Make Better Business Decisions with Cloud Based Bookkeeping Software

Over the past decade, technology has revolutionized bookkeeping practices and accounting systems. Bookkeeping software helps small business owners to enter and mange financial information on their own, more efficiently than ever before. Reporting functions provide quick access to the information that matters most. And with the proper information, business owners are empowered to make better financial decisions. 

Cloud based software has taken the benefits of bookkeeping technology to a whole new level, allowing business owners to access financial data from anywhere.  With secure online file storage, financial data can be quickly and easily shared with others as well. This is particularly helpful to business owners who rely on outsourced accounting support.

The support of a professional bookkeeper ensures that financial information is not only accessible but that it is entered and analyzed accurately. Cloud based software and online file sharing help to enhance the efficiency of outsourced accounting because key performance indicators can be accessed remotely and monitored consistently by someone who knows what they are looking for. Learn more about the peace of mind that accounting software and outsourced support provide by reading a DEKE Bookkeeping client feature. 

I strongly encourage all business owners to adopt a cloud based bookkeeping solution (like Quickbooks Online or Xero). With the proper software, most business owners can easily manage basic accounting functions in house (invoicing, bill payments, etc) and make more informed financial decisions over time. 

Need help implementing software or ensuring the accuracy of your financial data? Or perhaps you just need to free up more of your time to focus on operations? Professional bookkeeping support may be right for your business. Email David@DEKEbookkeeping.com to learn more. 

Preparing Your Business for a Rainy Day

As a bookkeeping firm, we talk about money quite a bit. Cash flow plays an important role in planning for the unexpected. We would certainly encourage all business owners to maintain savings for tax liabilities, operations and emergency expenses, but that is not what this blog is about. 

What if you (or one of your most valuable employees) were facing a personal emergency—an illness, an ailing family member or a natural disaster? Emergencies interrupt business as usual and may even require you to be away from the office for extended periods of time. Is your business prepared? 

Your business needs more than cash to survive, and we’ve put together a list of things to consider as you evaluate your operating procedures…

• What obligations does your business have to customers and/or employees? 
• How does your business go about fulfilling these obligations?
• What tools/technology/information is necessary to complete these functions?
• Do some business functions rely upon the completion of other functions?
• Who is accountable for each?
• Could these functions be handled remotely in an emergency situation?

Cloud based software for file storage, project management and bookkeeping can certainly make working remote easier. Dropbox and Google Drive are great solutions for file storage, and Quick Books online can ensure that you maintain access to crucial financial information. There are also a lot of great applications for communication… Google Business Apps ensures that you can access your inbox and contacts from any computer (unlike an Outlook Inbox that may be specific to your desktop computer). VOIP phone systems and apps like Dialpad allow you to use your business number remotely and help to keep you connected to clients even if you can’t be at the office.

Prepare for the unexpected by evaluating your procedures and systems. It’s going to make a world of difference on a rainy day, and it may make your day-to-day a little easier too. 

New Minimum Wage and Overtime Regulations

Minimum wage is going up significantly for exempt employees (from about $23k/year to $47k/year). If you are a small business owner, this may mean that you need to start paying overtime to employees who previously didn’t qualify for it.  

According to the Fair Labor Standards Act (FLSA), certain employees (executive, administrative and professional employees) are exempt from overtime pay as long as they meet a certain wage threshold. A new rule will go into effect December 1, 2016 that requires exempt employees be paid at least $913/week ($47,476/year) in order to remain exempt. Employees making less than that will be non-exempt (entitled to overtime pay). 

“The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.”

— US Department of Labor, The Final Rule

Visit DOL.gov to read more about this new regulation.

Need help preparing your bookkeeping system for the change? Email David@DEKEbookkeeping to set up a consultation. 

Client Spotlight: Best Kept Self

We’re always eager to talk about our clients, and we recently decided to share some of their stories on the DEKE blog. We wanted to pick a client who could speak honestly to the struggles of entrepreneurship and share some helpful advice, and Shauna Mackenzie, founder of Best Kept Self, is an expert in both departments.

