1. Divide revenue into major, relevant categories. This way both the specific source and respective amounts of each revenue stream can be identified. Track revenue by product, service, customer, profit unit, region or any other relevant method. For example, say you own a bicycle shop that does repairs, new and used sales, and rentals.  There would be at least four revenue categories separating each kind of income received:  repairs, new sales, used sales, and rentals. This will allow you to see the customers, products or services that generate the greatest amount of revenue. It also allows for a comparison of profitability and the amount of contribution to the bottom line from each individual revenue stream.

2. Each week pick a day that will be a “cut-off” day such as Friday or Saturday and on this day summarize the following data:

1. Current week’s revenue
2. Previous week’s revenue
3. Current month-to-date revenue
4. Revenue for the same period last month
5. Weekly and month-to-date revenue for the same period of last year
6. Year-to-date revenue for the current year
7. Year-to-date revenue for the same period of last year
8. At the end of each month summarize the following data:

* Revenue for the current month just ended
* Revenue for the previous month
* Revenue for the same month last year
* Year-to-date revenue for the current year
* Year-to-date revenue for the same period last year

Remember to separate all revenue comparisons into major relevant categories (products, service, customer, new and used sales, etc.) as well as the totals. This level of revenue detail can be integrated into future strategic planning and marketing to help grow the business and improve its profitability. Tracking business revenue in an organized and systematic way can help target and capture a greater market share of those more lucrative revenue streams.

If it is more and more difficult to manage bookkeeping and accounting tasks, call or email Your Administrative Solutions for a free consultation at 1-866-363-5580 or fran@youradministrativesolutions.com

The first thing you should do is decide what is important but not urgent in the business. Is it selling more products, generating a larger and more profitable customer base, or improving the quality of your service? What are your long and short term goals? For most entrepreneurs the answer would be growing the business and generating more profits. How you spend your time should be aimed at achieving those goals.

If you find that your business drifting from goals and priorities, perhaps it’s time for you to work out how much time you spend each day adding value to your business. Compare this to how much time you spend doing things that don’t really contribute to the business’ goals.

Track your time: If you’re tech-savvy, there are many different internet and mobile apps designed to invoice clients for work completed. These programs can easily be set up to track time by client and project. Or keep it simple and carry a notepad with you for a few days and make a note every time a different task is started and completed. Once you have spent a few days tracking time take a look at your results. You may be surprised by how much time you spend on administrative tasks or unproductive activities. Categorize your different activities by determining if they are urgent or important. Urgent being that “squeaky wheel” and important being tasks that drive your business towards achieving its goals.

Analyze your time: Now that you know where time is being spent, analyze how your time spent matches up with the business goals. Where are you spending the majority of time? Is that time spent adding value to the business? Is your time being spent on “important” tasks or “urgent” tasks.

Implement change: You know what is important to your business and how to drive your business towards your goals, and now you know how much time you are spending doing just that. Is it enough? If not, try using these tips to help manage time to meet business goals.

* Say you currently spend 20% of your day doing tasks that are important to reaching business goals; try increasing that time by 50%. So instead of two hours a day planning a marketing strategy or researching a new product that will increase revenue, spend four hours.

* Get someone else to handle the trivial tasks that suck up valuable time, if the task isn’t helping reach business goals, hire part time help. Your time will be well spent driving the business towards its goals and its future success.

If it is more and more difficult to manage bookkeeping and accounting tasks, call or email Your Administrative Solutions for a free consultation at 1-866-363-5580 or fran@youradministrativesolutions.com

Keeping good records is a very important part of the growth and maintenance of a business. A good set of records makes it easier to:

• Monitor the progress of the business
• Prepare financial statements
• Identify source of receipts
• Keep track of deductible expenses
• Prepare your tax returns
• Have supporting documentation of items reported on tax returns

Monitor the progress of the business

Good records are needed to monitor the progress of a business. Records can show whether business is improving, which items are selling, and what changes need to be made.

Prepare financial statements

Good records are essential to prepare accurate financial statements. These may include income statements and balance sheets.

Keep track of deductible expenses

It is easy to forget expenses when preparing a tax return unless they are recorded when they occur.

What is the best way to keep records?

Use any recordkeeping system that clearly and accurately reflects income and expenses. Be sure to separate business and personal receipts as well as taxable and nontaxable income.

