Category Archives: Budgeting

Writing Off Your Summer Vacation – My Money (

If you’re lucky enough to get away this season, consider making vacation plans that will enable you to deduct some of your travel expenses. The only way to do this is to include certain activities in your trip.

Combine business with pleasure. Take a meeting for business in a distant location and all of your airfare is a deductible business expense even though you spend some time on your personal activities. As long as the primary purpose of the trip is business within the United States, transportation and lodging costs and 50 percent of meal expenses on business days can be written off. If you drive instead of fly, you can deduct 56.5 cents per mile, plus parking and tolls.

However, there’s no red line for determining whether the primary reason for your trip is for business or pleasure. Clearly, if you spend more days on business than personal activities, it demonstrates a business need for the travel.

The key to nailing down a deduction for business travel is good record keeping. Be sure to carefully follow the rules outlined on so that if your return is questioned, you can back up your claims. Consider using an app like Expensify to keep track of your business-related travel expenses.

read more…via Writing Off Your Summer Vacation – My Money (

Do I Need an Accountant?

If you are bootstrapping, or starting a small business on a limited budget, you have probably spent some time trying to figure out where you can cut business costs and do more on your own in order to stretch the funds you have available.

One area you may consider doing it yourself instead of hiring it out is accounting. If you have an accounting background and a solid understanding of business finances, then this may be a good place to cut costs. However, if you lack experience in managing the books of a business and expect to learn as you go, you should think twice. Managing your own accounting system incorrectly can hurt your business not only now, but also in the long-term.

Here is a rundown of the things an accountant can do for a small business owner. Review the list carefully, especially if you’re still unsure why an accountant may be a good resource to add to your small business team.

During the Start-Up Process

When you start a business, there are a number of actions you need to take and systems you need to set up in order to create the foundation of a successful business. Here are some ways an accountant can help:

via Do I Need an Accountant?.

Three Things I’ve Learned From Warren Buffett by Bill Gates| LinkedIn

Know how valuable your time is.

No matter how much money you have, you can’t buy more time. There are only 24 hours in everyone’s day. Warren (Buffett) has a keen sense of this. He doesn’t let his calendar get filled up with useless meetings. On the other hand, he’s very generous with his time for the people he trusts. He gives his close advisers at Berkshire his phone number, and they can just call him up and he’ll answer the phone.

(Good advice for all business owners…spend time doing what you do best, and leave the other details to those who know those details best. Contact us today ( if you’d like to stop dealing in the bookkeeping details!)

via Three Things I’ve Learned From Warren Buffett | LinkedIn.

Outsourced Bookkeeping Provides Safe Keeping For Your Business’s Financial Data

The Tornado recently in Moore, OK reminds us of the devastating effects a natural disaster can have on a community. Just as families are working to rebuild their lives, so too are the small businesses that were impacted by the storm.

Kai Ryssdal of American Public Media’s Marketplace interviewed a business owner in Moore, Oklahoma whose business was completely destroyed by the tornado. In the interview, Kai asked the business owner about her business forms and client records. She responded by saying:

“Luckily I did find my [client] records, and I have a CPA offsite … that was the saving grace because I didn’t get the computer backup.”

Regardless of scale, natural disasters have proven that even traditional backups can fail. For instance, say your office experiences a fire, flooding, or even an earthquake, and everything is damaged. Your paper records are gone and your computer equipment is unsalvageable. You can’t rely on keeping your most important business information backed up on an external hard drive. Storing your information with an offsite financial professional can help by protecting your mission critical data so that when it is time to reopen your business, you have all the information you need at hand.

Outsourced Bookkeeping Gives You Peace of Min

via Outsourced Bookkeeping Provides Safe Keeping For Your Business’s Financial Data.

Money Mistakes You Might Be Making – 360 Degrees of Financial Literacy

Mistake 1: Only saving what’s left over

Do you continue to worry that you’re not saving enough? Do you routinely rely on credit rather than cash to pay for the things you want or need? Rather than blame your financial inertia on your income, look a bit deeper, because the real culprit may be the lack of financial priorities. If you don’t know exactly how you’re spending your money and you haven’t set financial goals, it’s unlikely that you’ll see much financial progress.

