Business Strategies

Whether you’re launching a startup or already managing a small business, understanding how to build business credit is a crucial aspect of your company's financial health. A robust business credit profile can open doors to various financing options, better loan terms, and advantageous relationships with suppliers. This comprehensive guide will walk you through the process of building business credit.

Understanding Business Credit

Before diving into the process of building business credit, it's essential to grasp what it is. Business credit is similar to personal credit in that it represents your company’s creditworthiness to potential lenders and suppliers. Just like your personal credit score, your business credit score can affect your ability to secure loans, the interest rates you're offered, and even the terms your business gets from suppliers. And speaking of personal credit, your business credit should be treated with the same seriousness and attention. Neglecting your business credit—or even ignoring the fact that you have business credit—can have a very negative impact on your ability to grow your business.

Step 1: Establish Your Business

Building business credit begins with formally establishing your business. To be seen as a separate entity from you, the business owner, your company needs to be a legal entity. This legal separation protects your personal assets from business liabilities and enables your business to start building its own credit history.

Next, obtain a free Employer Identification Number (EIN) from the IRS. This number is essentially a social security number for your business and is required to file tax returns, open business bank accounts and establish credit.

Step 2: Register with Business Credit Bureaus

Business credit scores are maintained by credit bureaus like Dun & Bradstreet, Experian Business, and Equifax Business. Consider getting a D-U-N-S number from Dun & Bradstreet, a unique identifier for your business that is often required to build a business credit file. You can think of these like the personal credit score bureaus, Experian, Equifax and Transunion. Essentially, they operate in similar ways, reporting good payments, late payments and applications for business loans. In addition, business credit bureaus report financing from investors.

Step 3: Open a Business Bank Account

Open a business checking account in your registered business name. Having a separate account for your business not only keeps your accounting clean but also provides another proof point to lenders that your business is a separate entity. To shore up your business and ensure financial security, take this one step further and open up a business savings account at the same time. Note that your business bank may ask to see documentation, such as your Articles of Incorporation.

Step 4: Get a Business Credit Card or Line of Credit

Obtain a business credit card from a company that reports to the major credit bureaus. Alternatively, open a business line of credit. These actions provide opportunities to build a credit history for your business. You may not qualify right out of the gate for a business credit card or line of credit. Like with personal credit, you need credit to get credit. However, there are some places that will approve your business for a small credit card and increase the credit line when you make timely payments. Just be sure not to get too far over your head in business debt. Treat it like short term debt, to be paid off in full each month.

Step 5: Establish Trade Lines with Suppliers and Vendors

You can also ask one or more of your vendors if they’ll give you a line of credit. Strive to work with specific suppliers and vendors that offer trade credit — that is, the option to pay several days or weeks after receiving goods or services. Be sure to request that these suppliers report your payments to business credit bureaus, as not all vendors and suppliers do this automatically. Vendors must do a minimum volume of business to be eligible to report to credit bureaus. Even if they can’t report, they can act as a reference should you need or want lines of credit from other vendors you do business with. Having several trade lines in good standing can improve your business credit score.

Step 6: Pay Your Bills on Time

Just like with personal credit, timely payments are critical for maintaining good business credit. In fact, payment history is often the most significant factor in your business credit score. Always aim to pay your bills before their due date to reduce the amount of interest due.

Step 7: Monitor Your Business Credit Report

Regularly reviewing your business credit report allows you to catch any errors or signs of fraudulent activity. Most credit bureaus offer services that allow you to check your business credit score and monitor changes. Dispute any inaccuracies you find as they can harm your credit.

Step 8: Borrow Responsibly

As you begin to establish credit, it can be tempting to take on more debt than necessary. However, overextending your business can lead to missed payments and damage your credit score. Borrow only what you need, and always have a plan for repayment.

Step 9: Maintain Your Information

As your business grows and evolves, ensure that all business information on file with banks, lenders, and credit bureaus is up-to-date. This includes contact information, size of your business, and number of employees. Regular updates ensure your credit profile accurately represents your business.

Step 10: Diversify Your Credit

Over time, try to establish a mix of credit types — such as trade credit, business credit cards, and traditional loans. Credit mix often factors into your credit score, and a diverse portfolio demonstrates to lenders that you can manage different types of credit responsibly.

Building business credit isn't an overnight task, but with consistency, diligence, and strategic planning, you can establish a strong credit profile that benefits your business. Contact your CPA for more tips for building and managing business credit effectively.

Diversifying your business's revenue streams is essential for the long-term success and sustainability of any organization. Having multiple streams of income means that if one source dries up, the business can still survive on the strength of its other revenue streams. Here are some reasons you might want to consider diversification for your business and some ideas on how to do so bring in different revenue streams.

Risk Mitigation

One of the most significant benefits of diversifying your business's revenue streams is that it helps to mitigate risk. When a business relies on a single source of income, it is at risk of failure if that source dries up. However, when a business has multiple streams of income, it is more resilient and can weather any downturns in the economy or changes in the market. For example, if a business relies solely on retail sales, it may suffer during a recession when people are less likely to spend money on non-essential items. However, if that same business also has a strong online presence and generates revenue through e-commerce, it may be able to weather the recession and continue to generate income.

