How an Accountant Can Help You Grow & Scale Your Business

June 3, 2020 in Accounting, Business Formation, Resources

Looking to make your small, self-owned business grow? One of the best things you can do is to hire an accountant who can guide you through the major financial decisions involved in doing so. There are arguably quite a few involved, and each one is important and will play a vital role in the future of your business.

In this article, we’ll give you a basic overview of what to expect and the ways that a certified accountant can guide your next steps.

Moving Forward as a Small Business

Before we proceed, we’d like to give you an idea of what you can expect moving forward.

Depending on how your business is set up currently, you have several routes you can take to effectively scale up your operation. For entrepreneurs (i.e. self-employed individuals), the most common options that many people go for are a) transitioning to a sole proprietorship, and b) registering as an LLC (limited liability company).

Both options have their pros and cons. From a financial standpoint, some of the key differences between the two include:

  • Sole proprietorships require minimal paperwork to set up and maintain. LLCs, on the other hand, have much more stringent requirements.
  • An entrepreneur with a sole proprietorship exposes themself to business liabilities that can put their personal assets at risk. LLCs effectively minimize this risk by providing protection from commercial lawsuits, debt, and similar threats.
  • Sole proprietorships are subject to fewer taxes than LLCs. The processes involved in filing taxes as a sole proprietor are also simpler. However, when an LLC grows in scale (e.g. hires more employees), the potential tax savings could surpass those of sole proprietorships.

There are other key differences as well. What’s important to know is that each one is a viable choice, but the right one for your business will depend on many different factors.

How an Accountant Can Help

As you can see, knowing which path to go on is already a complex decision. The applicable concepts and pertinent laws can be understandably confusing, especially if you’re a small business owner who has so far only been involved in their own finances.

This is where the help of a certified accountant can be immensely helpful. They’ll be able to simplify the many concepts involved such as asset protection and taxes for entrepreneurs. With their aid, you’ll be able to make better decisions as you’ll have a better grasp of the relevant subject matter.

In addition to this, an accountant can help you acquire and submit all the documents that are needed in scaling up your business. They’ll be able to facilitate the process of setting up your sole proprietorship or LLC—depending on your choice—and continue to provide their services for all future requirements.

Conclusion

Hiring an accountant, when everything’s said and done, is simply the smart thing to do. Small business owners often struggle to scale up because they lack the resources and knowledge to do so in the first place.

When you hire an accountant to share the burden, you give your business the chance to grow while also providing yourself the time and energy you need to focus on other aspects of your operation.

We provide accounting services for entrepreneurs in Boston, and we’d be happy to help you take your business to the next level. Send us a message to find out more!

Ways to Pull Your Business Through Uncertain Times – Our Guide

May 29, 2020 in Accounting, Covid-19, Resources

As we continue to wait for pandemic curves to flatten, businesses all over the world are feeling the pressure of forced shutdowns. Many are scrambling to reassess finances and keep operations running for an indefinite period of time. As uncertainties become unprecedented, here are a few key areas to shift your focus to in order to help your business survive.

1. Redirect Your Focus

If your focus has been on how to increase sales and revenues or improve efficiencies and profitability, now is the time to work with an accounting service to zero in on your balance sheet. Keep an eye on your working capital and start forecasting your cash flow with an accountant. This can help keep your finances predictable for the next 30 to 60 days.

2. Work on Receivables and Payables Management

To avoid any unforeseen financial disasters, tighten up on your receivables. Start working on halted collections and offer discounts for early payments and even long-overdue payments. Stretch out AP payments for as long as possible without damaging your relationship with key suppliers. Review your customer credit risk to prepare for the impact of the pandemic over the long run. Identify those who may be at risk and begin limiting their credit.

3. Take Note of Your Inventory

An inevitable drop in demand will result in inventory levels that may be too high for your business to manage. If such is the case, you’re going to want to reassess your safety stock levels and lower ones you can afford to lose without hindering customer demand. Consider low or negative margin sales and how you might be able to convert excess inventory into cash.

