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.
Outsourcing bookkeeping services is becoming a viable solution in the business world. It involves hiring external bookkeepers to manage your financial records and accounting tasks. This approach is cost-effective, ensures accuracy, and allows businesses to focus on their core operations.
In this article, we will discuss the importance of bookkeeping, outsourcing services, what to expect from it, and how to choose a provider. By the end of this article, you can decide whether to outsource bookkeeping services for your business. Let’s begin!
Let’s begin by discussing why outsourcing bookkeeping services is better than hiring in-house staff or a freelancer—some of the more common choices business owners like you have for bookkeeping and accounting.
Prime among the reasons you should partner with an agency is cost-efficiency. With an agency, all you need to worry about is paying the monthly fee. You can skip the added work and costs of training, and you do not have to worry about employee incentives and benefits. The agency handles all this.
You can also save time and effort on recruitment.Agencies have qualified bookkeepers and accountants, though you can check their credentials if you want to.
Two heads are better than one, they say. When partnered with an agency, there will be a dedicated team to manage your account. A bookkeeper will make sure to use the latest bookkeeping and accounting tools. From QuickBooks and Xero, tax software like Avalara and Taxomate, to document management software like Hubdoc—agencies have all these tools to ensure your books are up-to-date and organized.
If you aren’t trained in accounting, a dedicated accountant will create easy-to-understand reports. They also have the skill to explain the charts and statements in detail for you to understand your business finances. Most of all, they can give live insights and advice on how to run your finances. Nevertheless, you get the final say.
Last but not least, among the reasons outsourced bookkeepers and accountants are the way to go is that you get more time for other essential business responsibilities.
While you go about your day-to-day business operations, financial management and other bookkeeping and accounting must-dos are handled simultaneously by a dedicated bookkeeping and accounting team. As the business owner, all you have to do is make it a habit to check the accuracy of the details in the books; the rest can be delegated to your partner agency.
Outsourced bookkeeping services are ubiquitous, and you’ve probably already considered them for your business. To tip you over, here are the services you can expect when you partner with a third-party bookkeeping and accounting firm.
As a business owner, you have a lot on your plate. While it is manageable to do the books on your own in the beginning, your business transactions will grow as you scale your business. After signing up for a virtual bookkeeping service, you won’t have to worry about tracking your business financial transactions independently.
The agency will handle your books. Depending on the offer, the agency can track month-to-date income and expenses even if you sign up later in the year. From then on, all your business transactions will be monitored.
The best outsourced bookkeeping has the best accounting software to perform their tasks efficiently. Accounting firms invest in the following technologies to optimize their operations:
When looking for a firm to partner with, check the different software they use to manage your business finances.
Business planning and forecasting is another essential task covered when you partner with an agency. This data will help you create business plans to maintain the numbers you have or scale earnings to grow your venture further. They will make the most of the historical and recent data that you already have to foresee how your business will look in the future.
Keep in mind that these forecasts aren’t 100% accurate. They are subject to change, but they will still give you an objective view of your finances on a future date.
Of course, once your business grows, your team will also expand as you need expert minds and hands to help you with your day-to-day operations. Ensure that your employees are compensated correctly and are paid on time by delegating the task to an outsourced bookkeeping service.
Through their software and expertise, they can track the time rendered by employees, project costs, benefits, incentives, and taxes to come up with the computation of the final payment.
Your workers will automatically receive their salaries, too, as the software is connected to payroll apps or banks that can deposit money straight from your account to theirs.
Taxes are one of the most dreaded tasks of business owners. The reason behind this is the complicated tax rates that change from time to time, especially when it comes to sales taxes. When it comes to taxes, bookkeeping, and accounting, inaccuracy is a mortal sin. Not having the correct numbers defeats the purpose of the task and keeps business owners as you blinded to the actual financial status of your venture.
But with proper services, all the income and expenses of your business will be tracked, so computing your gross income on a tax rate basis will be easier. Agencies are also equipped with updated tax tools containing the latest sales tax rates, so the amount you’ll charge to customers will always be correct.
More and more business owners need ecommerce bookkeeping and accounting. You can also get this industry-specific assistance from a bookkeeping and accounting agency.