About Best Kept Self

Best Kept Self is a web-based community and digital publication for freelancers and entrepreneurs who want to explore a variety of self-care topics. The publication has more than 40 contributors who write for and engage with entrepreneurs worldwide. Visit www.bestkeptself.com to learn more about webinars, live chats and other programs. 

The Challenge

Like most business owners, Shauna wears a lot of hats. Prior to working with DEKE she was managing all of her financials in house. She had a general idea of “the numbers” but didn’t have the capacity to thoroughly analyze financial data on a monthly basis. Company growth (including the addition of new, sub-entities) made accounting systems more complex, and Shauna was busier than ever with day-to-day operations.

THE SOLUTION

Shauna hired DEKE Business Bookkeeping in 2012 for data entry, budgeting, financial statement preparation and consulting services.

Photo from BestKeptSelf.com

“Bookkeeping is such an understatement because David really takes a 360 approach to helping me grow my business and make wise decisions to keep the financial health of my business strong. When I hired Dave, my business was making a transition where things were becoming more intricate and complicated. Multiple sub-entities, payroll, and a recent upgrade to an S-Corp meant I needed an expert to assist in keeping it all straight (and in the black) and that’s exactly where David was able to step in and make a huge difference for me and my businesses.”

— Shauna Mackenzie, Founder of Best Kept Self & Principal of Shauna Mackenzie Inc.

The Results

•  All Shauna Mackenzie Inc. entities (including Best Kept Self) have maintained positive cash flow.
• Expenses that negatively impacted bottom line have been completely eliminated.
• Revenue for all Shauna Mackenzie Inc. entities (including Best Kept Self) has increased.  
• Shauna added a co-owner (by partnering with a competitor) which doubled revenue for the respective entity.

Learn More

Shauna told us that “[as an entrepreneur], time management and delegation are two very important skills to master.” We agree, but it can be tough to take the first step. Outsourced business functions are a viable solution for many business owners, and we hope that you will schedule a complimentary call (when you’re ready) to learn more. 

DIY Bookkeeping: When and How to Make it Work

Most people assume that proper bookkeeping requires one of two things – math skills or the proper software. Those things sure do come in handy, but I would argue that good books require something far more important. Good books require discipline. 

Bookkeeping, by definition, is the discipline or skill of maintaining systematic records of financial transactions. Bookkeeping is not a mathematical process. With consistency, patience and the proper tools (I recommend Quickbooks Online) most business owners are capable of managing their own books without formal education, but there are a few exceptions to that rule…

3 Reasons to Outsource Bookkeeping

1. You do not understand accounting software and have no interest in learning.
2. Your tax preparer has alerted you to inconsistencies and/or improper practices.
3. Your business is growing. Outsourced payroll, a new business loan or a recent purchase of substantial business assets may all signify that it’s time to outsource your books. 

Learn more about the benefits of outsourced bookkeeping here, or email David@DEKEbookkeeping.com to schedule a complimentary call.

The Best Time to Set Business Goals is Now

The business world buzzes with talk about goal setting each and every New Year. You may have put time and energy into some goal setting of your own in January, before life and running your business got in the way. It’s hard to believe that March is here already. And while you may feel as though you’ve missed the business planning boat, you can be rest assured that you haven’t. When it comes to setting goals, there is no better time than now. 

At DEKE, we talk a lot about goals because financial data plays such a crucial part in the planning process. You can check out a few of our previous posts about SMART goals and benchmarking for more information, but the major takeaway is that reviewing financial data (whether you do it yourself or outsource that job to someone like me) is important. Don’t neglect your books until next tax season, and don’t wait until December 31st to start reflecting on the health and future of your business. There’s a lot we can be doing today to get you on track!

