10 Things to Consider When Choosing an Accounting Firm

Every year legislators twist and tweak tax laws, leaving the average citizen scratching his head when faced with financial decisions such as selling investment property or claiming a tax deduction for a home office. Accounting firms stay abreast of the new tax laws, and many offer financial advice and help individuals and small businesses develop budgets and set financial goals. Whether you need someone to handle weekly payroll or you just want reliable tax advice, you’ll be happier with your choice if you ask some preliminary questions.

Fees
Accounting fees vary from one firm to the next. Some accountants charge a set rate for each financial task they perform, such as filing a 1040 personal income tax form, preparing a profit and loss statement or compiling a statement of net worth. Other firms charge by the minute, and every phone call you make to the accountant will raise your bill.

Business Specialties
Accountants generally specialize in a few business areas in order to offer clients better service. A retail tax accountant might not be as much assistance to a farmer as an accountant who specializes in helping rural and agricultural clients.


Certification
Tax preparation firms hire and train tax preparers to assist the public in filing income taxes, but these firms can’t offer in-depth advice to small businesses. In general, the greater your accounting needs, the more you’ll benefit from a general accounting firm that employs certified public accountants, or CPAs.

Advice
Some accounting firms are quick to offer advice on when to purchase equipment and how to keep financial records, while other accounting firms compile the necessary financial reports but offer little feedback. The amount of advice you need or want depends upon your financial knowledge and experience. If you need a lot of help, select a firm that offers in-depth financial counseling.

Level of Service
If you need complete bookkeeping services, look for a full-service accounting firm that employs bookkeepers who handle day-to-day client transactions. An accounting firm that does not employ bookkeepers will charge more if a CPA handles routine bookkeeping tasks.

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Availability
Some clients are content to meet with their accounting firm once a year for tax-filing purposes. Others clients have frequent business questions that require timely answers. Find out if your accountant is a phone call away or if you'll have to schedule a time to come into the office and talk in person.

Personal Connection
You can hire the highest-priced accounting firm in town, but if you don’t feel comfortable discussing your finances, you aren’t getting the service you need. If the accountant talks in terms you don’t understand or if you feel intimidated, look for a different firm.

Goal Setting
Some accountants offer to help clients set goals and monitor financial progress, which can be very helpful if you’re just starting out in business. Find out the firm’s policy on goal setting and if you’ll be charged an additional fee for the service.

Audit Support
When the Internal Revenue Service comes knocking, it’s reassuring to know that your accountant will be right by your side. IRS audits are a way of life for some small-business owners and individual taxpayers, but facing an audit is a stressful situation. Some accounting firms offer their own offices for audit purposes and provide an accountant to represent your interests.

References

Old-fashioned word-of-mouth is as valuable a reference today as it ever was. Talk to friends or business associates to find out what accounting firm they use and if they would recommend it to others.

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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The 3 Smartest Money Moves You Can Make While You're Making Money

A surprisingly large number of people making good money really don't have much money.

A friend once came to me for financial advice. He made pretty good money, had no real debt, no kids, no health problems, no mortgage. On paper, he should have been doing just fine.

It was a different story in real life. He was constantly stressed, living from paycheck to paycheck. He had no savings, yet had nothing to show for all his spending. The expression on his face could be spelled out in four capital letters: HELP.

All I could do was offer some basic tips -- tips I would give to anyone, regardless of their circumstances. These tips have saved me plenty of cash and heartache over the years. They can do the same for you:

1. Live like the bonus is not going to hit.

When you go to work, work your butt off. Work like there’s no tomorrow. Strive for that bonus as hard as you can, but in your regular, everyday life, behave as if it’s just out of reach.

Never increase your cost of living above what your baseline income is. Never. Apply this rule to everything. If it’s the weekend, and you can’t afford to eat at Chili’s, eat at Wendy’s. If you can’t afford to eat at Wendy’s, grab a Digiorno’s and eat at home.

You don’t have to see the latest summer blockbuster on opening night. You can wait till it comes to the dollar theater or rent it online. All of these tiny sacrifices will build up into significant savings. When the bonus does finally hit, you’ll have learned a lot about willpower in the meantime.

2. Save for a rainy day.

We’ve all heard this one a thousand times, but according to a recent report by CNBC, only 29 percent of Americans have at least six months of emergency expenses set aside. A disheartening 55 million Americans have no emergency fund at all.

You don’t control the weather. Rainy days come; be ready for them. It’s one of the only things that’s certain. Some people are better at forecasting disaster than others, but most of us never see it coming. A lost job, a sick family member -- you can’t predict it.

