In response to the 2018 Wayfair decision by the Supreme Court, at least 30 states have instituted new regulations related to sales tax collection by remote sellers. Will your business be affected?

​Check out this article to learn more about California's adoption of economic nexus.

Check state nexus requirements here.

​Please feel free to reach out to us for assistance if you find yourself facing economic nexus challenges.

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

Revenue
 
The report starts by listing the revenue for the period of time covered. Revenue includes all sources of income, including sales from operations, interest and investment income, revenue from insurance claims, sales from assets or other parts of the business, and any other source of revenue. In most small businesses, sales will be the largest part of the revenue, if not all of it. In some countries, the term used for sales is turnover.
 
If you sell more than one item or have more than one location, it might be a good idea to be able to view the sales detail from these categories. This may or may not be on your income statement depending on how formal it is, but you should be able to get a drill down report on your sales detail.
 
Look for exceptions to what you expect to see. There can be some decisions you can make and actions you can take from the insights you discover.
 
Cost of Goods Sold
 
This section of the income statement includes costs you incur directly on items you sell. If you maintain an inventory, it’s the cost you paid for the inventory items that you sold during the period. If your business is a manufacturer, cost of goods sold, or COGS, will include costs of materials and labor to produce the items.
 
If you own a service business, COGS will typically be zero. As a service business, you may incur direct costs when providing services, and these costs can be booked in a variety of expense accounts, including supplies.
 
Gross Profit
 
Some income statement formats will include a gross profit number which is sales minus cost of goods sold. This number is important for businesses with inventory.
 
Expenses
 
The expenses section of the income statement is the longest part. It includes all of the expenses you incurred in your business, including advertising and marketing, rent, telephone, and utilities, office supplies and meeting expenses, travel, meals, and entertainment, payroll and payroll taxes, and several more.
 
You might also hear the term overhead. Overhead is a subset of expenses that have to be met whether you sell zero items or millions. They include items like rent and utilities, management payroll, and office supplies.
 
To review your expenses, check line by line to see if anything looks out of sorts, and take the appropriate action.
 
Net Profit or Loss
 
The final number on your income statement represents whether you made or lost money in the period the report covers. The formula is simple: revenue less COGS less expenses equals net profit or loss.
 
Net profit/loss can go by many names, depending on the size of your business and your accountant’s vernacular. You may also see EBITDA: Earnings before interest, taxes, depreciation, and amortization. Earnings is another word for net profit.
 
Perspective
 
It’s a good idea to compare your income statement numbers to other periods in your business. Common comparisons include last period, last several periods, and same period last year.
 
It’s also a great idea to have a budget that sets goals for your income statement numbers. Then you can compare budget to actual numbers and take action on the variances.
 
If your business falls into a standard type of business, you may also be able to see how it is doing compared to others in your industry. This is called benchmarking, and the income statement is a very common format that’s used in benchmarking.
 
Do spend some time each period reviewing your business’s income statement. It can help you make a faster course correction in your business so you can be even more successful than you already are. 
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Remember, though, that the Income Statement will only report based on the accuracy of data entered. For assistance with ensuring your books are accurate, please contact us. We offer many solutions to support business success through accurate financial reporting.

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

When it comes to marketing, the company invoice might be the last thing you’d think about.  But think again:  it’s a great place to make every attempt to get paid faster and have your customer coming back for more services and products.  Here are five fun easy-to-implement ideas to add to your invoices: 

• A Thank-You  

A simple “Thank you for your business” or a “We appreciate your business” is a nice added touch on the bottom of every invoice. 
 
QuickBooks invoices include a comment line where you can choose your comment or write one for yourself.  You can also customize the form so that it appears on every invoice. 

• Your Current Special Offer  

A customer that just purchased from you now trusts you; it’s the perfect time to let them know what else you have available that they could benefit from.  Your offer could be a small amount off their invoice for referrals they send you, your monthly special, a sale item, or an item related to what they purchased. 
 
Just add a quick text line to your invoice letting them know the special and where to call for more information.  If you haven’t ever tried this, you will be surprised and delighted at the results.

• A Prominent Due Date

 
Most invoices include terms, but you can make it even easier on your client by computing their specific due date.  If possible, include the due date on your invoice so the customer can see clearly when they need to pay you. 
 
Make the due date stand out, too.  Bold it, print it in a different color, increase the font, or do all of the above. You want it to be really clear when that payment is due in your office. 

• A Payment Link

 
Can you take payments online?  If so, include the web link that customers can use to pay you online. If it’s convenient for your client to pay, you’ll get paid faster. (For a great QuickBooks integrated online payment option, please contact us.)

• A Friendly Warning for Overdue Invoices: “Does your mother know you haven’t paid this invoice?”

