Small Business Accounting Challenges

There are days when running a small business can certainly test your limits. There are always going to be challenges – whether you’re dealing with customers, employees, marketing or technology. One of the biggest hurdles faced? Small business accounting challenges. Productivity provider, Wasp Barcode Technologies recently asked small business owners exactly what their biggest challenge was and accounting functions rose to the top.  

Greatest Small Business Challenges

In their Small Business Accounting Report survey, Wasp found that only 42 percent of small businesses have a CFO or controller. For companies with 11-25 employees it drops to 25 percent. And while accounting is central to running a small business, most entrepreneurs are not professional accountants and only 40 percent of small business owners feel they are extremely or very knowledgeable on accounting/finance.

Nearly 400 small business owners were surveyed in the industries of nonprofit, retail, agriculture, banking/financial, education, energy, healthcare, hospitality, service providers, IT and professional services, as well as manufacturing, military and warehouse. The survey found that business owners find the greatest challenges in these five areas:

  1. Accounts receivable/collections
  2. Cash flow
  3. Managing paperwork
  4. Closing the books each month
  5. Managing payroll

Other key findings included:

  • Only 17 percent of small businesses use an asset management system that allows auditing
  • Accountants ranked among the top professionals in order of importance to small businesses; and, 88 percent of small businesses are very or somewhat satisfied with their accountants

Why then do so many small businesses go without a senior level accounting professional on staff?

There are ways to save on costs by managing some of the back-end work before it gets to an accountant, which can be simplified by managing it through your accounting software.

Simplify Your Business Accounting

With today’s advancements in technology and wide options of accounting software that can help you with your accounting functions. Sage 50 offers a business solution that manages your accounting as well as all your other operational needs, including:

  • Inventory
  • Sales Activity
  • Job Costing
  • Payroll and Taxes
  • Payments

These are just a few of the things well-rounded business solutions can manage for you. If you’re accounting software doesn’t offer all these benefits, you may not be using the right solution. Quantum Buyers has several solutions and can help you find the right one for your specific business needs.

 

Stay on Track with 8 Essential Accounting Tips

The New Year is here! It’s a time when many of us make resolutions to improve our health, finances or family situations. As a business owner, New Year’s resolutions are also a great way to make positive changes for the future – especially when it comes to finances and accounting. If you’ve struggled with the daily challenges of running a small business, here are some essential accounting tips that will get you back on track and on the road to success.

Think ahead. Are there some expenses you’ll need to incur in the coming year such as new office equipment, computer upgrade or remodeling/repairs? Plan ahead by setting aside money now so you’ll have the resources when you need it. You can also take the stress out of next year’s taxes by putting back a certain amount of cash each month.

Invest in accounting software. A little investment in accounting software upfront will make all the difference in the long run. Programs like Sage 50 allow you to keep everything you need in one place for easy access and recovery and will help you track unpaid invoices, billable hours and your budget as well as create customized invoices. Always be sure your current program is up-to-date.

Don’t mix business with personal. As your business grows, it’s important to separate your business and personal expenses. If you use personal funds to supplement your business, record them as loans or capital contributions. Your accountant can assist you with any questions you have.

Check, check and re-check. Even though your accounting software does a lot of the work for you, data entry errors still happen. Monthly reconciliation of your bank account as well as running monthly error reports can go a long way in making sure your books are as accurate as possible.

Keep an eye on inventory. Track all inventory (i.e. dates purchased, stock numbers, purchase prices, dates sold, etc). Managing your inventory will help cut down on “misplaced” items or alert you to suspicious activity or theft.

Track every expense. Avoid using cash for businesses purchases whenever possible. A credit or debit card will make tracking statements easy, plus it will help you and your employees in recording true business expenses (which is information you’ll need to know come tax time).

If expense reports are a pain in your side, Expensify integrates with Sage 50 and makes capturing receipts, tracking time or mileage, business travel and creating expense reports in a timely manner easy — for both you and your employees. Just be sure to set up a clear, published time frame for submitting expenses — whether bi-weekly, monthly, etc). When employees delay filing their expenses, not only does it hurt their pockets, it can also cause cash-flow challenges for you, not to mention associated accounting nightmares.

