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sales forecasting for a small business

How to do sales forecasting for a small business?

End your struggle to forecast sales with the Ultimate Sales Forecasting Guide

Suppose you are a restaurant owner. You wish to forecast sales for your restaurant in the upcoming financial year. You will forecast each dish’s sales or certain meals like lunch, dinner, etc. In short, you will be forecasting sales for the following year. It will help you predict the budget and pave the way to set realistic goals. As a result, sales forecasting will lead to the success of your restaurant. Before jumping on how to do sales forecasting, let’s understand what it is?

 

What is sales forecasting?

In the simplest terms, sales forecasting predicts a picture of your future sales pipeline. The concept is derived from actual sales, economy, and industry data and trends. It helps in enhanced inventory, workforce, and cash flow management. An established business can forecast more quickly than a new brand as a new company is bereft of previous sales data. Eventually, they depend on industrial databases and competitive benchmarks.  

 

Importance of sales forecasting

Primarily sales forecasting helps in mapping out sales growth. Eventually, you can prepare actionable sales to forecast reports. Also, it becomes easy to tap sales team performance, and Secondly, it leads to better resource planning. 

Thirdly, sales forecasting is the base of the sales budget, including hiring new employees or increasing the inventory, machinery, etc. Fourthly, you can anticipate the product interest. In simple words, while looking at previous sales data, you learn which of your products sold the most. Likely, you can figure out the consistent best-selling item over the last few years. 

As a result, you can predict and prioritize the best-selling product. And all these benefits are directed towards positive earnings. So last but not least, sales forecasting also helps in forecasting revenue. Now, let’s sneak peek into how you can forecast sales for your small business. 

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How to do sales forecasting? 

  • Set up a sales process & pipeline for your team

An effective sales pipeline system and a well-mapped sales process lead to business growth. A growing business demands defining a sales pipeline as per prospect behaviour, and a well-defined and managed sales process is required to be set up. The sales process focuses on consistency and increases accountability, which comes into the role while converting a lead to a customer. 

  •  Map Individual Lines of Sale

The second steps include separating your products and services into distinct category. For instance, ‘product’ and ‘product’s parts. Similarly, services can be separated based on billable hours, subscriptions, etc. One thing to be noted, always use a similar unit throughout the sales forecasting. 

  • Take past data from other departments 

Sales forecasting becomes a piece of cake with historical sales data. This data draws the baseline of sales forecasting numbers. Moreover, it guides you about the season ability or cyclical fluctuation of a product. You need to analyze previous year’s data from other departments like marketing, development, or finance as it gives insights into the quality of the sales pipeline. At the same time, the finance team makes you understand the alignment of your sales goal with the company’s overall financial plan. 

  • Choose a Sales Forecasting Method

In the fourth step, you must study and choose the best forecasting method for your company. Around 79% of sales companies inaccurately predict sales by forecasting more than 10%. Therefore, you must choose a proven sales forecasting method. There are various methods to forecast sales. For instance, pipeline, historical, initiative, sales cycle length, opportunity stage forecasting, etc. So always study your business model, sales team, and industry trend before opting for a sales forecasting model. 

  • Prepare a unit sales and price projection to estimate sales revenue. 

If you are projecting sales from the historical data, use the parallel period. Firstly, forecast unit sales for each month. Then predict unit sales each year as we advance for three years. You may include quarterly projections to prepare for high seasonality. Secondly, forecast sales revenue, multiply the unit sales projection and respective prices. Then with basic math and accounting, you can discern the sales and cost. You will get the estimated profit or loss by deducting cost of sales from sales.

Conclusion

Sales forecasting is based on many assumptions or historical data. So the accuracy of forecasts is never 100%. As a result, you always want to forecast the closest sales with the industry expert who understands your company like their own. So, if you wish to have an industry expert’s consultancy while projecting sales and forming sales reports, then contact SKB Accounting now!

 

-By Dipali Nishad 

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benefits start-up can redeem from accounting

Benefits Startups Can Redeem in Accounting & Bookkeeping

What are the benefits startups can redeem in accounting? 

Warren Buffet once said, “Accounting is the language of business.” 

Now suppose Mr. XYZ starts a company. He has the funds to run his startup. Also, a robust business plan with sound research and strategy is done. But, he is not aware of the language of business. In simple words, he is unaware of the benefits accounting can redeem. To our surprise, several entrepreneurs and business owners like Mr. XYZ. Around 60% of small-business owners feel they are not knowledgeable about accounting and finance. 

What is accounting?

A company needs to keep track of all the expenses and income. In accounting, you need to maintain records of all financial transactions. Eventually, it leads to sound cash flow management. Accounting starts with drafting a strategic budget. Secondly, you develop a bookkeeping system. Then, you create a trustworthy payment gateway. After which, you set up a payroll system.

