If you've been thinking about selling on Amazon, you've probably heard this advice multiple times—you must have a tax strategy. Taxes are involved when running a business, and it's a tedious and challenging task to do for most business owners.
If you're new to the selling business, you may want to focus on other aspects of your business, such as creating marketing strategies, but taxes are just as important. In this article, we'll share some tax management tips for new Amazon sellers.
One crucial part of running a business is sales tax. These are specific amounts that businesses have to collect whenever they sell a product, which will then be remitted to tax collection agencies. It is a tax liability that every business must fulfill.
Taxes for Amazon sellers are easy as they provide a tax collection service. But for it to work, sellers must know the proper sales tax rate by identifying which sales tax nexus they belong in.
Once a business has established a nexus in a state, it is required to register for a permit, collect, and remit sales tax. Sales tax nexus requirement violations may incur fines, penalties, and other legal repercussions. It is vital for businesses to carefully monitor their sales activities and ensure they are meeting all applicable sales tax obligations.
The inventory method used by a business can have a significant impact on its tax liabilities. This is because the method used affects the cost of goods sold (COGS), which is a critical component in calculating taxable income.
For example, the FIFO (first in, first out) method generally results in lower COGS during rising prices, as the older, lower-cost inventory is matched against revenue first. This can lead to higher taxable income and, therefore, higher tax liabilities.
On the other hand, the LIFO (last in, first out) method generally results in higher COGS during rising prices, as the newer, higher-cost inventory is matched against revenue first. This can lead to lower taxable income and, therefore, lower tax liabilities.
Given the potential tax implications of inventory methods, businesses should carefully consider their options and seek professional advice to ensure they are using the method that best meets their needs while complying with tax laws and regulations.
Small businesses can benefit from a number of tax deductions to lower their tax liabilities. Home office expenses, including rent or mortgage, utilities, office supplies, and maintenance costs, are one type of standard deduction that small business owners can take advantage of. Another popular deduction is vehicle expenses, and businesses can deduct expenses related to using their vehicle for business purposes.
Other tax deductibles include equipment and business expenses, travel expenses, and employee benefit expenses. To be sure they are claiming all allowable deductions and adhering to tax laws and IRS rules, small business owners must maintain thorough records and engage with a certified tax professional.
When businesses use multiple payment methods, such as cash, checks, and credit cards, it can be challenging to keep track of all the transactions and ensure they are correctly recorded for tax purposes. As much as possible, online sellers need to use one payment method for tax management for several reasons.
First, using a single payment method helps simplify the tax management process and reduces the likelihood of errors. Second, a single payment method makes reconciling bank statements and identifying discrepancies easier. This can be crucial during tax audits, as businesses need to provide accurate and complete financial records.
A single payment method can also help companies benefit from tax credits and deductions. Some deductions and credits require specific payment methods or documentation, and using multiple payment methods can make it difficult to qualify for these tax breaks.
Planning tax payments is advantageous for online businesses. By understanding their tax obligations and planning, businesses can ensure they have enough cash flow to cover their tax liabilities and make timely payments to the internal revenue service. Planning tax payments helps businesses avoid penalties and interest charges for late or incomplete tax payments.
Planning tax payments also has the benefit of improving cash flow management for firms. Businesses can plan their budgets and make sure they have enough cash to cover their bills and invest in development prospects when they know how much they will owe in taxes and when payments are due.
After collection, you also have to file taxes. As an Amazon seller, it should be your responsibility to know the necessary tax information. There are several tax obligations and dues that business owners and individuals should know about.
Due to the complex nature of tax laws and regulations, small businesses need a professional accountant for their taxes. Professional accountants possess the expertise to navigate the intricacies of tax codes which can result in maximizing tax savings and minimizing the risk of penalties and fines. Small business owners can also save time by outsourcing tax-related responsibilities to a professional accountant, allowing them to focus on running their businesses.
Additionally, professional accountants can provide valuable tax planning and financial advice, helping small business owners make informed decisions that align with their business goals. Hiring a professional accountant for taxes provides small businesses with expertise, time savings, compliance, tax planning, financial advice, and peace of mind.
When tax season comes around, are you sure your business is ready? Luckily for Amazon sellers, Unloop offers a sales tax collection and filing service. Our expert services include the following:
With our services, you can ensure that you pay taxes accurately and timely. Stop worrying about your sales tax, and let the professionals handle it. Book a call and start working with us today!
Running an online business without knowing how to read a financial statement is like sailing in the dark sea without a map. It's all intuition, and you’ll find yourself pulling numbers from everywhere as if you're a captain looking at the constellations, wondering if the patterns will point you in the right direction.
Learning how to understand financial statements is your weapon to success. Obtaining this skill is like learning how to read a map; when you know how to read one, you can steer your business in the right direction. Let Unloop give you a crash course on how to do it.
This financial document measures how well the business operates in a given period. This financial reporting tool, also called the profit and loss statement, calculates the total income and expenses and takes the difference between the two to arrive at the net profit—a crucial determinant of a company's financial performance.
Variable expenses are a big part of the income statement. For most business owners and managers, these expense breakdowns take up much of their effort because, logically, reducing these expenses will bring in more profit. But to get a better insight into income statements, they must watch out for the following critical accounts.
Net Sales / Revenue
This is the revenue after you deduct all the returns and allowances which come from incorrect or damaged orders. The net sales give you an accurate picture of what the business earned in a given period.
Cost of Goods Sold (COGS)
If you produce your own products, the cost of goods sold summarizes all of the expenses you incur while making the products. This cost is calculated on a per unit basis and is attributed to the number of units sold.
The cost of goods sold and cost of sale give you insight into how efficiently you manufacture or sell your products. It can also help you do revenue forecasting.
Gross profit is the amount a company earns from its sales after subtracting the cost of goods sold (COGS). In other words, it is the difference between the net sales or revenue earned and the direct costs of producing or purchasing the goods sold.
Gross profit is a key indicator of a company's financial performance and is used to assess its profitability and efficiency in managing production and inventory costs.
Operating income, or operating profit, is the money a company generates from its daily business course after deducting its operating expenses.
Operating expenses are costs the business incurs as a normal part of doing business, such as salaries, rent, utilities, marketing, and depreciation.
Operating income represents the earnings before deduction of other expenses such as taxes, interest, and other non-operating expenses. It is a key metric to evaluate a company's operational efficiency and profitability.
Net Income After Tax
Also called the net profit, this is a crucial part of the company's income statement. It represents the business's "bottom line" income in a given period.
Net income is what's left after all the expenses and taxes from the business operations have been deducted. The resulting amount also reflects the cash asset on the cash flow statement and balance sheet.