Another Year is In the Books

DEKE Business Bookkeeping is celebrating an anniversary this month. We have been serving business owners throughout the Lowcountry for six years now, and in that time we’ve had the pleasure of working with a lot of wonderful people. Thank you so much for your continued support. We look forward to what the future has in store—new clients, new achievements for the clients we already serve and continued success for ourselves.  Cheers to six years!

New Business Mileage Rate Announced for 2016

Effective January 1, 2016 the standard mileage rates for business miles driven is 54 cents per mile. This is down from 57.5 cents in 2015. 

Why Do Rates Change?

Standard mileage rates are based on an annual study of the fixed and variable costs of operating an automobile. Thus the rate fluctuates from year to year. Many business owners use this rate when calculating mileage deductions, but you do have the option to calculate actual costs instead. Actual cost must be used in some instances. Standard business mileage rates cannot be used for a fleet of vehicles (more than four vehicles simultaneously).

Visit the IRS Newsroom, or contact David@DEKEbookkeeping to learn more.

Top 3 Tax Mistakes

1.    Mixing Business with Personal Finances

Law doesn’t require that you keep business and personal accounts separate, but it sure makes bookkeeping a whole lot easier. Separate accounts will ensure that your financials reflect all relevant activity. Income and expenses may be inaccurately reported or missed entirely when your accounts are commingled, and that could mean penalties and missed deductions for you.  And if you are an LLC or corporation, commingling of your personal and business activity could put you in jeopardy of losing the liability protections these types of organizations provide.

2. Misclassifying Labor

Are you reporting labor correctly? If you’ve reported an employee as an independent contractor, you may owe penalties and interest on the employer share of employment taxes. Ensure your employees are classified correctly with these guidelines from a previous post.

3. Missing Out On Deductions

Good books will ensure that you have everything you need to validate deductions come tax season. I’ve put together some helpful tips for smart spending and tracking expenses (mileage deductions, equipment purchases and strategic spending, but you may want to consult with a tax professional for additional deduction strategies. 

Avoid a Tax Fiasco

The mistakes listed above really boil down to one thing—poor preparation. An organized bookkeeping system will be your best friend come tax season. A little research and consistent practices will take you a long way! And if you are struggling to find time or the proper system to get your books in order, it may be time to call in a professional. Email David@DEKEbookeeping.com to learn more. 

Task or Tool? How are You Treating Your Books?

Bookkeeping seems like a complicated chore to many small business owners, but when it comes to maintaining your books, you should try to keep a bigger picture in mind. I recently read an interesting Forbes article that clearly explains the purpose and importance of bookkeeping. Here’s what it all boils down to...

“For an entrepreneur, the truth is that accounting and finance are only tools to accomplish three key tasks: (1) To make predictions about the future; (2) To help you make more effective commitments of time, energy and money to attract customers and deliver goods and services at a larger and more efficient scale; and (3) To measure and reassess your progress, so you can reward and encourage profitable behaviors, report progress to third parties, and change directions when necessary.”

— Acton for Forbes.com

Bookkeeping in and of itself is not a task. It is a tool by which you can more effectively manage the larger more significant tasks listed above. Consistent bookkeeping practices simplify these tasks and ultimately make achieving your business goals much easier.

As you prepare your business for the New Year, evaluate your books. If your record keeping has been somewhat haphazard, resolve to do better in 2016. And if consistency proves difficult, consider outsourcing your bookkeeping. Contact our Charleston office to schedule your complimentary consultation. 

Bookkeeping with Quickbooks Online

The right tools can help you get (and keep) your books in order. Software packages are pretty much a no-brainer these days… They eliminate paper and offer reporting functions, but all software is not created equal. I highly recommend Quickbooks Online to my clients for a few reasons:

Cloud Storage

Documents are stored safely in secure cloud storage, which means that you can rest assured knowing you will have access to what you need when you need it. This organized storage system also helps to improve workflow. Your team members and/or outsourced professionals (like myself) can share information quickly and easily, and that’s important, because your time is valuable. 