Last but not least, you prepare financial statements. It shows an accurate picture of your business’s financial health. Accounting holds much more than the before stated. Therefore, we are unfolding the benefits that accounting has in store for startups. 

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Why is accounting vital for your startup? 

1. Bookkeeping

According to Wasp Barcode, around 21% of SMB owners admit not knowing enough about bookkeeping. But you must know bookkeeping leads to better and informed financial forecasting of a company. As a result, you can strategically draft your business plans. Secondly, you can access your business’s accurate accounts and cash flow. Eventually, this helps in receiving payment timely. Thirdly, the tedious nature of bookkeeping increases the chance of higher human errors. So many entrepreneurs have started looking to outsource their bookkeeping to experts. 

Outsourcing your bookkeeping will lead to secure & reliable financial health. They also take care of your monotonous task of bank reconciliation. Since monthly reconciliation keeps your books clean and brings countless benefits, maintain a clean general ledger and prepare accurate financial statements for your business. Lastly, an outsourcing accounting firm will provide unlimited consultations.

2. Payroll System

You need to set up a payroll system to pay your staff on time. You often miss the IRS deadlines and become unable to pay on time. It can lead to low morale and legal difficulties. That’s why you may require a payroll service provider. You outsource your payroll system to a payroll service provider. 

You can get the best payroll solution that fits your startup. Your payroll checks are printed on time. Additionally, a report of employees’ vacation, sick days, new hires, etc., is always ready. You don’t need to worry about the Free IRS and State tax reporting. Lastly, you get access to reports that the government agencies always require. A payroll service provider eases things for you. As a result, you spare more time for your primary operation. 

3. Cashflow Management

Cashflow management is one of the main benefits of accounting. While adequately maintaining books, you are also paving the way to positive cash flow. On the contrary, if books are not maintained accurately, it leads to a cash crisis. Due to the crisis, entrepreneurs shake hands with a cash management service provider. 

cashflow manager gains a depth of knowledge of your cash flow. They build an accurate cash flow projection. Plus, they provide cash collection acceleration techniques. They give the best-proven effective collection and payment policies as well. Finally, yet importantly, they help you get the maximum rate of return on your idle cash. 

4. QuickBooks

By now, you have read enough about outsourcing various services. But what’s that an accounting outsourcing firm possesses but a startup doesn’t. It’s nothing but accounting software. The cost of installing and updating accounting software is huge. Therefore, startups and small business owners outsource accounting and bookkeeping. There is various accounting software like- QuickBooks, FreshBooks, Xero, etc. 

QuickBooks is the ideal business accounting software for small to mid-sized business owners. Primarily, it saves time on bookkeeping and paperwork by automating the tasks. Secondly, it generate vital financial reports. Thirdly, QuickBooks can be tailored as per your startup requirement. Lastly, a virtual accounting firm integrated with QuickBooks provides QuickBooks Training

If you are still looking for more reasons, click here to know why you must choose QuickBooks.

Conclusion

In a startup’s budding days, owners must face a host of problems. We at SKB Accounting help you kickstart and redeem the enormous benefits of accounting. The most significant benefit of shaking hands with us is that our estimates grow only with your startup’s growth. So, schedule a call with us now and get relief from the accounting stress. 

 

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5 Best Software Salon

5 Must have best Software Salon

Must-Have Salon Software to Excel your Salon

Salon owners, do you consider your salon a small business? If yes, you should do everything a small business does. It begins with creating a salon business plan. It involves researching local laws, regulations, and ways to make your salon stand out. Also, it requires a solid client base and so on. However, the whole task could get tedious.

Moreover, it costs your time to be spent on providing services and developing loyal clients. To alleviate the process, a little salon is best. According to a report, over half of the small businesses (53%) use a software solution. 

 

Gone are the days when the salon manager had to manage appointment registers. With modernization, everything comes at the touch/click of a button. Thus, salon software comes to play a vital role. Primarily with the salon software, scheduling appointments becomes easy. Secondly, it helps in efficient inventory management (product stock). With the growing salon, the number of employees also rises. Thus tracking and managing employee performance becomes a smooth process.

Moreover, it automatically generates a client database for you. Fourthly, it manages the cash flow of your business with swift payment processing. As a result, you get the chance to grow your business and move towards wealth. Lastly, automated loyalty programs add stars to your salon.

 

So now you might start questing for the best software. The salon software reviews on the app or website are not 100% reliable. Therefore we have compiled with 5 best salon software: 

  1. Square Appointments 

Does your salon require an affordable appointment scheduler, a minimalistic design, or a full-blown POS system? 

