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. 

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!

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.

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.