4. Negotiate Your Supply Line

It’s likely that your suppliers are sitting on excess inventory just like you are. Use this as an opportunity to negotiate lower prices in order to increase your leverage.

5. Reduce Discretionary Costs

While most of your focus will remain on your balance sheet, it may also be time to cut costs. Immediate cash flow opportunities might include reducing your 401k Plan to zero or whether you can pay the match at the end of the year instead of during your pay periods. You can consider leasing larger purchases that you can’t defer rather than buying altogether. Try to obtain COVID-19 tax credits and cash flow savings related to deferrals to obtain payroll savings.

6. Assess Your Financing

If you haven’t yet teamed up with any bookkeeping services, you probably should. You’ll want to consider drawing down on your line of credit while it remains available and assess how significant your cash flow situation is. You might have to look at recapitalization opportunities such as taking advantage of SBA lending or economic injury disaster loans.

7. Prepare for the Rebound

Though today holds significant uncertainty, major financial institutions predict a large bounce back in GDP by the third quarter of 2020. Remember that while it may be your business’ main goal to survive, it is also to take part in the eventual upswing. This means remembering to prioritize your supplier and customer relationships and, most importantly, your employees.

Conclusion

Trying to keep your business from going underwater may seem nearly impossible in the middle of a pandemic. But with the right business growth services, such as ours at A4E, we can take the stress of bookkeeping and other finances off your shoulders and into our own hands.

If you’re looking for effective business growth services in Boston, MA, we’ll be sure to take note of your pain points and provide you with exactly what you need.

Why You Shouldn’t Procrastinate Your Tax Filing in 2020

May 21, 2020 in Accounting, Resources, Taxes

You may have months left to file your taxes, but processing them as soon as you can leave your feeling relaxed and far from bouts of headaches. You’ll be saving more than just your head, however, as the sooner you file, the sooner you’ll know if you have any money returning. You’ll also be protecting your business from any fraud.

If you’re not convinced and would rather wait for the tax season, consider how filing your taxes early can help protect your company and your investment. Here are several tips why you shouldn’t procrastinate tax filing, taken from the experts.

Reason #1: You’ll reduce the risk of exposure to tax-related identity theft

Just over a month into the 2019 tax season, the IRS identified more than 3,500 tax returns that claim a total of $15.8 million in fraudulent refunds. The statistics show the agencies the IRS managed to catch, but unfortunately, plenty of them remain rampant. These identity thieves use Social Security numbers (SSN), which they steal to file fraudulent tax returns and get a refund from the government. Tax season is a gold mine for identity theft, as millions of SSN just float about. If you wish to protect yourself and your company from these threats, file your taxes during the low season!

Reason #2: If you’re getting money back, why not get it early?

Most taxpayers get a refund and out of 155.9 million tax returns filed in 2019, 111.8 million qualified for a refund. If you file your taxes earlier, you’ll be able to get the money back sooner. Why is this crucial? As a business owner, this means three more months of investing, which allows that money to gain value and returns. It could also mean paying debts three months earlier, which cuts down interest rates that would have led to more costs. While it may not seem like much in hindsight, three months of every single year is a lot for business growth.

Reason #3: The IRS will favor you more

While plenty express contempt for the IRS (Who likes taxes, anyway?), it’s one of the most underappreciated agencies in the government. Contrary to what the public regards them as, the people behind the IRS work with all taxpayers, especially those struggling with their bills. There are structured payment plans available, usually offered with generous terms and grace periods. IRS loves helping you pay your taxes, but filing those taxes is another story. Taxes for entrepreneurs is an incredibly complicated process, and the people behind the agency will not be able to help you during a hectic tax season. If you wish to ask them for help, do so in February and March!

Conclusion

It might seem reasonable to just go ahead and file your taxes when it’s due. Never overlook the stress and pressure tax season can bring, however, as the last-minute stress is real. You’ll do well to wrap your taxes in advance, as you’ll be saving plenty of time.

You’ll also be able to protect yourself from identity theft, get your money back early, and become friendly with the IRS. For business owners, hiring a tax service may be the best option. This could mean saving so much more, as taxes tend to be much more intricate when it comes to businesses.