Then your answer lies in this salon software- Square Appointments. The appointment scheduler works best for booth renters and individual stylists. Also, it integrates with all marketing and business tools from Square. Maybe right now, you wish to get an appointment scheduler only. But later, you can add Square’s professional POS unit, payroll tool, the Square marketing suite, and even build a website and online store. 

  1. GlossGenius

Do you know an all-in-one salon software without technical complexity and boring design now exists?

You heard it right GlossGenius is an all-in-one appointment, payment, and marketing app for independent salons in the USA. The software provides support to both individuals and salons with teams. With this beautifully designed app, your business breathes exceptional beauty. Eventually, it gives a high-end client experience. It provides easy-to-use email and SMS marketing along with advanced business reporting. Plus, it’s affordable, transparent, pricing, and offers a free 14-day trial.

  1. Mangomint

Are you a growing salon having 5+ staff? 

Then the salon software- Mangomint is just for you. It is one of the most well-designed platforms. But, it also provides smart automation, which saves your time invested in managing appointments and business operations. Mangomint features are inclusive of calendar scheduling, online booking, POS, inventory, reporting, etc. 

Moreover, with mangomint you can integrate with your favorite marketing and business systems. Mangomint Pay card processing is fully integrated with the software, and it offers the easiest way to accept all major credit cards with straightforward flat rates.

  1. Fresha 

Fresha is a 100% subscription-free salon software. It’s a widely popular salon software used across 120 nations. Around 50 000 beauty businesses and 250 000 stylists & therapists are using the salon software as there are no limits on the times of usage of the trial period limits. 

Its easy-to-use interface relieves the stress of a non-technical savvy. It’s best to be an individual stylist or salon on a tight budget as it’s subscription-free. With Fresha marketplace, you need to pay only a 20% fee for the first appointment as a new client. Moreover, the marketplace widens the marketplace and clients for you.

  1. Vargo 

Vargo is an all-in-one salon software that doesn’t pierce a hole in your pockets. It is the best fit for most small to medium size salons. The software pairs up integrated payments, full payroll support, native booking & online store integration with your website. It provides a client marketplace and great salon marketing support.

You get some advanced features that are difficult to find in other apps. For instance, live video streaming, subscription payments, and agency design services. Plus, a custom mobile app will is waiting for your salon!

 

Conclusion

Automation and software have been fruitful for all businesses. So what are you waiting for? Schedule a call with us now to get Quickbooks service at an affordable price.

 

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How to keep your books cleaned?

How to keep your books balanced?

Accounting Tips for Small Businesses to Keep the Books Balance

 According to Wasp Barcode, around 21% of SMB owners admit not knowing enough about bookkeeping. If you belong to that 21%, you do not need to worry. We will give you a sneak peek at how you can keep your books balanced.

Why keeping your books balanced is essential? 

Before jumping, let us understand the why. Accounting and bookkeeping are as crucial as the core operation of your company. Therefore maintaining balanced books becomes more important. Firstly balanced books lead to better and informed financial forecasting of a company. As a result, you can strategically draft your business plans. Secondly, you get access to your business’s accurate accounts and cash flow. Eventually, this helps in receiving paying timely. Thirdly, the tedious nature of bookkeeping increases the chance of higher human errors. So, reviewing your books at regular intervals helps in identifying that errors. Also, it saves organizations from bigger financial blunders. Therefore, we present the best accounting tips for SMB owners to maintain balance and clean books. 

Tips to Balance your Books

  • Separate Personal and Business Accounts

Often new SMB owner or entrepreneurs don’t distinguish their personal and business accounts. If you are one of them, you might overlook the critical business transactions. Maintaining separate personal and business accounts makes it easier to determine your regular spending. This way, keeping books balanced becomes easier. Also, keeping a separate credit card for your business expenses separates personal expenses. 

  • Monthly Bank Reconciliation

Bank reconciliation requires you to compare the cash balance of your bank statement to that of the company’s records. Firstly you need to identify and highlight the difference between both statements. Secondly, you must ensure that all interest income and bank deposits are added. Thirdly, subtract the bank fees & service charges. Lastly, it would help if you calculated & compare the balance of both bank & company records. Monthly reconciliation keeps your books clean and brings countless benefits. All these recorded expenses help in tax savings. Also, it is cost-efficient and guards the business against fraud. 

  • Maintaining Clean General Ledger

The general ledger is the core of your company’s financial records. These records constitute the central “books” of your system. Since every transaction flows through the general ledger, a problem with your general ledger throws off all your books.

Reviewing your general ledger system regularly allows you to hunt down discrepancies such as double billings or unrecorded payments. This way, you can fix the discrepancies in your books. As a result, your books are always accurate and balanced.

