Small Business Expert

Tips for Small Business Owners

  • keep an eye on profit and loss

    Your Small Business Needs a Profit and Loss Statement!

    posted by Michele Bossart
    Featured Article
  • ITINs: Use ‘em or Lose ‘em

    ITIN time expires like a parking meterDid you see the June 30, 2014, IRS announcement about ITINs? (And is it something that affects your small business?)

    The announcement. The IRS announced that an Individual Tax Identification Number (ITIN) that has not been used on a tax return for five consecutive years will be voided.

    In other words,

    Your Small Business Needs a Profit and Loss Statement!

    As an owner of a small business, your understanding of the Profit and Loss Statement, or P&L, is absolutely crucial. The P&L is an important tool for all small business owners to possess, utilize, and maintain on a regular basis.

    By the end of this article, you should begin to comprehend how absolutely critical the P&L is to the operation of your business. Its effective usage within your own business’s accounting matters both for having an accurate financial picture of your business, as well as for presenting the state of your business to others, whether those others are potential investors, accountants, or auditors.

    On the surface,

    True or False: You Are Making Payroll Mistakes!

    Payroll is expensive. But payroll mistakes can be even more expensive with fines, audits, penalties, or legal challenges.

    Are you in danger of making a common payroll mistake? Sharpen your pencil and take our six-point quiz and find out. (The answers are at the end – no peeking!)

    Use the Hybrid Accounting Method? Maybe Not…

    doing the math for hybrid accounting methodAs a small business owner, you’ve probably heard of the cash and accrual methods of accounting, but you may not be as familiar with the hybrid accounting method. The hybrid method is a blend between the cash, accrual and special methods of accounting, and is acceptable for internal accounting and tax purposes. To begin to understand hybrid accounting, it’s important to know the differences between the cash and accrual methods.

    Will Impending Overtime Laws Raise Your Payroll Costs?

    overtime laws affect small business ownersWhite-Collar Exemption (a.k.a., overtime) laws are changing …

    What does this mean for small business owners? In short, your salaried workers, who are exempt from overtime pay now, might become eligible for overtime soon.

    Let’s say you own a framing shop. Business is good so you add a few employees. Soon you can afford to promote a worker to supervisor — which gives you some much-needed time out of the store. However, that supervisor may cost you more than you thought …

    Do You Pay Employees Per Diem?

    man gets per diem for hotel roomIf you have employees who travel away from home for business purposes, they may be eligible to be paid a per diem, or a daily rate to cover the expenses of traveling.  Covered expenses include lodging, and meals and incidental expenses (M&IE).

    There are maximum dollar limits allowed per day:

    What Is a Chart of Accounts (COA)?

    chart of accounts makes small business owner happyAs a business owner, it is important to keep accurate records of all of your company’s financial transactions. You want to record all of the money going into your business and all of the money that goes out of it. In general, you want to make sure that the money is broken down by categories to make it easy to track for budgeting and tax purposes.

    In order to keep accurate records, most companies start a chart of accounts. In layman’s terms, the chart of accounts is

    Accounting Basics: What Do Small Business Owners Need to Know?

    Money walks in and out of your small business …

    Small business owners are passionate, hardworking people. They are positive, they are resilient, and they are dedicated to creating a sustainable and profitable business. But what they are not is accountants, and if you run a small business it’s not uncommon to find yourself not knowing where to begin with basic accounting for your small business.

    You’re in charge of making sure your books are in order, and yet if you’re like most small business owners, your “bookkeeping practices” are almost non-existent – and the only place you keep track of your company’s spending and revenue is your bank account.

    The Importance of Quality Bookkeeping

    One of the most unfortunate reasons that small businesses struggle is from

    What Is 401(k) Plan Testing?

    This article was updated on 6/12/2014 from the original post 5/22/2012.
    401(k) Plan Testing for payroll software

    According to Internal Revenue Service (IRS) requirements, annual testing of 401(k) plans is mandatory. The goal of these tests is to promote fairness and prevent discrimination between highly compensated employees (HCE) and non-highly compensated employees (NHCE).

    There are several types of 401(k) plan tests. Among these, ADP/ACP is the most common type. ADP and ACP stand for actual deferral percentage and actual contribution percentage, respectively. This test helps determine whether or not the plan is offering equitable benefits to all the participants. The objectives of different tests vary. While ADP/ACP ensures nondiscrimination and fairness, there are tests designed to make sure that the contribution limits set by the IRS are followed.

    4 Reasons Vacation Carryover Helps Your Business

    vacation carryover policy helps small businessIn an attempt to retain loyal employees, many organizations have a vacation carryover policy in place that allows employees to carry over earned vacation time from one calendar year to the next.

    Among small businesses with fewer than 100 workers, 69% offer paid vacation to their workers (US Bureau of Labor Statistics, 2012). Employee vacation days are important to both the employees who earn them and the company that provides them, for various reasons.