Increased Opportunities

Diversifying your business's revenue streams also opens up new opportunities for growth and expansion. When a business relies on a single source of income, it may find it difficult to expand or grow in new directions. However, when a business has multiple streams of income, it can explore new opportunities and markets without risking the entire organization. For example, a business that relies solely on retail sales may find it challenging to expand into new geographic markets. However, if that same business also generates revenue through e-commerce, it can expand into new markets without incurring significant costs or risks.

Stability

Another benefit of diversifying your business's revenue streams is that it helps to ensure the stability of the business. When a business relies on a single source of income, it is at risk of fluctuations in that income source. However, when a business has multiple streams of income, it is more stable and can weather any fluctuations in any one income source. For example, if a business relies solely on retail sales, it may suffer during a recession when people are less likely to spend money on non-essential items. However, if that same business also generates revenue through e-commerce, it may be able to weather the recession and continue to generate income.

Ideas For More Revenue Streams For Your Business

E-commerce
One way to diversify a business's revenue streams is to explore the world of e-commerce. Setting up an online store and selling your products or services through the internet is a great way to reach a broader audience and generate additional income, even if all you have right now is a brick and mortar store. E-commerce also allows a business to expand into new markets and reach customers that may not be accessible through traditional brick and mortar stores. Additionally, e-commerce provides businesses with the opportunity to sell products or services 24/7 and reach customers globally.

Subscription-based Models

Another way to diversify a business's revenue streams is to explore subscription-based models. This could include offering monthly or annual subscriptions for products or services. For example, subscription boxes are a popular way for customers to discover new products and services on a regular basis. For instance, a beauty company could create a monthly subscription box that includes a selection of their top-selling products, or a food company could create a subscription box that delivers a selection of their popular snacks or meals to customers. Subscription-based models provide businesses with a steady stream of recurring revenue, which can be very beneficial in terms of forecasting and budgeting. Additionally, subscription-based models allow businesses to build long-term relationships with customers, which can lead to increased customer loyalty and repeat business.

Affiliate Marketing
Affiliate marketing is a performance-based marketing strategy where a business rewards affiliates for bringing new customers to the business. Affiliates are typically websites or individuals that promote a business's products or services. When a new customer is brought in through an affiliate's efforts, the affiliate is rewarded with a commission. This can be a great way for businesses to tap into new audiences and generate additional income without having to invest in significant advertising or marketing efforts.

Rent Out Space or Equipment

A business can also diversify their revenue stream by renting out space or equipment that they own or have access to. For example, a photography studio could rent out their space for events, or a construction company could rent out their equipment to other contractors.

Consulting or Professional Services
Another strategy for diversifying a business's revenue streams is to offer consulting or professional services. This could include offering training, coaching, or consulting services to other businesses or individuals in a particular industry. This can be a great way to leverage the expertise and knowledge of the business, and spread brand awareness.

Partner With Other Companies

You could consider partnering with other companies and forming strategic alliances. This can help to expand the company's reach and open up new opportunities for revenue generation. For example, a marketing agency could partner with a web design company to offer bundled services to clients.

Developing a Mobile App
A mobile app can be used to provide customers with a more convenient way to engage with the business, and can also be used to generate revenue through in-app purchases or advertising. For example, a restaurant could develop a mobile app that allows customers to place orders and make reservations, and also includes a loyalty program that rewards customers for repeat visits. This would provide the restaurant with a new stream of revenue, as well as help to build a loyal customer base.

Business diversification is a proven strategy to increase stability in volatile times. You and your CPA can work together to determine the best ways to diversify your revenue stream based on your financial resources and positioning in your market.

Now that 2023 is right around the corner, it’s a good time to look ahead at planning for a brighter financial future. You can review your financial moves in 2022 and consider what worked well and what didn’t. For many people, 2022 was a year to recover financially from the troubles caused by the pandemic. Hopefully, your household was able to make some strides toward getting back on track. The following ideas may help you make even more progress in 2023.

Create a Budget

Creating a budget is the most effective way to keep your money in check. The first step in creating a budget is figuring out your income and your spending. You can do this by taking a look at your bank statements and credit card statements.

Next, think about your financial goals. You may have short term goals, such as paying off debt or saving for a college fund. Or you may have long term goals, such as buying a home. Whatever your goal is, set a timeframe and make a list.

Make a list of expenses that are fixed. These expenses include mortgage payments, car loans, insurance, etc. You will also want to consider other expenses that are billed periodically, such as taxes. These are often billed annually or semi-annually.

Next, consider variable expenses. These expenses can vary from month to month. Examples include utility bills, fuel, childcare, road tolls, etc.

Once you have a list of fixed and variable expenses, you can calculate your discretionary expenses. Discretionary expenses are those that are your choice. These may include things like hobbies, clothing, entertainment and dining out.

You can use a budgeting spreadsheet or a budgeting app. Using a spreadsheet is a more formal method. However, you may also want to create a budget on paper. Then, you can hold yourself accountable by writing down every dollar that leaves your wallet.

Save More Money

Whether you're on a budget or simply want to get out of debt, saving money can help you achieve your goals. Saving can also be a great way to relieve stress related to fear of not being able to pay upcoming bills.

The key is to save and spend smartly. The best way to do this is to develop a budget. The budget will help you determine how much you can save each month without jeopardizing your financial goals.

When you're on a budget, you need to start by cutting unnecessary spending. This includes things like memberships, subscriptions, and streaming services. Eliminating these expenses can make a big difference in your budget.

