Small Business Accounting for When You Need It Most
Small business accounting crises hit business owners in Fort Collins and surrounding areas with alarming regularity. Most can be avoided with the right type of accounting planning and control.
Small businesses come in all shapes and sizes, from digital e-commerce companies to more traditional brick-and-mortar businesses. In all these cases professional accountants do more than just bookkeeping. They help the owners to weather financial storms through smart choices and astute planning.
Entrepreneurs Should Plan for the Worst While Hoping for the Best
It does not always take a natural disaster to put your business on the ropes. Planning for the often-cataclysmic effects of seemingly minor events will often separate successful businesses from failures. Small business owners often begin to worry about two major expenses when their business is starting to grow: taxes and labor costs. They do this however often without leveraging the experience of a small business accountant.
These knowable expenses are only compounded when problems with inventory or accounts payable threaten to derail your business plans.
Small Business Growth Guide – Fort Collins Small Business Accounts
Unforeseeable and expected costs can arise from a multitude of situations, including labor disputes, weather events, and market competition. To handle these and other expenses, business owners can be too likely to make the wrong decisions at the wrong times. To get sound financial accounting, payroll support, and reliable small business tax preparation from a local CPA firm that knows how to help area businesses succeed
Enlist the support of Steven J. Wick and Associates
Unexpected Hits to Your Pocketbook
Business owners should try to plan for everything. Developing start-up capital can be hard enough without having to plan for unexpected occurrences like floods or droughts that can impact your inventory or your ability to receive and deliver goods and services.
Other occurrences, like theft or vandalism, can infuriate and frighten, but most small businesses are at a higher risk of internal problems that involve inventory control or improper accounting, as well as short-term or long-term labor disputes that cause reduced productivity. These events can have an immediate impact on your bottom line, but with the right strategy, your business ends up on its feet.
Capital Gains For Your Fort Collins Small Business
Developing capital is one of the most important things any business will have to deal with. Many small businesses begin with bank loans that hopefully, are in the process of being paid off. When you need more capital, you may have more options than you think. Rather than piling on debt through lines of credit or high-interest loans, you may want to consider seeking outside investments through one of many available streams:
Venture Capital – One possible form of investor is through venture capital firms that see potential in your growing business. Steven J. Wick and Associates can help you develop your financial statements to woo this type of investor.
Equity Investors – For some businesses, growth means bringing on new partners or shareholders that may or may not have controlling interests in your business. If you are thinking about adding a part-owner, your financial accountant can help you come up with terms to protect your interests.
Building profits is the long-term goal of any business, and investing in a sound financial strategy can be the best-spent money in your portfolio. Accurate record-keeping, knowledgeable tax preparation, and innovative financial consulting services are merely the framework of what it takes to build a successful business. Sit down with Steven J. Wick and Associates so that their experienced CPAs can help you come up with a strategy for success. Developing a Small Business Package might be the best move you can make to grow your business in the Fort Collins area.
Determine What Credit Cards You Actually Need
Before applying for a credit card, decide if it is one you will really need. Many credit card vendors will offer perks if you apply and are accepted.
As your accountants, we know, as do credit card companies, the lure of impulse spending. Credit card companies make their profit from several areas, and one is interest paid by cardholders on purchases. It is fine to buy impulsively occasionally, we all do it, especially when we find something we absolutely love and know we would use it often.
Overall, however, apply a budget to your credit card spending to keep it under control. As accountants, we see far too many people who are overwhelmed with credit card debt.
If you are in this position, your accountant can help you manage the debt. If you are not, we can help you set up a budget and spending plan to stay out of trouble.
Nature is Not Always the Culprit When it Comes to Crises in a Small Business
Today, many businesses rely on highly customized computer servers and networks. Power outages and problems with IT can threaten valuable data and prevent your business from running effectively, costing you time and money in the process.
Many businesses in Fort Collins are also at-risk of hacking schemes that aim to retrieve customer information or business account details. The right financial accounting firm will not repair your computers, but they will help you find streams of revenue when you need it, and help you save money when unexpected dips in sales occur from time to time.
Develop a Continuity Plan – Accountants for Small Businesses
The professional accounting support from Steven J. Wick and Associates in Fort Collins can allow you to breathe easier. Your strategy for success can include a continuity plan to make the inevitable bumps along the road a little smoother.