This account is often part of every income statement analysis to determine operational efficiency and profitability.
This is a financial statement sought by many business stakeholders, particularly investors and business executives, as it details the company's value at a given period and expresses it in numbers.
The purpose of the balance sheet is to show the current condition of the company's status through numbers. The balance sheet gives a lot of opportunities for analysis and insight.
In understanding the balance sheet for management or investment purposes, it's essential to know what accounts you should look after when you want to measure your business's value. Here are the critical accounts you must manage.
The cash account is the part of the balance sheet where you will find cash and cash equivalents a company has on hand at a specific point in time. Highly liquid assets such as income from operations, other bank deposits, and money market funds make up this account.
The account provides insight into a company's capacity to fulfill financial obligations in the immediate future. It measures how competent the business is in maintaining its current operations and growth potential.
This account reflects the decrease in the value of high-value, tangible assets. Depreciation operates under the concept that long-term assets such as machinery, equipment, and structures decrease in value over time due to wear and tear. To accurately reflect the value of such assets over time, their original value must be reduced.
Depreciation is a non-cash expense, meaning that cash allotted to cover the decrease in the long-term asset's value stays within the business as a resource for possible future asset purchases. This is why depreciation must be looked after.
This account is part of the balance sheet's liability section and represents the amount owed to suppliers and other vendors from whom the company purchased goods or services on credit.
Accounts payable, concerning the balance sheet, is vital because it's correlated to many possible interpretations. A high accounts payable amount can be interpreted in many ways. It could mean that the business is experiencing a high demand surge, or it could also mean the company is low on liquid assets and is about to shut down.
If accounts payable is the amount the company owes its suppliers, accounts receivable is what your customers owe the business. It's the total credit amount a company gives to its customers for purchasing goods and services without paying cash immediately.
Accounts receivable gives managers and investors insight into the company's capacity to extend credit, but more importantly, its ability to collect them. A high amount of accounts receivable may signify a high risk of writing off bad debts, which may affect the business's value in the long run.
The inventory account in the balance sheet is a current asset representing stock and available for sale. It includes all the raw materials, work-in-progress, and finished goods a company has at hand. A portion of the amount is expensed in the income statement as the cost of goods sold when sales are made.
Inventory in the balance sheet represents how much business value is tied to the goods intended for sale. It will give investors and managers insights into how efficient inventory management is relative to demand.
Arguably the most important account in the balance sheet is equity, often called shareholder's equity. This account represents the value of the business in numbers. It's crucial for executives because it gives them insight into the company's profitability. At the same time, investors look for equity to gain information on whether their investment has increased or decreased in value.
The function of the cash flow statement is to monitor the activities of the cash account. The statement of cash flows comprises three sections: financing activities, operating activities, and investing activities. All of which provide a breakdown of cash inflow and outflow.
Cash makes a business run. That's why for managers, this financial statement document is essential. Studying how cash flows in these three basic activities can give them insights into where cash must be channeled for better business performance.
In brief, here are the critical accounts you must watch out for when interpreting cash flow statements.
This pertains to how much cash and cash equivalents the business earned during a period. This will serve as a baseline where you will add or subtract all cash increase and decrease due to business activities.
In the balance sheet section, we mentioned that depreciation is a non-cash expense, which increases the cash balance. The amount of depreciation from the balance sheet reflects the cash flow statement as part of operating activities.
Another account that's part of the operating activities of the cash flow statement is the accounts receivable. In this case, the account measures increase, representing who paid the business in a given period.
In cash flow statement language, the accounts payable represents how much short-term debt the business is lent during the period. Usually, the accounts payable is treated as a cash equivalent as a result of credit purchase for goods and services the business obtained rather than sold.
Unpaid taxes also form part of the cash flow statement's operating activities section. It is included as an increase in cash because it is still money the company can use even if the taxes are yet to be paid.
Inventory is considered a decrease in cash and reflects COGS from the balance sheet. It tells you how much cash you used to produce or acquire the goods for sale.
We've given you a rundown on the three financial statements and the important accounts you must watch out for as you manage your ecommerce business. But to learn how all these accounts play out, you must see how they behave in the ordinary course of your business operations.To do that, you must have a sound accounting system and staff that will provide you with these reports. That's where Unloop comes in. We can give you accurate financial statements monthly, built upon excellent bookkeeping practices. If you're curious about our services, book a call now.
When your business starts growing, hiring employees will be a must to help you with your business operations. And hiring people means you need to run payroll. Payroll management is a critical function for any business, and it involves many complex processes, such as calculating employee salaries, taxes, and benefits.
With the advancement of technology, companies have shifted from manual payroll processes to automated payroll management systems. Payroll management software is a tool that simplifies and streamlines payroll tasks, helping businesses to manage employee compensation accurately, efficiently, and securely.
Payroll is an essential aspect of any business. It involves managing employee salaries, wages, taxes, and other related financial activities. In this modern age, many businesses have already adopted payroll software to manage their employee payroll. Those that haven't are missing out on numerous benefits. Here are some of the great benefits of payroll software and how it can streamline payroll processes for businesses of all sizes.
Whether you run a small business or a vast enterprise, automated payroll software will benefit your business. Payroll processing involves repetitive tasks. Imagine if you have 50 employees—you will have to do these tasks over and over again every month or on a bi-weekly basis. It will be time-consuming, tiring, and confusing.
Payroll solutions can automate this repetitive task for you and reduce manual labor. You can ensure that all processes involved will be accurate and timely.
Payroll problems are the last thing you want to happen. Tracking down where the calculations went wrong will be difficult since many factors could affect the calculation. If you have one or two employees, calculating their salary will be easy, but if you have several salaries to calculate, doing it manually will increase the risk of errors.
Furthermore, processing the wrong amount of pay to your employees will affect their relationship with the administration. Payroll software solutions also help decrease processing time.
If you want to build rapport with your employees, providing them with accurate pay is the way to do it. An online payroll system will ensure that your employees get the right amount they expect at the end of each payroll period. Additionally, you’ll never need to stress about whether your employees will receive their pay on time.
Most online payroll software have a direct deposit feature that allows you to schedule your payments for the system to directly send the money to your employees’ bank accounts. All you need to do is input the necessary bank account details and authorize the transfer, and you can ensure all payments will be processed.
When a company has transparency with their pay, they are more likely seen as an organization that implements fair practices. Adopting payroll software can give your employees transparency, which comes with these benefits.
Payroll taxes are specific amounts deducted from employees' salaries. These taxes are used to pay social security, Medicare, and other federally mandated taxes. It is the employer's obligation to process the taxes on behalf of their employees, and failure to do so will lead to legal consequences.