• Recording expenses: Record expenses when an item is acquired.
• Keep a record of business assets: Business assets are such things as property and equipment owned and used by the business. Always keep a complete and detailed record of such assets showing when they were acquired, how much was paid for them and how the assets are used in the business. This record will help depreciate assets properly and report the correct gain or loss when the item is disposed.

How long should records be kept?

The length of time depends on the action, expense, or event that the document is associated with. You must keep records as long as they may be needed to prove the income or deduction.

How long should employment tax records be kept?

4 years.

What should be done when records for tax purposes are no longer needed?

Do not discard them without checking to see if they are needed for other purposes. Insurance or creditors may require them to be kept longer than the IRS does.

The most critical numbers of your business can be found on three very important documents a balance sheet, income statement and cash flow statement. Below is a quick review of these basic financial documents that track the flow of money within your company.

1. Balance Sheet: A statement of the assets, liabilities and capital of a business at a particular point in time. This is a cumulative document from the time you started your business, reviewing your balance sheet will give you a good perspective on the financial strength and capabilities of your business.

2. Income Statement: This document otherwise known as a profit and loss statement or P & L, lists your company’s income minus your company’s expenses during a specific period of time-usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs.

3. Cash Flow Statement: This document will help you understand why, even if your company appears to be turning a profit, you still don’t have much money in the bank. A cash flow statement shows the amount of cash generated and used by a company in a given period. It is calculated by adding non-cash charges to net income after taxes. Cash flow can be attributed to a specific project, or to a business as a whole. A Cash flow statement can be used as an indication of a company’s financial strength.

Now that we have a basic understanding of the three important financial documents and how they track the critical numbers for your business, let’s move on to profits and understanding critical profit numbers. There are three important and basic terms that represent the profitability of your business, gross margin, net income, and EBITDA (earnings before interest, taxes, depreciation and amortization).

1. Gross Margin: Gross margin or profit is your company’s total sales revenue minus its cost of goods sold and divided by the total sales revenue and expressed as a percentage. In other words, the gross margin represents the percentage of total sales revenue that your company retains after incurring the direct costs associated with producing the goods and services sold. The higher the margin, the more the company retains on each dollar of sales to service its other cost and obligations such as salaries, rent, advertising, telephone and utilities and still make money.

2. Net Income: Your Company’s net income or bottom line is an important measure of how profitable your company is over a period of time. The net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is critical because it reveals how much money is left in your business after all the expenses are taken out, if the number is negative your company is not profitable and has in effect produced a loss.

3. EBITDA: Earnings before interest, taxes, depreciation and amortization is often used to make profits look better in comparison to net income. Although EBITDA is widely used as a way to report earnings for a company it can be deceptively optimistic because it doesn’t take into the expenses of taxes and interest payments. EBITDA is best used to provide a cleaner view of a company’s core profitability, the higher the EBITDA margin, the less operating expenses eat into a company’s bottom line leading to a more profitable operation.

Tracking your business profits should be self- explanatory, however there are several terms that represent the profitability of your business which can make things confusing. Understanding the three terms and definitions above should give you a better grasp on how to track your company’s critical profit numbers.

What can a database do for you?

• Collect contact information accurately from large groups.
• Run reports daily, weekly, or monthly.
• Track your most valuable customers so you can target your marketing.
• Track the condition or status of assets and inventory.
• Keep track of not only who’s on your guest list, but where they’re staying, and what they are eating.
• Keep track of your customers’ key information, buying habits, and more.
• Track projects, tasks, and the people assigned to them.
• Track the progress of team activities.
• Manage quotes and create invoices.
• Establish your pricing and keep track of your competition.

Databases save time – A database pulls up information with a simple query, rather than rummaging through endless piles of paperwork a user can enter specific keywords in order to recall information.

Databases are secure – File cabinets can be stolen, lost or destroyed. A database can be password protected and stored in a remote facility adding another level of security to valuable information. Databases are inexpensive managers – After the initial investment a database will save money over the long term by improving efficiency of employees, saving on paper costs and impressing customers who will not need to repeat their information.

Databases aid in communication – If your company has more than one branch a central database can be viewed by all employees creating a cohesive work environment. You can also make your business more competitive by tracking important trends such as which product are most popular with your customers.

