CPA, Managing Partner, Financial Advisor
The end of year is quickly approaching, which means it’s about time to start planning your accounting records to be ready for the new year.
Closing your books helps you prepare for income tax time and allows you to get other financials in order to continue leading a successful business. We’re here to remind you that there are several things to consider when completing your year-end books so you don’t miss anything if you’re doing it yourself!
Think of all the financial transactions your company has done over the last year. You should have some sort of record on those transactions, otherwise known as “books”. They let you know, as the owner of the business, how much money is flowing in and out of your business and can help you set trends as well as gain insights for the future of your business.
Closing your books means you are officially finalizing those transactions, and they are recorded to show where your business stands financially.
So, how can you get ahead of closing your books?
Get your statements and financial records from your bank that date back to the beginning of the year. These statements are crucial for your accountant to prepare your end-of-year books correctly and efficiently. Instead of getting your information online, going to your bank directly can ensure you’re getting everything and not missing any important information.
Taking inventory is a step that many people don’t even think about when preparing their books. Assets and products need to be compared to your balance sheet from the beginning of the year to ensure there aren’t any major discrepancies. If there are some inconsistencies that you notice off the bat, be sure to note it for your accountant.
When all is said and done for this past year’s books, you can now start preparing for your business’s future. Your accountant can help you budget for the upcoming year, which is important to understand if your business is operating within your means. Think of budgeting like a forecast that is dependent on your previous year. This is where you prioritize and set goals based on how the previous year went, so your business can grow in the upcoming year.
Some people thrive under pressure, therefore they procrastinate everything they do. Unfortunately, that isn’t the case with closing your books. Preparing all the documents and reconciling accounts takes a lot of time – weeks, or even months! To ensure your business is in good standing, you shouldn’t wait until the last minute to get things done. The phrase “the sooner, the better” is perfect to apply to this situation so you can continue to grow your business.
If you need help closing your books, or even just need some advice, our tax professionals at Bumgardner Morrison can help you! We provide complete tax services to ensure you and your business are prepared for the new year.
Of course, one of the most popular reasons that people seek out a business loan is to, well, start a business. Revolutionary, right? The truth is, many people have great ideas for a business, but having the funds to start something from the ground up is a different story. Thankfully, many lenders give out business loans for this very reason alone.
Getting a business loan to start a business isn’t exactly easy, either. To prove this is a legitimate venture you want to seek out and not just an idea, going through the steps of establishing your business and getting an employee identification number (EIN) can increase your chances. Furthermore, setting a plan in place with goals and ways to grow the business can solidify your legitimacy to some lenders.
Whether you’re starting a business from scratch or you’re well-established, equipment is most-likely something that you need to account for as you build or grow your business. Depending on the type of equipment you’re looking for, it can get a little pricey, and if you’re just starting your business, you might not have the allocated funds to make such a large purchase.
There might be multiple things you need – machinery, computers or a software subscription for multiple employees. It’s a good idea to determine what you need that is going to help your business grow and increase revenue to ensure that a business loan is the smart financial move.
So your business is doing well. That’s great! But now you’ve outgrown your current space and need to move to a bigger office, or maybe you’re interested in moving to a better location that will help your business grow. Whatever the reason may be, a business loan can definitely help you out. Depending on how long you’ve been in business, you can get better rates on a loan.
It’s no secret that marketing is one of the best things a business can invest in to help get reach potential customers. Marketing can also get really expensive, but it can be ultimately worth it if it’s executed well and does its job. Whether you want to hire someone to create a radio jingle for you, design a billboard or hire a marketing company to handle your SEO, these expenses add up.
There are many great things about securing a business loan that can help you grow your business and revenue. Doing your research to determine the best ways to distribute the loan and ensuring it goes into the business is the best way to make sure you’re doing right by your company and properly paying the loan over time.
At Bumgardner Morrison, we want to help you and your business succeed. We can offer advice on taking out a business loan, the best ways it can benefit you, and how it will impact your taxes. Contact our office today!
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, is a $2 trillion stimulus bill that was signed on March 27. This historic government funding dwarfs the two rescue packages from the Great Recession. It is aimed at supporting large and small businesses, industries, individuals, families, gig workers, independent contractors, and hospitals. But, its hefty price tag, quick signing, and less than stellar rollout have left many individuals and businesses wondering how it will relieve their burdens.
The Paycheck Protection Program offers guaranteed loans of up to 250 percent your monthly payroll average, based on your previous year’s numbers. This loan is designed to allow you to continue to pay your workers during these difficult times. If your business is eligible, you can obtain this loan anytime between February 15 and June 30.
The portion of the Payment Protection loan spent on payroll, rent, mortgage, interest, or utilities is also forgivable by the SBA as long as all employees are kept on the payroll for eight weeks. Any portion of the loan that is unforgivable will be treated as a two-year loan with a 1% interest rate. However, payments on this amount will be deferred for 6 months. While the current Paycheck Protection Program funds have been accounted for and are set for distribution, Congress is working diligently to provide additional funds to continue offering the program to assist businesses.
Unemployment benefits are also being extended. Individuals that can qualify for unemployment now include those diagnosed with COVID-19, have a household member with the disease, are caring for someone with the disease, or are quarantined due to the disease. It also applies to individuals who cannot go to work due to coronavirus, is unable to begin their job, has become a widower of someone who was diagnosed with coronavirus and was the primary money maker, someone who quit due to coronavirus, and if your business closed. In addition, gig workers and self-employed workers are also covered under the CARES Act.
Typically, if you’re younger than 59 1/2, the IRS slaps you with a 10% penalty when you withdraw money from your 401(k). But under the CARES Act, you can withdraw up to $100,000 penalty-free during the 2020 fiscal year to ease financial hardships caused by the coronavirus.
Withdrawal will still be subject to your ordinary income tax rate, but instead of paying the lump sum this year, you can disburse payments over a three-year term.
To encourage businesses to keep employees on their payroll during the slowdown, the IRS is offering a refundable 50% tax credit of up to $10,000 in wages paid by an eligible employer.
An eligible employer is defined by a business that is temporarily suspended in any form due to coronavirus, or that is making less than half its average revenue.
Employers can immediately claim the tax credit by withholding taxes that they would otherwise deposit each quarter. If credits exceed their tax liability, then employers can file a Form 7200 to receive an advance refund.
Ordinarily, business owners collect 6.2% of their employees’ wages for Social Security Tax and then match their contribution dollar for dollar. But the CARES Act allows employers to delay paying their portion of payroll tax in full until December 31, 2022, with at least 50% being due by December 31, 2021.
It is important to note that all businesses are approved for the deferral, but if you receive a loan under the SBA’s Paycheck Protection Program, you will not be eligible.
Under the Families First Coronavirus Response Act, businesses with fewer than 500 employees will receive tax credits for the cost of providing paid leave to employees if taken for specified reasons related to COVID-19.
The tax credit will reimburse employers for 100% of the employee’s salary and health insurance costs. Employers will also face no payroll tax liability for the paid leave.
Don’t try to navigate these muggy waters all by yourself. Working with a tax and accounting expert is the best way to make sure you take advantage of the new stimulus package. If you have additional questions regarding the CARES Act, we recommend you visit the IRS’s page for Business Tax Relief.