Try switching your cell phone provider. You may be able to haggle with your current provider and save money. Also, look into buying a prepaid phone plan, which are usually cheaper than premium cell phone providers.

You can also look for free events in your area for entertainment. There are a variety of free museums and library perks to check out.

Look into using a free online spending tracker to help you keep track of your expenses.

You can also set up an auto-deposit for a specific amount into your savings account every time you receive a paycheck. This can add up to a large amount in a short amount of time.

It's important to keep track of your spending so you can see which areas are causing the most problems. You can use free online spending trackers or even make a simple spreadsheet.

You can also try using an investment account (versus a traditional savings account) for saving money. Putting a specific amount into your investment account every payday can help you avoid impulse buying.

Live Below Your Means

Living below your means is related to saving money, but a little bit different. You can strive to save money while still spending every last penny that’s left over. Living below your means entails several strategies.

Put your bonus into savings. Did you get a holiday bonus or a performance bonus this year? Instead of spending it on some extravagance that you’ve “always wanted,” put it away in a rainy day fund, or consider investing it.

Ignore your pay raise. If you recently got a raise, consider ignoring it. That is, put the extra net amount into your savings instead of adding it to your household budget. You might not notice an extra $100 a week in your budget, but you’ll certainly notice your savings account growing by an extra $400 a month!

Stop upgrading. Tech companies like us to believe that we’re losing out unless we buy the latest plasma TV or iPhone. But those constant upgrades are like chasing your own tail. You’ll never get there. If your old car/TV/phone still work, there’s no reason to run out and buy new ones.

Choose an Investment

Once you start seeing your savings account grow, you may be inspired to invest some of that money. Investing can be a wise choice. There are more opportunities to invest than ever before. You can invest in real estate in a variety of ways, buy stocks, bonds, buy a business and much more.

Before investing, make sure you are in a financially sound position where you won’t lose your shirt if your investment goes south. For help determining your financial health, consult with your CPA. Your CPA may also help you determine a figure that is safe for you to invest. Remember to keep some of your savings liquid for emergencies.

Consider Changing Jobs

The pandemic had a major impact on the job market. Many employers went through a period where they were paying out hiring bonuses just to get employees. Consider your employment position now. Is it possible you could increase your income by getting a new job? It’s worth considering if all other factors, like job fulfillment and happiness, make sense for you and your household.

As you get serious about your finances in 2023, no doubt you’ll come up with even more ways to get ahead and thrive financially. For added help, consult with your CPA for smart money moves in 2023.

Working from home offers tremendous benefits. If you’re a person who has longed to work from home, it may be possible to make this scenario a reality. Before approaching your boss with the idea, take some steps to see if this would actually be practical for you.

List Your Responsibilities

Think about the work that you do. It’s helpful to refer to your original scope of work from when you were hired. Make a list of tasks that you do now, because scopes of work tend to shrink and enlarge as businesses change and employees come and go. Include everything, even menial tasks like making coffee in the morning or liaising with the office copier repair person.

Envision How it Would Work

Now think about how you could transition your job responsibilities to a work from home situation. Do you have a job where it would be possible to work remotely? Not everyone does. If you’re a receptionist, you likely need to be behind a desk in the lobby of your office. But if you’re an account manager, you could probably service your accounts just as easily from home.

Consider Your Home Setup

Before broaching the subject with your boss, consider your home work area. Is there an area of your home where you could have quiet, privacy and solitude? Is there space for a desk? Do you have high-speed internet or could you acquire it? When you do speak to your boss, it will be helpful if you can reassure him or her that you have adequate workspace available in your home already.

Consider Your Family’s Needs

If you’re married and/or have children, consider how your working from home will affect them. Will your spouse or partner be supportive of your decision, or will it cause resentment or animosity? A supportive partner will make everything easier, but you also need to consider their feelings.

What about your children? Will they be able to resist jumping on your lap while you’re trying to work? Will they be upset when you close the door so you can have privacy? Young kids may have a harder time understanding why mommy or daddy can’t play when they’re right there on the other side of the door.
Of course, you have the right to work at home if it’s okay with your employer. But the realities of making it work with your family do need to be thought of.

Will You Really Enjoy It?

Many people dream of staying at home and working in their pajamas. What they forget to consider is the isolation and loneliness that comes from not interacting in person with colleagues. For social butterflies, isolation can feel like punishment. Remember, once you get your boss to agree, it could be embarrassing or awkward to try to walk back your decision.

Do You Want the Added Responsibility?

There will be more things you have to take care of yourself when you work from home. If your office equipment breaks, it will be up to you to figure out a solution. You’ll need to take more care with keeping track of office expenses so your CPA can deduct them for you. You’ll have more deductions working from home, but you have to keep receipts and records organized yourself.

Convince Your Boss to Continue Letting You Work From Home

Have you already been working from home during the pandemic? If so, you might have gotten used to the extra freedoms that come from working in your own home. Many workplaces are starting to bring workers back into the office, but if you want to keep working from home, here are some ways to make that happen.

Over-Perform

Let your boss know that you can be more productive working from home by over-performing on your projects. Submit completed work early instead of on time. Do extra credit work that will help the company be more profitable.

Be Responsive

Don’t “disappear” while working from home. Show that you’re reliable and responsible by being responsive to emails and phone calls. This will prove that you aren’t off doing laundry when you’re supposed to be hard at work.