Information is king in the business world. It is important to deal with data in an organized fashion. Customer names and information need to be logged, reports need to be generated about product demographic, customer surveys and profits to name just a few important areas.

Database management is another area that small business owners especially don’t have time to look after. It takes time to organize this information and that takes you away from the business of selling and creating new products. A business captures data in order to grow. They would discover their strong areas, weak areas or whether past and future marketing campaigns were a success.

There are considerable advantages of using a database for keeping and managing information.
If you are a business owner, creating a database can save you time and money, however creating the database it’s self can be time consuming and costly. Consider hiring a virtual bookkeeper or virtual professional to create one for you and save yourself the hassle and headache of doing it yourself, then enjoy the benefits of saving time, increased communication, more security and more efficiency within your business.

If you are interested in setting up a database – and time is not on your side. Your Administrative Solutions can assist you with this task. Stop by for a visit, http://www.youradministrativesolutions.com and sign up for a free consultation to find out how we can help you free up your time so you can work in your business!

Bookkeeping is a job that most business owners can handle themselves. Unfortunately most business owners would love to forget about bookkeeping. Should you spend your time focusing on core business activities or organizing and tracking receipts? Many business owners underestimate the amount of time it takes to track a company’s fiscal details especially in small business settings. Owners can get wrapped up in attending to every aspect of day to day operation of their company that there is simply no time left for bookkeeping. The success of any business depends on keeping track of your income and expenses, thereby improving your chances of making a profit.

When considering if you should hire a bookkeeper for your business, ask yourself this: what do you as a business owner want to focus your time on? The following are necessary bookkeeping tasks that must be performed diligently to make sure the “business” end of your business runs smoothly.

• Account statement reconciliation
• Categorizing expenses
• Keeping track of receivables
• Tracking income
• Paying employees
• Filing and paying federal and state taxes
• Keeping your records audit ready
• Generating accurate financial statements

If you find yourself doubting your ability to perform these tasks, wishing you didn’t have to, or realizing you really don’t have the time to do them properly, maybe it is time to consider hiring a professional bookkeeper so you can focus on the important tasks of your core business activities. After all, it is a well-known mantra that professionals hire professionals!

1. Give your accountant plenty of time to prepare your taxes. Giving your accountant sufficient time to work on your taxes will help you avoid filing late and save you from having to pay penalties and interest.

2. Use bookkeeping software. Using bookkeeping software is essential and can save you a lot of money when it comes time to hand everything over to your accountant. Using a simple spreadsheet format like Excel can actually end up costing you more
money with inaccuracies and the time it can take your accountant to figure it all out. Accountants are familiar with bookkeeping software and know exactly what they need and where to find it and this will save them time and you money.

3. Download the necessary reports. If you are using bookkeeping software such as QuickBooks this should not be a problem, you will most likely need an income statement, balance sheet, aged receivables and payables, general ledger and sales tax if applicable.

4. Make sure your totals add up. If you are not using bookkeeping software and already have an excel spreadsheet make sure it all adds up. Always have totals at the bottom of your summaries and use the formulas excel provides so your accountant can easily reconcile your totals. If your accountant has to spend extra time fixing errors and making sure they reconcile because he/she is not confident the numbers are correct, it will cost you extra money.

5. Don’t miss any expenses. The time it takes your accountant to call you, receive missing documents and make adjustments will cost you more money. If your accountant is good they will know what expenses are typical for your type of business and if they see something is missing they will go looking for it taking up their valuable time and costing you more money. Save money by double checking all of your expenses before you meet with your accountant.

6. In case your accountant has any questions make sure you are available and respond quickly.

If documents are missing or questions arise your accountant should be in contact to resolve these issues, make sure you are available and respond quickly. Your accountant is most likely working on several clients and if they have to wait to hear back on a question your file could end up on the bottom of their pile. When they do get back to it, time is needed to re-familiarize themselves with your file, costing them time and you money.

Tax time can be stressful, time consuming and costly, being prepared and implementing these tips can help save you time and money at least when it comes to your accounting bill. If you need assistance preparing your financial software for your accountant or do not know how to prepare, please give Your Administrative Solutions a call for a free consultation on how to get started with your preparation.

No matter what kind of business structure you operate under; sole proprietor, LLC, S Corporation or C Corporation, be vigilant about how you manage your books. Here are a few things you can do to help you avoid the audit “red flags”.