Here are some of the payroll taxes employers should know about:
Familiarizing yourself with the taxes involved in payroll is already a challenge; imagine its computations. Online payroll services will ensure that you are always tax compliant and all necessary taxes are accounted for.
Payroll software is essential for businesses to manage employee payments accurately and efficiently. However, storing sensitive employee information in the software can also pose a security risk if the appropriate measures are not taken to protect it. Secure information storage in payroll software provides several advantages.
One of the most significant advantages of secure information storage in payroll software is protection against data breaches. If sensitive information such as employee social security numbers, bank account information, or salary details fall into the wrong hands, it can lead to severe financial and reputational damage for the company.
Furthermore, many countries have data protection laws that require companies to protect sensitive employee information. Businesses can comply with these rules and stay out of trouble by storing payroll data securely.
Centralized payroll management consolidates the payroll processes and systems into a single, centralized location. Centralized payroll management can increase efficiency by reducing redundant processes and minimizing errors. By consolidating payroll data and processes, businesses can streamline their payroll processes, reduce the time and effort required to manage payroll, and minimize the risk of errors and fraud.
Furthermore, centralized payroll management can provide businesses with greater visibility into their payroll activity and financial data, enabling more accurate financial reporting and forecasting and better cash flow management. Overall, centralized payroll management can help businesses operate more efficiently, save costs, and improve financial visibility and compliance.
What is the best payroll software management for businesses? Each payroll software has different features that small, midsize, and large businesses can capitalize on. Here are the best payroll software options to consider.
Business owners in the industry know how stressful it is to manage payroll. Fortunately for small businesses, Unloop has professional payroll services to handle your employees’ pay.
Our team of experts will link your business to cloud-based payroll management software, and we'll take it from there. We'll also generate necessary year-end reports, file payroll taxes, and ensure your employees receive their pay accurately and on time. Book a call with us today and let professionals handle your payroll.
Properly running a business means getting your finances in order. In the world of startups, where rapid growth is a necessity, the quality of accounting quickly determines success or failure. There is no room for error, so accounting services for startups are a must-have.
In this article, we'll show you how different startups are from regular businesses, different startup accounting tasks, and how outsourcing startup accounting services can help your business grow faster.
To a layman, a startup and a small business are interchangeable. However, differences in certain aspects of their structure and objectives, such as the following, separate the two.
When you think about a small business, what usually comes to mind are restaurants, cafes, or brick-and-mortar retail shops. Small businesses typically compete in a stable market with other businesses, projecting their growth to be slow and steady.
On the other hand, startups are built to grow rapidly. These are companies built for growth, so startup businesses usually differ from conventional ones. For example, a startup restaurant would have a system different from regular restaurants. Otherwise, it remains a small business.
Typically, startups grow faster by creating innovative ventures that can disrupt an existing market. McDonald's is a great example of a startup—it changed the way food was made and inadvertently created a new industry: fast food.
A startup and a small business can have identical structures. But there is a high possibility a startup will switch to a structure that best suits its goals, like growth. Fast growth requires a startup founder to be ready to scrap any ineffective parts of their organization. It is one of the key characteristics of a startup: instability. A high-risk, high rewards type of thing.
Meanwhile, small businesses limit themselves to conventional, tried-and-true organizational structures. For example, if you run a restaurant, there is a natural hierarchy in the kitchen. There is a chef de cuisine, a sous chef, then the garde manger, and so on—and success in the industry means sticking to the formula.
In a way, financing determines the major difference between a startup and a small business because their objectives stem from whoever is financing their operations. Since startups are risky, expensive ventures, they are usually funded by angel investors or venture capitalists for equity, from which they will expect quick returns—the reason for a startup's need for scalable growth.
A small business is usually self-funded, either from the owner's savings or a loan. Because funding comes from the owner's pocket, the risk is minimalized, and the business is built to grow slowly to generate a steady flow of income.
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Alt name: Start up accountants building a balance sheet.
Startups are all about growth; any startup that doesn't grow well risks being called a flop since investors expect nothing less than quick returns on their equity. To grow exponentially, your startup accounting needs to be on point. And what better way to do that than by outsourcing your financial management to professionals? Here’s what you can expect when you do so.
The first step to maintaining your financial records is bookkeeping. Bookkeeping ensures all transactions—income, expenses, loans, etc.—are well-accounted for. Proper bookkeeping benefits startups since the lack thereof could only hinder a business from growing.
As to the proper type of bookkeeping, businesses have two options: single-entry and double-entry bookkeeping.
Single-entry bookkeeping, also known as cash accounting, is a bookkeeping system that only focuses on income and expenses. In single-entry bookkeeping, you simply record money that goes in and out of your business without considering any prior or future expenses.
Double-entry bookkeeping is the more comprehensive of the two. Debit and credit are introduced in double-entry bookkeeping, giving you a more comprehensive view of your business's financial status.
In double-entry bookkeeping, each transaction is classified as either a debit or a credit. A debit is money that goes out of your account payable to another entity type, and credits are when money is added to your account.
Understanding which transactions are debits or credits is important in running a business as it allows you to see your company's financial health more clearly.
A great example would be taking a loan. In single-entry bookkeeping, a loan would be considered income since it adds to your company's assets. However, in double-entry bookkeeping, a loan is considered a debit since it increases your liabilities in the long run.
Sales are the lifeblood of every business and a startup's key to growing faster. More sales mean more growth, which is why creating and sending invoices are one of the chief accounting tasks for outsourced services.
Sending out invoices to inform clients of payments can do one of two things: either they get your business paid or allow you to label an “earned” sale even though it hasn't been paid yet. This directly affects your cash flow and allows you to move your finances faster. If you fail to send an invoice on time, you might as well consider the sale lost and a deficit in your company's transactions.
In addition to sending out invoices, services organize your accounts payables and receivables. Accounts payables are your expenses, and monitoring them closely gives you an idea of how much your company has to cough up regularly.
On the other hand, accounts receivable tracks how much money goes into your business and, consequently, the budget you have to work within a given timeframe, which leads us to our next task.
Cash is on the first line of a balance sheet for a reason. It’s the most liquid of all the assets and the nearest at hand for any emergency expenses or if the business decides to make any significant financial decisions in the near future. It also works to give a business an idea of how much room they have to move around financially.
For a startup, cash flow is a clear indication of its potential for scalable growth. And hiring accounting services for startups is a step forward in the right direction. Accounting services can ensure quality cash flow management by building a stable budget for your business and pinning growth as one of the metrics to measure your cash flow.
Finally, we have taxes. Taxes, while a very stressful task for all businesses, remains one of the most important. Taxes serve as every company's legal obligation to the government, and filing taxes ensures they stay in business.