Highlight the Benefits

Consider drafting a memo to your boss highlighting all the benefits of continuing to work from home. Ideas include:

More available space at the workplace
Not worrying about you getting in on time or leaving early
Less money spent on office supplies in the workplace
Less energy use in the workplace
Fewer sick days

Explain Your Family Commitments

Your boss is human, too. Let your boss know if you have extensive family commitments that are easier to fulfill when you’re working from home, like picking up kids after school, caring for an elderly parent and similar situations. Explain that when you have to juggle family commitments along with commuting and being at work all day, it causes you a lot of extra stress that keeps you from focusing properly on your work.

One final thought that you need to take into consideration is your own self-discipline. Do you have the willpower to say no to your friend who wants you to play hooky and go shopping all day? Can you force yourself to work instead of trying out a new recipe you found on Instagram? If you don’t think you have the willpower to work at home for what might amount to eight hours, five days a week, you could be jeopardizing your job. If you can’t pull your weight from home, your boss could notice and decide you’re not such a good fit for the company after all.

As a business owner, you know it's important to not only bring in revenue, but also limit your company's expenses. Yet, since there are so many expenses associated with your business, you know it can sometimes be hard to keep track of everything. Should tracking expenses fall by the wayside, you and your CPA know this can take you from having a very profitable business to one that is barely surviving. To keep your business moving forward, here are some of the best strategies you can use to keep track of your business expenses.

Open a Business Bank Account

If there is one thing your CPA will tell you time and time again, it is to never mix your business and personal finances in the same bank account. If you do, problems will always ensue. Instead, it will be much easier to track your business expenses and document them for tax purposes if you open a business bank account. Your CPA will tell you this is also a good idea because by having a separate business bank account, this will provide personal liability protection should your company experience financial issues at some point.

Use a Dedicated Business Credit Card

After you open your business bank account, it's also a good idea to have a dedicated business credit card. Again, this will ensure that you don't combine business expenses with personal expenses on your personal credit card. Many credit card companies will also offer businesses certain perks with these cards, especially on travel costs. Once you obtain the credit card for your business, make sure you authorize only a select few besides yourself to use the card, and be sure to go over your monthly statements very carefully to ensure everything is in order. In particular, make sure that no personal expenses have accidentally been charged on the business credit card.

Decide Between Cash or Accrual Accounting Method

When you start a business, you and your CPA will sit down and decide whether you want to use the cash or accrual accounting method. If you want an easy way to keep track of your expenses, your CPA may suggest using the cash accounting method. Easy for small businesses, it records the transaction when payment is received, with expenses being deducted during the tax year they are paid. If you choose accrual accounting, it will be more complex, since it requires double-entry bookkeeping, so discuss this with your CPA before deciding which will be best for tracking your expenses.

Use Great Bookkeeping Software

If you really want to make the task of tracking your business expenses as easy as possible, your CPA will definitely suggest you let the computer do the work for you by investing in great bookkeeping software. This will let you easily monitor, organize, and pay your expenses, reducing the chances you'll miss something or have certain expenses be much more than you expected. Bookkeeping software will decrease the work needed to track your expenses, and can also give you real-time information that is very accurate. As an added benefit, the software will organize your expenses into categories and sub-categories, and will let you examine year-to-year spending to see which parts of your business incur the most expenses. Finally, when you use bookkeeping software, you can simply send the digital file to your CPA whenever they need to review or work on it.

Connect Your Accounts to Your Software

As you use your bookkeeping software more and more to track your expenses, you should also consider connecting your bank accounts and credit card accounts to your bookkeeping software. By doing so, you will be able to import files into your system, enabling you to have information at your disposal 24/7. This will make reconciling statements much more efficient, let you spot potential problem areas regarding expenses much faster, and allow you to make immediate spending adjustments as needed.

Keep Track of Your Receipts

Even in today's digital age, chances are you still have plenty of paper receipts associated with your business. If so, you need to pay attention so that these receipts are properly stored. Should you not do so and lose one receipt after another, it will be almost impossible to know what you are spending on various things. Whether you use a binder, an old-fashioned file cabinet, or a manila envelope marked "Receipts" on the front, having one central spot to keep all your receipts will make your life and that of your CPA much easier.

Don't Forget Mileage

In case you haven’t noticed, gas prices have been a bit high lately. If you use a vehicle for business purposes, always keep careful track of your mileage and fuel costs, since these have rapidly become some of the highest expenses for businesses large and small. A great way to keep track of this is by using the Everlance app, which can be used to track your mileage for both tax and invoicing purposes.

Use a Spreadsheet

If you have recently started your business or just want to have a simple, low-tech way of tracking your expenses, your CPA can suggest you use a spreadsheet. However, one drawback to using a spreadsheet is that it will mean you will be manually required to enter every expense you incur during the day, which can be hard to do if you get busy. Yet if you feel this will work for you, a spreadsheet can let you create your own categories and customize them as needed. Should you not be quite ready to invest in more expensive accounting software and all its bells and whistles, a spreadsheet may be fine for keeping track of your expenses.

Now that you know the various strategies that can be used to keep track of your business expenses, schedule an appointment with your CPA to discuss which ones may work best for you and your business. Once you do, you'll find keeping track of your company's expenses is much easier than you ever imagined.

