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Deposit your Business Checks Anywhere and Anytime

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Bookkeeper to setup the chart of accounts

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An iPhone app allows users to deposit a check by taking a photo of the front and back of a check. Apparently this new RDC (Remote Deposit Capture) technology has been around for a few years, but I just found out about it. Several large banks like USAA, Bank of America and Chase offer this convenient feature.

If you are using a bank line of credit, I believe that you should deposit your checks as soon as possible to save on interest expense. Imagine that you are at a customer’s business to pick up a check. You can take pictures of the check with your smart phone and have the money deposited immediately. Then you can hand the check back to the customer to avoid having to shred it yourself.

Of course there are some who try to abuse any new technology. Apparently thieves will take pictures of the same check and deposit it at several different banks. Afterward, they’ll transfer the money out once the deposit clears but before the check comes back as fraudulent. I even found one news story  of a vendor allegedly depositing checks multiple times. This is an example of why I recommend small business have their bookkeeper reconcile their bank account daily or no less than weekly.

Some banks need to make some improvements to their security to prevent fraud but for the small business owner this technology can help improve your cash flow and save you time of going to the bank.

Tax Reform Checklist

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Business tax

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Business tax takes a large piece of the pie
Tax Chart

The National Small Business Association (NSBA) released its Tax Reform Checklist, which includes nine principles for tax reform.

The nine principles of the NSBA Tax Reform Checklist are:

  • Designed to tax only once
  • Stable and predictable
  • Visible to the taxpayer
  • Simple in its administration and compliance
  • Promote economic growth and fairness between large & small businesses
  • Use commonly understood finance/accounting concepts
  • Grounded in reality-based revenue estimates
  • Fair in its treatment of all citizens
  • Transparent

Everybody, except Warren Buffett, feels that they are overtaxed or taxed unfairly but I think businesses actually help people create wealth and the tax system should benefit businesses, not punish them. Tax preparation is one area of finance that I have never enjoyed. It feels like a huge waste of time without any improvement to the company and the regulations are constantly changing.

The NSBA favors a Fair Tax. A Fair Tax would of course be much simpler than the current system, but from a personal point of view, a fair tax lot would eliminate a lot my peers tax preparation businesses and their jobs.

Top Southern Indiana Manufacturing Firms

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Two Southern Indiana manufacturing firms, both in New Albany, Indiana, are in the top seven of Business First’s List of Louisville-area manufacturing firms. Beach Mold & Tool, Inc. is ranked number 7 and Samtec Inc. is ranked number 5.

My wife worked at Samtec for several years before she became a stay at home mom so I am glad to see them in the top five.

 

 

 

 
www.HyperSmash.com

Business Expo in Southern Indiana

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Small Business Southern Indiana
Souther Indiana Small Business Chamber

Small Business Expo In Jeffersonville Indiana

One Southern Indiana is hosting a Business to Business expo in Southern Indiana at Kye’s on October 4, 2012 from 11 a.m. until 6 p.m. Admission is free to business professionals who present a business card at the registration table. Lunch will be available for purchase from 11am – 1 pm. Exhibitors will be selling products from their booth.

It might be too late to register as a an exhibitor but you can you can check their website at One Southern Indiana or email Kalisha Bass for more information.
  
I recommend attending business expo’s like this one if you’re a new small business that regularly offers materials or services to other small businesses. You will get a chance to network with potential customers and vendors and let others know who you are and what you do. This business expo is free to attend and lunch is available which makes it a good networking opportunity.

You Are Responsible for Filing your Payroll Tax Returns

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Overworked bookkeeper

As a business owner, you are responsible for ensuring that your payroll employment tax returns are filed and employment tax payments are made, even if you have a bookkeeping service to processes your payroll for you.

The IRS recommends that you enroll in the U.S. Treasury Department’s Electronic Federal Tax Payment System (EFTPS) to monitor your account and ensure that timely tax payments are being made for you. If you use an outside payroll processor, you would create an Additional Taxpayer Enrollment. After you receive your PIN and enrollment number in the mail, you can complete your enrollment and verify your tax payments under the Payments tab. The EFTPS is an easy way to verify that your payments are being made by your payroll processor.

Enroll in the EFTPS online at www.eftps.gov, or call (800) 555-4477 for an enrollment form. State tax authorities generally offer similar means to verify tax payments. Contact the appropriate state offices directly for details.

Don’t Neglect the Bookkeeping

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Bookkeeper Silhouette

I know small business owners that are great at selling their products and services and winning over customers but they would probably flunk a basic bookkeeping course.

If, as a small business owner, you do not understand your own company’s books, measuring the actual profitability of your company is difficult and there is potential for a cash flow crisis.

Here are the most common types of bookkeeping accounts that a small business owner should know and track:

Cash.  I recommend reconciling your cash accounts on a daily or weekly basis depending on your account activity.

Accounts Receivable. This is money owed to you from customers. Reviewing it regularly and keeping it up to date is critical for cash flow. There is nothing worse for your cash flow than finding out 30 days later that a customer didn’t receive an invoice when you were relying on their payment to fund your payroll.

Inventory. Unsold inventory is just like money sitting on a shelf. It should be treated just like cash. Do a periodic testing of the book number compared to a physical count. Consider selling slow-moving or obsolete inventory at a discount or even a loss so you can turn it into cash.

Accounts Payable. This is the money you owe to vendors. You don’t like to see your money leave the business but it’s a little less painful if you can see exactly everything that you owe. Good bookkeeping helps you to make timely payments and, more importantly, not pay anyone twice.  Just like with your personal finances, paying bills on time can help you create a good credit rating. Paying early can qualify your business for discounts.

Payroll Expenses.  This is a big cost for a lot of businesses.  Compare your headcount and payroll expense to prior months and to prior years to make sure it is in line. Payroll costs can balloon quickly if you aren’t monitoring overtime and raises.  As I wrote in another post, you are responsible for making sure your payroll taxes are paid and you can get into serious trouble if they are not.

Owners’ Equity.  This is an important account if your company has multiple owners. Basically, it tracks the amount of capital each owner has invested into the small business or has withdrawn from the small business.

Retained Earnings. Retained Earnings is a cumulative account of your company’s profits or losses that are reinvested in the business and are not paid out to the owners. It is an important account for investors and lenders who want to track the profitability of the company over time.

If you are a small business owner just starting out and don’t know anything about bookkeeping, I recommend that you hire an accountant to help you setup your books and train you on how to enter transactions. You can also have the accountant review your books monthly or quarterly to make sure you have entered everything correctly. If you understand and make effective use of your financial data, bookkeeping can help you operate your business more effectively.