While you can expect the professionals who handle your account to be skilled in bookkeeping and accounting, they are also well-versed in how different ecommerce platforms—like Amazon, Shopify, Woocommerce, eBay, Etsy—work.
These ecommerce platforms already have a data center. But the agency will integrate the platform’s collected data into your main accounting system.
All the data in the bookkeeping and accounting software will be put into good use through the generation of these valuable financial reports:
Virtual bookkeepers will ensure the data you need for these reports are complete. At the same time, remote accountants will create reports and give you suggestions and assistance on decision-making.
Outsourcing bookkeeping services is a wise choice for businesses of all sizes. This cost-effective practice ensures accurate financial records and allows businesses to focus on their core activities.
We hope the common services offered by agencies mentioned above give you an idea of what you are investing in. In the end, opting for outsourced bookkeeping services instead of hiring in-house staff or freelancers will depend on what you need for your business.If you are wondering how to outsource bookkeeping services, call us here at Unloop. Our experts can handle your books. Talk to us today!
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.
If you are a small business owner, you know that managing your finances is crucial to your operations.
Bookkeeping involves keeping track of all your financial transactions, such as sales, expenses, and asset acquisitions. Accurate bookkeeping is essential for financial stability and growth but can be time-consuming and complicated.
Outsourcing bookkeeping can be an excellent solution for small businesses to save time, reduce costs, and ensure accurate financial records. In this article, Unloop will explore why outsourcing bookkeeping can benefit small businesses and provide a guide on how to outsource bookkeeping.
You might be asking yourself why you must change your bookkeeping and accounting practices. These processes have been working for you for most of your time doing business and will likely continue to do so. Yet, there's no denying that there are plenty of benefits when you cross over the virtual bookkeeping and accounting fence. Here's what you can look forward to.
One of the essential benefits of outsourcing bookkeeping is efficiency. If your books are done entirely online using cloud-based software, it becomes more efficient. Things such as bank reconciliation, locating transaction errors, and preparing financial statements will speed up. This results in a more efficient accounting system.
As a small business owner, time is your most important investment, and it's limited. Outsourcing bookkeeping buys you time and lets you focus on your business activities that truly matter while leaving the financial recordkeeping to professionals. Doing so will let you spend time growing your business, developing new products and services, and expanding your customer base.
Outsourcing bookkeeping can reduce effort and retain resources. By hiring a professional bookkeeper, you eliminate the need to train an in-house employee, buy software and hardware, and maintain office space. Professional bookkeepers can also complete the work faster and more accurately, saving you valuable time and reducing the risk of errors.
Keeping accurate financial records is crucial for small businesses. That's because bookkeeping errors can lead to inaccurate financial statements, tax penalties, and even legal problems. Outsourcing bookkeeping ensures that your financial records are in excellent shape.
Professional bookkeepers are experts in their field and have the knowledge and experience to ensure compliance with accounting standards and regulations.
Outsourcing bookkeeping provides access to expert knowledge and skills. Professional bookkeepers stay up-to-date with the current changes in the accounting world and other important matters, such as tax laws and regulations, to ensure their practices are up to par with what's currently accepted.
Ecommerce accountants and bookkeepers also keep up with the latest updates in the industry so they can understand how these changes will affect their recordkeeping and accounting processes and ensure your business remains compliant and keeps accurate records.
Outsourcing your accounting, especially if you come from a traditional business, will expose you to a new and better way of doing things in your business's accounting wing. A lot of virtual bookkeeping and accounting professionals are adept at bookkeeping software and applications. If your financial records need to be digitized, they can help you transition.
If you're an ecommerce business owner who invested in accounting software, the transition from in-house to outsourcing your accounting will be easy due to the experts’ familiarity with the tools you use.
Tax season is one of the busiest times for entrepreneurs, and for most who already have a lot to juggle, tax preparation and filing can be too much. This causes penalties for missed tax payments.
Outsourcing makes business owners ready for the tax filing season. By passing the weight of the work to qualified bookkeepers and accountants, they can continue with their core business activities and take on a monitoring capacity when filing taxes.
