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 Quick Bookkeeping Guide for Small Business Owners

April 22, 2020 in Accounting

In small business operations, regardless of nature, bookkeeping serves as the basis for the accounting system. Bookkeepers are responsible for classifying and recording every accounting transaction of a company. As a small business owner, it is essential that you handle your financial transactions well—your business growth greatly depends on this.

Here are some of the best practices to consider to make your bookkeeping effective, ensure you always have the right data at your fingertips, and you can make better business decisions.

1 – Choose automation whenever possible

If you can, choose a bookkeeping software. Automation simplifies the tedious process that comes with dealing with data and spreadsheets. Moreover, you do not risk losing papers from hoards of folders, as these types of software are already cloud-based—all your financial data is backed up and secure.

There are many paid and free versions out there. We recommend Quickbooks as it’s the most robust solution that includes enhanced reporting functionalities. As a customer of Accountrepreneur, you’ll save up to 50% off on Quickbooks Online.

2 – Do a weekly checkup

Even as a business owner, numbers may not come naturally to you. It’s not the most exciting work for an owner, to say the least.

As such, the accounting process tends to be dull and monotonous. Your data and transactions do tend to pile up, so if you leave them be even just for a month, disaster will ensue. With no focus, you may end up with unbalanced books, unpaid invoices long overdue, and even bounced checks. To make matters worse, tax season comes around and you realize you have to pay your CPA to fix everything.

What’s it all mean to the owner? Added costs, added headaches, added stress.

To avoid these disasters, make sure to take some time to review your books at least once a week—you’ll be able to catch any problems early on.

3 – Track all your invoices carefully

At the core of every small business’s accounting processes are invoices, so it’s essential that you keep constant track of them. Unpaid invoices could mean angry vendors and partnerships.

Every invoice received and sent should be recorded, as only then will you be able to keep up with any unpaid and overdue invoices. Leaving them as is will greatly hinder the flow of profit to your business, ultimately impeding any form of growth.

Using software such as Quickbooks will make managing all your invoices much easier and will provide valuable data for when you need to understand your business’ growth.

4 – Stay on top of your business’s accounts receivable

To add to the above, carefully tracking all your unpaid and overdue accounts is crucial.

Late-paying customers will dry up your cash flow, which will then affect your budgets, ability to pay vendors and staff, and strain the business during hard times.

Pay attention to your receivables; as soon as you find something overdue, act immediately. Reach out to these customers about their pending payments. Should they express financial difficulties, see if you can come up with a payment solution plan in order to receive money owed. You can use Quickbooks to automate payment reminders.

5 – Don’t hesitate to seek professional help

You’re a small business owner, and you wanted to run a business. Instead, you’re now overseeing all your operations, customer delivery and paying workers. Not what you had in mind, right?

Numbers may just not be your forte, so do not attempt to handle something as intricate as accounting. You risk jeopardizing your business’s cash flow, which also affects the overall growth.

With these in mind, it’s best to consider seeking the help of professional accountants with CPA-level expertise. There’s a reason their industry thrives—apart from being the best in handling numbers, they know how to handle financial concerns well. They’re proactive and knowledgeable, which will be helpful when your finances may be suffering—immediate action can be taken to avert disaster!

What more can you do?

Growing your business is already a huge undertaking—managing numbers, getting customers, producing content, paying workers, and so on. The list never ends.

Our team is here to take the stress out of bookkeeping, payroll, accounting and dealing with taxes off your to-do lists. Our team of licensed CPAs and finance experts can provide that much needed relief so your time can be better spent growing the business.

Learn more about what we offer and how we can help your business grow with our accounting services.

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 🙂.

Coronavirus in the Workplace – What You Need to Know

April 15, 2020 in Covid-19

The coronavirus (COVID-19) is rapidly spreading from country to country, and the cases in the US only continue to rise. As such, employers must keep track of any developments and adjust accordingly. These actions should maintain a safe workplace, as well as appropriate monitoring and responding to the situation. These include compliance with labor laws and alternative efforts, such as working remotely. Here’s a quick guide on the extent of your responsibility as an employer:

Why do employers need to think about COVID-19?

Should employers continue with normal working conditions, you risk exposing your employees to the COVID-19. While a relatively mild disease for some, the vulnerable sectors easily fall to the disease. In fact, one in every five of the COVID-19 positive ends up needing hospital treatment. You must take certain measures, which are discussed in detail below.