If there is one thing you as a business owner don't want to deal with, it is a cash flow crisis. Occurring when your business has more money going out than it does coming in, it can result in not being able to cover your company's payroll or pay for other operating expenses. In fact, over 80% of small businesses fail due to cash flow problems. If you want your business to continue thriving, speak to your CPA about implementing the following strategies to survive a cash flow crisis.

Figure Out Why it Happened

When you talk to your CPA, figure out how the cash flow crisis happened in the first place. To do so, you will need to examine your business plan so that you can find ways to improve your company's profit margins. If you don't do this, chances are the same problems will occur again and again.

As you examine your business plan, focus on such areas as clients who should be let go because they are costing your company too much money, which services your business offers that generate the most profit, and unnecessary expenses that could be eliminated to save money.

Speed Up Your Receivables

In many businesses, your CPA will tell you that speeding up your receivables will be one of the quickest ways to improve your company's cash flow. Fortunately, there are many things you can do immediately on this front.

First, don't be afraid to ask your new customers for a deposit or partial payment for the goods or services you provide. Next, pay more attention to your past due accounts, and start contacting these clients to get full or partial payment as soon as possible.

Other strategies you can implement include sending out invoices earlier, sending them out more frequently, and making it easier for your clients to pay by offering credit card payment options or even mobile payment options.

Negotiate with Your Vendors

While your CPA will recommend you speed up your receivables, they will also suggest you negotiate with your vendors regarding your company's payables. Remember, your cash flow crisis happened not just due to not enough money coming in, but also because you were sending more money out to your vendors.

Even if some vendors refuse to be flexible, chances are ones with whom you have done business for years will work with you to either delay payments or renegotiate payment terms. Also, contact your utility providers, be honest about your situation, and see if they will also work with you to delay payments.

Examine Your Borrowing Options

While you can borrow money and likely get immediate cash back into your business, don't simply jump into this option without thinking about it very carefully and discussing it with your CPA. Generally, it is best to consider and try many other strategies before you choose to borrow, since this could create more financial headaches later on.

If you do decide to borrow, a business loan or credit card advance will be your quickest option. However, be aware of the interest rates and repayment terms of these loans before you move forward.

Sell Equity in Your Company

If you don't mind giving up complete ownership of your business, you may be able to solve your cash flow crisis by selling equity in your company. Should you decide to raise investor capital, talk this over in great detail with your CPA. If you don't, you could make rash decisions regarding who you decide to go into business with, which could make a bad situation much worse. Since you will be giving investors a say in your company, it is usually best to exhaust most other options before going down this path.

Slash Your Expenses

Within reason, try to slash your company's expenses as much as possible during a cash flow crisis. This is where your CPA can be of great help, since they can work with you to determine which expenses are necessary and which are not. Ultimately, you should develop a strategy that has you spending money only on expenses that keep your company operating and generating revenue.

Sell Your Company's Non-Essential Assets

When you are in a real bind for cash, selling off any and all non-essential assets can be a quick way to get cash in your hand. Whether it is various types of equipment your business uses rarely if ever or other assets that are not necessary on a daily basis to keep your business operating, sell anything and everything you can as a temporary way to ease your cash flow concerns.

Lease Rather than Buy

To help improve your cash flow, consider leasing equipment and vehicles rather than buying them outright. When you do, you will not only be making smaller payments that will help improve your cash flow, but also creating a tax write-off, since lease payments will be a business expense.

Increase Your Prices

Though you as a business owner may be very hesitant to raise prices on your products or services, this can often be an effective way to ease cash flow problems. If your business has an excellent reputation and has many loyal customers, chances are they will accept a modest price increase and continue to do business with you for many more years.

Add New Products or Services

Once you begin looking at your company's revenue streams, you may realize you can add new products or services to your business as a way to increase your cash flow. For example, you may have unused space in your business that could be leased out, or perhaps you may be able to offer new services such as installation or maintenance that will cost you next to nothing.

Since you worked hard to make your business successful, don't let a cash flow crisis result in you closing your doors for good. Instead, talk over these strategies with your CPA. Before you know it, your cash flow problems will be a thing of the past.

In what feels like the blink of an eye, we are now at the end of 2021. As a business owner, that means you've got plenty of work ahead of you to get your financial records ready for tax time. However, with the holiday rush and the headaches that have come along courtesy of the pandemic, you may be wondering how you will ever get your books in order. To help with this, here are some tips you can use to get your business and its books organized.

Create a Year-End Checklist

If there is one thing you don't want to encounter, it's getting ready for tax time, only to discover you forgot to complete a crucial step with your bookkeeping. To ensure you don't forget anything important, create a year-end checklist that lets you check off each task as it is completed. Your list should include such things as organizing receipts and invoices, creating end-of-year balance sheets and profit and loss statements, following up on accounts receivable, calculating depreciation on your fixed assets, and other related tasks. If you encounter problems along the way or have questions, always consult with your CPA.

Learn About the Tax Codes

While your CPA will of course be the expert on tax codes, this doesn't mean you should sit back and have no idea about how the current tax laws will impact you and your business. Since the IRS makes it almost a yearly tradition to make changes to the tax code, try to familiarize yourself as much as possible with any changes you believe may apply to your business. By doing so, you can make out a list of questions to ask your CPA when it's time for tax preparation.