If you don’t live below your means, if you don’t have cash set aside, and you’re suddenly faced with a crisis, you’re certain to move with a haste that wouldn’t be necessary if you’d just prepared a little. You’ll run up debt on your credit cards, for instance. Or you’ll take the first crappy job that comes your way, versus having an extra month or two to search for a better gig.

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3. Choose a conservative lifestyle.

Lifestyle is super hard to dial back. Once you get used to a certain level of luxury, downgrading is almost impossible. Let’s say that, owing to your rising income level, you’ve moved from Digiorno’s to Wendy’s to Chili’s to The Cheesecake Factory to Ruth’s Chris Steak House.

That’s quite a climb. But here’s my advice: Even if you can afford a higher tier of comfort, stick with the next lower tier as long as you can. Buy your groceries at Walmart way past the date you can budget in Target. Buy your groceries at Target way, way past the date you can budget in Whole Foods.

This is true of restaurants, it’s true of cars, it’s true of the place you choose to live, the electronics that keep you connected. When I started my current company, for example, my income went to zero for the first time in my adult life. My wife Rachel and I had become a Ruth’s Chris couple by then. It took two years to return to my former salary, yet in those two years we did not successfully dial back our lifestyle in any reasonable fashion. I was raised on a farm; I consider myself a disciplined person and an expert in matters of money and credit; but it was still extremely difficult to do.

If we’d climbed the luxury ladder a little slower when times were good, we wouldn’t have burned through our savings when times were tough. No matter where you are on the ladder, life only gets more expensive. Practice self-restraint on the spend side of the equation at every single stage.

Source: https://www.entrepreneur.com

Image Credit: Sam Brewster | Getty Images


Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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Money Moves to Make Now

Take action before the end of the year to save money and improve your finances for 2019.

Many people wait until the new year—and the annual ritual of New Year’s resolutions—to take stock of their finances. But there are compelling reasons to attend to some financial tasks before December 31.

The bulk have to do with taxes, so check out Last-Minute Tax Tips to Lower Your 2018 Tax Bill. We have plenty of other timely suggestions, though, including health care housekeeping, investing and saving, making the most of your credit and rewards programs and paying for college.

Health care

Spend your FSA money

If you have a health care or dependent care flexible spending account, check its balance and rules. In many cases, you’ll lose anything left in the account at year-end—although some accounts allow you to carry over up to $500 or offer a grace period for claiming expenses from the previous year. If you still have cash in the account that needs to be spent, start by reimbursing yourself for any eligible health or dependent care expenses that you overlooked earlier in the year, including deductibles and co-pays as well as uncovered expenses for glasses or contacts, prescription drugs, or dental care. Beyond that, stock up on FSA-eligible products, such as contact lens solution, first aid items and thermometers. For a list of FSA-eligible items, visit fsastore.com.

Round up HSA-eligible expenses

Unlike FSAs, health savings accounts offer an unlimited amount of time to reimburse yourself for eligible medical expenses and don’t have a use-it-or-lose-it rule, so you can let the money grow tax-free until you need it. Gather the receipts for any medical expenses that you paid out of pocket. If you didn’t reimburse yourself for those expenses this year, file the receipts so you can reimburse yourself for the expenses, tax-free, any time in the future—even in retirement.

Fund a health savings account

Were you enrolled in a high-deductible health insurance plan this year? If you haven’t already opened an HSA, there’s still time. Most policies with deductibles of at least $1,350 for single coverage or $2,700 for family coverage qualify for an account. The account will give you a triple tax break: Contributions are made pretax or are deductible on your tax return, the money grows tax-free, and the funds can be withdrawn tax-free for medical expenses. If you had an HSA-eligible policy throughout 2018, you can contribute up to $3,450 if you had single coverage or up to $6,900 if you had family coverage. People who are 55 or older anytime during the year can make an additional $1,000 contribution.

Squeeze in appointments

If you’ve met your health insurance deductible for 2018, you may save money by scheduling appointments and procedures before the end of the year—rather than in the new year after your deductible kicks in again. And most dental insurance plans cover two cleanings and have a maximum dollar amount that they will pay toward your dental care each year. If you have benefits remaining or your dentist has recommended treatments that you haven’t completed, schedule an appointment before your unused benefits disappear.

Qualify for a health care subsidy in 2019

Premiums for many insurance policies you purchase on a health care exchange are high enough to induce sticker shock, especially if you don’t qualify for a subsidy. But if you’re near the cutoff to receive a subsidy (400% of the federal poverty level, or $48,560 for singles, $65,840 for couples and $100,400 for a family of four), you can take steps before year-end to lower your income—and the amount you’ll pay for your 2019 coverage. Contributions to a 401(k), a health or dependent care flexible spending account or a health savings account, or selling stock at a loss, help reduce your modified adjusted gross income, which is used to calculate subsidies. Early retirees may also be able to qualify for a subsidy if they have the flexibility to reduce withdrawals from tax-deferred IRAs or 401(k)s.

