New Small Business Checklist

Quick Checklist For Your New Business

1. Setup Your Business Structure - minimum to start DBA
   DBA stands for Doing Business As, what it means is that you will be able to open a bank account in the name of your business. A good idea if you need to get paid. Many times this is the minimum needed to open a bank account. I suggest everyone get a DBA if not an LLC to operate their company. Each situtation is different, so make sure you ask a professional before making the decision!
 
2. Get Business Licenses
Business Licensing is set by each state and profession, make sure you know the details before you start your business! 
Some might require a business license others may only require a sales and use tax license. 
The laws for sale tax vary by state, but make sure you understand the laws of the state where you are doing business! There are several considerations, first is penalties! It is better in most cases to have a sales tax license and not need it than to need it and not have it. As an example, in Texas, If you do not have a sales tax license and you should have had one, then the fine is $500 per day that you should have had it. So for one 30 day month, the fine would be $15,000! Better to have it, and do a little bit of admin work once a quarter, than to not have it!  
 
3. Bookkeeping/Accounting Software
Get Bookkeeping software and make sure you know the difference between an invoicing program (Freshbooks) and accounting software (Quickbooks Online).
If you don’t want to learn about bookkeeping, GREAT, then hire someone to help you! Bookkeeping and accounting software provides valuable resources to make decisions and help you run your business. Not only at tax time but throughout the year! You and everyone around you (cough, cough, the IRS) should know you are running a business. So put in the effort or the money in to make sure it looks like you are taking your business seriously.
   
4. Know your numbers!
Know your sales numbers, your marketing numbers, your CAC (customer acquisition cost), etc. You need to know them to run your business well! They will help you make good decisions about your business, and because of the work you put in, you will take personal ownership of the business.

5. Documentation (bookkeeping will fulfill a number of the needs below) 
Make sure that you are keeping good records! (See checklist item #3) When you need to find something, or research a question for a customer, documentation can keep that customer loyal. If you are saying “well it looks like I deposited that amount a couple of months ago…..” They are not going to want to do business with you. 

Dont keep paper unless you just want to, scan everything you can! 

Make sure to do the following:

Send invoices
Match payments to invoices (know check numbers and dates)
Know the deposit and payment amounts (if you allow for multiple payments of invoices) 
Keep copies of bills
Match your payment to the bills (know check numbers and dates)
Reconcile your bank account
Keep copies of receipts (digital copies are acceptable), if it is a business expense you should have a receipt! 
Track your business mileage (See blog post) 
Contracts 

Documentation is critical to a successful business. 
If you don’t document well, it will cause you problems with your customers, vendors and at tax time!

6. Time
Lastly, make sure that you are spending your time well! Be focused and intentional about where you are spending your time. Time is the only resource we have being spent, even when we do nothing with it!  

The 5 Small Business Concerns We Hear the Most

Let me first define small business - the definition I am using is someone who is running a business with themselves and 1-5 other people. They have revenue of 50K plus a year and are bogged down in administrative tasks throughout their day! They are frustrated because there is potential to make more money but cannot get out of these tasks, or they are putting off the "boring stuff" to grow their business(much more common)!

Their top five concerns have nothing to do with increasing profit or revenue, cash flow or budget projections. They would love to hire employees because they would see it as a sign of success, they have enough money to hire people! They need processes and cash flow to be able to reach the level of success that would require additional employees. Many times they are so overwhelmed with keeping their head above water and keeping the business open, they struggle to gain the success that requires hiring employees!

What are the top five concerns I hear from small business owners? 

1. Where do I find the time? 

Time is currency spent no matter what I do! It is the worst kind of spending, the kind that continues even if you do nothing! 

Time is the great equalizer, we all have the same amount! The biggest difference is how we spend it. 

“Where do I find the time” is not the right question….we should look at the past and determine where we spent time, then tell it to go somewhere different!  PRIORITIZE!

“Where do I find the time” is a passive defeated position, as small business owners we should be taking an active stance. Ask yourself “Where did my time go…” then PRIORITIZE your time, and spend it on purpose! 

2. I don’t know how to do that….

The statement could be about increasing sales, bookkeeping,  admin work, etc….it doesn’t matter what it is, the reality is that we have to determine if the task is critical to our business and then we have to solve the problem of not knowing how to do that thing. 
Simply put, learn the job or get someone who can help you with it. It doesn’t require someone full time; it could be a one-time consultant that you hire to discover more about the problem and possible solutions. 

Don’t try to do everything alone! 

3. I am always tired!

Again this speaks somewhat to the first item of TIME. We must make sure that we are actively prioritizing our time; setting aside time for relationships, family, and self-care. If we refuse to prioritize our time; other people, unimportant demands, or our desires will set the priorities. A lack of priorities will not only crumble our business; it will eventually crumble our life. Being tired might be an easy fix, just have to start making good decisions the night before tomorrow!

4. More documentation? 

Documentation is a hassle at the moment, and we don’t always see or feel the benefit of it. But, when the time comes, and the documentation is needed, you will be glad you have it! 
It is always better when the IRS comes calling to look like you have been putting the work in to document correctly and prioritizing the time to get it done correctly. Because then, if there are mistakes, the IRS can go off of what they see, that you have been trying to document properly! 

5. But I don’t want to hire a bookkeeper!

Maybe you don't want to hire a bookkeeper, but having someone who understands bookkeeping and how to code the different transactions can be invaluable. Many people rely on their software to auto code transactions for them, and this can lead to some issues down the road. 
If the IRS comes by and says your coding is incorrect, they can require you to amend your tax return to correct those errors and then you may owe penalties and interest for the unpaid tax that may have been due. I am not saying a bookkeeper is going to do things correctly every time, but they should get it correct more often than automated software. 
Bookkeeping and lawyers fees are coded as professional services because both have specialized experience and training to get the job done correctly. 