Set Realistic Goals

As a business owner, you naturally have plenty of things that demand your attention. Because of this, you may put too much pressure on yourself to get your books in order within an unreasonable amount of time. Therefore, set goals for completing these tasks that are realistic and attainable. For example, rather than try to get an entire day to hurry through the process, carve out some time each day for about 20-30 minutes to complete various tasks. Before you know it, you'll have everything done without adding to your stress levels.

Verify Your Payroll Taxes

If you want your taxes to turn into a disaster come April, fail to properly verify your payroll taxes. If you pay the wrong amount and don't realize it initially, you'll find yourself not only with a bigger tax bill, but possibly some penalties courtesy of the IRS. Rather than have this happen, always double-check your payroll tax payments to make sure everything is correct.

Don't Forget the PPP

Like many businesses, you may have used loans from the Paycheck Protection Program to help your business survive during the pandemic. If you did, don't forget to include this in your year-end planning process for your bookkeeping. Since the details associated with the PPP are complex for even the most seasoned of accountants, talk to your CPA so that you have everything in order as to how your PPP loans impacted your payroll taxes.

Withholdings on Employee Bonuses

Since your employees have worked extremely hard over the past year to help your business stay open during the pandemic, it's likely you have chosen to give them year-end bonuses. If so, take the time to properly calculate the correct amount of bonus tax withholdings before you give your employees their paychecks.

Don't Do Bookkeeping During Business Hours

While you may think you can get your books organized during normal business hours, reality will soon set in and have you realizing you've bitten off more than you can chew. Even if your employees are fantastic and have things under control, your services are always needed to answer phone calls, deal with customers or clients, and other time-consuming tasks. Instead of trying to organize your books during business hours and find yourself always being interrupted and losing your train of thought, make time after-hours to finish your year-end planning.

Don't Wait Until the Last Minute

Even though December 31 may still seem like it's far away, putting off your bookkeeping details until the last minute will make you remember that the calendar pages can turn much faster than you anticipated. If you wait until there are only a few days left in the year to start your year-end financial details, you're setting yourself up for disaster. Since unexpected details always arise when completing year-end bookkeeping tasks, rely on those 20-30 minute chunks of time here and there to get things done. By doing so, you can get through the holidays and enjoy time with your family and friends, rather than hole up in a room like Scrooge to finish your books.

Talk to Your CPA Along the Way

As your questions begin to mount and you are wondering if a certain part of the tax code may change the way you've always done things at the end of the year, talk to your CPA along the way. If you have minor questions, it may be okay to just write these down and wait until tax time. However, if you have detailed questions about something that could impact payroll taxes, depreciation on your fixed assets, or other issues, schedule a consultation with your CPA as soon as possible.

Be Willing to Celebrate

Last but certainly not least, be willing to celebrate once you have finally completed your year-end financial tasks. With all you have been through over the past year or so to keep your business operating and your employees on the payroll, have some fun by treating your employees to dinner, having a weekend getaway with your family, or just relaxing in front of the TV while you binge-watch your favorite show.

By doing a little bit here and there and consulting with your CPA as needed along the way, your year-end planning process will be a rousing success.

If like many business owners across the U.S. you relied on a loan from the Paycheck Protection Program to keep your business afloat during the COVID-19 pandemic, you were certainly glad to have this financial assistance. However, when the time comes for you to file your taxes, you may have many questions as to your tax obligation regarding your loan.  Since most tax issues are quite complex, the PPP loan only makes things a bit more muddled and confusing.  To make sure you have a good understanding of your state and federal tax obligation for your PPP loan, here's what you need to know.

Your Loan Doesn't Count as Income

Up until the COVID-19 pandemic hit, any business loan that was forgiven was considered to be taxable income, based on the IRS Tax Code. However, that's not the case with your PPP loan. When Congress passed the CARES Act, it specified that PPP loans will not count as income, meaning the amount of money you received is not taxable. This applies to any type of PPP loan, whether you had the entire amount forgiven or just a portion of the loan.

Expenses Can be Deducted

While the issue of your loan not counting as taxable income was set from the beginning, deduction of expenses has been a work in progress. Initially, the IRS stated that any expenses paid with PPP loans could not be deducted if the loan was to be forgiven. However, that has changed. Instead, the IRS is allowing PPP loan recipients to deduct any expenses that were paid with PPP money. By allowing this, it can have a substantial effect on your state and federal taxes, since more deductions usually mean far fewer taxes to pay.

Beware of Business Taxes

Even though you have quite a bit of flexibility as a business owner regarding how your PPP funds can be spent, be aware of how this applies to your business taxes. While such things as business software, property damage, and protective equipment are expenses that can be covered with PPP money, business taxes are not. Thus, should you use any of your PPP loan to pay business taxes, the amount you pay will not be forgiven.

Some States are More Forgiving Than Others

When filing your federal taxes, you may find plenty of forgiveness to go around. Unfortunately, the same may not apply to your state taxes.  Since states can vary their approach as to how they abide by the federal tax code, each one can in effect make up their own rules to a certain extent. Thus, while one state may decide to not count PPP loans as taxable income, another may not. The same holds true with expenses that can be deducted, meaning you may find yourself owing far more in state taxes than federal taxes. Needless to say, you'll need the advice of a trusted and experienced CPA to sort through what your state is doing in this area. 