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Credit and rewards

Freeze your credit reports

A freeze is the best way to prevent identity thieves from opening new credit accounts in your name because it blocks new lenders from viewing your credit reports, reducing the chances that someone will successfully pose as you when applying for credit. Thanks to a new federal law that took effect on September 21, both placing and lifting a freeze on your credit reports is now free. (Previously, consumers in most states paid fees.) Given the pileup of data breaches in recent years, a freeze is a wise move even if you haven’t suffered ID theft because your personal data may sit for years before someone attempts to use it.

When you request a freeze with each of the three major credit agencies—Equifax, Experian and TransUnion—by phone or online, they must place the freeze within one business day. And if you ask them to lift a freeze, they must act within an hour. For more details on how to take action , including web links and phone numbers for each agency, see Freeze Your Credit in 3 Steps.

Run a credit checkup

If you haven’t checked your credit reports in the past 12 months, visit www.annualcreditreport.com to get a free copy from Equifax, Experian and TransUnion. Review each for errors or signs of identity theft, such as an incorrect address, a credit account that you never opened, or a collection account that you don’t recognize. If you spot an error, contact any lender that’s involved to resolve the issue and file a dispute with each credit agency that’s reporting the mistake. Identity-theft victims can follow the steps at IdentityTheft.gov to have fraudulent information blocked from their credit reports.

Keep tabs on your credit reports throughout the year by signing up for a credit-monitoring service, which regularly scans your reports and notifies you of significant changes. You can cover all three credit agencies by enrolling in free monitoring at CreditKarma.com, which tracks your Equifax and TransUnion reports, and at FreeCreditScore.com, which monitors your Experian report. Each service also offers free credit-score updates and access to information in your credit reports from the corresponding agencies.

The Best Rewards Cards

Redeem your credit-card rewards

Looking for some extra green for holiday gifts or travel? Check the balance of cash back, points or miles you’ve earned with your rewards credit cards. You may be able to redeem cash back as a statement credit, a deposit into your bank account or a check. Points or miles are often exchangeable for travel bookings, cash, gift cards or merchandise. Find out which types of redemptions offer the most value; travel credit cards, for example, often provide the highest values per point or mile when you use them for travel bookings.

Sign up for a premium credit card

If you’ve been eyeing a premium credit card that’s packed with perks, now is a good time to apply. These cards often provide a yearly credit toward airline incidental fees, such as for checked baggage or in-flight meals. If the credit is provided on a calendar-year basis (rather than on your cardmember anniversary), you can claim your 2018 reimbursement for any airline fees you rack up before the end of this year, then start with a refreshed credit in 2019. Among cards offering calendar-year credits are PenFed Pathfinder Rewards ($100 credit), Bank of America Premium Rewards ($100 credit; $95 annual fee) and American Express Platinum ($200 credit; $550 annual fee).

Investing and Saving

Rebalance your portfolio

Suppose that three years ago you put $60,000 into Vanguard Total Stock Market Index fund and $40,000 into Vanguard Total Bond Market Index fund because you wanted a 60%-40% split between stocks and bonds. Looking at your portfolio today, you have $127,270 in your account. (Returns are as of October 12.)

Great! But now the split is 68% stocks and 32% bonds because stocks have soared and bonds have bored. You have a riskier portfolio than you wanted. It’s time to rebalance by moving enough from your stock fund into your bond fund to regain a 60-40 mix. (In this case, you’d sell $9,852 from Vanguard Total Stock and invest it in Vanguard Total Bond.)

Aside from reducing your risk, you’re also selling high and buying low. You don’t have to rebalance often because stocks and bonds are remarkably self-balancing. But check your asset mix at least once a year to make sure you’re not out of whack. And examine your portfolio for other imbalances: Your Apple stock may have been a great call, but if it’s now 30% of your portfolio, you’ve got a lot riding on cell phones. Consider trimming it.

Finally, think about your asset mix and whether it’s still right for you. If a mix of 70% stocks and 30% bonds was good a decade ago, for example, it might be time to slice stocks to just 60% and maybe add some cash. After all, you are 10 years closer to retirement, and the recovery and the bull market are long in the tooth.

Get a better rate on your savings

The Federal Reserve is expected to raise interest rates once more before the end of 2018. That means yields on savings accounts should continue rising as well. Rates at online banks are generally much better than those at brick-and-mortar institutions. For example, the MySavings Account from internet bank MySavingsDirect recently yielded 2.25%, with no minimums or monthly fees. And don’t discount money market deposit accounts, which may offer limited check-writing. Ken Tumin, of DepositAccounts.com, says rates are similar to those of savings accounts at many banks.