We offer the best accountants for entrepreneurs in Boston, as we focus specifically on businesses like yours! Let us take the stresses of taxes and bookkeeping away from your shoulders.

A Condensed Guide on the CARES Act for SMEs

May 15, 2020 in Accounting, Covid-19, Resources

Given the current pandemic, social distancing measures and quarantine lockdowns are in order. To risk the further spread of infection, consumers are forced to stay at home, while nonessential businesses are ordered to temporarily close down. Businesses falling under commerce are not considered essential services, so the closure of these operations have the potential to affect small businesses negatively in terms of finance.

You may be one of the small business owners worrying about the state of not only your lack of resources but your employees’ payroll. Fortunately, the newly passed CARES Act offers several benefits for you, as well as your employees during the coronavirus pandemic.

What is the CARES Act?

The CARES Act, which stands for Coronavirus Aid, Relief, and Economic Security Act, is a stimulus package designed specifically for individuals and businesses directly affected by the pandemic, which serves as an economic relief. $2 trillion is allocated to those covered by the Act, and $377 billion of the funds will go to small business owners with 500 or fewer employees.

What benefits does the CARES Act offer small businesses?

From the $2 trillion budget, the CARES Act provides $10 billion for Emergency Economic Injury Grants. This grant can be as much as $10,000 for each small business owner, which is enough to cover operating costs.

The Small Business Debt Relief Program is also offered, where $17 billion is available for six months of payments to help small business owners pay current non-disaster Small Business Administration loans.

Here are more benefits that small businesses can receive through the program:

  • The Paycheck Protection Program: This allows small businesses with existing loans to pay up to eight weeks of employee payroll services costs, which includes all benefits. The funds for this program can also be used to pay interests, specifically on rent, utilities, and mortgage payments.
  • Employee Retention Credit: Launched by the Treasury Department and the Internal Revenue Service, this program allows small businesses to keep their employees on their payroll. At a time where the unemployment rate is high, the program seeks to stop the further increase.
  • Expanded Unemployment Insurance: On top of what state unemployment programs pay, the unemployment insurance has been expanded by 13 weeks. This also includes a four-month $600 benefits enchantments. This program covers freelancers, gig workers (Uber drivers), and even furloughed employees.

What does the CARES Act offer employees?

The most beneficial program offered by CARES act is the expanded unemployment insurance. Originally only running from 26 weeks, it has now been expanded to 39 weeks. An additional $600 payment will be added on top of the weekly benefit amount eligible employees receive. Moreover, Americans will also be able to receive one-time stimulus checks of $1,200 per adult and $500 per child.

How do small business owners apply for the CARES Act benefits?

Eligible small business owners can apply for the CARES Act through the Paycheck Prevention Program, which was launched last April 3. Any application shall undergo through an existing Small Business Administration, which can be the following:

  • A federally insured depository institution
  • A federally insured credit union
  • Farm Credit System institution

For more information on loans and grants applications for the CARES Act, visit the Small Business Administration’s portal here.

What this means for small businesses

It is difficult to navigate through the new normal—your business may be suffering unimaginable losses, and you may be juggling all possible ways to support your employees through a difficult time. Although the end remains to be seen, getting help is still possible. Through the CARES Act, your small business may just see the pandemic through!

If you’re looking for accounting services in Boston, MA, our CPA-qualified accountants and financial experts are ready to help. Contact us today to learn more about our bookkeeping, taxes and CFO services!

I received my PPP. Now what?

May 15, 2020 in Accounting, Covid-19, Resources

Now that you have received your PPP loans as a business owner, I can see the relief in your face. But the big question now is what do I need to do to ensure the loan amount is forgivable?

The PPP has come out with a set of guidelines on what a small business has to do in order to get the loan amount forgiven. Here are our suggestions on how to stay compliant with those rules.

Suggestions

1) Qualified uses: At least 75% of your PPP loans need to be used for payroll expenses (independent contractor’s pay does not count towards payroll expenses). The remaining amount of the loan can be used for mortgage interest, rent, and utilities.