Go back to basics by preparing (or reviewing) your budget. If you tend to save only what you have left over every month, you can put yourself on a more disciplined course by having a fixed amount taken out of your paycheck automatically for retirement. Or, you can set up automatic transfers from your checking account to a savings or investment account.

Mistake 2: Not having an emergency fund

One lesson that you may have learned over the past few years is that the job market isn’t stable. That’s a major reason why one of your savings priorities should be an emergency fund. While it isn’t glamorous, this underappreciated workhorse really pulls its weight during hard times. Having cash on hand that you can use for an unexpected expense, or to pay bills if you lose your job, is vital because it can help you avoid having to rely on credit or tap your retirement savings. If you don’t have emergency savings to fall back on, a minor money shortfall can quickly turn into a major cash crisis.

Mistake 3: Not asking for help

Even if your finances are in good shape right now, you may be overdue for a checkup. Reviewing your finances is especially important during periods of volatility because it can help reveal potential strengths and weaknesses, and identify changes you might need to make to adjust to the current economic climate. And if you’re already in financial trouble, don’t let fear or shame prevent you from asking for help. Facing financial problems early may help you make a full recovery. Many creditors are willing to work with you, but this may be much easier while your credit is still good, and while you still have time to turn things around.

via Four Money Mistakes You Might Be Making – 360 Degrees of Financial Literacy.

Analyzing Business Expenses

budgetTracking business expenses is essential for staying profitable and predicting future income and expenses. Whether you’re doing the analysis or leaving that to your financial person, it’s important to know what’s going on with the finances of your business.

1.         Compare the budgeted numbers to the actual numbers.

If you don’t have a budget, create one based on past years’ data and soldier on from there. Knowing what you plan to make and spend over a year’s time and tracking that plan against actual spending month by month is very helpful in forecasting what lies ahead and how to fix it.

2.         Analyze the income statement.

Accounting software (such as QuickBooks) provides a report of operating expenses called the Profit & Loss Statement or Income Statement. Compare the operating expense figures to last month, last quarter, the average of the last three months, average year to date, and the same month last year. By doing this, expense trends can be identified making it easier to see if a particular expense has increased. This provides the chance to find out what’s happening before it gets out of control.

3.         Understand the business’ fixed and variable costs.

You’ll always have an electric bill, but maybe you only have to buy milk for your ice cream business in the spring and summer months (since ice cream sales are zip in the winter). This is the difference between fixed and variable costs. Fixed costs are always there, whether you have income or not—variable costs depend on the amount you’re selling.

4.         Breakeven analysis.

This is the volume of sales needed to cover all costs. A breakeven point can be determined once the variable and fixed costs for the business are known.

To have a strong and successful business it is imperative to have a clear understanding of the financial impact that the most basic business decisions have. Analyzing business expenses is critical to making informed and profitable decisions for your business’ future.

The Top 5 Documents Your Accountant Needs to Do Your Small-Business Taxes | Intuit Small Business Blog

signatureAs a small-business owner, tax time can be stressful, as you scurry to pull together all of your receipts and try to remember everything you did last year.Although accountants can help you sort and summarize, it’s a lot less expensive if you do that part yourself.

Here are the top five things that your accountant really needs to do your taxes.

1. Financial Statements — A basic set of financial documents comprises a balance sheet, an income statement, and a cash-flow statement. For tax purposes, the income statement is the one most used by your accountant, but she will also want to see the company’s assets and liabilities.

2. List of Capital Asset Activity — If you bought, sold, or disposed of any capital assets in the company during the year, you must account for it in your tax return. Your accounting software will allow you to print out a list of all of your capital-asset activity for the year, and this will give your accountant enough detail to classify any changes. If your listing does not specify the exact nature of the assets being bought and sold, make notes in the margin.

3. Vehicle Log — If you sometimes use your own car for business purposes, you can claim a portion of the car’s operating expenses as a tax deduction against your business income. The IRS allows you to calculate this one of two ways: The detailed method starts with adding up all of your vehicle operating expenses (loan interest, lease costs, gas, repairs and maintenance, and insurance). Next, divide the miles driven for business by the total miles driven in the year and apply the resulting percentage to the operating costs. This is your allowable deduction. The simplified method allows you to apply an IRS-mandated mileage rate to the total business miles driven in the year. Under both methods, you are required to keep track of your business mileage in a vehicle log. This can be as simple as jotting dates, descriptions, and miles into a blank notebook. Give this log to your accountant.

