Business Accounting

Your manager breaks her leg playing softball and will be out for a month. Or your receptionist’s husband lands his dream job, but it’s out of state so they’ll be moving. When you own a small business, learning to expect the unexpected comes with the territory. Yet, you don’t have to stand idly by and wait for something to disrupt your finances and send you down a path of trouble. Consider being proactive with these troubleshooting tips.

Watch Your Numbers

You can monitor your company’s financial health, spot developing problems, and improve performance by reviewing key ratios derived from the numbers on your financial statements. Taken together, these ratios help paint a picture of your company’s financial well-being.

At times, you might dwell on problems in one particular aspect of your business. But don’t ignore the rest. If you’re not seeing the big picture, you might not spot trouble in other areas. For example, if your profit margin is falling, you could become so focused on trying to find a solution that you fail to notice that several of your biggest customers haven’t sent a payment lately and a cash flow problem is brewing.

Watch Your Assets

Always try to make the most of your assets. If you carry inventory, keep your eye on turnover rates. Slow inventory turnover can strain your cash flow. Figure out how many days’ worth of product you’d ideally like to have on hand, and adapt your purchasing to meet that goal. Also, check your fixed assets. If you have equipment that’s not being fully utilized, you may be able to repurpose it. If not, it may be time to sell or donate it.

Watch Your Debt

It’s practically impossible to operate a business without taking on at least some debt. Debt itself isn’t a problem, as long as you keep it under control. A high level of debt can eat up your cash, cut into your profits, and reduce the return you’re getting on your investment in the company — and that’s definitely trouble.

Send us an e-mail or call us today at 727-544-1120 and ask for Debbie Jackson to discuss your business needs with an experienced Largo CPA.

Increasing your profits requires selling more and/or spending less. While building up your sales may require an extended effort, business costs are often very ripe for a quick trimming. Here are some possibilities.

Supplies and Other Purchases

Usually, in any business, relatively few items represent a very large share of all outlays. The first step in cutting expenses is, therefore, to identify your highest costs. You may be able to trim many of these costs by making sure you always bid out significant purchases or by more actively seeking less expensive alternatives.

For many companies, inventory carrying costs are a very significant expense. Focusing on matching your inventory quantities more closely to your short-term needs could result in significant savings.

Telecommunications and Other Services

The ongoing services you buy may also offer the potential for cost savings. Revisit your choice of telecommunications vendor and your usage.

Look carefully at your costs for financial services. If you borrow or maintain a line of credit, always compare the rates from more than one financing source before you commit. Make sure you are not paying higher-than-necessary fees for your company’s checking and deposit services.

Cash Management

To control cash outlays, take advantage of discounts for early payment whenever possible. And look to delay payments for as long as you can without giving up discounts.

On the receiving side, deposit all receipts daily. And always actively pursue collection of any invoices that are past due. To help control your working capital needs and, therefore, your credit costs, try to match any new liabilities to your anticipated cash flow.

Fixed Expenses

One other category worth examining is fixed expenses that are long-term commitments. While you usually can’t change these quickly, be aware of when a window for change will open and prepare well in advance by considering lower cost alternatives.

To learn more ways to control your business costs give us a call today. Our trained staff of professionals is always available to answer any questions you may have.

Having your children work in the family business is a great way to teach your kids about work ethic and money management, and to kick-start their retirement or college savings plan. Click through for tips on bringing your children into the family business.

Is having your children work in your family-owned business a blessing or a curse? Here are five tips for making it a blessing and preventing it from being curse:

Have them work elsewhere for at least five years. They need time to mature, becoming their own individuals, and to gain confidence learning and doing things as distinct human beings rather than just children of successful parents. Kids need to learn how to work, to be punctual, to earn their own money and to be held accountable. Everyone wins when potential successors have excellent training and gain skills and confidence outside the nuclear family.

Consider this scenario: A family-owned restaurant in a small town occasionally has three generations working together on a Friday night. The children are under the age of 16. Assuming that child labor laws have been taken into account, the family is content that they are passing on a tradition and family trade. The kids work one or two nights during the weekend.