Startups, in particular, have to do an excellent job on their taxes because scalable growth at a rapid pace is sure to prompt tax investigations. Filing taxes for your startup correctly and on time can prevent any tax violations that could lead to your business's suspension or even closure.
If the technicality of taxes troubles you, tax services for startups can help. It's always better to have a tax expert on the team to guarantee accurate tax returns.
Accounting tasks are done on a daily, weekly, and monthly basis. The financial data collected during this timeframe are usually evaluated on a monthly or quarterly basis. But not everyone can read financial reports accurately, especially if your goal is to grow your startup.
Hiring startup accountants from an outsourced accounting firm is a step in the right direction. Here are some ways startup accountants can make your life as a business owner easier.
The day-to-day management of a business is tiring enough. Accounting and bookkeeping services take away the extra stress from your job and allow you to spend more energy on running your business. Imagine handling your own accounting, too.
Outsourced accounting firms save you money, since hiring accounting services is much cheaper than adding an entire team of accountants to your payroll.
Once you have your data ready, it's important you evaluate them accurately. But even if you have the most accurate books, the data in them won't matter unless you have an experienced team analyzing them for you.
Accounting services for startups know how to analyze your financial reports specifically for your business's long-term goals. To do so, they will produce and analyze the following financial statements:
Any financial decision can make or break your startup—that's how volatile startups are. If you want it to grow continuously and produce adequate results, you'll have to make decisions that are nothing short of the best.
Accounting services for startups have an in house team of seasoned accountants who specialize in launching your startup further. They can help make decisions concerning investments, stock options, and valuation. This is especially helpful for taxes since the companies always struggle with the technical side of filing taxes and how to save money on tax returns.
Having a stable accounting system for your startup is vital to its success, and hiring accounting firms for startups is the way to get it done. If you're in the market for startup accounting services, try Unloop, the premier North American accounting service in the market.At Unloop, we ensure your business stays in great financial shape. Book a call with us to learn more!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Small businesses face various challenges while trying to keep their operations organized and streamlined. One of the significant hurdles such businesses face is finding an accounting system that provides efficiency, accuracy, and manageability. However, investing in accounting software designed for small businesses can be worth it.
Accounting software can do more than track the inflow and outflow of cash from your business. Though the tool’s primary function is bookkeeping, you’ll be amazed at how it can also handle many other tasks for your business. The tool can be a one-stop-shop for many of your business operations management needs, making it worthy of every penny you invest.
Investing in competent accounting software from the outset is essential to avoid potential setbacks or losses. With these, let’s check why such software is worth it.
A bookkeeper can rely on the accounting software to record transactions. Through it, they can take note of all business transactions involving money. They can ensure that income and expenses from different channels, like bank and credit cards or online payment gateways, are all accounted for.
It’s easier for bookkeepers to check whether the data on the books and the transactions recorded on the bank statement reconcile when an accounting tool records both. Because of the high-tech tools available today, a bookkeeper’s task of entering data manually is slowly disappearing. Data from different sources can be connected to a central accounting system. There are also optical character recognition tools that minimize manual data entry.
Invoicing is an essential part of bookkeeping and accounts receivable management. Through software, you can conveniently send payment reminders to customers, and everything is done online. To avoid missed payments, especially for recurring transactions, you can schedule the sending date and time and let the software handle its transmission. In case customers forget to pay, sending a nudge can also be done on the software.
Invoicing from an accounting tool also makes payment easier for customers as each invoice includes a “Pay Now” button. Customers can click on it for online payment. All money coming from this channel will automatically be recorded in the books.
The money you collect from customers and the money you use to pay suppliers and company expenses are all recorded in your business bank account. Through an accounting software’s bank connection feature, you can have visibility on these transactions, and they will also be categorized into income and expenses in the books.
You can reconcile bank accounts to check whether the details in the books and the transactions in the bank match. With this, you’ll be able to correct any mistakes and raise red flags on fraudulent deals.
Business planning and forecasting are vital as they allow you to see how your business will go in a projected period. A business forecast cannot be 100% accurate. Still, with sufficient historical and present data, you can get the closest possible financial situation your business will see in the future.
If you have invested in bookkeeping and accounting software, acquiring past and present numbers won’t be a problem as they are all recorded in the books. Many accounting software have a feature that allows you to come up with a business financial forecast in just a few clicks.
When you have the forecasted data you need, you can create plans based on numbers and even simulate results using the software. As a result, you can follow a strategy that gives you the best possible financial results.
Taxes are undeniably complex as they vary from country to country and even on the provincial and state level. As an ecommerce seller, you’ll be exposed to tax laws of different countries, provinces, and states, so it is better to stay updated.
Primarily, you need to be familiar with sales taxes as this can be applied to the transactions you make. You can use bookkeeping and accounting software to calculate and track sales taxes. There is also software specifically intended for this, and on top of calculation and collection, the software will also handle tax remittance. You can integrate the data from these tools into your accounting system for tracking purposes.
And when it comes to your income tax return, because all income and expenses are recorded in the books, calculating your tax base and tax rate becomes easier. When you have the most comprehensive accounting software, tax season will be a breeze.
The younger your business is, the more often you should generate financial reports. You need to check your business's financial health as often as possible so that you can adjust your strategies. Some of the important reports you should get are the following:
Many tools have accounting features to generate these reports easily. They can give you financial insights and suggestions to help you make the best decision for your finances. When you know these reports, you and your accountant can run and analyze them.
One thing that turns off customers is when they see that a store’s product is out of stock. Inventory tracking is something an accounting software can help you with. Yes! You can manage your inventory through this software too. Besides, your inventory is a part of your company assets.
Integrate the inventory data available on ecommerce sites into your bookkeeping and accounting software. When you can monitor your inventory, you’ll know which items fly off the shelves and you can replenish them immediately. You’ll also know the ones that don’t move. You can use the information to create plans on how to duplicate your successes and how to sell slow products.
Growing businesses should take into account their growing workforce when picking an accounting tool. Pick an accounting program with payroll management features or one that allows the integration of payroll processing tools to help you streamline your processes. With this, paying your employees can occur timely, and the details included will always be accurate. If you wish to study your payroll data, it will all be available on the software.
Look for tools that can track your employees’ rendered work hours for different projects and calculate their benefits and deductions to include them in the salary computation. It’s also convenient to get a tool that can automate payroll sending, so look for this feature too.
Look for a tool with human resource management features to stay on top of your people management. The best accounting tool for small business has these features:
The information you get with this will go hand in hand with the details you need to complete payroll.