With cloud-based accounting software run by experts, you can be sure that your bookkeeping and accounting system will be agile and ready for growth. Every abrupt demand shift will keep the system steady, allowing every growth strategy you formulate to be smooth because your adaptable accounting system is prepared to take on the challenges.
You can scale your business knowing that your bookkeeping and accounting team can handle the data load. As your revenue soars, you will continue to have accurate reports, seamless payment processes, and timely payments.
Now that you know why outsourcing bookkeeping can be beneficial, let's explore how to do it. Here are some tips you can apply.
Before you start looking for a bookkeeping service, you need to identify your needs. What specific services do you require? Do you need help with accounts payable, accounts receivable, payroll, or all of the above? Knowing these things will help you identify the services that can meet them.
Once you've identified your needs, you can start researching your options. Look for bookkeeping services that specialize in working with small ecommerce businesses. Read testimonials from other clients that can vouch for their experience. You may also ask for recommendations from your network of business owners and vendors, too.
Once you've narrowed your list of potential bookkeeping services, it's time to evaluate them. Schedule a consultation with each service to discuss your needs and get a sense of their qualifications, experience, and expertise.
To find the right service provider for your business, you must know what accounting services they offer. This way, you can get familiar with the options for your business. Here's what you should look for.
What makes outsourced bookkeeping valuable for ecommerce business owners is the remote feature. They can have their entire bookkeeping and accounting process done by a team of experts from another location.
Documents and receipts become electronic files at a snap of a camera lens, so all the necessary information to substantiate every transaction is converted online, making remote bookkeeping services a viable option.
Virtual bookkeeping services must have a roster of skilled accountants that can record transactions accurately, generate financial statements, and, on top of that, know the tools and software to make their work efficient.
Ecommerce businesses are prone to rapid growth because of their wider reach. As sales increase, so do expenses and the complexity of transactions. This poses a challenge to cash flow management, and if the ball drops on a growing ecommerce business, it can cause damage such as an unpaid obligation or, worse, insolvency.
It boils down to managing accounts payable. For your business to continue running smoothly, you have to control the frequency and amount of cash disbursement according to the business's obligations. So, the team of experts must know how to set up an excellent payment approval and processing system for you to take control of how you spend your business's cash.
Outsourced accounting and bookkeeping services must understand how to accurately record and manage financial data from different cost centers online. Doing this will be crucial in recording one of the most important accounts in ecommerce businesses—the Cost of Goods Sold (COGS).
COGS is an essential account in many ways. It can give you insight to your production or purchase efficiency, but it also serves as a data point to forecast potential revenue your business will have. Experts must know how to accurately calculate COGS and forecast revenue as important activities such as planning growth strategies or selling a company rely on it.
Every business has employees. Even if you own a one-person ecommerce business operation, it can grow big enough to employ many people, which the business has to pay.
Accuracy and promptness of payment are crucial to keep a growing business's gears running. Doing this requires a team of accountants and bookkeepers who are adept in payroll accounting and taxation.
Another thing that all earning entities are bound to pay is taxes. In the ecommerce realm, sellers face two tax challenges: sales tax and income tax. Both these obligations require different tax preparation and assistance.
When outsourcing accounting services, the experts must know how to support each type of tax. For sales taxes, they should offer assistance and guidance in setting up tax collection systems in your online store to deduct customer purchases automatically.
If it's income tax, they should be able to provide tax information and financial reports and collaborate with CPAs during the tax filing process, so you don't have to stress about filing on time.
Outsourcing to an accounting firm or agency should feel like your financial system is on autopilot. It should run like a machine on its own, needing only periodic checking and maintenance from you. That's the value Unloop offers with its bookkeeping and accounting services.Unloop has a team of experts who can do all the abovementioned services. They are more than just accountants and bookkeepers. They are ecommerce-specialized and act as your business partners invested in your growth. If you want to know more about how outsourcing can improve your business, book a call.
In the world of ecommerce, companies need the right financial infrastructure to support their growth. This includes hiring the right ecommerce Certified Public Accountant (CPA) to manage financial records, taxes, and other accounting tasks.