In this example, the family is limiting the number of hours, and their expectations are reasonable. It’s a way for children to learn the family business and helps them gain self-respect. Indeed, one adult who remembers working with his mother in a greenhouse when he was 12 and 13 recalls that the job was hot, dirty and exhausting. However, he recalls he got paid for the work he did, and it gave him a greater appreciation for the work his parents did to support their family.

Understand generational differences. Today’s young people are far more likely to want to work to live rather than adopt their parents’ “live to work” attitude. That’s why your adult children don’t want to work 80-hour workweeks. Younger children and other employees are most probably looking for a different workplace experience.

Give psychometric assessments to make their personalities/capabilities fit their jobs. One child may be temperamentally unsuited for a position demanding detail and strict deadlines; he or she may be more of a big-picture, laissez-faire personality. Assessing such things will go a long way to improving both business function and family harmony.

Hold them accountable, but not to an unreasonable standard. Give your kids crystal-clear roles and responsibilities and regular reviews so they know whether they’re living up to their job descriptions. The biggest morale killer in small businesses is underperforming or dysfunctional family members who are allowed to meander through various roles with virtually no accountability and to inflict themselves on others in your organization. In that case, pruning the family tree almost always results in improved business productivity.

Communicate formally and regularly with a third-party facilitator. Virtually every family employee thinks he or she works harder and contributes more than anyone else and stews over this. Family businesses have a greater need for formal communication to resolve perceived contribution issues, especially if you decide a family member is ill-suited to working at your company. You need to be able to discuss volatile topics constructively and productively. Seek the help of a talented facilitator to get the most from your family business.

It can be a wonderful experience for all involved to have your children work with you. Just remember that it’s a delicate balancing act that needs your attention.

Send us an e-mail or call us today at 727-544-1120 and ask for Debbie Jackson to discuss your tax planning needs with an experienced Largo CPA.

Before you get involved with other things this summer, schedule a mid-year checkup. No, we’re not talking about the height/weight/blood pressure kind of checkup, we’re talking about the income statement/balance sheet/cash flow kind of checkup — a review of your business’s financial operating fundamentals.

If you review your vital financial information only when year-end rolls around, you may not know there’s a problem until it’s too late. The more often you take your company’s “pulse,” the sooner you’ll be able to notice — and react to — changes in your business situation.

Check Your Vital Signs

What should you be looking at? Start with the operating fundamentals. For example, what’s the status of accounts payable? When’s the last time you ran an aging report for accounts receivable? How quickly is your inventory turning? What is your profit margin?

These numbers are critical to running your business. You can’t make accurate decisions if your figures are old. And, by keeping track of key financial ratios, you can more readily spot trends that should be addressed sooner rather than later.

Monitor Your Budget

Next, check your spending. If overspending is a problem, creating a comprehensive budget that establishes realistic guidelines is an effective remedy. Make sure you have a budgeted amount for every line item expense on your operating statement. Then track and compare actual spending to budgeted amounts on a regular basis.

Reduce Your Debt

Avoid the temptation to take out all your profits in good years. Instead, consider reinvesting some of those earnings in the business. Using retained earnings instead of debt to capitalize your business saves money — and provides a safety net that will be there to help you through periods of lackluster sales or unexpected expenses. A healthy debt-to-equity ratio will also look great when it’s time to borrow money or sell your business.

See a Specialist

Helping owners build and maintain healthy businesses is our specialty. Let’s schedule that mid-year review of your company’s finances soon.

To learn more about financial reviews give us a call today. Our trained staff of professionals are always available to answer any questions you may have. Send us an e-mail or call us today at 727-544-1120 and ask for Debbie Jackson to discuss your business needs with an experienced Largo CPA.

Your company is expanding — and that’s great! You’ve grown from one office to two, three, or even more. But you need to be able to manage all of them to continue to grow. Click through for some help in multi-office management.

Each new office seems deserving of all your time, but there are still your existing offices, whose need for attention hasn’t diminished. Building, disseminating and maintaining a cohesive business strategy across multiple sites is a challenge, but you need to get it right to continue to be successful.