  • Clean up your books at regular intervals 

Cleaning up your books at regular intervals will help you identify and minimize errors in the beginning. Also, it deters employee fraud, embezzlement, theft & dishonest behavior against the business from both outside and inside. It will generate accurate amounts in account payable, account receivable, etc, which need to be considered before purchasing. Eventually, you make an effective decision as per the business’s financial health. With transparent cash flow, it allows you to track profit & company performance.

Additionally, it saves your business from accounting blackholes. Besides, it enhances your internal control as you are not required to rush to correct an incorrect accounting method or some mismatched balances.

  • Record Cash Expenses

Being an SMB owner, you need to track all expenses to keep your books balanced. Among the hustle-bustle of the business world, you may forget to track your cash expenses. But it’s essential to deduct them from your income at the time of taxes as it leads to accurate and enhanced financial analysis. So, it would be best if you always asked your vendor for invoices.

  •  Create a cash flow statement 

A cash flow statement gives the picture of your business’s cash inflow and outflow. Making a cash flow statement weekly or monthly can help you anticipate expenses and allocate income. Besides, it helps maintain optimum cash balance and even generate more cash. Moreover, it helps short-term planning for the business and leads to better cash flow management. 

  • Understand the difference between Invoices and Receipts

Invoices and receipts are often considered the same, and that’s where you go wrong. An invoice is a bill you send to the customer once they receive your service or goods. It consists detailed outline of all the deliverables. It helps you ensure that the payment is received timely. However, a receipt is a proof that a transaction occurred, and you provide the receipt to your customer once a transaction is complete. So to balance your books, you need to know the difference between the two.

  • Leverage Technology

Balancing or keeping books accurate requires time and concentration. It leads to irregular checking of the books. Besides, the process is complex and overwhelming for anyone. That’s why the whole world is leveraging technology. Installing a cloud-based software or app relieves you from the monotonous and tedious bookkeeping and accounting job. Still, you must not forget to keep track of receipts.

Conclusion

Why wait for tax season when you can outsource your bookkeeping service with us. Get on a call with us and get your books cleaned as we offer accounting and bookkeeping services integrated with Quickbooks

 

 

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Accounting tips for small business and start-ups

How to do accounting for small businesses?

Accounting tips for small businesses and start-ups

The most daunting task after founding your startup is kickstarting your accounting. Accounting is not as easy as falling off a log but keeping track of your expense, cash flow, and business transactions are essential, and it will pave the success path of your small business.

Challenges faced by startups in accounting

The challenges emerging in the budding days of a startup can be frightening. Firstly, you need to juggle multiple financial information like sales, debts, expenses, payroll, etc. Secondly, raising finances to fund your startup. Thirdly, choosing a payment method for employees. Lastly, prepare all financial statements and reports to get a clear picture of your business.

Stepwise Accounting Guide 101 for startups:

These challenges can be overcome and head start your accounting with the following steps:

  • Strategically Draft a Budget

Without a strategic business plan, you will sail without any end goal and make budgeting errors. It ensures that every decision you make aligns with your organizational goals. Firstly, it forecasts revenue, plans expenditure, allocates funds strategically, and communicates the purposes of the business. Secondly, it increases operational efficiency. Thirdly, you can make profits on seasonal business days with a strategic budget. Last but not least, it secures a business from a financial crisis by improving cash flow management.  

The process of drafting a business plan starts with analyzing the operating cost of the business, and it should consist of fixed, variable, one-time, and unexpected expenses. Next, you must list all the income sources and forecast your revenue to set realistic financial goals. Besides these, you need to accommodate interest and taxes while integrating all the departments—furthermore, draft estimates for financial statements. 

Here are budgeting tips to smoothly manage your finances.  

  • Develop a bookkeeping system

Bookkeeping begins with creating a new business account to split personal and business funds. Next, you need to unclutter and organize all the records in one place to save time. Furthermore, it would help if you track your expenses and account receivables. It’ll help you know exactly where to look in times of tax filling and making or receiving payments. Using an excel spreadsheet or software system such as Quickbooks enables you to keep track of all the expenses, revenue, and invoices in one place. 

As a business owner, you must keep an eye on your invoices to trace your billing. Bookkeeping is a tedious and time-consuming task, and therefore, many companies are outsourcing their bookkeeping to increase their productivity. U.S. outsourcing statistics also suggest that outsourcing in the financial services market will continue to rise by almost 7.5% annually. 

  • Create a trustworthy Payment Gateway

All your marketing and promotions could fail if you don’t have a payment gateway as it structures your company. With this step, you can start selling your product, and it impacts your sales, as now providing invoices portrays you as a trustworthy startup.  