In conclusion, investing in the best accounting software for small business can be worth every penny. This tool can truly be a one-stop-shop for many of your business management needs like the following:
Partnering with a reliable provider such as Unloop can help you make the most of your investment and take your business to the next level. Whether you sell on Amazon, Shopify, DTC, multichannel, or wholesale, we offer bookkeeping, forecasting, accounts payable, payroll, and tax management. Book a call with us now to discuss our offers further.
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
What is Peachtree software? Now called Sage 50cloud, Peachtree is one of the most popular bookkeeping and accounting software in the market. It was designed to help small and medium-sized businesses manage their financial records, streamline accounting processes, and enhance financial transparency. Sage 50cloud offers numerous features and benefits, making it an attractive choice for businesses of different sizes and industries.
In this article, we will look at five of the most compelling reasons to invest in Sage 50cloud/Peachtree. From invoicing to its advanced reporting capabilities, we will explore how Sage 50cloud can help make bookkeeping and accounting more efficient and effective for your business. Let’s begin!
Don’t worry about inaccuracies in bookkeeping, as automation is on top of Peachtree’s features. You will be sure that the details are all correct because they’ll come straight from the source: the numbers are recorded not by manual input but through integrations, bank connections, and optical character recognition tools.
Through Sage 50cloud, you’ll have visibility on employees’ rendered time, payroll details, and project management specifics. If you are in the ecommerce world, your business inventory matters a lot because you need to know the stock of each product; Sage 50cloud has inventory management, too.
Since Peachtree offers real estate and construction-based bookkeeping and accounting, business owners in these industries will know their complete building and labor costs through the help of the software.
The tool is connected through the cloud, so you can be sure of data security and robust functionality. You can manage your books through the desktop version, or you can also use a mobile device on-the-go.
Because your books are constantly updated, and you can ensure that the details inside are correct, your accounting and financial analysis will be easier. The continuously updated software dashboard will give you a complete view of your financial health.
Through the Peachtree bookkeeping software, you can generate different kinds of financial reports like balance sheets, cash flow statements, income statements, and shareholder’s/owner’s equity statements. You can also check the specifics like sales taxes, expenses, profits, and more!
If you want to see how business will go in the following months, quarters, or years, you can utilize the data to run a financial forecast. The reports you’ll get can guide you for advanced budgeting, planning, and making objective business decisions.
Peachtree also allows unlimited users, letting you and other key members of your team update and view these vital reports.
Invoicing is a task that will help you maintain a healthy cash flow as it ensures that you’ll receive payments from customers and clients on time. Peachtree allows the creation and sending of professional invoices online. It also assists you in converting quotes and estimates automatically into invoices. Because everything is computerized and all the details and data needed for the invoice are in one place, you can send invoices in seconds.
These e-documents include a “Pay Now” button to make it easier for clients to settle their financial obligations. When you have regular transactions, you can also schedule invoices to be sent automatically on Sage 50cloud, resulting in timely payments.
Peachtree is on par (or even better) than the many bookkeeping and accounting software available today. What makes it shine above others is its human resource management capabilities. Sage 50cloud goes above and beyond, offering all of these within the tool:
Sage 50cloud has features that explicitly assist individuals in the construction, real estate industry, and ecommerce industries!
The software has Sage Intacct Construction, a feature for construction and real estate bookkeeping, and accounting. It also has the Sage 100 Contractor which is mainly to help contractors and subcontractors to check job costs, project details, budget proposals, biddings, and anything finance-related. It also helps in accomplishing payroll, billing, and lien waiver creation.
Peachtree, through the Sage 300 CRE, is also a reliable tool for homes that are already built. It has a Commercial Real Estate (CRE) management feature that makes it easy for property managers to check details about their finances.
On top of this, Peachtree is also a go-to for many ecommerce sellers because of all the features mentioned above. From inventory, invoicing, sales taxes, and more, Peachtree has got any online seller’s back when it comes to bookkeeping and accounting.
Sage software offers an all-in-one solution for bookkeeping and accounting needs, with features designed to streamline accounting processes and enhance financial transparency. Overall, Sage 50cloud, formerly Peachtree, is an attractive choice for businesses of different sizes and industries that want to improve their financial management.If you are looking for a team that can help you manage your finances, from bookkeeping, payroll, taxes, accounts payable, and forecasting, we at Unloop have you covered! Give us a call now so that we can discuss our offers in detail.
Many Canadian ecommerce sellers dread handling taxes. The apprehension roots in the difficulty of understanding the many rules and regulations surrounding taxes. Adding to the challenge, especially for ecommerce sellers, are the different rates for sales taxes. Sellers offering services and products in different territories need to keep up with the ever-changing rules on sales taxes.
These troubles make every business owner, especially those new in the field and unfamiliar with taxation, abandon the possibility of understanding taxes and handling the task on their own. While you can delegate taxes to professionals, it still pays to know how it works, even in the most basic sense.
With that, here are the seven frequently asked questions ecommerce sellers ask about taxes. Knowing the answers may give you the confidence to handle your own. Let’s begin!
When you become an ecommerce seller, there are a lot of key dates you need to remember, some of which are tax deadlines. In Canada, you can file your taxes for the previous year’s income as early as February, but the tax filing deadline is on April 30.
The Canada Revenue Agency (CRA) makes the process easier, you can file taxes online. Just be ready with the complete financial details for the whole calendar year and receipts in case the CRA looks for them.
To keep yourself from cramming months before the tax due date, it is best practice to put your business bookkeeping and accounting in place as early as launching your business. This ensures that you will have all the financial transactions recorded throughout the year. You will also minimize the possibility of inaccuracy as your bookkeeper or accountant won’t need to rush.
An income tax return is a document containing a person or a company’s annual income, expenses, and other financial transactions that occurred within the year. It is from these details where the taxpayer and authorities calculate one’s tax liability, which is often paid annually. If there is any overpayment, the taxpayer can request for a tax refund.
Canadian residents, immigrants, indigenous peoples, deceased individuals, people who have left Canada temporarily or permanently, and temporary Canadian residents are all obliged to pay income tax return.
When filing for tax returns, you must declare your total annual income to know how much you need to pay. The Canadian government determines a tax rate depending on your total income. Rates may change yearly. For instance, the 2022 tax rate has already been changed for 2023, so it is best to stay updated. All provinces and territories in Canada submit their taxes to the CRA except for Quebec, where taxes are paid to the Revenu Quebec.
Sales taxes in Canada vary per province or territory, and each charges General Sales Tax (GST), Provincial Sales Tax (PST), a combination of PST and GST, or Harmonized Sales Tax (HST). Sellers and service providers who have a physical store or office and even those selling online are required to pay sales taxes when they earn at least $30,000 in a year.