Step one: Information needs to be shared.

This means that no one is behind on information, and you create a sense of community. Technology makes this happen because it allows immediate, widespread communication. You must ensure that there is one main method of digital communication — inconsistently used initiatives quickly become difficult to manage effectively. Use the one tool that works well and commit to communicating relatively frequently through it. You may want to send a brief weekly email newsletter to all staff. The tricky part is working across time zones, so if possible, send official communications when all offices are open.

Step two: Your leadership team is your greatest asset.

Employing an excellent senior management team to undertake communication on the company’s behalf is as important as digital communications. Have a senior management team member assist in running the firm, coordinating each office to provide local leadership. It’s wise to have a strong chain of command and a team that integrates as much as possible with each other to keep everyone informed about work across the company. Strong departmental management complements the businesswide strategic vision.

Step three: Timing is everything.

It’s essential to maintain a top-level presence across all offices and to be a recognizable face to all employees. If your company is based in one region, try to visit each office every month. If your firm is spread across the country, visit every two or three months. Time your visits within a week of each other and give a little more attention in your weekly email newsletter to any office that hasn’t been visited in a timely manner.

It makes sense to prioritize visits according to the size of the office, while maintaining a high level of inclusion in digital communications to show staff that they are highly valued.

Step four: Integrate wherever possible.

Encourage cross-office collaboration to develop a wider understanding of the business as a whole. It’s healthy to work with a number of different people and conducive to caring about the business beyond each office’s four walls. One means of doing this is to give staff opportunities to shape the company’s image, such as by participating in brand workshops or to be personally involved in company improvements.

Step five: Don’t be afraid to try something new.

Always try new things and commit to change. What suits one business may not suit another. Be prepared to innovate to find what works for you. That’s why building a personal relationship with as many employees as possible works — you’re giving people a chance to mix with others they would never normally work with.

Don’t forget the value of old-fashioned face time among and across teams. By encouraging this, you will contribute to successful integration and a corporate culture across geographies. Local offices need to be held accountable for quality control, scheduling and improving systems, and such efficiencies may work companywide.

All of this can seem like a lot of hard work, but splitting time between offices and building a system of shared information is crucial to the overall success of multi-office businesses. By trying to achieve equilibrium, you create a happy workforce that delivers the best results.

Send us an e-mail or call us today at 727-544-1120 and ask for Debbie Jackson to discuss your tax needs with an experienced Largo CPA.

Maybe it was lost, or got tossed out. Maybe the dog ate it. While it may be hard to understand how payroll checks can go uncashed, it happens. Unclaimed wages (and other property, such as commission checks, shareholder dividends, checks to vendors, and unredeemed gift cards) create problems for businesses — and revenue opportunities for cash-strapped state governments. That could be an unfortunate combination if your company isn’t in full compliance with state law.

When Wages Go Unclaimed

Generally speaking, businesses are not permitted to hold onto uncashed checks indefinitely. Each state has its own laws regarding unclaimed property, and employers must follow the rules for reporting and remitting such property to the state.

Most states consider unclaimed wages to be abandoned after a year. During that period, employers must make a good faith effort to contact the wage earner so the property can be claimed. If these attempts fail, employers must turn over the abandoned wages to the appropriate state agency.

States Want to Know

To supplement tax revenues, states have generally been stepping up their audit and enforcement efforts regarding abandoned property. For businesses, the cost of noncompliance can be quite high, especially if they haven’t been keeping reliable records. In the absence of records, auditors may — and often do — estimate a business’s liability, which may result in an exaggerated assessment.

Protect Your Business

In addition to paychecks, you might have other unclaimed property to contend with, too. Take steps to protect yourself by putting someone in charge of handling your business’s unclaimed property, keeping accurate records, regularly filing required reports of unclaimed property with the appropriate state agency, and promptly turning over any unclaimed property according to state law. Your time and effort will be well spent if it helps avoid costly problems in the future.

Send us an e-mail or call us today at 727-544-1120 and ask for Debbie Jackson to discuss your business needs with an experienced Largo CPA. Click here for a Free Consultation.