However, finding the right ecommerce CPA can be daunting, especially for small and medium-sized companies that need a dedicated accounting department. In this article, Unloop will explore how companies can find ecommerce CPAs and how accounting service agencies can help them get one.
CPAs can do all the regular accounting functions. Many non-CPA functions such as bookkeeping, financial statement analysis, internal business auditing, and tax preparation are part of their skill set. But there are certain things only a CPA can do, such as the following.
Licensed accountants can formally audit a company's financial statements as a representative of an institution such as the IRS. They can check if your business's recording methods comply with the rules.
If you have non-CPA ecommerce accountants doing your tax preparation, they are limited to bookkeeping, financial statement preparation, and filling out tax forms. A qualified CPA must still sign off on your tax documents before it's honored.
In some cases, only a qualified CPA can take on the responsibility of a comptroller. While even non-CPA ecommerce accountants can do consultation work, they may need to be qualified to oversee your accounting systems and make changes.
All ecommerce companies must have a CPA working for them. It is essential because there are plenty of business activities in the accounting and finance facet that need the services of a public accountant. You'll need CPAs to move things along to keep your business running well. Note the following before deciding to get a CPA.
Accountants must pass a licensure examination to become CPA. This license allows them to take private and public business clients. So before you hire a CPA, be sure to check for their license. Additionally, their license must also cover the state or jurisdiction where you're operating so they are recognized by the institutions they're going to deal with.
Accountants also have different specialties when they set out to practice accountancy. Public accountants are no different. So, as much as possible, look for the ones with several ecommerce clients under their belt. This reduces the learning curve, plus they can offer great insights from their previous experiences working with online businesses.
Hiring a CPA is an added expense to your business operations. But you want to get the best value out of their service—which means paying the correct amount given the degree of work provided. As an ecommerce seller, be aware that accountants, in general, charge in three different ways.
Each one has its benefits, depending on your company’s needs.
One of the most sought-after characteristics of a CPA is their reliability. They have to be ready to work at a reasonable time. This is how they move things along for your business. So in a practical sense, try to go for a public accountant that services only a few clients.
Now that you have the qualifications to shortlist your CPA candidates, it's time to find one that suits your ecommerce business. Here are some of the steps you can take to ensure you choose wisely.
Before you start looking for an ecommerce-specialized CPA, you must determine your ecommerce business's accounting needs. So check your business's accounting system and volume of business, then ask yourself the following questions:
Once you have a clear understanding of your accounting needs, finding a CPA who can meet your requirements will be easier.
One of the best ways to find a reliable CPA is through referrals and recommendations. Check with other ecommerce business owners in your network for a CPA recommendation. Lawyers, bankers, or other professionals you work with can also be a great source of CPA referrals because they are more likely to use accounting services.
The internet is a valuable resource for finding ecommerce CPAs. You can use search engines like Google to find local CPAs specializing in ecommerce accounting. You can also use online directories like the American Institute of CPAs to find licensed CPAs in your state.
Professional social media sites are also rich sources for accounting professionals. Sites such as LinkedIn can give you the essential information you need to know to help you find and connect with ecommerce CPAs in your area.
Attend conferences and events in the ecommerce industry to network with other professionals and learn about the latest trends and best practices. These events can be a great way to meet qualified CPAs specializing in ecommerce accounting.
Some conferences double as trade fairs where you can find several CPAs that offer their services. What's good about these conferences is you get to ask them questions and qualify them on the spot.
Once you have a list of potential ecommerce CPAs, evaluating their credentials and experience is essential. Read back to the previous section on what to look for when hiring CPAs.
Your public accountant may be a member of the American Institute of CPAs or other professional organizations for accountants. This is a plus you can consider on top of their experience. Check to see if they have certificates to present that back up their titles, too.
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If you need more time or resources to find an ecommerce CPA, accounting service agencies can help. These agencies can connect businesses with qualified CPAs who can manage their accounting needs. Here's how they can help.
Accounting service agencies have a network of qualified CPAs who specialize in ecommerce accounting. They can match you with a CPA who meets your specific needs. This is convenient because you can get your tax filed through a CPA from an agency that also handles your books.