Sellers are to base the rate they charge on the destination of the package, and here are the rates.
|Province||PST||GST||HST||Total Tax Rate|
|Newfoundland and Labrador||15%||15%|
|Prince Edward Island||15%||15%|
These tax rates are charged for every sale made, which the buyers should shoulder. Yet, it is your duty as a seller to provide transparency in every transaction. Show your customers a breakdown of their pay, including the sales tax charges.
Although challenging, ecommerce sellers like you should always prioritize paying taxes as there are repercussions. The CRA requires one time payments, so when they find out that a business owner does not pay taxes, a collections officer will be assigned to review their case. If found guilty, they can be subjected to pay interest rates on top of the taxes they weren’t able to pay.
The good news is most Canadians are responsible taxpayers, but if the business cannot pay, the CRA can seize the company’s assets and bank accounts, garnish wages, and register a lien on the owner’s home. Tax relief can still be given to business owners (when eligible for it),, and owners can also make payment arrangements with the CRA after setting up a meeting with the agency.
Many bookkeeping and accounting software already have a tax computing feature. They can also integrate with ecommerce sites like Amazon and Shopify. These platforms compute sales taxes and send the data to your main accounting software through integration.
There are also separate software like Taxomate, Taxify, Hello Tax, and TaxJar that can give you the following assistance:
However, for the most comprehensive software, consider QuickBooks. It has features to track, collect, review, and pay your sales taxes. And even when you sell on sites that handle sales taxes for you, you can still integrate the data collected from that platform with the QuickBooks software, so all your data is in one place. Because all your financial transactions are recorded on QuickBooks, you can use it to find the amount of income tax you need to pay.
Whether you sell on Amazon or are still planning to, the first thing you should know is the platform’s Marketplace Tax Collection (MTC).
Because of the Marketplace Facilitator Law (MPF), third-party sellers like Amazon are compelled to compute, collect, report, and remit sales taxes. This is good news for sellers like you as you no longer have to worry about these tasks. All you need to do now is monitor the sales taxes and integrate the data from Amazon into your bookkeeping and accounting software for tracking.
You should also know that the platform also has the Amazon Tax Exemption Program (ATEP), which considers individuals and organizations that are eligible for tax exemption.
As an ecommerce seller, it’s a wise business move to sell on Amazon. Amazon is the largest ecommerce site in the world, and although the competition is tough, there is also a high chance of introducing and selling your products to a broader audience.
Shopify does not offer the same tax assistance as Amazon, but you can optimize the settings in the ecommerce site to make your sales tax management more efficient. You can set up Shopify to add sales taxes upon customer checkout.
To streamline the tax detail determination, collection, and remittance process, you can integrate the data from Shopify into the tax software you use. They can do the following steps after Shopify has charged the correct sales taxes to customers.
You can also integrate all the data from Shopify into your bookkeeping and accounting system so that you can compute your income tax return correctly and quickly by the end of the year.
Knowing some of the tax details can give you confidence as an ecommerce seller. It may make you realize that taxes aren’t that dreadful to handle, especially when you have the right software and tools. You’ll also realize that many ecommerce platforms have made taxes easier for sellers like you by doing the computation, collection, and remittance themselves.
If you are looking for convenience when filing for tax returns, another wise thing to do is to partner with tax experts to whom you can delegate this complex task. Unloop could be the partner you are looking for!When you partner with us, whether you are in Canada or the US, we can help you make tax season less of a worry. Don’t worry about your income tax, either! We’ll handle the bookkeeping and connect you with the best CPAs in North America for filing taxes. Beat the deadline! Connect with us now; we’d love to discuss the details with you!
Think of business financial statements as the prologue of books you are about to read. They give you a preview of your business's financial status. If you, investors, and creditors would like to grasp how you manage your company's money, looking at financial statements is the way to go. With this, it is your job to generate these financial statements regularly and as needed. And when done manually, that is no easy task.
But bookkeeping and accounting software undoubtedly bring a lot of convenience in preparing and generating financial statements. With these, let’s look at the four tips to using accounting software for preparing your business financial statements. Let’s begin!
Although signing up for bookkeeping and accounting software will add to company costs, the investment is worth it. Aside from generating financial statements, these are some benefits you’ll reap in using bookkeeping and accounting programs.
Software can make data collection and monitoring stress-free. This is because you can integrate all the information from the different platforms and tools you use. Whether the data you need is from different ecommerce platforms like Amazon or Shopify, from a tax software, an optical character recognition (OCR) tool, a human resource management tool, customer relationship management program, or various payment gateways, you can all add them in the accounting system automatically through integrations.
When generating different financial statements, lots of computations will occur. After collecting and monitoring data that will be included in the statements, software can also do the calculations for you. Whether it’s the computation of your company’s profit, owner’s/shareholder’s equity, taxes, assets, or liabilities, you’ll know the details immediately through help from the software. Skip the hassle of inputting formulas on Excel sheets, which is prone to human error, and rely on accurate outputs from software instead.
When data collection, monitoring, and computation are handled, generating reports will be easier. It is more convenient when using a bookkeeping and accounting program because these tools already have templates for the different financial statements you need. Just pick a report you need to generate and the software will do all the work for you.
You now know some of the benefits you can reap by using accounting software for your financial statements. Our tip number two is all about picking the best tool there is. When searching for the best accounting tools, you will discover names like QuickBooks accounting, Xero, Sage50 cloud, and FreshBooks. Learn how these accounting software options can assist you in preparing your financial statements.
A financial statement will only be generated when all the details needed to fill it out are complete. QuickBooks cloud-based accounting software has features that enable you to track all your business finances.
Different data from various third-party apps can be integrated with it for your financial data to be complete. With this, when you need to generate any financial statement, the tool will gather all the information already stored in the software. Check QuickBooks’s pricing to know which version offers financial statement generation, so you can sign up for the most efficient one.
Not far left behind the financial tracking capabilities of QuickBooks is Xero. The tool tracks sales, cost of goods sold, inventory, taxes, projects, employees’ rendered time, bank accounts, and plenty more details that make up your business income and expenses. These are all readily available in the Xero cloud-based accounting software, and they can be utilized when creating financial statements.
Xero has ready-made templates for income statements, balance sheets, and cash flow statements. If there are details you need to customize, Xero reports are open for customization too.
Sage50 cloud has a specific list of financial statements they can help you generate. They have the primary reports you need to get, like cash flow statements, income statements, and balance sheets. The income statement can be further optimized into showing you reports for a particular period, year-to-date, or two years. Sage50 cloud also generates reports like a general ledger account summary report, statement of changes, statement of income and retained earnings, and statement of retained earnings.
FreshBooks is one of the easiest accounting software to use. It is a straightforward accounting software designed to cater to freelancers, self-employed individuals, and small- to medium-sized businesses.