Make your clients pay. Sending out an invoice doesn’t always mean a check’s in the mail. Don’t let your clients avoid regular payments and always follow up on unpaid invoices. Sage 50 allows you to put an account on hold once it reaches an outstanding dollar amount (set by you) so additional orders can’t be placed. This safeguard keeps past-due clients from accidentally slipping through the cracks.

Make time for your books. Don’t get caught up in the “end of the year scramble.” You may find yourself spending hours trying to track down receipts and other documents that are several months old and that is just plain stressful. Put your bookkeeping day on the calendar and stick to it – you’ll feel much better when the end of the year rolls around.

Can’t do it all?
Running your business can be stressful enough without dealing with all the financial responsibilities that come with it. If you simply don’t have the time it takes to keep it all straight, that’s OK. Hire a part-time bookkeeper to help keep you on track with finances and payroll. Maybe there’s a financial advisor or an accountant in your area who knows your industry that you can rely on for expertise and advice when needed.

Year-End Survival Checklist

There’s no doubt the holidays are the most wonderful time of the year, but once the celebrations are over, that tune quickly changes. January can be the busiest time of the year for you and your business with all that goes along with year-end close. Use this year-end survival checklist to get a strong start on the new year.

Make your list and check it twice
Here are a few items every business should look at and/or make sure are completed before closing the year:

  • Reconcile general ledger accounts to bank statements
  • Complete all invoicing
  • Record all your supplier bills
  • Print year-end reports for historical review (i.e. accounts payable/receivable, inventory, financial, payroll, etc)
  • Make adjustments to reports as needed ( i.e. write off bad debts, account for depreciation expenses, adjust entries for accruals of payroll tax liabilities or pre-paid expenses, etc)
  • Print and mail 1099s (due by 1/31)
  • Print and mail payroll forms if you do it yourself (W-2, W-3, 940, 941)
  • Print and mail 1096 to IRS (by 2/28)

Wiz Through Year-End with Sage 50 Year-End Wizard
When you’re ready, close any other applications and start the process at the end of your business day because you’ll want to leave your computer running. Before launching the wizard, print out any items such as invoices and payroll checks as well as clear the Waiting on Bill from Vendor check box in the Purchases/Receive Inventory window for any outstanding vendor purchases.

The Year-End Wizard guides you through the process. Simply select Tasks, System, Year-end Wizard.  Sage 50 requires you to make a backup so give the back up a unique name and consider putting it on removable media (CD, flash drive, external memory, etc.) for future reference.

You will also be prompted to run year-end reports, which you can do on paper, export to Excel, or to a PDF file. It’s recommend you retain a backup file of your Peachtree/Sage 50 data for seven years, plus save PDF copies of the following reports for seven years as well:

  • General Ledger for the year you are closing
  • Under general ledger, General Journal for the year you are closing
  • Under accounts payable, Check Register for the year you are closing
  • Under accounts receivable, Cash Receipts Journal for the year you are closing
  • Under payroll, Payroll Journal for the year you are closing

The best advice to survive year-end? Keep your financial activities consistent and thorough each month of the year (with the help of Sage 50), so you’ll prevent year-end from becoming a major undertaking.

 

photo attribution: © melpomene/depositphotos

Affordable Care Act Reporting Requirements

Are you up to speed on the mandates, penalties and new reporting requirements for individuals and businesses? If you’re a business that employs fewer than 50 people, you may not be aware of (or even understand) the punitive business provisions that do not apply to the roughly 96% of business owners like yourself.

How do Mandates/Credits Affect Me?

Businesses with fewer than 25 employees, can qualify for a credit of up to 50% in 2015, if you meet the following requirements:

  • Have fewer than 25 full-time employee equivalents (FTEs)
  • Not be a member of a controlled group with more than 24 FTEs
  • Have average annual wages for FTEs less than $50,800 (inflation adjusted)
  • Pay 50% or more of the cost of employer offered qualified health plan (QHP)
  • Offer QHP through a SHOP Exchange (for years after 2013)
  • Have not previously claimed the credit in two consecutive years (after 2013)

For businesses with 50 or more employees, the penalties are phased in: To be subject to a penalty in 2015, you must have employed 100 full-time and full-time equivalent employees in 2014. In 2016, that number drops to 50 full-time and full-time equivalent employees in 2015.