1. Take all the business deductions you are allowed on your tax return but make sure you can back it up. Keep files of all your bills, receipts and sales information in order to back up all the income and expenses you claim for your business.

2. Avoid using personal checks and credit cards for business expenses and business checks and credit cards for personal expenses. But if you must, keep detailed records of each transaction, keep your receipts, copies of your credit card bills and bank statements. If you are using bookkeeping software, buying a personal item out of your business account would be entered as owners draw and if it’s a business expense out of your personal account it would be considered an owner contribution or equity.

3. If you have employees or independent contractors make sure they are what you say they are. The IRS is cracking down on employers who claim they use independent contractors who are really considered employees. This can be a costly mistake and a huge audit “red flag”.

4. Take reasonable deductions, a first year business that earned $5000.00 in sales and claims $8000.00 in deductions for a conference and travel expenses will have the IRS red flag pointed right in its direction.

Budgeting is important, estimating and matching expenses to revenue helps small business owners determine whether they have enough money to fund operations, expand the business and generate income for themselves.

Without a budget a business runs the risk of spending more money than it brings in or not spending enough money to grow the business and compete.

The performance and cash flow of your business should never be a surprise, create your budget and update it often, this will help you decide which areas of your business are over performing and which are under performing.

Below you will find some helpful tips in creating the road map for your business, your business budget:

1. Create a short term and long term budget. A new business should have a more detailed budget that is included in your business plan along with a monthly budget forecast for the upcoming year and a 3-5 year estimate of revenue and expenses. Established businesses will find the best forecast for the future is prior performance so follow the same rules as a new business but base your estimates on prior revenue and expenditures.
2. Create expense categories to calculate what you will spend and when you will be spending it. This will help eliminate surprises like the extra expense of having to hire temporary employees for the holidays.
3. Create three versions of your short-term budget. Conservative – your worst-case scenario, expected – what you truly expect to happen and optimistic-your best case scenario. It is important to be realistic by not using too much wishful thinking and therefore losing the benefit of your budget.
4. Calculate the number of employees you will need for your business. Employees are often the biggest expense for most businesses, by determining how many employees you will need to produce goods or services you will be able to estimate what kind of a strain employees will put on your businesses budget.

Budgeting is an easy and essential way for business owners to forecast current and future revenue and expenses. Your goal when creating your budget should be to make sure there is enough money available to keep your business up and running, to grow your business, to compete and to ensure a solid emergency fund.

If earnings were less than $600.00 from a client and a 1099 was not received, that income must still be reported to the IRS. For each independent contractor who has earned more than $600 for your company for services rendered in 2011, copy A of the 1099 must be sent to the IRS. However, the contractor is not required to provide a 1099-MISC form. When someone begins to work for you, know beforehand if that individual is an employee or an independent contractor.

When using financial software, such as QuickBooks, set up each independent contractor as you go along throughout the year. Enter their EIN or Social Security numbers into the information fields. If not using financial software, use other on-line software that will help generate 1099′s such as http://www.filetaxes.com.

1099 Deadlines & Specifics:
• By January 31st – Send 1099 copies B & 2 to the contractor
• By February 28th – Send copy A & copy 1 to the IRS and State Department
• Copy c is the business owner’s (Payer’s copy for their records)
• Copy A (In Red Ink) is sent to the IRS

In recent news it has been learned that the federal government estimates that there is a $300 billion “Tax Gap” each year. This is the difference between the amount of money individuals and businesses owe to the government and what they pay. A new form called a 1099K is intended to help catch those who don’t properly report their income to the IRS.

The floor to the new requirement is less than 200 transactions for the year totaling less than $20,000. Typically credit card and debit card companies have to report these levels of transactions to the IRS. The new law also applies to companies like PayPal and Amazon.com. Because of the change in the law, the social security number or Employer identification number will need to be reported to payment processors like PayPal or credit card companies.

The 1099-K is the latest addition to the family of 1099 IRS documents. The 1099K joins other 1099 forms that report things like interest income, dividends, and distributions and miscellaneous income.

If you’re an independent contractor, 1099′s are likely to have hit your mail box now. These are the tax documents sent by business owners for whom you’ve done $600.00 work or more in the past year. As business owners are required to meet the first 1099 deadline by having them in the mail by January 31st for independent contracting work done in 2011.