FreshBooks can generate profit and loss statements, sales tax summaries, accounts aging, general ledger reports, expense reports, invoice details reports, and time and project tracking profitability reports. Because all data you need are stored in the tool, you can get these reports in a few clicks.
Does the capacity to generate different financial statements sound promising? The numbers and reports will only make sense when you know what they are for. Here are the three basic financial statements you should check and the different insights you’ll get from them.
You’ll see many details in your company income statement, like the revenue, cost of goods sold/cost of sales, gross profit, operating expenses, operating income, non-operating items, earnings before taxes, and net income. All these details boil down to providing information about your business expenses, revenue, and net income. This is a report that states whether or not your business is profitable.
As the name of this report suggests, a cash flow statement gives you an idea of how the money flows in your business. You’ll have visibility on the money that’s coming in and where it is from, and you’ll also see how company money is being spent and where. A cash flow statement details various operating, investing, and financing activities to give you a more in-depth look at your cash flow.
Check your balance sheet if you want to know your business assets, liabilities, and owner’s/shareholder’s equity. The premise is that your business should have more assets than liabilities to ensure you can meet all your financial obligations and make your business thrive. On the other hand, the owner’s/shareholder’s equity shows the amount you can give to yourself or the shareholders. The higher your company equity is, the more investors you can entice to invest in your business.
By following the previous tips, you will know what bookkeeping and accounting software can do for you and how to read financial reports. You should now have the confidence that you’ll get accurate reports and trust that you will understand any financial deck.
Make your daily operations and business management even easier by complementing your tools with help from experts. These days, many bookkeeping and accounting firms offer complete services to assist you in managing your business finances. Here are some of the benefits you’ll enjoy in partnering with them.
Experts from a firm can help you make sense of the numbers and the statements through statement notes. The statement notes include methods and rules used to develop the report and how the numbers were computed. These notes also explain how the accountant comes up with their various insights to help you in your financial decision-making.
When partnered with a firm, you can get financial statements and reports regularly or as often as you need. As a result, you can check up on your business’s financial health as often as possible. You can use these reports to know if you are hitting your goals or need to adjust your game plans to succeed.
When it comes to your business finances, accuracy is a priority. It is only when the numbers are correct can you make correct decisions. It is a must for business owners like you to make it a part of your daily routine to check the accuracy of your books and the reports that you get. You can get a helping hand in fulfilling this task when you have an account manager from an agency working with you.
In conclusion, bookkeeping and accounting software are essential for generating financial statements. These tools offer convenience and help streamline collecting, monitoring, and computing financial data.
Utilizing software and expert assistance can provide a comprehensive solution to managing your business finances effectively. Picking the best software for your needs and familiarizing yourself with the basic financial reports and insights they offer is crucial. However, partnering with experts from bookkeeping and accounting firms can offer additional benefits, such as accurate financial statements, regular reports, and statement notes to help you make informed decisions about your business’s finances.Partner with us here at Unloop so that we can assist you with your financial statement needs. We offer more assistance on top of that. If you’re interested, contact us now so that we can discuss our offers and services with you!
Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Bookkeeping and accounting are essential for any successful business. When managed efficiently, they provide a detailed account of financial transactions. Complete data enables businesses to make informed decisions based on accurate information. By understanding how to use bookkeeping and accounting to their advantage, business owners can monitor and analyze their finances, identify revenue streams, and manage expenses—all of which can ultimately boost profits.
This article provides seven ways to utilize bookkeeping and accounting to monitor your business's financial transactions. From recording transactions to making sense of the numbers through regular reports, we’ll provide practical tips and strategies to help any business maximize its financial potential.
Among the many complex accounting journal entries within your books, your financial transactions can be summarized into two details: assets and liabilities.
Assets are the funds coming from a sales transaction and the monetary value of the equipment, machines, and properties your company has. It also includes accounts receivables or the payments you have yet to receive from clients or customers. All the items in your inventory have a value and are included in your assets too. And if there are supplies or services you’ve paid for in advance but have yet to be delivered to you, categorize them as assets. Investments, trademarks, patents, and goodwill all fall under this same category.
Meanwhile, liabilities are everything under your accounts payable and those already deducted from your income to pay rent, utility fees, debts, and the cost of goods sold. These are the wages you give to your employees, the dividends your shareholders get, and even your owner’s equity.
When your company bookkeeping is in place, you can analyze where your funds are coming from and plan how to continue or increase the inflow of cash. You’ll also see cost culprits and map out how to lower them.
One thing you can do to track your income and expenses efficiently is to connect your bank to bookkeeping and accounting software. This way, all the cash coming in and withdrawals happening in the bank will automatically be recorded in the books. Transactions will also be categorized immediately so you can include bank details in your central financial system.
Through bank connections, bank reconciliation will be easier too. You can compare what’s recorded in the books and your bank statement. You can check if all transactions are accounted for, and if not, you can investigate what happened or correct the data right away.
Another responsibility you need to accomplish as a business owner is paying taxes. You are responsible for paying your yearly income tax and must calculate, charge, and remit sales taxes to the tax bureau.
But tax computation isn’t easy, especially with localized rules. Yet, you can forget your worries when your bookkeeping and accounting are in place. When all your income and expenses are tracked, you can efficiently compute your annual income, which is the basis of your tax rate. You can track and calculate the sales taxes you’ve collected from sales and remit the exact amount on time and even automatically.
As you grow your business, you need more hands to help you. Part of your business financial transactions is your employees’ compensation. You’ll be responsible for your employees’ monthly salary, incentives and benefits, taxes, and other mandated deductions.
Streamline the computation on how much they’ll get and how much you’ll deduct through bookkeeping and accounting. You can also send their salaries straight into their accounts by integrating payroll software into your accounting system. Don’t worry about late payments and keep the workforce's morale high as you can schedule payment sending through the help of payroll software.
Staying on top of your invoices can benefit your cash flow. Through invoicing, you can remind clients and customers who owe you money. With the right tool, you can schedule these reminders to ensure you don’t forget to send them and your customers do not forget to pay.
These invoices are sent online, so you won’t have the hassle of printing them on paper and delivering them face-to-face. Clients and customers can pay conveniently and skip the cash method of payment, too, as the electronic invoices also come with a “Pay Now” button. The payment goes straight into your account and gets recorded on the books automatically.
Your books that are filled with numbers and organized in different financial categories will make more sense through financial reports. Make sure that you know what the intentions of the reports are, so you can understand them better.
Assets, liabilities, and equity are the three main contents of a balance sheet. The rule is that your assets should equal or even exceed your liabilities and equity. Through bookkeeping and accounting, you can check whether your assets are higher than your liabilities and whether you can get satisfying equity from your business.