Reporting Functions 

Yes, you need to keep accurate records for the IRS, but they shouldn’t collect dust on a shelf until tax season. Reporting functions that are easy to understand can help you to utilize crucial financial information in your day-to-day decision making. 

Connectivity

Quickbooks Online syncs with a lot of other software solutions that are popular among small business owners. Pay Pal syncs relatively seamlessly, and other data (like Square sales) can be easily imported.   

Learn More

DEKE Business Bookkeeping clients receive discounted access to Quickbooks Online. Is cloud based bookkeeping right for your business? Email David@DEKEbookkeeping.com to learn more.

Should Your Small Business be Using E-Verify?

DEKE Business Bookkeeping offers payroll services to many of our bookkeeping clients, and while we are not equipped to function as an outsourced HR department, we often field general HR questions. Many of those revolve around new hires and compliance implications.

You’ve likely heard a lot of talk about E-Verify on the campaign trail, but did you know that employers in the State of South Carolina are required by law to use it? According to SC legislature HB 4400, which was passed in 2008, all employers are obligated to use E-Verify or some other verification process effective July 1, 2010. Refusal to comply can result in fines, debarment from government contracts and criminal penalties.    

What is E-Verify?

E-verify is web-based software that helps an employer to validate whether or not an employee is eligible to work in the United States.

How can your small business access the E-Verify system? 

Visit the official E-Verify website at uscis.gov/e-verify/employers to enroll. Once registered, you can easily login to access the online system. When verifying a new hire, you will need a photo ID (a driver’s license or identification number) and a social security number or work visa. The verification process should happen quickly (in as little as five minutes). 

Learn More 

For more information on how to use E-Verify, visit smallbiztrends.com.

And if your business is seeking payroll services, it may be time to outsource your bookkeeping. Email David@DEKEbookkeeping.com to learn more about the options available to you. 

Tracking Mileage for Tax Deductions

Do you use a personal vehicle for business purposes? Are you maintaining detailed mileage logs? Mileage can account to a sizeable tax deduction, but if documented incorrectly, the cost can be even greater. If your books are subject to an IRS audit, your inadequate mileage log could cost you your deduction as well as time and money spent defending yourself in court.

Spend some time setting your records straight now to avoid owing the IRS later. To prove that you are entitled to a mileage deduction, you must document the following for each and every trip:

• How far you drove
• When you drove
• Where you drove
• The business purpose for which you drove

It can be a hassle when you are running late or in a hurry, but this information is absolutely necessary to justify your deduction(s).  And while a good, old fashioned paper log will suffice, a lot of business owners are turning to mobile apps to stay more organized. Here are a few that you may want to consider…

• MileIQ
• The Mileage Ace
• TripLog
• Mileage Log+

Visit americanexpress.com to learn more about other apps that can help you to track business expenses.

Are you using a mileage app? If you’ve found a good one, email David@DEKEbookkeeping.com. We would love to share your find with others!

Can Your Business Afford It?

Can your business afford to hire more employees? Can you spend more on advertising? Can you afford rent on a larger office space or store front? How will you know?

It all boils down to your books, but financial statements can be difficult to decipher. A professional bookkeeper can help! We employ two methods…

Vertical Assessment

Vertical analysis is when we consider each number on your financial statement as a percentage of something else. When analyzing a balance sheet, every amount is calculated as a percentage of total assets. The income statement can be analyzed similarly by restating every amount as a percentage of sales. By restating expenses as a percentage, we can compare those expenses to one constant variable (in this case, sales). Restated financials can also be compared to financial statements of other companies or industry standards. For example, if we discover through vertical analysis that 3% of your income is spent on renting your store front, we can compare that figure to industry standards. 

Benchmarking

Benchmarking is the practice by which we compare P&L activity to industry data. DEKE Business Bookkeeping has access to various industry data/standards that can be used as point of comparison. Check out this blog post from 2014 to learn more. 

Make Better Financial Decisions for Your Business

The methods outlined above can help you to make better use of your company money! Email David@DEKEbookkeeping.com to schedule a complimentary call. 