2) Spend it within 8 weeks: From the time the loan was issued, please keep in mind that your loan amount is based on 2.5 months of your payroll expenses, which is 10 weeks’ worth of payroll. However, you only have 8 weeks to spend it in order for your loan to be forgiven. If you need to adjust your payroll timing or headcount to pay out the whole PPP loan within 8 weeks, do so. Any loan amount not used for the qualified purposes will not be forgiven.

3) Payroll headcount needs to be maintained: Compare the average number of full-time employees for the 8 weeks following the loan disbursement with 1) employee headcount from Jan 1, 2020 to Feb 29, 2020 or 2) headcount from Feb 15, 2019 to June 30, 2019. Ensure that the headcount for the 8 weeks following the loan disbursement is equal to or larger than either of the comparison periods.

Exemption: Many employers are complaining that their headcount levels cannot be maintained due to employee refusal to return to work. There is an exemption of this headcount rule if the employer can provide either of the following:

  • A written re-hire offer with the same rate of pay and number of hours before the employees were laid off and.
  • A rejection to the offer from the employee.

Employees who refuse offers will no longer be able to continue with the unemployment benefits.

4) Payroll amount needs to be at least 75% from the most recent quarter: Before the 8 week loan period is complete, with the exception of any employees who receive more than $100,000 in salaries in 2019. Any reduction in pay lower than the 75% level will reduce the forgivable portion of the loan by the difference between the employee’s current pay and 75% of the original pay.

If you have previously laid off or furloughed any employees or reduced their original pay by more than 25%, you are able to reinstate their pay and rehire them before June 30, 2020.

5) Documentation and books need to be maintained: Lenders will ask you to provide the following documents. You need to have these ready:

  • Form 941
  • Payroll records
  • Other health insurance and retirement contribution documents to support your claim.

6) Currently, the forgivable loan is not taxable and expenses used under the forgivable portion of the loan is therefore not tax deductible to prevent double dipping. This means your expenses need to be clearly labeled in your books and to identify the expenses being paid by the PPP Loans. Also, we recommend business owners to house their PPP loans in a separate bank account so any expenses paid out of PPP loans are traceable and easily trackable. This will be very helpful when it comes time to file your 2020 tax returns and provide proof of your expenses.

7) For self-employed (Sch. C) business owners, it’s even more important to maintain good record keeping of your books and documents to prove that you have met the PPP loan forgivable guidelines. This ensures funds are used appropriately.

8) The amount of forgivable loans for self employed individuals on owner’s compensation replacement is calculated based on your 2019 Sch. C net profit multiplied by 8/52 weeks. Any remaining amount will need to be used for mortgage interest, rent payments, and utilities.

9) For new businesses in 2020 that were not in existence in 2019 but were in business before Feb 15, 2020, there has not been clear guidelines from the SBA on how to calculate the owner’s compensation replacement yet. We will keep you updated.

10) File your 2019 tax returns and apply for forgiveness with your lenders. Deadline for the 2019 federal tax return has been extended. If you have already submitted your Sch. C to your lenders, you might want to file the tax return but delay the payment until July 15. You will also need to apply for forgiveness with your lenders after your 8 week period.

11) Some payroll credits are not allowed if you have a PPP loan. This is to prevent double dipping since the forgivable portion of the PPP loan is not taxable. So if you have a PPP loan, you will not be qualified for the Payroll Reduction Credit. For more information on what other credits and benefits your business is eligible for, please check out our article here.

If you’re looking for help filing your tax returns (including back tax filings), bookkeeping for your business, or catch-up bookkeeping services, please feel free to contact us. We want to ensure your books are clean, your taxes are up to date, and your PPP loans are forgiven.

 

My journey to founding and growing Accountrepreneur (A4E)

April 16, 2020 in Resources

My name is Sara, and I’m the Founder of Accountrepreneur (A4E). Yarty is our other co-founder and my husband, and together we’ve built and grown A4E to a business that has replaced our corporate career.

It’s been a long journey, a difficult one, but one that we’re proud of. We hope our journey and findings can help benefit you in your journey to becoming a founder and owner.