What you need to know about reporting employee health care benefits

The Affordable Care Act (ACA) means a new set of tax forms for business owners, and it’s now a requirement to report the types and extent of coverage being offered to employees. While 2014 was an optional year for reporting, that all changes for 2015 as the ACA’s reporting and coverage mandates will be enforced, and business owners like yourself need to understand exactly what is required.

Sage 50 can help you track and report health insurance information and the required 1094 and 1095 forms are expected to be available in time for year-end reporting in Sage 50 Pro, Premium and Quantum editions 2014 or higher.

Form W-2

You must report the cost of health care coverage under an employer-sponsored group health plan in box 12 using code DD.  The amount should include both the portion paid by the employer as well as the portion paid by the employee. This requirement has been in effect since 2012 and was meant to provide employees useful and comparable consumer information on the cost of their health care coverage. Sage 50 allows for easy reporting employer-paid health insurance on W-2 forms.  

Section 6055

Insurers, government agencies and employers of any size who sponsor self-insured group health plans must use forums 1094-B be and 1095-B to report the minimum essential coverage they provide to the IRS and to all covered individuals

Section 6056

Any applicable large employer regardless of whether it’s a tax exempt or government entity must use forms 1094-C and 1095-C to report the health insurance coverage offered to the IRS and to their full-time employees

Understanding all of the rules associated with the Affordable Care Act can be confusing. The good news is that incorrect filings will not be penalized for calendar year 2015 filing (reported in 2016) if you file on time and make a good faith effort to comply.

Don’t Stress Over Tax Time

Today’s tax laws can be complex and confusing. Do you have a hard time keeping up with the constant changes and revisions? What’s even more daunting is that the simplest, most innocent mistake can result in unexpected penalties.

It’s tax time, and as your business filing deadline looms, it’s important for small business owners to stay on top of current tax changes and be aware of what to watch for in the future.

What Can You Deduct?

In preparation for filing, there’s a lot for small business owners to think about, and just as many deductions to benefit from. Just to name a few:

  • Current capitalized expenses
  • Auto expenses
  • Business and professional fees
  • Bad debt
  • Insurance costs
  • Home office expenses
  • Retirement contributions
  • Meals and entertainment expenses
  • Travel expenses

The Affordable Care Act 

The Affordable Care Act (ACA) added an estimated 2,400 pages to the U.S. tax code, further complicating the tax landscape for businesses of all sizes. Most familiar to business owners is the tax penalties for businesses with 100 or more employees who fail to provide health insurance to full-time equivalent employees and/or not reporting to the IRS what type and the cost of coverage provided for employees. 

Beginning Jan. 1, 2016, businesses with 59 to 99 employees will also be required to offer health insurance.

Don’t Let Taxes Trip You Up

Tax law can be complicated, but they don’t have to trip you up. Consider these tips:

  1. Think about taxes all year long. Waiting until the last minute could make thing more complicated and limit your money-saving options. 
  2. Bring in a professional. Hire a knowledgeable tax attorney or accountant who can tackle complex tax laws with ease and help you identify tax breaks and deductions you might otherwise miss. 
  3. Always be aware. Even with the help of a skilled professional, it’s your job to keep up with news related to laws.
  4. Never assume. Even though Congress has always passed the tax-extender bill at the last minute, it’s never guaranteed. Don’t make any business decisions on the assumption that tax breaks will pass. 

Sage 50 Accounting not only has its Year End Wizard to help simplify your year end processes, this business management software also helps with simplified reports for you or your accountant to help speed up your filing process.

Sage 50 with Payroll offers error-free tax filing, standardized and customized reporting features, plus support from professional payroll experts.

Calculating deductions, keeping up with changing tax laws, and easily preparing employee paychecks and reports — reducing errors and saving time with every transaction.