With the growing business losing track of payments and invoices can be evident. So, it is advisable to integrate all electronic payment systems with your accounting software. It allows you to automate your accounting systems and books. Also, it saves time and adds accuracy by removing human errors from accounting records—automated tracking of payments in real-time increases cash flow and cuts labor costs. 

  • Manage Cashflow System

A study from Intuit stated that 61% of small businesses worldwide struggle with cash flow. An extended cash shortage is probably the worst nightmare of an SMB owner. The cash shortage often occurs due to the massive cash inflow and outflow gap. The first step is to analyze your inventory over time. It includes identifying the low-demand products and selling them at a discounted price. Also, it would help if you stopped buying any additional stock of such products. Instead, invest and buy the inventory giving high returns. 

If you deal in monthly payments, shift to getting paid right away once deliverables are given. It is best to open a business line of credit when your business credit score is good, and it also reduces the rejection risk of getting credit in the future. Instead of buying the various required equipment, you can lease them to minimize the short-term financial burden. Last but not least, make the best use of technology to create streamlined budgets and project cash flow with cloud-based software and apps. 

  • Set up payroll System

Either you have hired or plan to hire more employees as a startup. But have you thought about how you will pay them without delays? If no, then the answer is by setting up a payroll system. Initially, it would be best to determine how often you’ll pay employees. You must provide Form W-4 to identify withholdings to deduct tax from paychecks. Moreover, constantly be updated on the IRS deadlines to avoid penalties. 

In the United States, the IRS estimated that one out every three employers had been penalized for payroll. Billions of dollars in fines are collected each year. It can also destroy your hard-earned goodwill. So you can consider outsourcing your payroll to a cloud-based payroll service provider. It will give you freedom from security and software updates worries as they are transparent and accessible with 24*7 customer support.   

 Conclusion

Accounting, at times, can be exhausting and divert you from your end goal. That’s why we empower you with accurate accounting and bookkeeping services. A top-secret is that our estimates grow only with your startup’s growth. So, schedule a call with us now and get relief from the accounting stress. 

 

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Accounting Tips To Smoothly Run Your Restaurant

Accounting Tips for Success of Your Restaurant

5 Effective Accounting Tips To Smoothly Run Your Restaurant

Did you also start your own restaurant to follow your passion? 

Then you might have or are facing hurdles to manage your restaurant’s accounting. Don’t stress out pal because, as per a report, around 52% of restaurants face the challenge of high operation costs. 

A part of this high operating cost is your daily accounting. Restaurant accounting includes keeping a tab of the restaurant’s finances and drafting the budget accordingly. It is one of the indispensable aspects of running a restaurant.

Restaurant Accounting is different from other industries. Accurate and true finance reports are necessary for any business’s success. But for restaurants, it becomes more important as it relies on historical data and current records to forecast and make business decisions. The profit margins in the restaurants are very thin. Due to this reason, it becomes vital to pay attention to your accounting process. 

That’s why we bring you the 6  effective accounting tips to smoothly run your restaurant. 

  • Understand the language

If you wish to excel in your accounting game as strongly as in your kitchen, then you must learn the language of accounting. Everyone is not a trained accountant, that’s why you should start by understanding the basic terms. For instance, debit, credit, balance sheet, cash flow, prime cost, profit & loss, etc. In the beginning, it may feel heavy-duty. But, grasping their meaning, differences, and application in accounting will give you essential financial insights into your restaurant. However, if it feels onerous you can hire or outsource an accountant. 

  • Keep track of your Bookkeeping

Bookkeeping should be your new habit. Firstly, you can create a cash-flow projection to calculate the estimated revenue after expenses. It builds the foundation for your restaurant’s budget. Secondly, you must maintain regular financial records, for future IRS audits. You can consider buying restaurant bookkeeping software as well. Thirdly, as a restaurant owner, you must track your inventory on a weekly basis. Lastly, maintain a sound ratio of Cost of Goods Sold (COGS). It helps in setting better pricing and sales goals and making your restaurant profitable.

  • Choose the right point of sale system

You must invest in the right Point of Sale (POS) System. It will help you understand where your money is going. A POS system offers you a detailed analysis of your accounts via insightful infographics. However, many managers are unaware of the benefit of intertwined POS and accounting systems. Linking your POS system and accounting system helps you track inventory and labor costs, methods of payment, etc. There are various POS systems specifically designed to manage all facets of a restaurant. For instance, Toast POS, Lightspeed POS, ShopKeep, Square, etc. 

  • Get your restaurant insured

Understanding financial terms will definitely help you comprehend the accounting department. But, it is still exposed to financial troubles namely, property damage and lawsuits. For instance, your kitchen can catch fire and destroy the expensive equipment, or a customer slips on the restaurant’s wet floor and breaks his leg. Any of the instances could lead to financial calamity. Therefore, you must get your restaurant insured. Many small business insurances are available for restaurants such as commercial general liability and restaurant insurance. This insurance offers general liability and property damage coverages. You can consult an insurance agent to identify and secure the specific risk associated with your restaurant.

