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Shortcut Your Management Time with Exception Reporting

by Sean on 08/21/14

Do you spend a lot of time reviewing stacks of reports each month so you can get the information you need to make decisions?  Do you find out after the fact that something went wrong in your business and that if you had known about it sooner, you would have made different decisions? 

If so, you might benefit from a special type of reporting called exception reporting.  Exception reporting highlights red flag areas that you need to take action on.  It contrasts with regular reporting, which lists lots of data that you may or may not need to take action on.    

Here’s an example:  How often do you check your bank balance?  You probably check daily or even more, right?  Do you really need to? 

 Ask yourself when do you really need to know about your bank balance?  You need to know when it falls below a certain amount, or when you don’t have enough to cover imminent bills, right?  Why not stop checking your balance all the time and replace it with an alert that will send you an email under the conditions and criteria you set?  This will save you time. 

 Some exception reports are already built into some accounting systems.  A couple of good examples are the A/R aging report which shows past due invoices that have not been collected and the inventory re-order report that lists inventory items that reached their re-order points and need to be re-ordered. 

 There are many ideas to generate exception reports:

  •  Missed and upcoming deadline tracking such as project due dates, tax forms due, and payroll due
  • Employees on vacation
  • Bills overdue
  • Expiration date tracking like end of lease and insurance policy renewal dates
  • Large variances in budget to actual reports

 To take advantage of exception reporting, here are a few steps:

  1.  Identify the reports you currently receive that you review but take no action no matter what.  Do you really need them?  If not, throw them out.  If so, ask yourself what trigger would have you taking action and change the regular report into an exception report that reports on that trigger.  
  2. Think about what data you access all day that is not in a report or easy to use format.  Can you create an exception report or alert out of it and save yourself time?
  3. What information would you like to start receiving that you don’t have now?  It should be something that you would take action on if you knew about it.  Can you create an exception report for these new information needs?

 Try exception reporting, or take it to the next level of implementation in your business, and watch your time free up and your management decisions sharpen. 

 ***

 

Six Common Payroll Mistakes to Avoid

by Sean on 08/07/14

Getting payroll done has gotten so much easier than it used to be for small business owners.  But there are still some minefields when it comes to state and federal compliance.  We’ll take a look at six of them in today’s article.   

  1. Business or Personal?

     

    A great admin might want to help you in any way they can, including personal errands.  But time spent having your admin fetch your dry cleaning and drug store prescriptions is not deductible as a business expense, even if it makes you more productive at work.  

     

    Be sure you separate your business payroll from personal payroll to avoid tangling with the IRS on this issue. 

     

  2. New Hire Report

     

    It’s not every day that a small business needs to hire additional help, and the New Hire Report is easy to overlook.  It’s due to your state within a certain number of days of your new employee’s hire date.  Some payroll companies will file it for you, and some won’t, so it’s best to check so that you don’t make the common mistake of forgetting to file this report. 

     

  3. Worker’s Compensation

     

    When you have employees, you need worker’s compensation.  When you bring on your first employee, you’ll need to overcome this learning curve of figuring out what you need. 

     

    Even if you’re a veteran employer, you may have coverage holes in your worker’s compensation coverage.   Do you have employees who work at home?  Are you sure they are covered?    In some states, employees have to be specifically named in the policy before they are covered to work at home. 

     

    Be sure you ask the right questions so there’s not a risky gap in this essential protection for employers. 

     

  4. Posters

     

    There are both state and federal notices that must be posted for employees to be able to read.  California is especially zealous and liberal about issuing fines (up to $17,000 per location) for employers that do not have their posters, well, posted on workplace walls. 

     

  5. Employee versus Contractor

     

    The proper classification of a worker as a W-2 employee or a 1099 contractor has long been an area of scrutiny for the IRS.  The IRS has rules as well as court cases that have established the guidelines that exist in this area. 

     

    If you classify a worker incorrectly as a contractor when they should be an employee, then you can be held liable for paying employment taxes on that contractor. 

     

  6. Bonuses

     

    Bonuses can often be a spur of the moment thing or something that’s done at the very end of the year when we’re occupied with the busy holiday bustle.  It can be easy to forget that the bonuses need to be run through payroll like all other wages so that the proper deductions and taxes can be calculated. 

Use these six items as a checklist to avoid these common mistakes as well as reduce your business risk in the payroll compliance area. 

Summertime Strategies for Your Business

by Sean on 07/25/14

Summer is a great time of year for most businesses to pause for just a little while to take stock, congratulate yourself on what you've accomplished so far this year, and make big plans for your future. Here are five summertime strategies to help you regroup, reassess, and rejuvenate your business.

1. Mid-Year Review

If your business runs by the calendar year, 2014 is already more than half over. This is a perfect time to stop and reflect on where you've been, what you've accomplished, and where you want to go next. You can make this process as informal or formal as you want. Some firms hold complex retreats; you may simply need some quiet time on a weekend where all your family is busy doing something else.

If you've never done any planning and feel like you need a guide, consider the book,  The One-Page Business Plan written by Jim Horan.

