You can also take a look at these accounts: cash, accounts receivable, and accounts payable. They should look reasonable to you based on your business history.
 
Accounts Receivable Aging
 
Your gaining report can alert you to who has not paid their invoice, so that you can take action to collect that money. Any balances over 30 days should trigger a collection process since the older the receivable gets, the less likely it is to collect.
 
Accounts Payable Aging
 
Hopefully, this report is clean and you are able to pay all of your bills on time. If you have an unusually large amount in this account, you’ll want to make sure you have the future cash to pay the bills.
 
Income Statement
 
The first number most entrepreneurs look at on the income statement is profit. It’s a good idea to review every account balance on this report to see if it is what you expected. Some questions to ask yourself include:

1. Did I generate the amount of revenue that I expected? If not, should I ramp up marketing for the next few months?
2. Do all of my expenses look reasonable? Are there any numbers that look too high?
3. Are my payroll expenses in line with what I was expecting?
4. Which accounts caused me to generate more or less profit? 
5. What I can I do next month to improve performance and increase profit?

 
Sales Reports
 
There are many excellent sales reports to dive deeper into your revenue so you can see what sold and what didn’t. Sales by Item and Sales by Customer are two good options for you to get more detail about your revenue balances. By analyzing your revenue, you can see what promotions worked and how you might take action to increase sales. 
 
These five reports are very basic, but they are also very key to your business. To profit from these reports, it’s up to you to take action in your business to improve your success. If you need assistance with setting up or maximizing your accounting system, please give us a call or schedule a complimentary consultation to see how we can assist.

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

​Even if your business is no longer a startup, the failure rates for businesses started in 2014 were as follows:
 

• 20 percent failed to make it to their second year
• 30 percent failed to make it to their third year
• 38 percent failed to make it to their fourth year
• 44 percent failed to make it to their fifth year

 
Many of the reasons for business failure can be prevented with good budgeting and planning. Here are some benefits of making a budget and managing to it.
 

• A budget helps to control spending by seeing what’s available beyond your cash balance at the time
• Impulse spending can be curbed by avoiding spending on anything that is not budgeted for
• If a loan is needed to finance the business, you have a better idea of how much you need and how to best schedule the loan payments
• Your chances of business success increase with a budget
• You can see future revenue shortfalls so that you can take proactive steps to boost sales
• You can better manage growth
• You have a better idea of your profit level so you can make pricing changes, tax predictions, appropriate compensation, and other strategic changes
• You can plan for large expenditures such as asset purchases and time them better for cash flow, loan acquisition, and other considerations

 
Getting started with a budget is easy. If you’ve been in business for more than one year, you can start with last year’s actual figures and then adjust for the growth and changes you want. The numbers can be input into your accounting system so that you can get reports that measure actual progress versus the budget numbers. You can then make good business decisions based on your variances.
 
When you take a little bit of time to create a budget, you really can enjoy the freedom of knowing you’re on track to make your numbers. If we’re not already working with you on your budget, feel free to reach out – we would be happy to assist. 

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

A quick glance is all you need to check your fuel gauge, speed limit, engine temperature, and RPM when you’re driving down the road. Your car’s dashboard is designed to focus you on what’s important and what you need to know to have a safe trip.
 
Your car’s dashboard items, if they applied to business, would be called key performance indicators or KPIs. Unlike a car, the KPIs of your business vary depending on your business goals and what’s important to you. Common ones might include your cash balance, how fast you get paid, how much revenue is coming in, and whether you're making a profit.

There are literally hundreds of them to choose from, and many of them are not derivable from your financial statements, such as number of orders, client satisfaction levels, and employee turnover. 
 