The Power of Customized Reporting

Put the Power of Customized Reporting to Work for You

If you’re like most small business owners, you might oftentimes find yourself feeling overwhelmed when it comes to effectively managing accounting, inventory, customers and employees. That in itself can be a full-time job.

Add running reports and analyzing all your business data to that task list and it can be down right daunting.  We are all familiar with added stress, which can also lead us to question whether we’re making sound business decisions. Are we even looking at the right data?

With the right accounting methods and software, you can rest easier. One of the most trusted is Sage 50 Quantum. It offers one of the most comprehensive reporting solutions available to small businesses,  providing access to all business information in one place. Sage 50 Intelligence Reporting (formerly knows as Sage Business Intelligence) works just like the Microsoft® Excel we’re all used to, and it’s right there within Sage 50 Quantum accounting software. (Did someone say, “pivot tables”?)

Custom Design Almost Any Report You Need

Is this different than the customized reporting feature already in Sage 50? Yes. Sage Intelligence Reporting (IR) is a supplement to the 140+ reports already available within Sage 50. And IR functionality is included Sage 50 Quantum.

When you finally get that report just right, save it and it will update real time… every single time you need it. Even combine auto reports and dashboards with KPIs – even from multiple divisions, modules and companies!

Sage 50 even has a report designer that makes life oh, so easy. With its drag-and-drop feature, reporting is simple, flexible and fast because you have the ability to customize your financial report layouts instantly.

Put the power of Sage Intelligence Reporting to work for your business so you can:

  • Get faster answers to your business questions
  • Access business metrics reports when and where you need them
  • Provide fast, invaluable detail for intuitive decision-making
  • Stay on top of cash flow
  • Gain insight into your unique customer behavior
  • Identify cross-selling and up-selling opportunities
  • Streamline operations and improve efficiency

6 Things Smart Managers Do to Better Manage Cash Flow

Businesses run on cash. It’s considered the lifeblood of business, and no company can survive without it. But if that cash isn’t managed properly, things can go downhill fast.  

For many managers, cash flow is about money coming in. But what they often don’t realize is that paying attention to the money going out is also a huge part of maintaining finances. As a manager, there are some things you can do to better manage cash flow for your company.

Figure out your budget

If you know your breakeven point, you will be better equipped to manage your money. Rather than focusing all your efforts on your profit, try focusing on properly managing your money.

Make collecting receivables easy

Set up a lockbox so that customers can easily send in payments. You may also consider setting up a direct payment option for repeat or long-term customers. Also, to ensure timely payments, set your invoices to net-30 or net-60 terms.

Offer incentives for early payment

This may sound counterintuitive, but it’s not. Offering an incentive of some sort, such as a slight discount, can really encourage your customers to get their payments in right away. Yes, your profit margin takes a slight hit, but overall you will come out ahead if this thwarts any non-payments.

Extend your payables

On the other hand, when it comes to your payables, try to extend your deadlines as far out as possible. Ask vendors for net-60 or even net-90 terms. Just make sure to pay on time as many vendors will charge a late fee.

Keep credit limits in check

If your business offers credit to customers, make sure to put limits on your credit lines and really evaluate each customer before approval. Check into their history and finances to determine if they can pay you on time. Non-payments will really bring your profits down and ruin your positive cash flow.

Keep good accounting records

Cash flow doesn’t just encompass your profits and losses; they should take into account your payroll and other expenses. Use a good accounting system like Sage 50 Quantum Accounting. It will give you everything you need to stay on top of your cash flow, as well as track orders and add users.

It’s great to bring in a profit, but smart managers know that staying on top of their cash flow is so much more than that. Track receivables and payables and keep good accounting records and you will be on the right course to managing your finances even better.

 

Sage 50 Memorized Transactions

Save Time with Sage 50 Business Templates You Can Use Later

If you often find yourself sifting through stacks of papers or wrestling with Excel when you need a report on monthly sales and inventory or customer invoices, you’re probably not alone. No matter the size of your business, managing the books is a necessary evil, and one of the most vital activities that contributes to your current and future success. Robust programs for accounting and customer relationship management can increase your ability to compete, but only if they are used strategically and effectively.