Finding the right ecommerce CPA can be a time-consuming and costly process. You can save precious hours and energy by working with an accounting service agency. They can handle the entire process for you, from finding the right CPA to managing the billing and payment process.
In addition to connecting you with a qualified ecommerce CPA, accounting service agencies can offer additional services to help you manage your finances. These services may include the following.
Accounting agencies employ many highly skilled and experienced ecommerce bookkeepers and accountants. They can help you record transactions accurately, which will benefit your CPA when it comes to tax planning.
This team of experts is also adept at using accounting software when dealing with ecommerce accounting tasks, which makes recording and reporting faster and better.
One of the challenges a growing ecommerce business faces is reconciling its business bank account with its financial records. Accounting services can do this in hours by combining their skills and expertise with your software.
Sales Tax Compliance
Ecommerce businesses need to collect sales taxes, just like any business in the United States. The challenge is that online businesses are wide-reaching, and they do business in multiple locations, making accurate tax collection problematic. A team of experts, combined with the right tax software, can help you surmount your sales tax collection obstacles.
Calculating the correct cost of goods sold (COGS) is a crucial part of managing an ecommerce business's inventory. This cost account says a lot about how efficient you are in producing or sourcing your products relative to their price. An accounting team can help you determine the accurate COGS in a given period so you can make good inventory management decisions.
Sourcing a qualified CPA accountant for an ecommerce business can be difficult, primarily if you have yet to work with an ecommerce-specialized public accountant. The easiest way to get access to these professionals is to find an accounting agency that can bridge the gap.Let Unloop handle your accounting and bookkeeping needs. More than helping your ecommerce business become efficient with its accounting systems, we can also connect you with a CPA during the most critical period of your business—tax time. If you're curious about what Unloop can do for you and your business, book a call.
Managing finances can be challenging, especially if you're a small business owner. Keeping track of your bookkeeping can take precious time away from growing your business. Luckily, automated bookkeeping software can help streamline the process, making it easier to keep accurate records and make informed decisions.
There's bookkeeping software for every need, from cloud-based solutions that offer real-time updates to affordable options for small businesses. With the right tools, automating your bookkeeping can help you save time, reduce errors, and focus on what matters most—growing your business. In this article, we'll discuss the benefits of automated bookkeeping and explore some of the best software options available to help you get started. Let’s get into the details!
Are you planning to shift from manual bookkeeping to an automated system? Or are you just starting your business and looking into automation? Whether you’re a beginner or a seasoned bookkeeper, let us share the benefits of automated financial management to show you that you are making the right choice.
Prime among the benefits you will get when you automate your bookkeeping is the freedom from manual entry. To begin the automation process, look for optical character recognition software that allows you to capture receipts and documents and convert the details into text. You can integrate the tool into your leading accounting software for categorization.
Then, you can also integrate your bank into your bookkeeping system, so the deposits and withdrawals are recorded on the books immediately. If there are other channels where you get data, like ecommerce sites and other tools and websites, you can connect them to your bookkeeping software to automate data collection.
The biggest downside of not automating your bookkeeping system is the inaccuracy of manual data entry. No matter how seasoned a bookkeeper is, a minor mistake in clicking the keyboard or the calculator can cause miscalculations. The tiny mistake creates a domino effect of errors which stops you from seeing your actual finances.
When submitting an income tax report, all the details in it should be accurate, as when an audit is made and there are inaccuracies, you may face repercussions from the tax bureau. But with automated bookkeeping, even tax calculations are done automatically.
A typical scene for bookkeepers using Excel sheets is data corruption. One day the Excel sheets are functioning well; the next, they won’t open. The causes of this situation vary from data being too big that the Excel sheet crashes. Sometimes file transfer from one computer to a hard disk may be incomplete or incorrect, and the file transferred cannot be accessed.
With software, all your data will not be stored on a hard disk or a single computer but on the cloud. This space has layers of protection, ensuring your business financial data is corruption-safe. You can stop using corruption-prone Excel sheets when you use automated bookkeeping.
Hackers attack any website and database, and a financial record for your company is undoubtedly a great target. But because your books are saved on the cloud, you can relax as they are protected from hackers.