Would it be useful to have a dashboard of KPIs for your business so you can know what’s working and get alerted to what needs focus? Here are the steps to creating a dashboard for your business:
 

1. Decide on the KPIs you want to track.  Selecting 6-10 to create and track is a good place to start. 
2. Select a tool that will provide you with the KPIs in the format you desire. There are many great add-ons to your accounting software that will instantly crunch the financial KPIs for you and present them in insightful formats, including charts, graphs, dashboards, and reports.
3. Create any new processes to calculate the new KPIs and get them entered into the dashboard app.
4. Hold a review meeting to go over the KPIs and determine any action based on the review. 

 
There are many great KPIs available right in your accounting system, which might be plenty to get started with. And there are some real gems outside your accounting system that will take a bit of work to calculate. In any case, we can help you through this process.  Feel free to reach out to us any time to discuss the possibilities of having a dashboard in your business.   

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

​2. Invoice faster or more frequently
 
The best way to smooth cash flow is to make sure outflows are in sync with inflows. If you make payroll weekly but only invoice monthly, your cash flow is likely to dip more often than it rises. When possible, invoice more frequently or stagger your invoice due dates to smooth your cash balances. 
 
Take a look at how long it takes you to invoice for your work after it’s been completed. If it’s longer than a few weeks, consider changing your invoicing process by shortening the time it takes to send out invoices. That way, you’ll get paid sooner.  Talk to us about options for automating your invoicing.

3. Collect faster

Got clients who drag their heels when it comes to paying you? Try to get a credit card on file or an ACH authorization so you’re in control of their payment.
 
Put a process in place the day the invoice becomes late. Perhaps the client has a question or misplaced the bill. Be aggressive about following up when the bill is 45, 60, and 90 days past due. Turn it over to collections quickly; the older the bill is, the less likely it is to get paid. If you need assistance with automating follow-up, please reach out to us.

4. Pay off debt

As your cash flow gets healthier, make a plan to pay off any business loans or credit cards that you have. The sooner you can do this, the less interest expense you’ll incur and the more profit you’ll have. 
 
Interest expense can really add up. If you have loans at higher interest rates, you might try to get them refinanced at a lower rate, so you won’t have to pay as much interest expense.    

5. Reduce spending

You don’t always have to give up things to reduce spending. Look at your expenses from last year and ask yourself:

• What did you spend that was a really great investment for your business?
• What did you spend that was a colossal mistake?
• What do you take for granted that you can cut?
• Where could you re-negotiate contracts to save a little?
• Where could you tighten up if you need to?

 
Managing cash flow is always a challenge, and these tips will help give you a little cushion to make it easier.​ Please let us know if you would like options for implementing any of the above changes.

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

Class, tracking codes, and other custom data may need to be added as well. Rules can be set so that the accounting application can pre-code the transactions; in this case the accountant simply approves or corrects the entry.

Invoice Fetching
 
It starts with a picture of a receipt. Invoice fetching applications can turn pixels into data using sophisticated OCR (optical character recognition). The data is then turned into a business transaction that can be imported into an accounting system.
 
Auditing
 
The books of many government agencies, nonprofits, and large businesses need to be audited on a regular basis. Auditing is an expensive process. Smart programs can review a company’s data and assess where the risks and anomalies are so that the audit program can be modified to focus on the more important parts. This reduces risk and cost for everyone involved. 
 
Accounts Payable
 
Artificial intelligence can help to speed up the matching of purchase orders, packing slips, and invoices so that accounts payable tasks are streamlined.  It can also automate approvals and look for duplicate invoices to avoid overpayments. 
 
Accounting Tasks That Are Clerical
 
Robotic Process Automation (RPA) is a platform that allows users to create automation without involving the IT department. Think Excel macros or Zapier on steroids. Any workflow with a mind-numbing set of clerical steps is a candidate for RPA. 
 
AI allows accountants to spend less time on routine tasks and more time on higher-level analysis work. As AI becomes more affordable for small businesses, everyone will benefit from this long-term trend.
 
For assistance with incorporating services that support efficient streamlining of accounting and payroll related services, please give us a call.

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.