4. Summary of Home-Office Expenses — If your home office is your sole place of business, or if you regularly meet clients or customers there, you can generally claim home-office expenses. These include a percentage of your utilities, repairs and maintenance, home insurance, and mortgage interest or rent. You may calculate your home-office deduction by dividing the square footage of your office space by the livable square footage of your house or by dividing the number of rooms your home-office occupies by the total number of rooms in the house. Using either formula, multiply your total home expenses by the home-office percentage. Some accountants will ask you for all of your original receipts and others will only want the summary; be sure to ask which she expects you to provide. Note: Starting with the 2013 tax year, the IRS will allow an alternative simplified method of calculating home office expenses.

5. 1098 Forms for Mortgage Interest and Property Taxes — Your mortgage company likely issued you a Form 1098 at the end of 2012 that summarizes your mortgage-interest and property-tax payments in the year. Your accountant may ask you for this form to claim the mortgage-interest deduction that all homeowners are entitled to, and she will also need them as part of your home-office deduction. If you carry multiple mortgages, be sure to provide 1098 forms for each one.

The Top 5 Documents Your Accountant Needs to Do Your Small-Business Taxes | Intuit Small Business Blog.

Stress Free Bookkeeping

Managing your books is a cumbersome but critical task for any business. It is very time-consuming, frustrating, and could mean working late hours. However, it has to be done to know the worth of your business and to satisfy the government for taxes. You also need to do this on a regular basis to get an accurate idea of your financial health.

How do you make this stress-free task work for you?

Some small and medium businesses either employ part-time bookkeepers or do the work themselves. No matter how it is done it is still a mundane task involving shuffling papers and working extra hours. Often there is a twinge of doubt that you are not doing something quite right or are missing important information.

Ask any entrepreneur why they went into business and you’ll get a hundred different answers. Odds are that “do bookkeeping” was not on the list even though bookkeeping is the core of any successful business. It is the way to measure growth, keep cash flow positive and track expenses.

Bookkeeping is like learning to play a musical instrument. The secret is to learn the fundamentals and create a system that works for the company.

Here are a few tips that could prove helpful to make the right decision for bookkeeping and accounting needs:

Don’t mix business and pleasure:

Get a business credit card to enable you to separate your business expenses from your personal. By this time you have already started your business checking account. So adding that business credit card will help you establish and build business credit and points. Co-mingling funds between personal and business is not a productive or efficient way of doing business and can prove to be a headache at tax time.

Keep it simple:

When creating your business in your accounting software doesn’t create too many categories in the chart of accounts. For example, office supplies will be a sufficient category rather than separate categories for paper, letterhead, printer supplies, etc. This complicates profit and loss and adds time to the day-to-day activities when items are being expensed.

Automate your invoicing:

There are many online invoicing services that allow you to schedule invoices for clients who are charged on a regular basis. You will find that most accounting software has the ability to memorize invoices that reoccur monthly. The day of the re-occurrence can even be set such as the first of the month.

Use the right accounting software:

There are many accounting software packages out there that you can use to assist you with your accounting and bookkeeping needs. Of course, I highly recommend QuickBooks but there is also a wide variety of Open Source software which is free to download. Additionally there are a wide variety of free manuals and tutorials online.

Outsource to a virtual bookkeeper:

Outsourcing to a virtual bookkeeper saves time, money, worry, and headaches. Many business owners take two common approaches to tackling the issue of bookkeeping. They try to do it themselves – which is time consuming and can lead to costly mistakes. They pay large firms to do it – which is unnecessarily expensive. A professional bookkeeper has the skills and experience to do the job right. There are many advantages to outsourcing your books. Save money, save time, and the need for extra help. The biggest benefit is your bottom line.

  • Books that are inaccurate do not reflect the true health of the business
  • Being clueless at any level about where the money is going is not being in control of your business.

Business people need to focus on the business:

There are many aspects to running a business and the most important is earning money. Some things just have to be delegated in order to maximize time and productivity. Bookkeeping can be a painful and time consuming process and many business owners do not have the expertise or knowledge to get the job done right. Time spent on bookkeeping activities is time away from making money.