Is Your Business Healthy?

How healthy is your business? You may know how much profit you brought in last quarter or last year, but is that all you need to know?

Working Capital 

Most business owners look to their profit and loss statement to evaluate business health, but the balance sheet is of equal importance. The balance sheet will indicate trends like whether or not working capital has increased over time. To calculate working capital, subtract current liabilities from current assets.

Assets – Liabilities = Working Capital

Working capital is the best way to evaluate the short term health of a business (i.e. that the business has enough assets to cover short term debt). 

Inventory Turnover

The balance sheet will also indicate whether your business is holding too much or too little inventory. Compare inventory value (from the balance sheet) to the profit and loss statement in order to gauge inventory turnover. 

Cost of Goods Sold / Average Inventory = Inventory Turnover

Low inventory turnover indicates that too much inventory is being held. An extremely high turnover rate may indicate the need to hold additional inventory. 

Fixed Assets

Should you purchase fixed assets? The balance sheet will reveal whether or not assets are being used sufficiently.

Net Sales / Fixed Assets = Fixed Asset Ratio

A high ration will indicate that assets are being used efficiently. A declining ratio would indicate that a business is over-invested in fixed assets. 

Accounts Receivable

Uncollected accounts receivable may cause cash flow problems and hinder business growth. Business owners may even look for a loan as a result. Careful analysis of the value of accounts receivable over time, the AR turnover and the aging of accounts will indicate business health and help determine if a loan is the proper course of action.

Would your balance sheet and bottom line benefit from a well-trained eye? Email David@DEKEbookkeeping.com to schedule a complimentary call. 

3 Step Guide for Raising Small Business Capital

The quest for business capital is often a stressful and frustrating process. Banks consider small business lending to be high risk and low return, and as such, many business owners are quickly refused with little or no explanation. 

So what’s a small business owner with capital needs to do?

Step 1: Get Your Books in Order

When applying for a business loan, you will need to clearly articulate:

• The amount of capital needed
• How the cash will be used
• A plan for repayment

Accurate documentation of your income and spending habits will reveal cash flow problem areas and opportunities for improvement. A careful evaluation of your financial statements may even eliminate your need for a business loan entirely. If you only need a small amount of capital, there may be easier ways to get it (i.e. liquidating an asset, incentivizing collections with a discount, etc.). 

Your records will play an important part in the loan qualification process.  If the financial records still indicate a need for cash, the time spent organizing your books certainly won’t be a waste. 

Step 2: Research Your Options

Financial institutions are in the business of “calculated risk.” When you apply for a business loan, that institution is deciding whether or not you are a good investment, but different lenders have different ideas as to what a good investment is. 

Generally speaking, large banks are not as interested in granting small loans as they are with making larger loans. This does not mean they will not, it just means it may be a little more difficult.

What is most important is to pick your lender carefully. You may want to consider working with a community bank or credit union. You should also talk to banks and other financial institutions you already have a relationship. By all means, do your own research to find the best fit for your lending needs.

Step 3: Prepare Your Repayment Plan

Lenders sure do ask for a lot of stuff, don’t they? Application requirements vary from lender to lender and help a lending institution to evaluate your ability to repay the loan. Have you identified key financial metrics? These will indicate the health of your business from the lender's perspective and predict the likelihood that your loan will be approved. 

For an example of what it may take to get a business loan, visit the US Small Business Administration website, www.sba.gov. Be sure to check with your lending institution regarding additional requirements.

Are your books in order? Is a business loan in your future?  Schedule a complimentary call to learn more - 843.225.6522.

Improve Your Bottom Line with Better Business Functions

All businesses, large and small, have three general functions—operations, marketing and accounting. Most business owners work very hard to improve those systems, but many become frustrated when profit doesn’t increase. Hard work should pay off, and yet sometimes it doesn’t. Today we’re going to talk about why…

The Pitfalls of Process Improvement

Improving all business functions at once is a daunting task, so business owners often take a “divide and conquer” approach to process improvement. They identify a problem area and focus on changes to that particular process. Immediate results (like a short term increase in production) are typically used to measure success. 