When you sell an inventory item, the asset is reduced and the Cost of Goods Sold account is increased, moving the item from an asset to an expense. It’s no longer an asset once it’s sold, and the cost of the item sold reduces your profit and is expensed into the Cost of Goods Sold account.
 
Some accountants will abbreviate the Cost of Goods Sold account to COGS, and you might hear them call it that.
 
In the case of wholesale and retail businesses, the cost of goods sold is the amount that was paid for the inventory items to be sold.

• In the case of a manufacturer, the costs can include the cost of raw materials, labor to produce the item, and sometimes additional allocations of other related costs.
• Construction businesses may have a Cost of Construction account or Contract Costs instead of COGS.

Service businesses will typically not have a balance in the Cost of Goods Sold account. If they do have direct costs, the costs are often coded to a Supplies account under expenses.
 
At any point in time, the cost of items you purchase are in two different accounts:

1. The unsold items are reflected in the asset account, Inventory, on your Balance Sheet report.
2. The sold items are reflected in the Cost of Goods Sold account, on your Income Statement report.

  
It’s important that the Cost of Goods Sold balance is accurate, because there are many good things you can learn from it when you compare it with inventory. You can learn how fast your inventory is selling, and you can determine your gross profit margin.
 
If your inventory purchases have not been coded correctly, you can take inventory and arrive at the correct cost of unsold items. If your physical inventory does not match your books, your accountant can make a correcting entry between Cost of Goods Sold and the Inventory account so that both are accurate.
 
If you have further questions about the Cost of Goods Sold account, feel free to reach out any time. And if you are still manually handling inventory tracking, please schedule an appointment to discuss options to more efficiently account for your inventory and COGS.

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.

Next, get your Income Statement for June 2019 Year-to-Date and check the revenue figure. Are you on track with your budget, or are you halfway there revenue-wise, accounting for seasonality? If so, pat yourself on the back! If not, what promotions will you put in place to boost your growth for the rest of 2019?

On Track for Profit
 
Looking at the same Income Statement, check your net income figure. Are you on track with what you planned? If so, great! If not, the reason is simple: it will be either lower sales than expected or higher expenses than expected. 
 
If your expenses are too high, you’ll need to drill down into each of your expense accounts, including cost of goods sold, to see which ones are higher than expected. Were there some unanticipated costs? Does your pricing need adjusting? Do you need more volume to cover your costs? This is where we can help you with an analysis of where your opportunities are to increase profit. 
 
On Track for Cash
 
One more place to look is your cash balance. It can be uncomfortable when you are running short of cash for your business. If your balance is lower than you’d like it to be, it could be because of some of the factors mentioned above. It could also be because you just purchased an asset like a truck. If you need help with improving your cash flow, that’s another thing we can help you with. 
 
Mid-Year Review
 
This mid-year review can help you head off any small problems before they grow into big ones throughout the rest of the year. And it can keep you on track so you can meet your 2019 business goals.   

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

Why pay more for software and services than necessary? Check out our Resources page for information on discounts available to our clients.

​Trade-In
 
If you traded in a vehicle that is on your books, we’ll need to make an adjustment to your books. Effectively, your old car will be eliminated from your balance sheet. If this asset had a book value and it was not fully depreciated, the net value would be compared to the trade-in value and a gain or loss on the asset sale would be recorded on your income statement. We’d also start the depreciation for the new car.
 
New Car Loan
 
Most often, a new car purchase will be financed, so we have a new liability to record too.  We’ll need to get a copy of the loan documents from you and an amortization schedule of the payments. Then, each time you make a monthly payment, the amount will need to be split between principal and interest and those amounts will need to change each month.
 
There are a lot of other numbers on a car purchase: taxes, licenses, warranties, add-ons, fees, and more. Some of these can be directly expensed, while others need to be included in the value of the asset. 
 
Let us know if you purchase an asset this summer so we can get it booked right for you.  

