem shouldn’t be ignored. A business that has previously been on a growth track has all the more reason to investigate the reasons for a downturn promptly.

Get on Firmer Ground

Once a continuing problem is recognized, steps should be taken as soon as possible to curb the downward spiral and stabilize the business. It may be important to update bankers and suppliers regarding the situation and let them know that efforts are being made to turn it around. Open communication can help show that management is serious about reviving the business and can make it easier to enlist help from these groups later on.

Analyze Operations

Decisions can’t be made in the dark. Despite the daily pressures that may only intensify during hard times, it’s important to keep financial records and disseminate key information to management for analysis. Expenses should be looked at in detail to determine which can be reduced or eliminated to improve cash flow.

Declining sales can reflect a slow economy, but a downward trend also may indicate that the business is losing market share. This is not the time to let customer service and quality standards falter. Nor is it a time to ignore the competition. A business that is repeatedly losing sales to competitors has to ask whether it is still in touch with — or has lost sight of — the market’s demands.

Take Action

Once all the groundwork has been laid, it’s time to put the plan into action and start making the necessary changes. This is the point when the owner’s leadership skills are put to the test. It is the time when he or she has to inspire and energize managers and employees to make a sustained, disciplined effort to revive the business and retain the support of suppliers, bankers, and customers.

You’ve finally found a buyer for the rental property, land, or business you’ve been trying to sell but the buyer doesn’t have enough cash to pay the full purchase price in a lump sum. So you agree to an installment sale. The buyer will make a partial payment now and pay you the balance over several years, with interest. The deal’s done, now what about your taxes?

Pay as You Go

Because you’ll receive the payments over more than one tax year, you can defer a portion of any taxable gain realized on the sale. You’ll report only a proportionate amount of your gain each year (plus interest received) until you are paid in full. This lets you pay your taxes over time as you collect from the buyer.

Reduce Surtax Exposure

The installment sale also might help limit your exposure to the 3.8% surtax on net investment income. Capital gains are potentially subject to this surtax (in addition to regular capital gains tax) but only in years when your modified adjusted gross income (AGI) exceeds a threshold amount: $200,000 if you file as a single or head of household taxpayer, $250,000 if you file a joint return with your spouse, and $125,000 if you are married and file a separate return.

If your AGI is typically under the threshold, recognizing a large capital gain all in one year could put you over the top, triggering the additional 3.8% tax. By reporting your gain on the installment method, you may be able to stay under the AGI threshold and minimize your tax burden.

Take Note

The installment sale method isn’t available for sales of publicly traded securities and certain other sales. And you have the option of electing out of installment sale treatment and reporting your entire gain in the year of sale. Electing out may be advantageous under certain circumstances: for example, if you have a large capital loss that can offset your entire capital gain in the year of sale. Contact your tax advisor for information that pertains to your particular situation.

For businesses that haven’t traditionally embraced remote employees, it may be difficult to get up to full speed with the current turn of events.  To make the inevitable transition less overwhelming, we assembled a handy checklist of actions to consider while adjusting to the new workplace reality.

Organization

• Access your staff members and/or roles that are able to work remotely, those that can’t work remotely, and those where remote work may be possible with some modifications.
• Conduct an employee survey to determine the availability of computers that can be used for working remotely, as well as availability to high-speed internet access.
• Create company guidelines covering remote employees, including inappropriate use of company assets and security guidelines.
• Develop and conduct work-at-home- training for using remote access, remote tools, and best practices.
• Select a video-conferencing platform for services, such as Zoom, Cisco WebEx, or Go To Meeting.
• Develop a communications plan to involve remote employees in the daily activities of the organization.

 Security

• Create and implement a company security policy that applies to remote employees, including actions such as locking computers when not in use.
• Implement two-factor authentication for highly-sensitive portals.
• If needed, confirm all remote employees have access to and can use a business-grade VPN, and that you have enough licenses for all employees working remotely.

Staff

• Institute a transparency policy with your staff and communicate frequently.
• Check in on your staff, daily if possible, to confirm they are comfortable with working from home. Find and address any problems they may be experiencing.
• Make certain each staff member has reliable voice communications, even if this results in adding a business-quality voice over IP service.
• Don’t attempt to micro-manage your staff. Remember their working conditions at home won’t be ideal, and they will need to work out their own work patterns and schedules.
• Create a phone number and email address where staff members can communicate their concerns about the firm, working at home, or even the status of COVID-19.

Infrastructure

• Ensure that you have ample bandwidth coming in to your company to handle all of the new remote traffic.
• Make sure you have backups of your services so your staff is able to keep working in the event extra traffic causes your primary service to go down.

You may need to adjust or expand this list to match the specific needs of your firm and the conditions affecting your organization.  Use this list to get you started and to help guide you through the process.

Busy is good. Most small business owners would rather things were too hectic than too slow. As the year winds down, though, let your staff handle the busy-ness while you look at the business — where you are, what you’ve accomplished in the past year and where you’re headed in the new year and beyond.

Your Bottom Line

The quickest way to figure out where you are is to check your bottom line. Are you making money? Are profits better or worse than they were last year at this time? Are you meeting your expectations? If not, why not?

Your Business Plan

Change is inevitable. And businesses have a way of outgrowing their business plans. But if you don’t have a current plan, you don’t have a way of measuring your progress. So if you’ve been “off road” without a plan for a while, it’s time to formalize a plan that reflects past growth and sets new goals for the next several years.

Your Competition

The more you know about your competition, the better. Who are they? How are they different? How are they the same? Where do you overlap each other? Understanding their business model will help you prepare strategically for possible changes in the marketplace.

Your Secret Weapon

Your workforce is your secret weapon, especially if you’re in a competitive market. Dedicated, well-trained employees providing top-notch customer service can help put you out front of even the largest competitor. A rich, competitive benefits package will help you attract — and retain — a high-caliber workforce. Health insurance and retirement plans are highly valued benefits. You can offer a variety of other benefits to suit your employees’ needs and your budget. Ask your financial professional for information.

Your Future

Do you have a formal succession plan? Are you grooming someone to take over? A well-trained successor could help in the successful — and profitable — transfer of your business. And you can use life insurance to prefund all or part of the sale.

Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track. Don’t wait, give us a call at 912-634-7722 or request a free consultation now to learn more.