 
If all the above fails and the customer does not pay you by the invoice’s due date, you’ll want to have a process for re-sending the invoice and/or statement until the customer pays or until you’re ready to turn it over to a collections agency.  Here are some sample sentences you can choose from:

• “We hope you’ve just overlooked this bill and can send your payment right away.”
• “We’re re-sending this invoice in case it got lost.  Please send payment right away.”
• “Could you check on the status of this payment for us? Our records show it’s past due.”
• “Please contact us if you have questions or issues with this invoice. Payment is now past due; please remit immediately."

When the invoice gets older, sometimes it helps to add a little humor: 

• “Does your mother know you haven’t paid this invoice?”
• “Hey, we need to pay the rent! Please send your payment as soon as possible.”

 
Marketing to Get Paid
 
With these five low-cost ideas, you’re “marketing” to get the payment sooner.  They are easy to implement, cost very little, and will improve your cash flow. Try them and let us know how they are working. 

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

Income Taxes
 
Everyone knows about the April 15th deadline to file your taxes. Some people file an extension and have until October 15th. However, we need to remember that the best estimate of your tax liability needs to be paid by April 15th even if an extension is granted. Failure to correctly estimate and pay income taxes leads to a penalty that is calculated by multiplying the number of days the tax is late by the effective interest rate.
 
Paying Vendors
 
If we’re slow to make our accounts payable payments, our vendors may tack on a penalty, but the larger consequence is the effect on our credit score. A damaged credit score will create a ripple effect that impacts many other areas of your business.
 
Business Goals
 
It’s so easy to let internal deadlines slide, but they may be the most important of them all. To move your business forward, set goals with deadlines so that you can measure your results. 

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Mastering Deadlines
 
Here are a couple of tips to master your deadlines so you can avoid the above consequences:

1. Keep a list of deadlines or hire someone to help you with them.
2. Make a mental commitment to yourself that the deadline is important to your business.
3. Set aside the time you need to prepare for the deadline.  Block time on your calendar and stick to it.
4. Remind yourself of the consequences of missing the deadline.
5. Try not to overcommit. Delegate other tasks when possible.
6. If possible, automate or systematize the processes around the deadline so that it’s met automatically.
7. Stay up late when needed in order to meet your deadline.
8. Celebrate when you meet your deadline!

If financial tracking or incomplete record keeping is impacting your ability to meet deadlines, give us a call. We can offer suggestions and recommendations for options to support your needs.

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

Easy mileage tracking? That's hard to believe.

One of the biggest deduction challenges can be proper mileage tracking. But the benefits can pay off - depending on your situation, you may be able to take deductions for business, medical and/or charitable purposes. One way to simplify your mileage tracking is to use a mileage tracking app, such as MileIQ. (Check our our Resources page for a discount on an annual unlimited drive subscription with MileIQ.)

The new tax law changes have affected the ability for some to take advantage of the mileage deduction. For a quick overview of changes, check out this blog post.

As of May 31, 2018, QuickBooks Desktop (QBDT) 2015 will no longer be able to work with add-on services. Such services include:

• Desktop Payroll Services – Assisted, Basic, Standard, Enhanced, Workers Comp Payment Service, and ViewMyPaycheck
• Live Support – discontinuing Telephone and Chat support options
• Online Backup – Intuit Online automated backup service
• Online Banking – Ability to download Credit Card and Bank Transactions, Merchant Services, Automatic Credit Card Billing, ACH Check Processing
• Accountant Copy File Transfer Service
• Multicurrency/Exchange Rate
• Bill Pay / Intuit Payment Network

In addition, security updates will no longer be provided after June 1, 2018. If you plan to continue using any 2015 Desktop version, make sure to download all updates prior to June 1, 2018. 

If you would like to upgrade your 2015 QBDT product or would like to discuss other options to provide the functionality you need, please give us a call or use our Contact Us page for assistance. We'd be happy to help!

If you perform a service or ship a product before you get paid, then you likely have a balance in your Accounts Receivable account. If customers pay when their invoice is due, all is right with the world. If they don’t, then your cash flow slows down and your bank balance is not as high as it should be. Here are some tips, preventive and supportive, to help you keep your accounts receivable current. 
 
Granting Credit
 
When you deliver your service or product before your client pays you, you are in effect their “bank,” granting them credit. Not everyone deserves to be granted credit. Consider running credit checks, especially if you are billing large amounts of money for your sized business. 
 
You may also want to ask for a retainer or deposit prior to starting work or shipping your products. This will smooth your cash flow and reduce your credit risk. 
 
Offer Multiple Payment Options
 
When a customer is ready to pay their bill, make it easy on them by offering multiple payment options. Perhaps they will pay faster if you take payment by credit cards. Many people have extra money sitting in their PayPal accounts, so that is another payment option.  Apple Pay and Android Pay are relatively recent options to consider adding. 
 
You may also want to revisit the credit cards you offer: MasterCard, Visa, and American Express are universal, but many places also take Discover and Diners Club. If you are doing international business, consider JCB (Japan), China UnionPay, and RuPay (India).       
 