2. Take a Vacation

There's nothing better to rekindle your creative juices than to get away from the business for a while. Summertime is when most people take vacation, so if your business is not having its busy season, this might be a good time to go away for a while.

If you're anxious about being away from your business, you're not alone. In your annual planning process, plan for and block out your vacation time way ahead of time. Book the reservations with no refunds several months in advance so that you won't chicken out at the last minute. There is life beyond your business, and you will be a better business owner when you take regular breaks away.

3. Celebrate

Take time to pat yourself on the back and congratulate the people around you for the goals you've reached and the efforts your team has made on your behalf. We all could use more praise and celebrations in our lives. Perhaps you can organize a party, or if you are not the partying type, a quite word individually with your team can go a long way, maybe more than you know.

4. Prune Your Projects

Is your plate too full? Most of us would say "yes" to that question, so the next step is to ask yourself what you can afford to stop doing that doesn't make sense. Is there a project or two that can wait? If so, decide to stop stressing about not getting it done and give yourself permission to put it on the back burner for now.

5. Focus

Ask yourself what one thing you could do today that will make all the difference in your profits, revenues, goals, or simply peace of mind. And get that thing done.

Try these five summertime tips to rejuvenate your business.

Does Your Small Business Need a CRM?

by Sean on 07/10/14

Have you ever stayed at a hotel and then returned, finding that they have stocked your room with everything you asked for the last time you were there? Your special allergenic pillow was already waiting for you, you were asked if you would like a dinner reservation made just like you always do the first night, and there were even extra hangers because you always need extra hangers. None of this would be possible for the hotel if it didn't have a CRM (customer relationship management) system in place.

Would your clients be impressed if you remembered all of the details about your last conversation, their last purchase, or their preferences? If so, your business might benefit from a CRM system.

Businesses that have more than 30 or so clients may benefit from a system that allows you and your employees to enter detailed information about each client interaction that they have. It can work for both current and future clients. A CRM is basically a great big customer database at its core. It contains master file information on a customer or client, such as name, company, address, contact info, and custom fields. It is also transaction-driven in that you can log activity such as calls, meetings, proposal dates, and more.

A good CRM system is also integrated with your other internal systems, such as your accounting or POS system. In some CRM systems, you can see invoice and payment history, so that when a client calls in, you can also peek to see whether they owe you money or what goods they ordered that they may be calling about.

There are literally hundreds of CRM systems to choose from. The gold standard for large companies is Salesforce.com; however, some small businesses use it as well. SugarCRM is the largest open source for CRM, meaning its programming code is available to the public. ZohoCRM is one of the largest small business CRMs and offers a suite of products for small businesses. And Act! is also very popular and plays well with social media.

Before choosing a CRM, decide what you want it to do and how you will be using it. One of the most important aspects of profiting from a CRM is to make sure it gets used, and that takes some habit-changing from you and your staff. Once you have your requirements, you can evaluate the software options available, and choose the one that works best for you.

When your clients start talking about how great your service is and how much attention you pay to the details they care about, you'll know your CRM is paying off for you.

Oops: Do You Owe Sales Tax and Not Realize You Do?

by Sean on 06/27/14

One of the side effects of our last economic slowdown was in state government budgets; states searched hard for new income, and many of them found a great source by cracking down on sales tax collections. Their new hot buzzword: nexus.

Nexus means a connection that a business has with a state, and it has to do with the form of a presence. In the sales tax world, you owe sales tax to a state if you have nexus in that state and you are selling taxable items. The scary part for small businesses is what makes up nexus.

A Small World

Globalization and technology together have produced dramatic shifts in the way businesses can look today. Not only can we access a pool of local talent to staff and grow our businesses, we can employ almost anyone around the world to work for us. Hiring employees or contractors located in other states can stretch our nexus to include that state.

As an example, if your company is located in Illinois and you hire an employee that works from her home in Nevada, you might have nexus in Nevada and Illinois, and you might owe sales ta in both places. Sales tax nexus is not the same as state income tax nexus, but the presence of a worker in another state is a possible trigger for sales tax nexus.

Taxable in One State, Not Another

The taxability of services has grown rapidly as states look to balance their budgets after Federal cuts and other shortfalls. Not all services are taxed equally across states. Web design services are taxable in Texas, but not California, as one example.

Some states have smaller jurisdictions such as counties and municipalities, making for a total of 10,000 jurisdictions in the U.S., not just 50. Alabama, Colorado, and Arizona, for example, have statewide rules as well as taxability rules for localities within the states.

Innocuous Survey Can Trigger Audit

You might receive a form that looks like a survey that asks innocent-sounding questions such as how many employees do you have and what state do they work in. The surveys don't look like they are from a state government but they might be. It's their way of getting you to admit nexus.

Minimizing Sales Tax Audit Risk

Because of the high dollar impact on the profitability of your business, it's best to get a sales tax professional involved in helping you determine the taxability of your items as well as interpreting nexus. Many states are hiring auditors and aggressively pursuing businesses, so due diligence in this area is prudent.

If we can help in any way, please reach out and let us know.

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