The cloud has a technology called data encryption which translates the information while it is moved from one storage to the cloud. As a result, even when data is being sent to the cloud, and hackers try to interfere, they won’t decipher the message. Only those with access to your account can access and understand the information.
Threat to the security of your financial data does not only come from outside but also from within. As a business owner, you should be wary about who you share your financial data with. As much as possible, keep the financial team small; these individuals should always keep financial information confidential. Create a confidentiality agreement and put it on paper, so those who will break the agreement can be held legally accountable.
Through automated bookkeeping software, you can limit access to only the most critical of people. Compared with traditional data that can be accessed by anyone who uses the computer where the data is saved, automated bookkeeping allows only those with login credentials to access financial data.
With traditional accounting, data can be accessed only on the devices where the document is saved. But when you use an automated bookkeeping system, you can access your books anytime as long as there is internet.
Many bookkeeping and accounting software are mobile device-compatible. When you download the app to your mobile device, you can log in and check your financial data wherever you are. The requirement to work in the office isn’t necessary anymore, and employees can work remotely. The best part is that when someone changes something on the books, the changes are updated automatically. Everybody who has access to the books can have the most updated numbers immediately.
Because all your financial data is in one place, you won’t have a hard time preparing for tax time. An automated bookkeeping software tracks and categorizes all your business income and expenses and even computes the taxes you need to pay yourself. As a result, you can file tax documents and pay on time.
Regarding sales taxes, you can use other apps and software to compute, track, and remit your sales taxes automatically. If there are instances when you must remit sales taxes, the tax software and your accounting system will show you how much exactly you need to remit.
Meanwhile, to understand the data in your books better, it is best to create reports from them. Some of the basic accounting reports you’ll want to see regularly are the following:
These reports will allow you to see the health of your finances. These financial statements are also helpful during investors' presentations and when applying for loans.
With the help of accounting software, you can generate these reports immediately. Many software have report templates that can quickly be filled out in just a few clicks. And if you need to customize these templates, many software programs allow you to do so.
If you are convinced that an automated bookkeeping system is just what you need for your business then you’ll need reliable bookkeeping and accounting software, and QuickBooks and Xero are the best choices. They are the primary tools that will transform your manual bookkeeping into an automated system.
The answer to your question, “How to automate bookkeeping?” could be answered by simply having Quickbooks. QuickBooks is one of the top choices of bookkeepers and accountants because of the following features:
All these features work together to provide business owners like you the convenience of tracking your income and expenses and transforming them into easy-to-understand reports.
QuickBooks is an excellent choice for business owners because you can access all these great features for affordable prices. For beginners, the QuickBooks Priority Circle that provides training is extremely helpful.
Xero is another option you can look into when picking bookkeeping and accounting software. This tool can assist you in your various financial management needs because of the following features it offers:
Some software don’t have a sales tax feature, but not Xero. You can also make better data-based decisions because of the tool’s data analytics capabilities.
The benefits of automating your bookkeeping are numerous and can significantly benefit your business. From saving time on manual data entry to reducing errors and accessing your financial data from anywhere, automated bookkeeping can help take the hassle out of managing your finances.
QuickBooks and Xero are two great options for reliable bookkeeping and accounting software, and we highly recommend seeking assistance from us here at Unloop to help you get started. We use both software and other tools to automate your business bookkeeping.
Don't let bookkeeping take up all your time; automate it today so you can focus on growing your business!
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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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!
Your business may be considered small, but running it is not an easy task. It can be too much if you are responsible for sourcing your products, creating marketing strategies, and managing payroll. But with proper planning, you can ensure these tasks are manageable.
One perfect example of an overwhelming task for business owners is payroll. In this blog post, we'll talk about the most common errors in payroll processing and the benefits of getting a payroll management system for your business.
Business finances are some of the most complicated things to handle. There are several tasks involved in processing payroll, and there are also many ways business owners can make mistakes. Here are some common ones to look out for.
Errors in pay calculation are at the top of payroll mistakes. There are many ways pay can be miscalculated. There are payroll deductions, commissions, and tax payments payroll administrators need to consider. Furthermore, there are different rules when it comes to overtime pay and holiday pay.