Collection Process
 
Once an unpaid invoice has reached its 90-day mark, the chances of collecting it are about 50 percent. This means that you will need to put some aggressive collection processes in place prior to the 90-day mark.
 
If the invoice is due in 30 days, start at the 35- to 40-day mark with a friendly reminder. At 60 days, your customer needs a strong reminder and perhaps a phone call. At 75 days, they need to know what consequences there will be for not paying. Will you report the customer debt to credit agencies? Will you turn the account over to a collection agency?
 
At 90 days, it’s probably a good idea to make one final collection effort and then turn it over to a collection agency. It might sound too soon, but the odds of collecting something much older go down significantly as time passes.     
 
At any rate, create your own process, and automate it as much as possible. The main thing is to stay on top of it.
 
Past Due Accounts
 
From how you first engage with your clients to the last steps in the collection process, there are many cost-effective techniques to avoid past due accounts and the unpleasantness that goes with them for both parties. If this is an issue in your business, try these ideas above and reach out if you’d like our help.    

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

User Permissions
 
Some companies have a need to limit certain functions to certain users.  Most systems come with basic functional limitations, such as restricting Accounts Payable and Accounts Receivable functions. But what if you need more granular user permissions such as access to only purchase orders or a certain bank account? Mid-market systems like QuickBooks Enterprise provide those features. 
 
Multiple Companies and Consolidated Financial Statements
 
Do you have multiple companies that are the “children” of a parent company? You might need consolidated financial statements and the ability to open multiple companies at the same time. 
 
Number of Customers and Vendors    
 
If your business is growing and the number of customers and vendors you do business with is regularly increasing, you may be in danger of reaching a list limit in QuickBooks Premier. Each system has their own list limits, and these limits can get complex quickly, so check with us if you have questions or concerns. 
 
File Size and Performance 
 
There may also be file size limits that you need to watch, especially if you have a high volume of transactions or multiple years of history in one file. 
 
You could also have performance issues.  If you have a new PC and your accounting system is still running slowly, we can offer suggestions on how to improve your performance. 
 
Inventory Features
 
If you need advanced inventory features, such as tracking inventory in multiple locations, using the FIFO method, and managing lots or serial numbers, you have options either to stay on a desktop-style system or move to the cloud. We can help you identify the best option for your situation – talk to us!
 
Enhanced Customization   
 
Most mid-market accounting systems provide better customization such as additional custom fields, better reporting, and improved form design. 
 
Number of Simultaneous Users
 
The final reason to switch to a larger accounting system is if you need more simultaneous users.  QuickBooks Pro allows for up to three simultaneous users, QuickBooks Premier handles up to five, and QuickBooks Enterprise makes room for up to 30 simultaneous users. QuickBooks Online allows up to 25 simultaneous users. Check with us if you are curious about your system’s license limits. 
 
Outdated Versions
 
At times, accounting system support is only offered for a limited time period. To ensure the security and safety of your data, make sure your current system is properly and effectively supported.
 
Did any of these reasons resonate with you?  If so, let us know so we can discuss your needs. 

It’s the time of year to update mileage rates for business, medical and charitable purposes. The new rates for 2018 are highlighted below.
 
For additional details related to the mileage rate and automobile expenses, please read the official IRS notice (2018-3): https://www.irs.gov/pub/irs-drop/n-18-03.pdf.

Year-end is just around the corner, and that means a couple of administrative tasks are necessary to take care of bookkeeping and tax chores. Here are a couple of tips to make year-end go smoother. 
 
Cleaning Up
 
Things will go a lot smoother if you reach out to your vendors and employees and get their help to update your records. 
 

• Send a notice to all employees, asking them to verify their address so they will get their W-2s without delay. 
• Make sure you have the right information for vendors that you need to produce a 1099 for. Before you pay your vendors more than $600 in one year, ask them for a W-9 so that you have a current address and taxpayer ID number on file. 
• Check to make sure you have any sales tax exemption certificates from vendors that you are not charging sales tax to.

 
It’s also time to clean up any account balances that need to be reclassified or corrected.
 

• Any clearing accounts, such as undeposited funds, should be zero.
• Bank reconciliations should be caught up and book balances should match the bank or be explained.
• Inventory should be adjusted to reflect accurate quantities.
• Loan balances should be adjusted to correctly reflect interest and principal allocations.
• Depreciation entries should be made.

 
Maximizing Deductions
 
Here are a just a few ways to maximize deductions:
 

• Any bad debts that aren’t expected to be collected can be written off.
• Any inventory that is not saleable or worth less than you paid for it can be adjusted on your books.
• For cash basis taxpayers, pay any large bills before year-end if you have excess profits.
• Pay employee bonuses prior to year-end.

 
Getting Organized
 
Create a dedicated and secure place to store tax-related documents, such as W-2s, brokerage statements, and tax returns. Convert them to PDF format if they are not already, and upload them to your accountant’s secure client portal as you get them. 
 
With all this great preparation, you’ll find tax season easier than ever and a chore that you can mark off your to-do list early.  

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