Rolling and Static Conformity

As to why there are so many variations among states, you can blame rolling and static conformity. When a state holds to rolling conformity, this means it automatically adopts any new federal tax changes once they are implemented. However, for states that use static conformity, they base their tax decisions on the rules contained in the federal tax code as of a certain date. Thus, to accept any changes made beyond that date that may benefit you the taxpayer, the state must pass legislation. 

To make matters even more confusing, it is not uncommon for states to cherry-pick parts of the tax code to their liking. As a result, a state that generally uses rolling conformity rules may use static conformity in some areas, and vice versa. 

Why This Matters

If you are wondering why the decisions of states matter so much in the PPP loan mix, it can come down to how much taxable income you are viewed as having when filing your taxes. For example, if your state chooses to deny you the chance to deduct expenses paid with your PPP loan, the result is that your taxable income will likely be increased to an amount that would be more than you would have had if you had not taken out a PPP loan in the first place. Thus, since your business has already been struggling to stay afloat financially, this tax impact could have severe and long-lasting consequences you never anticipated. 

Employee Retention Tax Credit

If there is one good thing that has arisen for many business owners who received PPP loans, it is that most are still eligible to claim the Employee Retention Tax Credit. However, you won't be able to claim wages that were paid with your forgiven PPP loan. Instead, you can claim the credit for any wages that were paid above and beyond the amount of your loan that was forgiven. To qualify, you must be able to prove you suffered at least a 20% drop in your gross receipts from the same period one year ago. 

An Audit is Still Possible

Remember that just because the federal government was kind enough to give you the money needed to keep you in business doesn't mean the IRS won't come calling with an audit of your tax returns. Since there are so many new additions and requirements regarding PPP loans, you'll need to be extra vigilant with your record keeping. In fact, the lender that gave you the PPP loan as well as the SBA have the authority to audit your company's financial statements and related records for up to six years after your loan was forgiven, so be aware of this when filing your federal and state taxes.

As you know, preparing and filing taxes is difficult enough in normal years, much less the ones that have been pandemic-ridden. Rather than make a costly mistake, consult with your trusted and experienced CPA to ensure you know the rules and how they apply to your situation.

Many ambitious entrepreneurs launch an online business using their own funds. They use personal savings or max out credit cards. Tactics like these are even lauded. You can find many articles on the internet that encourage entrepreneurs to do whatever it takes to launch their business online. Entrepreneurs who “risk it all” are called brave and “hungry.” But don’t rush to take advice that puts your own financial security on the line. Instead, run through the ideas outlined below for launching an online business. There are more reasonable ways to get your online business up and running that don’t require such a huge financial risk for you and your family.

The Risks of Dipping Into Savings For Your Online Business

Using savings and personal credit cards to launch your business is fraught with peril. This kind of action carries significant—and unneeded—risk. 

You Could Lose It All

What if your business fails and you lose all that savings? That will set you back many years on whatever you might have been saving for. Was it retirement? You could end up working many more years; well into your feeble old age. Was it your child’s education? You might have to rely on student loans or scholarships. Was it savings for a down payment on a house? You could be looking at another whole decade of renting.

You’ll Incur Significant Penalties

If the savings money is coming out of your official retirement account, like a 401k, you’re going to incur substantial penalties for early withdrawal. If you’re unsure just how much money in penalties you’d have to pay, consult with your CPA. Estimates are typically around 40%, though. That’s a hefty price to pay. Too hefty.

Your Business Could Take Longer to Show a Profit

If you’re like most people., you’re probably underestimating just how long it could take you to see a profit from your online business. Some people—the lucky ones—see a profit after one year. Others don’t see a dime of profit for several years. Meanwhile, all that time you’ll be paying interest on your credit cards if that’s what you used. And you’ll be forfeiting investment opportunities on the savings account you depleted.

Now that we’ve excluded the unwise option of using your personal savings or credit cards to launch your online business, what are the alternatives? 

Leverage Crowdfunding

If your online business idea is innovative or unique, leverage the power of crowdfunding. Crowdfunding platforms like Kickstarter have helped launch hundreds of successful online businesses. According to Kickstarter, successful campaigns include video, heavily descriptive text and widespread circulation on social media platforms. Every single one of those aspects would be free for you to implement and don’t require technical knowledge. Kickstarter isn’t the only crowdfunding site either, and you can launch multiple campaigns simultaneously. Try Indiegogo and Patreon, as well as others.

Take Advantage of Free Trials

Most companies offering business tools have free trial periods that you can take advantage of. This trial period gives you a free pass to avail of the services at no charge while you get your online business up and running. Free trials typically run from seven days to 30 days; some require a credit card to register and others just stop working after the trial period or revoke your right to entry onto their site. If you use a trial period that requires your credit card, be sure to mark the trial expiration date in your calendar the day before, so you have time to choose to go ahead or to cancel the subscription before you get charged. Some especially valuable sites that offer online business tools with free trial periods include: 

•    Shopify - Offers business websites with templates, hosting, online payment support and much more. You could use this to create and launch your online website.

•    Adobe Stock - Offers a free trial with 10 free images within 30 days. You could use this to create beautiful marketing materials for your online business.

•    SmartDraw - Powerful business tool to create professional flow chart diagrams, floor plans, and basically any other kind of diagram you might need to organize or market your new online business. Offers a seven day free trial period.

•    Reception247 - Offers live person telephone answering for your business. Their free trial period of 14 days is long enough to test whether this service might be helpful for your business.