Your employee's trust will take a hit when you continuously make mistakes with their wages. Payroll correction will help you fix the discrepancies, but tracking the mistakes can take a lot of time.
A company's payroll is often scheduled. Employees will anticipate getting paid after a given length of time. Imagine what they would feel if their pay is delayed a day or two. Giving your employees their pay on time builds trust and good rapport between them and the administration.
Failing to fulfill tax obligations that come with payroll can also cost your business penalties, late fines, and even legal issues. It should be a business owner's top priority to properly schedule the payroll and know the due for payroll taxes.
The busiest day for processing payroll is at the end of the year and the beginning of the new year. After a full year of paying employees and taxes, businesses should give the necessary tax forms to their employees. Most employees need the W-2 form that they will use to file for their annual income tax return.
Forgetting or not providing your employees with their needed tax forms is a big inconvenience on their part. It can also mean trouble for your business when your workforce complains about missing tax forms.
If there's a time business owners need to be thorough, it is when they do payroll records. The government recommends at least three years' worth of records regarding payroll operations. These records should include the employee data such as total hours worked, payment rates, and dates. For other legal purposes, some may require more years of records.
Complete records help you prepare for possible future audits and make the payroll process more efficient. Without the records, your business will be at risk of miscalculating payment and misidentifying your employees.
Most companies pay employees based on the time they log at work. Standard rates apply in the first 40 hours for a permanent employee. Depending on company’ rules, overtime rates may vary. Improper time tracking can lead to errors in payment. It can also be upsetting to the employees when they are underpaid because of lost time.
Here are some overtime situations that employers often overlook and fail to track.
For companies, a payroll system can handle, automate, and administer payroll. A payroll management software is an application designed to make the payroll management process convenient. Payroll management systems can eliminate the manual work for payroll administration, which translates to fewer errors in payroll.
If you are still trying to decide if you should invest in payroll solutions, here are some excellent reasons you should.
The last thing you want to happen with your payroll is a mistake in calculation. It can be stressful not just for the employee but also for you since tracking the error takes time. Underpaying your employees will lower their morale, and overpaying them will disrupt your business's cash flow.
An employee payroll management system can significantly decrease the risk of making errors from manual payroll processes. You can ensure that your employee receives the exact amount of their salary every pay period.
Collecting employee details is a necessity of payroll processes. Choose payroll management software with top-notch security to ensure that payroll data is only accessible to the human resources department and authorized personnel. The payroll employee database contains sensitive information such as addresses, birth dates, bank account numbers, Social Security numbers, and many more.
Time has significant value for every business. You can't afford to spend all your time on just one aspect of running your industry. A payroll software helps you skip manually entering long pay stubs, doing calculations, and individually depositing pay into your employee account.
By investing in the right software, you can automate payroll. Other payroll software can perform direct deposits. All you need to do is to authorize the transfer, and the system will deposit the money to your employees' bank accounts. You can go through your usual payroll routine hassle-free and more quickly.
Creating your employee's payslips is a grueling task. Imagine if you have 20 employees. How long would it take you to finish all the payslips and give it to them? The payslip is essential to employees since it contains the details of their pay, allowing them to see if they are paid right. It is also used for income tax filings.
A good payroll software can generate a payslip in an instant. This feature will be extremely helpful for growing companies. The more people you hire, the more payslips you need to generate, and this generation feature will make it easy for you.
Sometimes, work gets too busy, and business owners tend to forget their other tasks. A payroll solution is your friend during hectic workdays. You can customize your software to notify you of important reminders to ensure you meet necessary deadlines.
You can also schedule the payroll ahead of time for a more efficient process.
As business owners you have a lot on your plate, not just managing the payroll. Fortunately for you, Unloop offers a payroll service so your employees' wages are done for you. Here are some of the things we can do for your business.
Payroll is a tedious process. Focus on other aspects of your business and let professionals handle your payroll. Aside from payroll, Unloop can also do bookkeeping, taxes, accounts payable, and forecasting.
Book a call with us and talk to an expert for free!
Finances keep your business running. That's why managing it can make or break a business. But as new business owners, it can be confusing to handle money, and you might be spending them on things that could be devastating for your business.