Do you:

  • Provide the same/similar service for a customer on a regular basis?
  • Pay a bill to the same company on the same day each month?
  • Have a repeat order with a vendor?

Rather than spending valuable time entering and re-entering data for every new transaction, why not make use of Sage 50 Quantum’s memorized transactions and create templates that can be saved and used later? Sage 50 can memorize and save quotes, sales invoices, purchase orders, payments, and general journal entries for payroll and month-end accruals.

Memorize Repeat General Journal Transactions

Using memorized transactions can save time in repetitive data-entry tasks… here’s how:

  1. Access a Memorized Transaction or create a new one from the Maintain menu.
  2. Under Memorized Transactions, select General Journal Entries and make your entry as you typically would in the Memorized Journal Entry shown and give it a Transaction ID (i.e. PRTRANS-01)
    Sage 50 memorized transaction
  3. The hidden little arrow in Sage 50 (just to the right of the List button) needs to be selected when you go through your normal General Journal Entry process.
  4. After selecting the little down arrow button, click on the Select button to get to the list of memorized journal entries.
  5. From the list of memorized transactions, select the memorized transaction you want to use and select the OK button to create your journal entry.
  6. After your memorized transaction has been pulled into your current journal entry you can change your reference number, amounts and even add lines to the entry as needed before you save it.

Start using memorized transactions from Sage 50 Quantum so you can free up your time and focus your energies on those that matter most – your customers.

Struggling to keep up with change requests?

Last week we took a look at managing projects in the Job and Project Management Center. This month, we’re going to explore this management center further with Change Order Processing, a feature allowing you to track change requests and their approvals.

A change order is a way to track changes to job estimates.

Sage 50’s advanced change order tracking system lets you quickly see how job changes will affect overall profitability, keep track of when an estimate changed, how much and even who approved the change order.

This can help make sure each job stays profitable and helps protect the business by staying on top of changes.

Easier Processing

Revising revenue estimates is easy; simply open a “new change order” to record your revisions.  Once the order is approved, it’s automatically applied to job records and report estimates.

Here are the steps:

  1. Open a new change order
    • Click on the “Jobs” button and select New Change Order
    • Enter the change order details (Job, date, etc.)
    • You can also change the projected end date if necessary on this screen.
    • Enter any relevant notes you want to tie to the change order (why the customer requested the change, etc.)
  2. Enter the specific change
    • Enter change estimates for units, expenses, revenues by the amount the current estimate is changing by (example: if the existing expense estimate is $200 and the new estimate is going to be $150, enter -50.00 as the change amount).
  3. Approve
    • Approve the order by checking “approved”
    • Select “applied to transaction” to keep track of orders applied to a proposal or invoice
    • Enter the date and approvers name
    • Select “Update Job Estimates”

You can also print or email change orders by selecting the option on the toolbar.  This is helpful if you want to quickly confirm with your customer and keep them informed of the changes to the job.

Tip: You can view a full list of all change orders by selecting “list” on the toolbar

Making multiple vendors/customers inactive with batch processing

Too Many Vendors?

Tired of scrolling through achingly long lists of outdated vendor records?

Well say goodbye to endless scrolling. Shorten those lists by making the records inactive (and also improve system performance).

Sure, you can go into each record and manually mark them inactive… one… at… a… time, but who has that kind of time?

Clear those inactive vendors quickly with batch processing in just a couple of simple steps. This rarely used feature has been part of your Sage 50 Quantum for a while but it’s not something many people think about using or even realize the function is available.

Use it! It will shave time off tasks every day and, as you know, every second adds up. Here’s how to do it:

  1. To set multiple records as inactive, go to the menu bar, select Maintain, then Make Records Inactive.
  2. There you can make old or unused records inactive all at once and even opt to view records you haven’t used since a certain date.
  3. After you complete the above task, go to Options -> Global to “hide inactive records” so you no longer see them in your lists.  You also have the option to “purge” those records.

This will speed up your day but it should also improve your software performance.  By the way… you can do this same thing with your inactive customers!