But a narrow focus can be problematic, because business functions are connected. The “divide and conquer” method may improve certain aspects of operations, but it does very little to increase profit. 

Hold Business Functions Accountable 

Without quantifiable data, process improvement is a game of chance. A proper accounting system will indicate the performance of each business function separately, and it will help the business owner to understand crucial overlap between business functions (i.e. the impact of marketing on production, etc.). 

Good bookkeeping practices provide insight that can improve your business functions and your bottom line. Is outsourced bookkeeping right for you? Schedule a complimentary call to learn more. 

Evaluating Small Business Goals

Tax season is coming to a close, and many small business owners are breathing a sigh of relief. The year may start in January, but most business owners spend the first four months of each year focusing on numbers from the previous year.  Once your tax return is filed, be sure to take some time to evaluate your current situation…

• What is your primary focus in 2015?
• Are your goals realistic and  measurable?
• Are you tracking progress in an effective way?
• Is it time to re-evaluate some of your goals?

I would encourage you to check out last month’s Spring Cleaning Checklist, and remember that SMART Goals are…

• Specific – Target a specific area… Aim small, miss small. 
• Measurable – Set goals that can be tracked and/or quantified.
• Assignable – Specify who will drive/own the initiative. 
• Realistic – Consider available resources.
• Time-Related – Specify a time frame.

Need help setting SMART Goals for your small business? Contact David@DEKEbookkeeping to schedule a complimentary call. 

Spring Cleaning Checklist for Small Business Owners

Springtime is an excellent time to tidy up your small business operations. Process improvement is crucial to the success of any business, but it can be overwhelming. Use the following checklist to keep your spring cleaning efforts constructive…

Start Small

Clear clutter from your desk, organize files, back up electronic files and delete the unnecessary emails that take up space in your inbox. 

Take Inventory

Maintain a list of software subscriptions, equipment and other resources. Determine what is working, what isn’t working and what needs to be replaced immediately.  

Plan Ahead

Most businesses experience seasonal changes (a high season, slow season, etc.). Analyze last year’s financial records, and develop appropriate marketing, HR and accounting strategies. Successful businesses are proactive, not reactive. 

Outsource Distractions

Business owners wear many hats—marketer, bookkeeper, office administrator, HR director… Consider outsourcing peripheral business processes so that you have more time to concentrate on the primary function of your business. Improved operations will positively impact your bottom line. 

Could outsourced bookkeeping benefit your small business? Email David@DEKEbookkeeping.com to schedule a complimentary call. 

Assessing the Financial Health of a Small Business

I recently read an article from entrepreneur.com that described the lack of business cash flow as a “symptom and not a cause of business failure.” I couldn't agree more, and that is why it is absolutely crucial to ensure that you have a clear understanding of your company finances.

Financial Warning Signs

• Little or No Profit – This can be a difficult symptom to diagnose. Even great businesses have struggled with profitability at some point along the way. If your business consistently relies on outside money and not profit in order to sustain itself, that is a sign of a much larger problem.
• Slipping Margins – Gross margins (gross profit divided by sales) are an indicator of your business’s ability to manage important expenses. Net margins (net profit divided by sales), is an indicator of profit (a much better indicator than outright profit alone).
• Profit but No Positive Cash Flow – Your business can be profitable without generating positive cash flow. That seems like an oxymoron, but it’s an issue of liquidity (can your assets be easily/quickly converted into cash).

Financial Stability: How’s your business doing?

It can be difficult to tell if your small business is financially stable… especially if you are unable to calculate or determine the items listed above. If you are struggling to make sense of your books, it may be time to consult with a professional. Your friendly, James Island bookkeeper can help you to better manage company money. DEKE Business Bookkeeping caters to the unique needs of small businesses in the Charleston area. Schedule a complimentary call to learn more.