We don’t vouch for any of these specific sites. We simply offer them as examples of what you can accomplish by leveraging free trials instead of using up your own savings.

Take on a Partner/Investor

Be vocal about your intentions to launch an online business. You might just find a supporting partner or person willing to invest so you can mitigate your personal financial risk. Consider talking to your parents, in-laws, colleagues and friends. If you engage in an arrangement with someone with whom you are in a personal relationship, keep it formal with an official document such as a partnership agreement or promissory note. Your CPA can help you to source such documents and review the terms for clarity and accuracy. If you don’t find anyone in your personal circle who wants to invest in your new business, widen it to include online angel investors through sites such as Gust.com. This is a platform that aims to connect entrepreneurs with interested investors. Always be sure to read the fine print before accepting funds from unknown sources.

There are other, more creative ways to get your online business idea funded. The good news is that online businesses take far less seed money than brick and mortar stores. Make sure that you explore every other option before jeopardizing your financial security by depleting your personal savings or maxing out your credit cards. To order a complete review of your finances and available assets, consult with your CPA.

Brainstorming is a fun and effective way to stimulate the creative side of your brain. If you want to leverage the post-pandemic surge in business, you may be thinking about starting a business. But ideas can be hard to come by; especially when you feel that time is of the essence. The pressure to come up with a viable business idea within a certain timeframe can make it even harder to think creatively. Thankfully, there are tools available to help you brainstorm your next business idea.

What Does It Mean to Brainstorm?

If you’ve never done brainstorming before, you may not know exactly what it means to brainstorm. Brainstorming isn’t just sitting around trying to think of something. You already know that doesn’t always work, especially when you feel pressured or put on the spot to hurry up and think of something great. Brainstorming is a way of generating ideas that are completely out of the box. You can brainstorm by yourself or with another person or with a group of people. The idea is to record every single idea, no matter how ludicrous it might sound. The reason is that ideas all lead somewhere. Follow that path, and you may just land on something that’s completely new and innovative; the kind of business idea that consumers would flock toward.

Physical Tools For Brainstorming

There are many physical tools you can use to assist your brainstorming session. They include:
Paper and pens
Whiteboard
Brainstorming cards
Bowl and slips of paper
What you can do with these tools is have everyone just write down or call out their ideas. Make sure everyone knows that anything goes. The idea is not to hold back. Every idea is a good idea, because every idea has the potential to either be “the” idea or to lead to “the” idea.

Brainstorming Cards

Brainstorming cards are physical cards that you can use to help come up with your next business idea or just about anything else you’re trying to do. Created by the Board of Innovation, each deck comes with 52 cards. The way it works is, you randomly choose one of the cards in the deck. Use what’s written on the card as inspiration to come up with ideas. It’s recommended that you spend about 20 minutes on each card. You can use this tool alone or with your brainstorming team.

Study Trends

Whatever kind of business you think you might want to start, you’re going to need customers. It’s always a good idea to get in early on a trend so you can leverage consumer interest. There are many “threads” of trends happening in the world at any given time. But they can all be broken down into basic groups:

Consumer Trends

This includes things that have to do with consumer behavior. For instance, you might want to study the recent consumer trends of using mobile devices for shopping online, downloading store apps for shopping, having consumer goods delivered, etc.

Technology Trends

Technology trends are related to things like virtual reality gaming, biometrics, online security, artificial intelligence, etc. This area is rapidly developing on a daily basis, so if this is the area where your business interests lie, you’ll really need to keep your finger on the pulse.

Market Trends

Market trends have to do with the economy, how people acquire, spend and save money, price indexes and even alternative forms of currency like Bitcoin, Ethereum and more. A good understanding of market trends could help you to make or save considerable sums of money.

Regulation Trends

You always need to know what the laws and local regulations are regarding your intended business model. For instance, if you plan to get into the natural supplements space, you’ll want to carefully follow the FDA’s guidelines, interests and announcements. Tracking regulation trends can help you stay on the right side of the legal system as well as prevent you from accidentally entering into an area that will soon be prohibited. It can also help you position yourself early in emerging markets, like the way CBD became a billion dollar market a few years ago.

New trends are always developing, even as older trends surge and wane. Focus on trends in categories that are relevant to your business. For instance, you don’t need to spend valuable time studying fashion trends if you intend to get into the automotive business. The earlier you can spot a trend and position your business idea, the more likely it is that you’ll be able to benefit from it financially.

Monitoring trends isn’t too hard. You can set up Google alerts for your areas of interest to get news and other articles delivered to your inbox. Subscribe to print or digital trade magazines in your niche for the latest trends and industry updates.

Vision Board

A vision board is a visual tool to help you gain clearer focus on your goals. The board can be done with physical materials, or you can make a digital vision board using an online tool like Canva or Pinterest. Fill the vision board with inspiring words, images and materials that speak to your business interests. For example, you might be inspired by a swatch of fabric or leather, a word or phrase or an old photograph. All you need to do is tape or pin the items to the board in any manner you like. It can be organized like a grid or haphazard. Looking at the vision board and rearranging things, adding things and removing things can help you to pinpoint ideas for your next business idea.

When it comes to starting a new business, your CPA is an invaluable resource. Not only is your CPA trained to help you with finances and taxes; they also work with other business owners and can offer insight into trends, business models, and just different ways to set up your new business.. Your CPA can be a team member as you get your business up and running.