Your responsibilities as an employer: An overview              

Apart from disseminating information on observing proper hygiene, you may be dealing with other business concerns. That includes efforts to reduce other possible effects of the coronavirus in the workplace, such as labor standards and laws.

Efforts to ensure employee safety

  • Reinforce good hygiene practices and safety precautions – The Occupational Safety and Health Act requires employers to provide employees with a healthy and safe workplace. With the threat of the pandemic, employers are naturally expected to uphold this law with the utmost importance, such as taking basic preventive measures to reduce the risk of infection and spread. These include constant reminders of hand washing, as well as providing soap, sanitizers, tissues, and masks.
  • Have your employees work remotely – Being in a digital age, you have all the means to migrate your business operations to remote work. Should you choose to do so, remember to consider security risks that may arise. As an employer, you are also required by law to provide IT support and loan equipment, as these are necessary to their job functions. Employees must also be paid for all hours worked, as well as reimbursed for work-related expenses (internet and electricity).

A review on labor standards and laws in the context of coronavirus pandemic

  • The FMLA leave The Family Medical Leave Act (FMLA) is specifically designed for people dealing with serious health conditions and those who need to care for sick family members. This act requires employers with at least 50 employees to provide up to 12 weeks of unpaid leave annually for particular health-related instances.

The symptoms of the COVID-19 are flu-like, but considering its adverse effects, it can be considered as a “serious health condition” depending on the circumstances (e.g., the elderly or immuno-compromised). With these in mind, an employee infected with the coronavirus or an employee taking care of a family member with the same disease may be permitted to take the FMLA leave. It is important to note, however, that an employee with no disease and refusing to report to work out of fear cannot qualify for the FMLA leave.

  • Wage and hour issues – According to the Fair Labor Standards Act (FLSA), non-exempt employees who do not work cannot be paid. The FLSA minimum wage and overtime rules pertain to applicable hours worked during an entire workweek, so employees who do not work during such weeks are not entitled to wages. The only exception is the FLSA “white collar” employees, which pertain to the people paid on a salary basis, not hourly.

The employer is also required to pay employees according to employment contracts, collective bargaining agreements, or any other contractual obligations that may apply. Keep in mind that the Equal Employment Opportunity Commission (EEOC) has allowed employees to telecommute, deducing it as an effective way for employers to remain in operation while avoiding the risk of coronavirus infections.

Conclusion

More than the labor acts and guidelines discussed above, it is imperative for businesses to remain vigilant. Most employers have drafted business continuity plans that enable them to run smoothly, which can be helpful for events like dealing with a pandemic. Those plans may include remote work, which should detail precise working hours for non-exempt employees to avoid unnecessary overtime work. Additionally, the payroll department should be included as part of a business continuity plan. However, certain transmissions and processes should be considered, especially when dealing with valuable data.

If you’re looking for reliable, trusting accountants for entrepreneurs, schedule a free consult with us. We’re here to help your business through this crucial time.

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.

4 Ways Accounting Benefits Your Business – What to Know

March 25, 2020 in Accounting

Accounting is a common term that is often thrown around during tax season, but it plays a pivotal role in running a business. While many believe that they can crunch numbers on their own, you need a professional eye to create a systematic and detailed recording of all financial transactions, statements, and cash flows of a business. 

Keeping an accurate record of a company’s income and expenditures enables the management, investors, and even the government with valuable financial information that can help them make sound business decisions. Not to mention, hiring a reputable accountant allows your business to stay up-to-date with ever-changing tax laws. 

To that end, the list below reveals all the different ways an accountant can help propel business growth for your bottom line: 

 

1. Accountants Get All Your Deductions 

Once the tax season hits, business owners are looking for ways to maximize their deductions. However, keeping track is a time-consuming process, while it’s too late to start by the end of the year. 

An accountant can solve the problem as their expertise can support you throughout the year by assessing potential deductions that can impact your strategic decisions before turning a new leaf. A full overview of your deductions also makes your company accountable for out-of-pocket expenses and depreciation. 

 

2. Accountants Create or Control Budgets 

Accounting can steer your company’s financial decisions by creating a budget based on their analysis of how the money is coming in and going out. With that in mind, businesses can establish a seamless budget plan to ensure all expenses are well-accounted for. 