The information presented is of a general nature and should not be acted upon without further details and/or professional guidance. For assistance in identifying and utilizing all the tax deductions to which you are entitled, please contact us, your CPA or tax preparer.

The benefits are simple. You save time, certainly. But the bigger benefit is you no longer have a monthly deadline to get your documents to your accountant – at least for all the documents that can be automated in this way.  This reduces stress and eliminates minutiae from your day.
 
Accountants benefit too.  No accountant likes to spend their time asking clients for documents over and over again.  We know you have better things to do with your time, and we know you probably hate doing the paperwork.  Receipt fetching is an easy way to get the job done.
 
To take advantage of receipt fetching, the first step is to select a receipt-fetching app. Some of these apps do receipt fetching only, and others have many more functions. There are a multitude of apps available so please let us know if you’d like some recommendations - some can even be found on our Resources page.
 
The second step is to determine which vendor accounts are supported, and to connect with them. Generally speaking, the connection is based on your account credentials, so if those change, the connection will need to be updated. When many of your documents can be pulled into one place, you don’t have to spend time logging into each vendor portal to pull receipts. 
 
If you’re curious about how to benefit from receipt fetching in your business, please feel free to contact us.  

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.

Cost accounting. This type of accounting looks at the cost of items for sale. It’s especially useful in manufacturing, construction, or even restaurants where dozens or even hundreds of components are purchased and assembled to make the items that are for sale. Cost accountants account for and evaluate these costs to determine when they are too high or low and need to be repriced or purchased in a different way. 
 
Cost accounting can be applied to small businesses to help them with pricing, determining break even points, controlling costs, and budgeting.
 
Government accounting. Government accounting is simply accounting that’s done for government entities. Government accountants are concerned with maintaining government regulations as well as learning a different way of keeping books.
 
Nonprofit accounting. Nonprofit accounting is unique to nonprofit organizations in that they often need to track and mark specific donations, manage grants and meet reporting requirements, fulfill public disclosures and reporting, and maintain a fund accounting process.
 
Financial accounting. Financial accounting is the preparation of financial reports for external use and includes providing financial statements. 
 
Attest. Attest accounting is where a CPA goes through a process of verifying financial reports of a business to interested third-parties, such as banks and the public. The three main services in this area include compilations, reviews, and audits. Only a CPA can perform these services.
 
Fraud or forensic accounting. A specialty role in accounting, forensic accountants can help a company that has been the victim of fraud. There are also services available to help reduce the possibility of fraud. 
 
Tax accounting. Tax accounting can be many things: the preparation of federal and state income tax returns for businesses, individuals, and other entities like estates and trusts; state and local tax assistance with collection, filing, remittance, and compliance; franchise tax support; and payroll tax collection, filing, and payment. There are more, but these are the big ones.
 
Budgeting. Making a revenue and spending plan is an important accounting function.
 
Internal auditing. Large companies have internal audit departments that maintain checks and balances for the company. In small companies, having someone in charge of monitoring internal controls would be the equivalent function.
 
Accounting systems. Some accountants are technology-savvy, and this type of accountant can help solve technology issues, integrate accounting system modules, and streamline workflow.
 
Fiduciary accounting. A fiduciary is someone legally responsible for financial responsibilities in an organization. Fiduciary accounting typically refers to accounting for trusts, but can have a much broader meaning.
 
Public accounting. Public accounting is practiced by employees in a public accounting firm, which is one that serves many businesses with varying accounting needs.  This is opposed to private or industry accounting where an accountant goes to work for one company in their accounting department. Public vs. industry accounting is really referring to an accountant’s career experience. 
 
Managerial accounting. This type of accounting focuses on internal numbers and how the organization can reach its goals. It’s broader than cost accounting, but there is an overlap. Accountants who serve in an advisory capacity to businesses will focus on this area. 
 
As you can see, there are many ways accounting can support your business success. Give us a call to discuss options for increasing the value you receive from your accounting services.

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.