For small businesses in particular, every penny counts, and managing finances is not always simple. In this article, we'll outline a few of the most typical errors that small business owners make that might hurt their company.
It is alright to feel excited about opening your business. But often, this excitement turns into unnecessary spending. Buying office space or furniture to make the area cozy can be tempting. There are also pieces of equipment and technology to splurge on. But before buying these things, make sure you need them.
When you have a small business, you can start with the basics. As your business grows and you earn more, you can continuously upgrade. Moreover, don't get business loans you can't pay back. The money you get will allow you to buy things, but if you don't have enough income to pay it back, your business won't generate profit or have the finances to keep operations running.
All businesses should have prepared emergency funds. There's always a possibility that an unwanted event will happen, and most of the time, it will cost you money. You can't always rely on the daily profits since you always have expenses to settle.
With emergency funds, preventing damages to your business will be easier. For example, when a piece of your equipment malfunctions or breaks, you’ll need a large sum of money to repair it. In worse scenarios, you’ll need to replace it. There will also be months when business is slow, and emergency funds can keep your operations running.
Every payment is essential for a small business. But many businesses need to pay more attention to their unpaid invoices. According to recent studies, almost 65% of businesses have unpaid invoices from their clients. That is a lot of money you lose if you're not settling with your clients.
Make it a habit to track your invoices. Send regular notifications to your clients regarding their dues. You can add penalties to overdue payments so clients are forced to pay your business more diligently.
Running a business also means you have tax obligations to fulfill. Many business owners focus on marketing strategies, sales, and other aspects that they often forget to consider taxes. Business taxes can be heavy when you pay them all at the end of the fiscal year.
You can plan them quarterly, so your business's cash flow will not be interrupted. Planning for your taxes will also help you distribute your business finances equally for your required expenses.
Many business owners fail to realize the importance of a positive cash flow. The main focus of cash flow is the money that enters and exits your company. Of course, it's good for your business's finances if cash continues to go into your business. The profit and loss statement can help you identify any cash flow problems early on.
However, there are also business-related expenses you should know of. There's inventory you need to track so you can keep selling and meeting your customers' needs. There are bills to pay, like rent, electricity, and other fees for business operations. Managing small business finances properly can help you balance your income and expenses.
Small business owners often think they have sound financial management if their expenses are paid. Always check your balance sheet to see if the money going out and in is balanced and will still make you profitable.
One of the most common mistakes of business owners is confusing cash and profit. For example, your business generates $1000 per week, and your expenses add up to $450. The cash you have on hand is $1000, and the profit you generate is $550.
In a month, you can expect to earn $4000 with $2200 to pay in expenses. If the business is stable and income is consistent, your expenses will be covered. But remember, business can be slow and unpredictable things can happen. The $4000 may not come in time, and you may not have enough to cover your expenses, leading to your business's downfall.
When business is doing good, and you are earning a lot, buying the things you want and using business profit for personal expenses can be tempting. But it is most practical to keep your personal and professional accounts separate which a lot of small business owners find it challenging to do.
While it makes sense to use your profit for your personal needs since you own the business, remember that a part of your profits should be invested for future growth. Moreover, business profits are used to assess your business's financial health.
Creating a budget is crucial for every business. When you have a clearly drawn budget for your business, you’ll have an accurate expectation of your future expenses. From business loans to buying inventory, paying your tax obligations, and employee payroll, you can ensure to fulfill all your business expenses.
It's inevitable that you can make mistakes in managing business finances. However, by having a financial plan, you may anticipate and prevent them. Furthermore, creating a budget plan allows you to see different situations that can happen to your business.
Don't underestimate small business financial management. When it comes to business, dealing with money is difficult. Fortunately, technology has caught up, and accounting software makes basic financial management for small businesses easy.
Investing in accounting software will make business financing easier, especially for owners new to the business. Here are some reasons why using accounting software for your business is beneficial.
Business finances go hand in hand with accounting, and it's not every business owner's cup of tea. Unloop offers accounting services for small businesses that need help with their financial management. We offer services for forecasting, payroll, bookkeeping, accounts payable, and taxes.
Don't let messy finances hinder your path to success. Get professional help today! Book a call with us 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.