Traditionally, small businesses relied heavily on word-of-mouth marketing that let your service and customer relations do the talking. Today, small businesses are still using word-of-mouth marketing, but this word-of-mouth includes the potential for a small mistake to turn into a major public relations nightmare on the internet with a swipe of a mouse.
Although your goal is to please every customer, one unhappy customer can cause a lot of destruction. That is why your accounting approach needs to understand that short-term success in a small business can only be turned into a sustainable business when you are prepared to make the minor adjustments necessary to weather any type of storm.
Your continuity plan can include alternative streams of capital, shifting the money in your budget to make up for deficiencies, or ways to streamline costs in the event that revenues face a prolonged egress.
Minimize the Impact of a Crisis on your Small Business
No business owner wants to throw good money after bad, but that is what many entrepreneurs do in an attempt to save money during lean times. The money spent on a qualified small business-centric CPA should save you time and money when it comes to accurate payroll processing, account reconciliation, financial accounting, and small business tax preparation.
Doing it yourself or hiring a cut-rate tax service usually only leads to further costs, penalties, and accruing interest on your debts.
The IRS allows businesses to use depreciating values for assets as a form of business cost recovery. The depreciating value includes factors like time, as well as general repairs, installation costs, and employee training that relate to the type of property used to generate business revenue. There are two key principles involved in expense accounting:
Cost Principle
This type of accounting requires that the actual cost of an asset be recorded on a balance sheet. This type of accounting does not calculate the current market value, but rather the actual expense of an asset, such as the initial cost of purchase, as well as the cost of installation and repairs. This is the historical value of an asset that amounts to calculating what your business has spent in order to generate business revenue.
Matching Principle
The matching principle uses a slightly more complex system of asset value calculation. If you purchase equipment or other property to generate revenue, then this expense will be used as a balance sheet deduction in the period in which revenue is generated. This method matches the expense directly to the revenue it generates, recognizing the direct correlation between costs and benefits. Using asset depreciation, this principle allows your business to accurately assess the usefulness of certain expenses over the entire life of the asset.
Audit Risks For Small Businesses in Fort Collins
Those businesses most at risk for an IRS audit usually have one or more of these things:
1. Operate as an LLC (Limited Liability Company) and file as a Schedule C Sole Proprietor
These are the most common forms of small businesses, from construction companies to design firms, but also have a larger potential for fraud. If you want to avoid the high rate of auditing in this category, consider filing your business as a corporation if possible.
2. Have a high-income return based on TPI (Total Positive Income) tax claims
Business tax returns that claim over $200,000 in TPI is more likely to be audited.
3. Claim a large EITC (Earned Income Tax Credit)
This type of claim has a high potential for fraud, resulting in over 1/3 of these tax returns being audited. For individuals filing Schedule C and claiming more than $100,000 in EITC, the rates of audit increase dramatically.
If you are concerned about being audited, you can always jump the gun and have your books inspected by a licensed CPA and try to correct any missteps and fill any holes that you may be missing before the IRS gets its hands on them.
And if you have received an audit notice, don’t try to handle it all by yourself! Call your local accountant for help with your case- we will know the ins and outs of the process better than anyone else and can make the process as hassle-free as possible.
Designing Service for Your Business
Every business faces different managerial challenges when it comes to costing, and determining how materials, labor, and utilities fit into the patterns of production for your organization is essential in today’s business environment. Whether you run a retail shop, a small factory, or provide a local service, your business can benefit from the services of a certified public accountant. To maximize your profits you need accounting help that can help you find out how your expenses are utilized to create revenues, and when scaling back or seeking capital investments might be necessary to reach the profit potential you are looking for.
Professional Small Business Tax Preparation
Professional small business tax preparation available as part of a Small Business Package at Steven J. Wick and Associates in Fort Collins can minimize your tax liability, get the most out of business deductions and credits, and help you develop a strategy to save money on your taxes in the future.
You can count on some type of crisis to eventually challenge your business revenue. According to the Natural Federation of Independent Businesses, over one-quarter of all small business owners will experience some type of revenue-effecting business crisis in any given year. It is important to be able to estimate the potential costs of a variety of unforeseeable events. Before a natural disaster, theft, virtual intrusion, or publicity nightmare threatens the health of your business, get the financial help you need to make sure your business can withstand the unexpected.
Join the hundreds of highly effective managers, leaders, and entrepreneurs in Fort Collins and surrounding areas we have assisted over the last 20 years
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