An income statement shows income, expenses, and profit. To determine if the company is profitable, you and investors can check this report. An income statement report includes the following:
Meanwhile, if you or investors want to see the cash flow in your business, check the cash flow statement. This report shows how money enters and leaves your accounts through operating and financing activities.
The statement of owner’s equity shows the money left for you after you deduct all liabilities from the assets. Ensure that your business assets are higher than the liabilities to get your owner’s share from the profits instead of the capital.
Forecast the financial transactions you will have on a future date based on the historical data stored in your bookkeeping and accounting system. Look back on your best practices in achieving the numbers and duplicate the same actions to achieve the forecast.
Make a solid plan to achieve your goals. Have the flexibility to adjust game plans as needed. You can also double up your efforts if you want to exceed your previous financial achievements. And, of course, regularly set meetings with your financial team to check your progress.
Keep your bookkeeping and accounting system up-to-date and secure financial transactions by investing in the right software. There will be some costs, but the investment will be worth it as these tools minimize human errors. They can also integrate with other financial tools. And many of them are cloud-based, so your data will be protected.
Bookkeeping and Accounting Software
Start by investing in bookkeeping and accounting software that record financial transactions in all your ventures. QuickBooks, Xero, Sage50 cloud, FreshBooks, and Wave Accounting are some tools you can check. Their features and plans vary. Pick the one that suits your business’s needs.
You can invest in tax software like Avalara, Taxomate, TaxJar, and Taxify to compute, track, and even submit the sales taxes you collect from your stores. You can also integrate these tools into your accounting system so all your business financial transactions are kept in one place.
Documentation and Data Capture Software
Manual inputs increase the risk of committing mistakes, and these aren’t acceptable when talking about finances. Skip the hassle of typing in data from printed sources like receipts and invoices, and let a software do it for you. These can turn hard copy documents into computer text for recording.
Last and not least, your business bookkeeping and accounting are handled better when you have the right people to do the job. Delegate the painstaking task of financial tracking to experts—by doing this, you’ll have more time to work on your business instead of stressing out about something you’re not confident at.
A professional bookkeeper can keep your books organized, while an accountant will help you make sense of the numbers through regular reports. They will work together to ensure that you have the financial data you need. Accountants can show you an in-depth analysis of your finances, and they are also capable of giving financial advice that you can consider in your decision-making process.
Bookkeeping and accounting play a crucial role in the success of any business. By monitoring and analyzing transactions, identifying revenue streams, and managing expenses, you can maximize your business’s financial potential.If you need assistance in bookkeeping and accounting, Unloop can help. Our team of experts can provide the professional guidance you need to help your business grow and succeed. So, what are you waiting for? Book a call with us now so we can discuss our offers with you!
The tax part of income is no one’s favorite. You have tax duties to meet whether you own your own business or not. It can be messy, confusing, and costly when you get it wrong.
If you need clarification about your taxes, you've come to the right place. This is the ultimate tax hack, so remember to take notes—come tax filing season, you’ll be ready!
Tax liability is the amount of money you are required to pay the government based on your income. People with low income are often exempted from paying taxes, but there are also people that pay taxes through federal income taxes or payroll taxes.
Tax liability also comes in different forms. It can come from state and local taxes, excise, sales, or other taxes from things that generate income.
We have already established that there are different forms of tax liabilities. To help you better understand tax liabilities, below are some of the most typical categories.
All employers are subjected to federal income taxes. In other cases, their income is also subject to local and state taxes. It is a common practice for employers to withhold income tax liabilities from their employee's wages. Your income tax obligation can also include a tax on your business income if you're not a legal organization. You can pay an estimated tax amount for your income tax debt throughout the year.
Both the employer and employee shares of the social security and Medicare taxes are covered by the self-employed tax. Social security and Medicare taxes must be deducted from an employed person's income. Self-employment tax can be paid through anticipated tax payments.
Payroll taxes are the money employers withhold from the payroll and the money they spend to generate their income tax liability. These taxes should be filed to the IRS according to a schedule.
Capital gains tax liability is levied on generated income when an investor successfully makes a sale in their investments. The tax owed is applicable during the fiscal year the investment is sold. Capital gains tax rates can vary between 0%, 15%, and 20%depending on the filer's income.
An individual may owe a long-term capital gain when an income from the investment is owned for at least a year. If not, short-term capital gains are applied. For short-term capital gains, the tax rate depends on the payer's ordinary income bracket.
Small businesses also have a share of their tax liability. Here are some events when tax liabilities are applicable for small businesses.
If you want to get ahead of your taxes, you can calculate your tax liability by yourself. Here are a few easy steps to assist you in appropriately calculating them.
Step 1 - Identify the category to which you or your company belongs.
Step 2 - Calculate the quarterly estimated tax payments using a calculation tool.
Step 3 - If you're a C corporation, you need to calculate your taxes using the corporate tax scheme, which has eight different tax rate brackets and a flat tax rate regardless of the corporation's income.
Step 4 - If you are not a C corporation, you are a flow-through entity, which means you are responsible for paying your own taxes rather than those of the company. Your tax rate is determined by your taxable income as well as how you file your taxes.
Step 5 - Pay your estimated taxes. Payments for income taxes are due in April. However, federal tax liability should be paid whenever they are incurred. Depending on their taxable income, the majority of small firms should make anticipated tax payments throughout the year.
Step 6 - Pay employment taxes. These taxes usually include the following:
Step 7 - Once you're done calculating tax liability, the last step is to pay the taxes you
If you're stressed about the amount of taxes you need to pay, there are some ways you can reduce your tax liability. Take note of these tips to help reduce your tax bill.
Tax credits are the best way to reduce the tax you owe. You can make full use of a number of available tax credits. These credits can reduce the amount dollar for dollar compared to deductions, which is based on percentages.
Here are some ways to earn tax credits.
Your Individual Retirement Account (IRA) contributions are a great strategy to reduce your tax liability. Most pre-tax contributions to traditional IRAs are made before taxes are deducted, lowering your taxable income for the current tax year. Taxes on your donations will be due once you remove the funds.
Charitable contributions are another way to lessen your tax bill. Donations of cash, toys, appreciated stock, or volunteer efforts to qualified organizations can provide substantial tax savings. Here are some things to remember.
You can deduct a huge variety of company expenses. So make sure to keep and document receipts so you have records when you declare them as deductions. Here are some business expenses you can use as deductions.
Tax obligations are complicated. With so many numbers, it's easy to become confused. Fortunately for business owners, Unloop is here to help you handle your tax liabilities.
We offer different services to handle all your accounting needs. Our services include bookkeeping, accounts payable, forecasting, payroll, and taxes. Book a call with us today and talk to an expert for free.
Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting.. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.