Much of the time I hear these questions before I hear something like, “We are not getting the anticipated ROI from the service department” Or “how do I increase revenue and profit.” My experience is those small business owners need help getting day-to-day operations streamlined so they can clear enough mental space and recover from decision fatigue to be able to grow and develop their business further.

Don’t put off the “small stuff,” it sets the foundation for you and your business to grow! No one wants to have a business and no personal life, prioritize your time, get some help, make sure you are documenting, and ensure that you have your bookkeeping in order! 

Make Your Mileage Log Count!

A quick guide to recording mileage deduction for your self-employed business! 

1.    Always track your business mileage! 


I have talked with people who think they can record their personal miles and assume the rest is business mileage. But the IRS Regs say you have to document and record your business mileage.

2.    At the beginning of the year write down your odometer reading and the end of the year odometer reading.

If you have missed the start of the year, as many people do, then start today! Record your odometer reading today. Then at the end of the year record, your ending odometer reading. Take the total mileage for the year, divide by the number of months since you started tracking and come up with a monthly number. Then backtrack the months you are missing based on the average monthly mileage number. 

Example Below:
You get your odometer reading in May of 30,000 miles. 
At the end of the year, your mileage is 47,250 miles. 
Step 1. Calculate the total miles driven. 
47,250 (end of year) – 30,000 (beginning of the year) = 17,250 miles.

Step 2. To figure out the first four months of the year, we will divide 17,250 by the number of months we tracked May – December is eight months. 17,250/8 = 2156.25 miles per month.

Step 3. Now we will backtrack for January – April 4 months. 2156.25 * 4 = 8625 miles. 

Step 4. we have to add back the miles for the first four months we were no tracking, so 17,250 (May-Dec) + 8,625 (Jan-Apr) = 25,870 Total miles for the year.


 
3.    Actual expenses Vs Mileage


Many times it is more beneficial to claim mileage, than the real costs. The reason is you are only able to deduct the percent of expenses that is equal to the percentage of business use. Ex. 9,000 miles of business use, 30,000 total miles so the business use is 30% of total miles. Which means you are only able to deduct 30% of actual expenses Insurance, maintenance, and repairs are examples. So if your insurance is 100 a month, maintenance is 40 dollars every three months (oil change), and there were no repairs. So, your total real costs are 1,320 for the year. Making $396 30% of the total and the only amount that is deductible. While the mileage deduction is over .50 per mile, so 9000/ .50 is $4,500 worth of a deduction. 

4.    Documentation


Documentation can make or break a written mileage log. Write on the receipt the information below:

1. The place you are going

2. The purpose of the meeting (client meeting, business meeting, bookkeeping review, etc. )

3. The first and last name of everyone present 

If the mileage log comes under review(via an audit), without the proper documentation, it can be disallowed.  

 

Taking the time to document your mileage correctly, can seem like a hassle. But it is worth it in the long run to have the proper documentation!

 

Easy Apps for tracking mileage:

Expensify - Relatively easy to track. Can use odometer readings or GPS to track trips. It is somewhat manual to track your drives. You will need to create the report names, then associate each drive with the proper report(s). But it is also useful to track other expenses, not just mileage. And it currently has a free version.   

Mile IQ (monthly fee) this is by far the easiest mileage tracking app I have used. It uses your phone's GPS to track trips, and then you add notes about the trip, and swipe left or right to categorize the trip as personal or business. Simple reporting, with an email each month reminding you the report is ready. Also, the app emails to remind you of unrecorded drives, so if that extra reminder is needed, this may be the app for you!

 


 

Overwhelmed by Bookkeeping?

Running your own business is not easy, and when you first get started, you have to do everything.

Even after everything is up and running, it can be hard to let things go. For some people it is a personal connection, they take ownership of each task. Others do not want to trust someone else with the task, or maybe, the only thing you can think about is the cost.

You as the owner are the lowest labor you can get -FREE!

However, the highest revenue generator is YOU!

You cannot do both at the same time.

Letting us take care of the data entry and tax returns, leaves you available to produce more income. 

The Benefit of Letting Go

Do you play the catch up game? Are you waiting till the sales tax deadline staying up till midnight trying to make sure you don't pay the late fee?

Do your eyes glaze over when someone starts talking about finances, accounting, and their P&L or Balance Sheet?

If you outsource those details to us, we can keep up with the day to day and provide you with concise answers about your books and potential tax plans.

Let us take the boring stuff, you keep growing your business and doing what you love! 

  • Cloud based accounting provides access from anywhere           
  • Cloud based security and backup
  • Discounts for cloud based accounting packages!
  • Yes, it costs money to outsource your bookkeeping, but, what you gain is even more valuable… Time!
  • A custom solution designed to fit your needs.  

Should Your Bookkeeper Also Prepare Your Taxes?

When we handle your bookkeeping and tax prep, we understand your business better than most.

We can offer guidance on business processes that are both efficient and compliant which prepare your business to scale as sales increase.

Understanding IRS requirements for record keeping is not always easy. We help keep our clients up to date on changes and help them make sure their processes are providing the correct amount of detail. 

Using cloud based solutions, we are able to gather information, acquire expense details, and keep up with record keeping with out mailing, faxing or picking up papers or receipts. 

Just because your sales increase, doesn't mean everything has to be more complicated.