How it all started

My journey with Accountrepreneur began when I attended and graduated from Babson College, a school known for entrepreneurship. I’ve always wanted to be an entrepreneur and one day own my own business, so everything I did was leading to that eventual path.

After working for ten years in the public accounting industry with firms like PricewaterhouseCoopers (PwC) and BDO, I realized that corporate life just wasn’t a fit for me anymore. With my husband, we both decided to quit our jobs and take an opportunity to travel the world. We ended up backpacking throughout Southeast Asia for months, and it was such an incredible experience. Here’s us below in Indonesia:

After returning home from our trip, I had a deep reflection on whether I wanted to go back to the full time corporate grind or try something different. I asked myself, “Would I regret this opportunity of running my own business?” That was enough for me to realize that I needed to take this chance now.

In terms of what business to start, I felt it was natural to start with a bookkeeping and tax services business. I had had a few customers already while working full time, and I knew the business model very well because of my corporate experiences.

Being in this particular industry for so long, I realized small businesses and startups didn’t have convenient ways to have the essential accounting services. Typically, owners have one bookkeeping service, a separate tax accountant, and maybe another financial advisory (e.g. CFO) service. All of this just adds up to unnecessary added expenses and headaches.

How we decided to package our services to provide better value to our customers

With Accountrepreneur, we analyzed the pain points our customers were experiencing with other accounting providers and decided there had to be a better way. With this in mind, we decided to package our services.

Currently, we offer three packages to help entrepreneurs, startups and business owners with their bookkeeping, tax returns and financial management:

  • Starter packages start at $299/mo and covers bookkeeping and tax returns for solo founders just starting out their businesses
  • Essentials packages start at $499/mo and covers all the essential accounting and tax compliance services for a small business
  • Premium packages start at $999/mo and covers all your bases such as bookkeeping, tax returns, payroll, as well as providing budgeting and analysis to help businesses grow.
  • We also offer individualized services for businesses looking for one-off services such as tax returns.

Because I’m a licensed CPA and Yarty was a corporate finance expert working with CEOs and CFOs, it made sense for us to combine our services and provide these valuable services to our customers without the exorbitant prices.

How the journey has been for the past year

Starting out, I thought it made sense to do the work first since that was what I was most comfortable with. Although it was important for us to get our first customers, it also led to some bottlenecks in our process. That bottleneck being me of course.

I was doing sales, marketing, service delivery, accounting, customer support in addition to being a wife and mother. It was just too much!

So I decided to take a step back and ask myself, “I can’t keep doing this forever.”

That’s when I read the book “E-Myth”. That book changed how I viewed business and realized I was spending too much time being the “Technician”, not enough time being the “Entrepreneur”.

That needed to change. Immediately.

So in the past couple of months, we’ve streamlined the operations by creating documentation behind our service delivery, automating recurring tasks using tools like Zapier, brought on my husband full time to support sales and marketing, and invested in tools to grow our business.

Here’s a video tutorial we created using Loom on how to pay contractors

Simply, it’s been a life saver. I’m no longer doing everything and I’m no longer scared that things may fall apart (although that fear is always there).

Where we hope to be in the next year

Although the start to 2020 has been a bit bumpy with the stock market collapsing and the coronavirus spreading, I’m optimistic that we’ll bounce back, that small businesses and large will rebound.

Given this, we’re still investing into the business and planning for our next year and forward. We’ve already planned a number of sales and marketing initiatives to grow the business, hiring more staff, provide more opportunities, and continually streamline our operations.

My mission has never been to extract profits and generate millions in sales.

It’s always been to help business owners with their business, and we do that by taking the stress off their plate with their books, taxes and other financial aspects.

That will never change.

And although 2020 will be unpredictable, I’ll be staying optimistic and continuing to serve our customers the best we can.

Thank you for reading our story! It means so much to us, and we’re always looking to help and support other businesses where we can.

If you’d like to follow along our journey, feel free to subscribe to our blog or find us on social media: Twitter @MeetA4E, LinkedIn and Facebook.

Finally, you can reach me at sara@meeta4e.com. Feel free to reach out and say hi 🙂.