–Fran McCully, Your Administrative Solutions

Budget…not a 4-letter word

Budget is not a bad word. On the contrary, it is something every business needs to pay careful attention to. Running a business without a budget is dangerous at best. In order to plan for future growth or expenses a budget is a necessary tool to have in place. Also, keep in mind a budget is not a fixed tool. It is fluid and needs to be referred to often to see if the business is healthy or if it needs some tweaking.

If you find budgeting intimidating, give us a call. We can help you set up and manage your business budget.

What is a budget? A budget is simply a tool that tracks expenditures and helps plan how money will be used. A well planned budget takes the guess work out of both day to day bills and long term goals.

Realize that a budget will not solve financial problems. It is simply a tool to help identify and address problem areas.

If you are in the process of starting a business and don’t have a previous budget to use, research typical costs and sales trends associated with firms in your sector and determine averages.

Keep it simple. There is no need to list every expense in great detail. For example, combine your office supplies into one category.

•          Calculate net cash flow: This is the most critical part of a budget. Calculate the funds the company brings in. Gather every financial statement possible including bank statements, investment accounts, all utility bills, and all sources of income and expenses. The goal here is to create a monthly average, so the more information you can find the better.

•          Record all sources of income: Hopefully, your business is already set up in electronic software such as QuickBooks. If so, this part will be fairly easy. Compile specific reports to get all of the information needed.

•          Review bank and credit card statements: These are all recurring expenses that have fixed amounts. Review the last 3 months in order to obtain a good feel for the pattern of recurring expenses.

•          Create a list of monthly expenses: Write down a list of all the expected expenses you plan on incurring over the course of a month. Then break the expenses into two categories: Fixed and Variable. Fixed expenses are those that stay relatively the same each month and are a required part of a business. Variable expenses are those that change from month to month.

•          Analyze results: If you have cash remaining at the end of the month, your financial business life style may be healthy. If your cash flow shows a higher expense column this means some changes will have to be made.

•          Make adjustments to expenses: Knowing that you have accurately identified and listed all expenses, the goal would be to have the income and expense columns equal. Therefore, all of the income is accounted for and budgeted for a specific expense.

If you are in a situation where expenses are higher than income, look at your variable expenses for areas to cut.

Always review a budget monthly. It is important to review a budget on a regular basis to make sure you are staying on track. After the 2nd or 3rd month, compare the actual expenses versus what was created in the budget. This will show where you did well and where you may need to improve. QuickBooks has a built-in feature to help with this process. If you have questions on setting this up in your QuickBooks, give us a call.

Why is a budget important?

Referring to a budget at regular intervals is a very valuable learning tool. Forecasts can be compared with actual numbers. It is important to revisit the budget on a periodic basis to evaluate these numbers and see whether planned figures diverge from the actual. Try to make this a regular part of running your business.

Be flexible. A budget, although a useful tool for remaining disciplined, is not set in stone. A budget should not be used as an absolute ceiling as to how much can be spent but a tool for making sure business goals are being met and all spending is justified.

In the beginning, planning the small business budget may seem like an overwhelming task. However, over time you will see how this simple planning tool actually takes much of the stressful guesswork out of running a business and helps you in getting control of your business.

–Fran McCully, Your Administrative Solutions 2013

Retirement success is about spending, not saving – MarketWatch

The traditional approach to saving for retirement goes something like this: Save 10% of your income every year, starting as early as you can, and if you can begin in your 20s the compounding growth will let you easily retire 40 years later. If you don’t start saving until your 30s and 40s, you have to save more to “make up” for what you didn’t accumulate when you were younger. In fact, recent research has even developed National Savings Guidelines to build recommendations for the right amount to save based on your current age and how much income you want to replace in retirement.

Unfortunately, though, there are several significant problems with this standard approach. The first is that by relying primarily on compounding a modest amount of savings for a very long period, the results become highly dependent on short-term market results in the final years before retirement. For instance, while it’s true that starting to save $300 a month as a 25-year-old for 40 years in a balanced portfolio at 8% will give you $1,000,000 to retire at age 65, the caveat is that at age 55 you’re not even up to $450,000 yet! In other words, “save for the long run and let compounding work for you” could also be characterized as “save for decades, then quickly double your money and retire.“ Of course, when you look at it that way, it seems a whole lot riskier to count on your money doubling in the last 8 to 10 years. As the last decade has shown in particular, sometimes that strategy doesn’t work out very well.

via Retirement success is about spending, not saving – MarketWatch.