As a small business owner, what is causing you pain?
When thinking about issues small businesses are facing, I think of tax and financial reporting issues in three major areas:
1. Compliance
2. Making Business Decisions
3. Choosing Accounting Technology
Let’s explore each area small businesses face and how I could help.
1. Compliance
Number one challenge is making sure you’re in compliance. Following the rules. Making deposits timely, keeping track of expenses as well as income, and a lot more. A couple of big areas in keeping compliant are:
Income Tax
Staying in compliance with federal and state income tax guidelines is top of the list. Tax professionals have been helping with this area for years to ensure you are up to date with any changes in the rules. I don’t want to focus just on deductions even though that is the most asked question. Technology has helped tremendously with tracking income and expenses.
I want to focus more on tax credits, a dollar-for-dollar reduction of the tax liability. This requires me to be proactive and understand your situation. One example is research and development credit. The tech industry could take advantage of this at the federal level but also in many states. This could be a huge impact in your favor.
Sales Tax
States face large budgeting issues and pressure economically. Sales tax is one area a state can raise more money. Not only increasing the rates but adding what is taxable. If you where in Iowa and many other states, a simple lawn mowing business is one of the services that requires sales tax. Is your product or service one that you need to collect that tax? Online businesses might have to collect and pay sales tax in a state they are not even in. Looking at the future, I think compliance with sales tax is the biggest issue.
Sales tax compliance, because of its complexity and the varied taxing authorities, is one that has low compliance rates. Companies are plainly unaware that some of these rules now apply to them.
2. Making Business Decisions
After you get compliant, what else do you need? I don’t just stop at getting you compliant. Being successful is your goal and that is an area I want to help. Moving to GAAP (Generally Accepted Accounting Principles) based financial statements too quick, before required, may be a pain point. The purpose of GAAP is to ensure that financial reporting is transparent and consistent from one organization to another. What’s going to be helpful to you?
Revenue Recognition
Client accounting service groups are slowly moving their clients away from cash basis to GAAP as needed. For instance, deferred revenue would be a reason. Selling multi year licenses, as in a tech company, could cause a very distorted view in a cash basis profit and loss. Defer revenue and move to a better matched P&L amortizing that revenue of the period that costs are inured. Now there is a more meaningful and actionable financial statement that makes sense and profitability is understandable.
Situational
There is a huge category of business decisions that can be labeled as ‘situational. Not overly complex decisions but happen infrequently.
An example is obtaining a line of credit, sale of a business, and raising money or some kind of fundraiser. One of the difficulties of making these situational decisions is they only happen maybe only once or twice. Accountants see this kind of decision every day and would be invaluable.
It’s not that tax professionals are smarter than you, it’s just they deal with a variety of issues every day. Look at recent programs that Congress put into law in response to COVID and the economic impact of PPP and the ERC. I am looking at all of the ins and outs of each of the economic relief programs that were initiated for you. You have better use of your time.
I know the business side of it AND the reporting side. How would you put it on your financial statements? This is what I help with. Just to be clear, if I don’t know something, I know where to look or who to ask. What if it becomes too complex, I am not an accountant (BA in Management), I will know who would be able to help.
3. Choosing Technology
Going beyond compliance and decision making, technology is often overlooked. Would you like to have more time to do the business?
Three interrelated components in financial reporting are people, process, and technology. Two area to reducing the people time and reduce pain in accounting are technology selection and implementation. Good choices influence which processes to put in place.
As a business owner, going it alone is jaunting. How do you choose? With the number of hardware and software choices, you need help. Do you use Quickbooks Online, Peachtree, or another major accounting package? Do you need a Windows based PC or a Mac? What about training?
I and CPAs (accountants) will be able to help by capitalizing on our in-depth knowledge of accounting software, tax rules, and business development, can give you more of your time back.
If you want to talk, I would be happy to help. Like I said earlier, if I don’t know, I will know someone who does. Call, text, or email me. Let’s talk.
#tax, #taxlaw, #business