Budgets can include coverage for industry conferences to making sales calls, allowing the business owner to stay on top of all expenditures on a daily basis using reliable accounting software. 

 

3. Accountants Can Forecast Revenues 

Seeing as accountants keep track of all the expenditures and cash flow of the business, it makes sense how their financial reports and records can be a reliable basis for forecasting revenues for the company. 

Forecasting revenues and expenses helps business owners identify whether their existing marketing efforts are providing a good ROI. This also opens up areas in a campaign that need improvement, along with the confidence to make business-related expenditures that are highly likely safe. 

 

4. Accountants Help Businesses Owners in their Purchase Decisions

Having a full overview of your company’s accounting on a regular basis can help business owners consider the consequences of making major purchasing decisions – from significant expenditures that has a direct impact on monthly cash flow, covering company vehicles, to paying for a new building lease. 

Consequently, accurate financial reporting allows business owners to make an informed decision to protect the company’s assets. 

 

Conclusion: Accounts Can Improve the Bottom Line of Your Business

Accounting is an integral part of running a business as they can manage your cash flow, keep an accurate record of your taxes and financial institutions, and help in making informed decisions when purchasing new assets. 

Knowing your assets, liabilities, and on-hand revenues can make a world of difference in your ability to accurately monitor your business growth as you can track whether your sales targets are meeting its goals.

If you’re looking to consult with accountants in Boston MA, get in touch with us today! We’re happy to help.

How to Find & Hire The Right Tax Advisor For Your Business – What to Know

March 18, 2020 in Accounting

How to Find & Hire The Right Tax Advisor For Your Business – What to Know

It’s no secret that one of the trickiest parts of running a small business is dealing with taxes — or everything that’s related to finance, for that matter. If you’re a small business owner, you have to wear many hats. You have to be in charge of operations, marketing, sales, customer service, and so much more. You may not have the additional bandwidth nor enough knowledge to manage your taxes, which is why it’s recommended that business owners work with a tax advisor. 

A small business tax advisor eases you of the burden of preparing and filing your taxes, as well as offer you sound financial advice so you can save more and help your business not only stay afloat but also thrive. If you’re going to hire a business tax advisor, you must first have a thorough understanding of what they do and what makes a good one. 

What is a small business tax advisor?

In a nutshell, a business tax advisor is a certified professional who can offer you help in all the tax-related needs of your business. They can do things like bookkeeping, manage, prepare, and file taxes, handle payroll filings, conduct budget analysis and review, and represent the business in the event of an audit. They not only work with you during the tax season but also all year round. 

Tips for finding the right small business tax advisor

Go for someone with experience.

While there’s no doubt that newly-minted tax advisors are very much capable of managing your tax-related needs, you’ll be better off hiring someone with years of experience. Ideally, this advisor has gone toe-to-toe with the IRS and has the specific expertise in your area of tax need. There’s no rule when it comes to the number of years of experience you have to look for, but you should opt for someone who has previously handled a situation like yours. 

Work with someone who understands your business and its needs.

The ideal business tax advisor is someone that knows and understands what you need, because sometimes, even you don’t understand exactly what you need. They should have in-depth knowledge about the industry you operate in, as well as the managing taxes businesses similar to you. They should be capable of recommending the best practices and specific steps on how to save you money in the long-run. 

Hire someone that offers a wide range of services.

Most businesses only turn to tax professionals for tax preparation and filing services and look somewhere else for other needs because said professional doesn’t have a lot to offer beyond tax season. The tax advisor you end up hiring should be skilled in different areas such as budgeting, payroll, strategy, and growth, so you don’t have to jump from one expert to another for your tax-related needs. 

Having to hire a business tax advisor is tough because you need one that is the right fit for your business. Accountrepreneur just so happens to be an excellent candidate. We take bookkeeping, taxes, and CFO-related issues off your shoulders, so you can focus on growing your business. 

If you’re looking to hire a professional tax advisor for your business, get in touch with us now and see how we can help you!

Should I Register My Business in Delaware?

January 7, 2020 in Business Formation

Despite being a tiny state, Delaware has great importance in the corporate world. The small state incorporates some giant corporation and traded companies such as Wal-Mart, Coca Cola, and Google. It is because Delaware has a history and reputation of corporation-friendly laws. So when it comes time to launch their businesses many entrepreneurs immediate think of registering their companies in Delaware.