What Are the Best Credit Cards for Businesses – Our Guide

April 8, 2020 in Resources

Every business owner must know how to keep their personal and business finances separate. Irrespective of the type of business you have, may it be a freelance venture, a side hustle, or a company with employees, there should be a clear distinction between your business and personal accounts. This is to save yourself from headaches come tax time, as well as to keep accurate records of personal and business expenses.

To help you with this, opening a business credit card such as the one offered by Brex is recommended. Not only can it help you maximize your purchases, but it can also grant you discounts and rewards on categories that are often associated with your operations, including office supplies, airfare, advertising, and gas. It can also give you access to higher credit limits, which you may not get with a personal card. Plus, you’ll have the peace of mind knowing that you’re protecting your personal credit profile and assets. 

To help you choose the best card to open for your business, here’s a rundown of the best in the industry, allowing the rewards and perks that come with them. 

Chase Ink Business Preferred Credit Card

In addition to a hefty sign-up bonus, business owners who use this card can enjoy flexible points on purchases like travel, shipping, internet, cable, phone, and advertising. Points are easily redeemable, and you get expense management tools, cellphone protection, and travel insurance. 

Bonus Offer: Earn 100,000 bonus points after you spend $15,000 on purchases in the first three months from account opening.

Benefits and Rewards:

  • Flexible rewards program
  • Lucrative rewards-earning scheme
  • Trip cancellation/interruption insurance
  • Primary rental car collision insurance
  • Cell phone protection
  • Insurance for stolen or damaged purchases
  • Extended warranties
  • Roadside assistance hotline

Discover It Business Card

Businesses who need more time to pay down upcoming expenses can significantly benefit from this card. New cardholders can enjoy a 0% APR on purchases for a full year, as well as a match in cashback you’ve earned during that interest-free period. The ongoing cashback rate of 1.5% on all purchases can become 3% for a limited time. 

Bonus Offer: Discover will automatically match all the cash back you’ve earned at the end of your first year.

Benefits and Rewards: 

  • Cashback match
  • Intro offer with 0% APR
  • No annual fee
  • 24/7 customer service
  • Fraud monitoring
  • Waived first late payment
  • Easy redeem point system

Brex Corporate Card for Startups

Unlike other business credit cards, this one uses your company’s cash and equity to determine your credit limit instead of pulling your personal credit report. It’s a World Elite Mastercard, meaning you’ll get benefits like price protection and extended warranty, as well as discounts from companies like Lyft, Boxed, and Lufthansa. It also doesn’t incur foreign transaction fees for purchases outside the US, and it boasts a competitive rewards program that includes a 1-to-1 point transfer ratio to airlines like JetBlue, Singapore Air, Air France, and Avianca.

Bonus Offer: Earn 75,000 bonus points after spending $1,000 in purchases and waived card fees for life. 

Benefits and Rewards:

  • 7x points on rideshares and taxis
  • 4x points on travel booked through the Brex travel portal
  • 3x points on restaurants
  • 2x points on recurring software/SAAS
  • 1x points on all other expenditure
  • 1.5% in cashback
  • 10-20x higher credit limit than traditional small business corporate cards
  • Integrations with Quickbooks, Xero, and more.
  • 15% discount off new WeWork desk or office space for up to six months across all US locations
  • Additional partner offers from Google Ads, Zoom, and many others

Bonus Rewards:

If you sign up using this link, you will receive the following additional rewards:

  • 100,000 points = $1,000 in rewards
  • $5,000 in AWS credit over a year
  • $150 on Google Ad spend
  • Waived monthly fees
  • New customers may also qualify for any of the offers from our rewards partners.

Note that the Brex Corporate Card has the following underwriting requirements: $50,000 in the operating bank account and a U.S. EIN Number. This card is not available for sole proprietors.

Conclusion

Having a business card not only lets you keep your personal and business expenses separate, but it also allows you to stay on top of your business expenditure. Should you need more help in staying on top of your business’s financial health or accounting services, get in touch with us.

 

Disclaimer: Accountrepreneur (A4E) receives commissions for those who sign up using our links.