  • Consider Outsourcing your Payroll

Paying your employees always seems like child’s play. However, it includes deciding a pay period, number & type of payments, classifying employees & withholding taxes. With the host of tasks at hand to do, properly handling payroll becomes tough at times. Also in case of mistakes in payroll you have to beat liability issues and high penalty fees. Besides all of these, it’s hard to keep up with the dynamic workforce laws.  That’s why it is advisable to outsource your payroll system.

 

The restaurant industry varies from other industries in terms of profit margin. Eventually, with the success and popularity of your restaurant, accounting often gets tough. That’s why we empower you with accurate accounting and bookkeeping services. Not only this, we help you with payroll and strategic business planning while you focus on growing your restaurant. 

That’s why we bring you the 7 effective accounting tips to smoothly run your restaurant. 

 

-by Dipali  Nishad

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Rich Dad Poor Dad Cashflow Quadrant

The Rich Dad’s Cashflow Quadrant

The Rich Dad’s Cashflow Quadrant: How to become an Investors

“You will never know true freedom until you achieve financial freedom.” ― Robert T. Kiyosaki

 

Being self-employed or a small business owner means you are your own boss. You earn and make your own income. It requires persistence, determination, and sleepless nights to build a successful business. However, many times you forget to trace your path to success. Your personal growth becomes stagnant. Moreover, the dream of living a wealthy life gets lost within the routine work of your small business. 

But what if there is a tool to measure your growth?

Yes, the tool was discussed by Robert T. Kiyosaki in his book titled Rich Dad’s Cashflow Quadrant. The concept is quite simple but it can drastically change your professional life. Before discussing how you can go from self-employed to an investor, let’s see what is a cashflow quadrant. 

 

The Cashflow Quadrant

The cashflow quadrant consists of 4 quadrants named Employee (E), Self Employed (S), Business Owner (B), and Investor (I). Additionally, the 4 types of people are grouped into 2 categories. One who looks at the world through the left side (poor side) & others look at it through the right side (rich side). The aim is to achieve financial freedom and move towards the right quadrant. Simply, people aim to move from poverty to wealth.

As per Robert Kiyosaki, only 5% of the people belong to the Investor quadrant. As the majority of the population is stuck in the employment and self-employment quadrants. The first step to shifting from the left to the right side quadrant is to start thinking. Robert T. Kiyosaki also said, “Thinking is the hardest work there is. That is why so few people engage in it.”

How to go from left side to right side?

Money has an addictive power. When a person starts earning money through a particular quadrant, one gets addicted to the quadrant. If you earn a certain amount from your small business or as a freelancer. Your brain will get fascinated by that cash reward. Shifting from one quadrant to another becomes difficult because of this. 

Moreover, the risk factor of the right side of the quadrant adds up to the difficulty. The questions like, “You might get bankrupt at the end”. Moreover “Money can’t buy happiness” like thoughts become a mental barrier. So one needs to overcome all such mental barriers. 

To move to the I quadrant, first focus on the B quadrant. The shift could be a little easier as you have already built a business skill set. You might have also become a master of networking. You know how to find the best fit for a job and use scarce resources to achieve the target. But, team management, leadership, and great communication skills are indispensable skills for a large business owner. So you must put some more skills on your bucket list of ‘New Skills to Learn’. 

 

Robert said that a great business owner is one who is a great leader. He also stated, “If you want to be a leader of people, then you need to be a master of words.” Being a leader of competent teams, you can make a profitable company. 

Once a successful company has been built you are ready to step into the Investor (I) quadrant. As the increased cash flow will give you the freedom to invest more fruitfully. The more profitable businesses are, the more money you have in your hands to invest. Though you can start investing even with $1000 or less. But for big returns, big amounts must be invested. 

As per Robert, Kiyosaki, the I quadrant is where money turns to wealth. As a result, you achieve financial freedom by using money. In this stage, you don’t work for money instead money works for you.  As an investor you must use your skills and expertise in a drastic business environment before investing a single penny.

 

“Believe in yourself, and start today!” ― Robert T. Kiyosaki

 

We at SKB Accounting understand that accounting could be tedious and time-consuming. Besides, it could be expensive for a small business to hire and train an in-house accounting department. If you feel the same and are looking for someone to overtake your accounting stress, schedule a call with us now. So that you have time to focus on making a profitable business and shift to the Investor quadrant

 

-by Dipali  Nishad

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3 Safe Harbors for all the Landlords and Real Estate Investors

3 Safe Harbors for Landlords and Real Estate Investors 

3 Safe Harbors for all the Landlords and Real Estate Investors 

 

A safe harbor is a legal provision to eliminate legal or regulatory liability in certain situations, provided that certain conditions are met, Investopedia defined. These are rules by the Internal Revenue Service (IRS). Also, it eases the process of tax filings for eligible companies that generate smaller incomes. 