However, what if your company is not located physically in Delaware or you run an online business? Will it offer the same benefits to your company?

Unfortunately, the answer is, “No.” In case your business is based in any states other than Delaware, you will have to face additional obligations and costs when you form your business in Delaware. While Delaware offers plenty of benefits to its home businesses, it also has some disadvantages that outweigh these benefits if you are not aware.

Where to Register

Whether you are a startup or you own an established business, you need to follow certain rules to determine if you should incorporate your business in any state.

Remember that regardless of the type of business you have, it has to be registered in the state where you are physically present. There are set up rules for all types of businesses that help entrepreneurs determine whether they have a physical presence in any state and should register there.

For example, your business will be considered to have a physical presence in any state and needs registration if:

  • You have a bank account in that state
  • You have working employees in that state
  • One of the shareholders or owners lives in that state
  • You have office or workspace in that state

Simply put, if you live in Texas, you need business registration in Texas. If you have employees in California, you have to register your business in California, even if you do not physically have a location within the state.

Reasons Why Registering in Delaware May Not Be a Good Idea

It is important to note that registering in Delaware does not offer the same benefits to every business. No matter how advantageous business incorporation in Delaware may seem, if you are a startup or runs a small business, registering in Delaware may not be a good idea.

●        Double Annual Franchise Tax

This is, without a doubt, one of the main drawbacks of registering in Delaware. When you register your business in Delaware as your home state but your business also has physical nexus in other states, it doubles your registration fees. Having nexus physically in any other state requires business owners to register in that state as well. That means businesses need to pay annual franchise taxes in both Delaware and the other state.

That is to say, if the advantages of registering in Delaware do not mean much to your business, there is no point in taking an additional expense or administrative time for incorporation in Delaware.

●        State Tax

No matter where your business is registered or what tax requirements a specific state has, as long as your corporation has a connection with any state, the state demands its share of profit.  So even though Delaware does not require state tax filing if no income is generated in Delaware, this doesn’t necessarily mean that your business can totally avoid state income taxes or state sales taxes in other states.

●        Added Cost of Registered Agent

To incorporate in Delaware, the corporation needs a registered agent who must be a Delaware resident. Business owners need to provide his/her Delaware’s street address to receive all legal documentation on behalf of their corporation. A registered agent is hired to provide these services to businesses, which is definitely an additional expense.

Benefits of Registering in Delaware

Registering or incorporating your business in Delaware holds several benefits, especially for home-based businesses. However, many small businesses do not notice these benefits due to complexity and cost. Some of these benefits include:

●        Friendly Law for Business

There is no denying that Delaware has some great friendly laws when it comes to structuring your business. The state offers flexible terms and working environment for board members and corporations. This might sound surprising for you. Delaware has a gold standard when it is about the corporate law environment.

Many giant corporations register businesses in Delaware due to its “corporate veil.” Because Delaware’s corporate veil is considered the thickest among 50 US states, that is what makes forming LLC in Delaware less risky as compared to other states.

Moreover, Delaware runs a separate court system named” Court of Chancery” to deal with corporate issues. The well- established court system expertly resolves complex corporate and law matters. The corporate attorney in the court specializes in the business laws of Delaware that make business matters hassle-free to handle.

●        Suitable for C Corp Looking for VC and Outside Investors

You might have seen many investment banks and VC backed ventures and startups choose to register in Delaware.  If you are considering VC funding, choosing Delaware would be undeniably a smart choice. By choosing Delaware, you will not have to convert your corporation when a venture capitalist demands it.

However, if you are currently registered in state other than Delaware and want to convert your business to be a Delaware corporation in the future, this can easily be done and the process is usually very painless.

●        Foreign Owners with Absolute No Physical Nexus in Any States

This is another benefit of registering a business in Delaware if you are a foreign owner. The flexible business statute and laws of Delaware not only permit but also provide efficient business procedures to the foreign owners who do not have any physical nexus in any other state. Foreign businesses can easily manage mergers, conversions, transactions, and transfers due to flexible tax laws.

Conclusion

Understanding the corporate laws and navigating the various state jurisdiction requirements can be complex for business owners.  Instead of just going with the “norm” or taking advice from the internet business owners should consult with their CPA to make sure that they are launching their businesses in the right foot and avoiding unnecessary expenses and administrative headaches.