I trust you had a great, looong Independence weekend — whether here in the Long Island and Stamford area or otherwise? Where did you take in the fireworks this year, if at all?
And speaking of fireworks (of the political kind), I know that many Long Island and Stamford business owners are breathing a bit of a sigh of relief about last week’s extension of the employer mandate component of the ACA, or “Obamacare”.
Here at your Long Island and Stamford Small Business Accounting Firm headquarters, we at Team Kessler are keeping an eye on how all of it develops for you and for all of our business clients (as it’s still unclear, practically, how it will play out), and we’ll make sure to keep you posted.
Moving on, this mid-year point is a great time to do a financial review.
However, for some small businesses, this can still create a big fat mess — made either by another accountant, a part-time bookkeeper in over their head, or (shudder) the business owner themselves!
After seeing too many business owner friends and NON-clients in Long Island and Stamford operate from a jerry-rigged accounting system, I thought it was a good idea to give you some perspective on what this could (and should) look like…
Long Island and Stamford Accountant Shares 4 Common Accounting Mistakes Made By Local Businesses
These mistakes are common enough that most experienced accountants could fix many of them in their sleep (well, that’s not *exactly* true…). And, sadly, they’re usually created by either inexperience on the part of the bookkeeper involved, OR by lack of communication from the business owner.
If you’re facing financial or accounting issues, rather than blaming your bookkeeper, perhaps the source of the problem is in fact YOU!
Either way, here are common accounting mistakes made by Long Island and Stamford businesses, all of which we can help you clean up.
1. Tracking Expenses Wrongly – Many business owners pay for expenses out of their own personal funds. And it’s no surprise that they often don’t keep accurate records of these expenses. Change that! Here’s why: The IRS frowns at the co-mingling of business and personal funds, and the best way to protect yourself in the event of an IRS audit is to avoid doing it in the first place.
That aside, you need to maintain effective communication between your bookkeeper and the rest of your team, be it yourself, or other staff. Essentially, your bookkeeper needs to make sure that everything is coded properly, or you’ll be in some hot water.
2. Employee Misclassifications – Many businesses have a combination of independent contractors and employees. And this is an area in which the IRS has been increasingly ruthless, as they search about for sources of additional revenue (i.e. penalties and additional taxes!).
Here’s the relevant IRS guidance on it: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
3. No Internal Cash Controls – Your business should have a monetary “line in the sand” on a monthly basis, the crossing of which should set off little alarms. These can range from the sophisticated (multiple trigger points and consequences), to the very rudimentary act of simply budgeting for each month.
But the main point is that your ACCOUNTING system should show you the way on this, on a monthly basis.
4. Backdating Too Much – Sure, it’s painful to have to reconcile and keep every expense entered on a monthly basis — which is why so many business owners don’t keep up with it (even when they’ve “outsourced” the task to a part-timer). The problem with playing continual catch-up is that problems AND opportunities are spotted too late.
For example, say you think one of your service or product lines is the most profitable … but circumstances have changed (whether expenses or other cost factors), and now a different item is most profitable. Well, if you’ve been pushing for what you *thought* was most profitable for six months and only now realize that you should have been pursuing a different strategy, that’s a bunch of time and money wasted.
In short, get a Long Island and Stamford-based professional to help you with this stuff. (Ahem.)
I would ask that you forward this article to a business associate or client you know who could benefit from our assistance–or simply send them our way. While these particular articles relate to business strategy, as you know, we specialize in tax planning and accounting for small business owners. And though we’re reaching our limit of new clients, we always make room for referrals from trusted sources like you.
Warmly (and until next week),
FREEDOM! (Enjoy Having Peace of Mind from the IRS)
$50.00 Towards Tax Planning Strategy Session with Michael Kessler
Print this out and bring it to our office for a special strategy session for how you are using your income. We’ll identify the BEST ways for you to maximize your wealth for the current year, so that we won’t just be “cleaning up” after the fact. Time to give yourself a raise, through smart and careful planning!
Response Deadline: July 12th, 2013
Limit: First 5 respondents only (we’re limited by capacity)
Email or call us ((516) 449-2852) now!