Like any other business owner, landlords and real estate investors wish to save dollars in taxes. Thereby, they simplify tax filing and save money with safe harbors. So, we are spilling the secret sauce of three safe harbors. Continue reading for a brief guide on how and when to use these safe harbors. 

 

De Minimis

The De Minimis Safe Harbor helps you to decrease expenses up to $2500 per invoice. This amount is double to $5000 with an applicable financial statement. These set limits determine whether a certain expense comes under the safe harbor. On contrary, the expenses falling outside the limits should probably be capitalized. Such limits are applicable to each invoice item and not in aggregate. 

However, some expenses exceeding the limit need not be capitalized. For instance, payment for acquiring and producing tangible property, exceeding the safe harbor limit. It excludes amounts paid for inventory and land. 

 

Routine Maintenance 

Routine maintenance safe harbor deals with the regular property maintenance expenses to be deductible regardless of the cost. This safe harbor has no annual dollar limit or income bar. Landlords spend regular and recurring expenditures to maintain efficient operating building conditions. There are two activities:

  1. Inspections, cleaning, and testing of building
  2. Replacement of the damages or worn parts 

Expenses under the first activity are deducted. But, the expenses under the second activity benefit the landlords. Earlier, landlords had to capitalize and depreciate expenses related to replacements. But now landlords can deduct it if it’s for keeping the property in ordinary working condition. 

However, note the first 10- year rule. As per this rule, any replacement is eligible as routine maintenance when it has been in service for 10 years. Once replaced, it must not be replaced within the next 10 years. 

 

Safe Harbor For Small Taxpayers (SHST)

The SHST let the landlords deduct their Schedule E annual expenses. These include repairs, improvements, and other costs for a rental building. To use this safe harbor landlords requires to maintain a record of all such annual expenses. There are various restrictions to check if expenses qualify or not. 

 

Rental Business Size Limitations

Landlords are restricted to use SHST if they exceed these limitations:

  • $I million limits on an unadjusted basis. Ex: land, improvements in land and cost segregation study identifies a personal property.
  • Annual expenses for repairs  & maintenance should not exceed $10000 or 2% of the buildings’ unadjusted basis.
  • For the last 3 tax years, landlords’ annual gross income should be less than $10MM

 

We at SKB Accounting offer detailed reports and analysis that will help you smoothly own and operate your rental property. Schedule a meeting with us now. 

 

-by Dipali Nishad

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Importance of Bank Reconciliation Statement

Why monthly bank reconciliation statement is important?

Why monthly bank reconciliation statement is important?

 

Mr. XYZ of your company erroneously put a $100 invoice in accounts payable. Instead of recording it in accounts receivable. In simple terms, he recorded it as an expense. 

Sounds like a common accounting error, right?

Now replace $100 with $10,000 and imagine Mr. XYZ made the payment. Your heart must have skipped a beat. This was an error of entry reversal. Similarly, there are many accounting errors. For instance, error of principle, exchange, omission, commission, duplication, etc.

In order to solve these errors, you need to prepare a Bank Reconciliation Statement

 

What is a Bank Reconciliation?

 

BRS is a summary of banking and business activity that reconciles an entity’s bank account with its financial records,” Investopedia stated. It compares your records to the bank records. Besides, it helps to discern exact bank balances on a certain date. It addresses accounting problems in real-time. 

Infrequent reconciliations leads to frauds, unauthorized withdrawals, and bank errors. Moreover, chances of bouncing cheques increase. Thereby, your relationship with clients, suppliers, and partners strains. Therefore, the fee and payment term also increases. 

 

What is the process of the BRS?

 

Initially, you need to compare the cash balance of your bank statement to that of company’s records. If they match, voila. Otherwise, the monthly BRS will come into the role. 

Firstly, identify and highlight the tiniest differences between both statements. For example, you may omit a transaction. But, the same can be there in the  bank’s statement. Secondly, ensure you have added all interest income and bank deposits. In case, some deposits are in transit (recorded in your company’s record), add that in the bank statement’s cash balance. 

Usually, bank fees & service charges, or outstanding checks are in the bank statement but not in the company’s record. In the third step, subtract these fees and charges. Also, consider the issued but not yet cashed cheques to a third party. Subtract the cheque amount from the bank balance. 

Lastly, calculate & compare the balance of both bank & company records. If the balances don’t match, either there is the chance of fraud or some accounting errors. This process increases the accuracy and efficiency of accounting department. Here are the 4 reasons to convince you that a  monthly BRS shields your business.

 

Why is monthly BRS important?

 

  • Validates cash flow

Tracking expenses is important to ensure that a business is earning good profits. One needs to carefully record all the expenses such as rents, utilities, bank charges, etc. In case bank service charges have increased, bank reconciling will help you ascertain the effect on cash flow. Moreover, lenders and investors consider your BRS to evaluate your financial stability.

  • Recorded expense help in tax savings

While calculating tax to be paid at the end of each year, all you look for is recorded expenses. Monthly BRS helps to keep track of all the expenses like depreciation, travel expense, and other information. As a result, these recorded expenses help in the availing of deduction. 

  • Save Money

How many subscription and their timelines can you remember every month? It seems hard to keep an eye on every new subscription in the tech-driven world. But monthly BRS reminds, records and keeps a tab of all such expenses. They help you in discovering all those forgotten free trials which are now automatically charging you every month.  

  • Guards from Fraud

When an employee alters or steals a cheque, mostly a BRS process identifies it. So, you should have a separate employee to reconcile both the bank statement and your records. Moreover, a fraudulent charge on the company’s credit card alerts of any loss of your credit card or its credentials. So a monthly bank reconciliation secures you from frauds before losing a great amount.

 

Being a business owner you have a lot to do on your plate. Finding time to do monthly bank reconciliation can be too difficult.

At SKB Accounting, we monthly reconcile your business to keep your bank account, accounting  up-to-date. To know more about this, schedule a meeting with us now. 

 

-by Dipali Nishad

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Credit card Process

Small Business Credit Card: Eligibility & Process

Small Business Credit Card Eligibility & Process

 

A small business credit card is opened to separate business expenses from personal ones. In fact, it opens a line of credit for the business. These cards not only improve your credit score but also offer travel rewards, added miles, higher cash backs, and bonuses. Building a good credit score helps in managing business finances. Moreover, it improves cash flow and timely payments

Well aware of the benefits but confused about how to apply for a small business credit card? Check out eligibility, requirements, and detailed application process of the business credit card. 

 

Who is eligible for a small business credit card?

A load of business credit cards is available in the market. Some credit cards yield numerous benefits for large companies. Similarly, there are credit cards for small businesses having five or fewer employees. Every card issuers have predefined eligibility criteria.

Here are a few common restrictions you could face.

  • Firstly, few card issuing authorities don’t issue credit cards to non-profit organizations like sole proprietorships.
  • Secondly, few issuers don’t issue to businesses operating in specific industries.  These include multi-level marketers, cannabis, or firearms.
  • Thirdly, not qualifying the minimum eligibility criteria. For example income range, the number of business years, and credit score. 

In the end, even if you are unable to get a card from one issuing authority, you can get it from another.  With the host of business credit cards, there is one for everyone. 

 

What is required for the application?

You must have applied for a personal credit card once in your life. Applying for a business credit card is pretty much the same. Here’s a checklist before you go to a credit card issuing authority :

  • Business address 
  • Number of Employees
  • Industry
  • Number of business years
  • Annual revenue 
  • Monthly expenses expected to cover using the card
  • Tax Identification Number (TIN)
  • Employee Identification Number (For incorporated business)
  • Social Security Number (For sole proprietor or single member LLC)

 

How to apply for a small business credit card?

  •  Research 

Primarily, you need to research to find the credit cards available for your business. Understand what kind of benefits you want from the credit card. For instance, do you need reward miles or cash back programs? Analyze your business expenses, needs, issuing fees, and interest rates of credit cards. Afterwards,  discern which cards fulfil your business needs. Here are the 8 things to know before you get a business credit card

 

  • Choose a Card

Next step, is to decide which card is the best fit for you. Secondly, read all the cardholder rights, obligations, terms, and conditions. Before applying, comprehend how rewards can be redeemed or when the 0% introductory period ends. Lastly, check the eligibility criteria of the credit card you want.  

 

  • Check your credit score

In case, your business years are three or more, you have a business credit score. That helps you to qualify for a business credit score. The issuers also check your personal credit score. The higher the score, the higher chances you have to get your best fit credit card. Your personal credit score should be at least 650. If it’s not, try to pay your debts, clear out credit disputes and improve the credit score

 

  • Collect the required information and apply

If your credit score is in good shape, you can apply for a credit card. Now, you only need to collect all the required information in the application process. Visit the credit card issuing authority physically or on a portal. Fill in details and answer a few more questions.

 

After submitting everything, you need to wait for the issuer’s approval. If all goes error-free, you will get a card. Lastly, you receive an email to activate the card. Finally, you can use your credit card. 

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