To compare rates in your region, visit www.depositaccounts.com and select “Savings Accounts,” then “Personal Savings Accounts.” Scroll past any sponsored accounts and click on the “Details” arrow for each bank. The rate history chart will tell you how its rate has fluctuated over time. Bank accounts that have offered consistently high rates for several years are better bets than a brand-new account with a high promotional rate.

Education

Prepay college expenses

If you have a student in college, consider paying the tuition bill for the first quarter of 2019 by New Year’s Eve, so you can take full advantage of the American Opportunity tax credit on your 2018 tax return. This credit, which you can claim for students who are in their first four years of undergraduate study, is worth up to $2,500 for each qualifying student. You don’t have to itemize to claim the credit, which gives you a dollar-for-dollar reduction in your tax bill. Married couples filing jointly with modified adjusted gross income of up to $160,000 can claim the full credit; those with MAGI of up to $180,000 can claim a partial credit.

Planning to take a class next year to boost your own career? If you pay your January bill before December 31, you may be eligible to claim the Lifetime Learning Credit on your 2018 tax return. The credit is worth up to 20% of your out-of-pocket costs for tuition, fees and books, up to a maximum of $2,000. It’s not limited to undergraduate expenses, and you don’t have to be a full-time student to claim it. Married couples filing jointly with MAGI of up to $112,000 can claim the full credit; those with MAGI of up to $132,000 can claim a partial credit.

Contribute to a college-savings plan

Contributions to a 529 college-savings plan won’t reduce your federal taxes, but they could provide a state tax break. More than 30 states offer a state income tax deduction for 529 plan contributions. A few states give you until April 15, 2019, to make a tax-deductible contribution for 2018, but most require the contribution by year-end. In most states, you must contribute to your own state’s plan to get the tax break, but seven states allow you to deduct contributions to any state’s plan. Check out your own state’s rules at www.savingforcollege.com. Many states allow grandparents and others to contribute to your child’s plan, and a few will allow them to deduct their contributions, too.

If you or someone in your family has special needs, you can contribute up to $15,000 this year to an ABLE account, which allows people who developed a qualifying disability before age 26 to save money without jeopardizing government benefits. You don’t have to invest in your own state’s plan, but nine states offer a tax deduction for contributions.

Source: https://www.kiplinger.com

Image Credit: Richard Borge

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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How to Save Your Business Money with WiFi Calling

As mobile phones became a ubiquitous part of our daily lives, managing minutes kept costs under control.

Today, we are less concerned with using minutes, and more concerned about data usage.

As a result, mobile users and providers must track data usage with the same diligence used for tracking minutes.

Before we get too far, what exactly is data usage?

Data usage is any activity that requires the mobile network (aside from calls) to transmit or access information.

This includes using your phone’s web browser along with streaming services. The streaming services are responsible for the lion’s share of data usage.

This is why many users end up with data overages.

We all know that today’s mobile phones are equipped with WiFi technology; therefore, a natural solution for mitigating data usage and overages is connecting to WiFi whenever — and wherever — possible.

WiFi is much faster connection than 4G — the mobile network used by most carriers.

Since WiFi connects to broadband, most broadband plans allow for data transmissions exceeding 100 GB. Businesses often have larger broadband data caps.

Now that you know more about the technical details, one of the most important questions related to WiFi calling is:

Does WiFi Calling Use Data?

The answer from nearly every prominent mobile phone provider is no.

So, without further adeu, here are some tips on how to make WiFi calls.

How to Make WiFi Calls

Making WiFi calls is extremely easy. For nearly every phone type, simply go to the Settings menu, then Phone, and toggle the WiFi Calling option to “On.”

Because many different carriers are enabling WiFi calling on various devices, and not counting WiFi calls against data plans, users can easily set their phones and devices to automatically connect with any available WiFi networks when in range. This will help you to manage your data effectively.

WiFi calling is also an easy way to keep your data usage low while getting better service.

How to Track Data and WiFi

If you use WiFi often, then your mobile data usage is probably quite low. However, it is still important to track your mobile data, and here are some reasons why:

How Data is Used

Many phones and devices break down the different types of data usage. This allows you to not only make WiFi calls, but also perform other activities, such as stream media but use less data.

The average call uses roughly 4MB. High-definition video uses a lot more data. In fact, an hour of streaming video in high-def can cost you up to 1 GB of data!

There are several ways to track your data. Mobile phone services make it easy because data is critical for any mobile plan today. Again, you can easily make it a habit to track data by opening up your service provider’s app and clicking on data. You’ll see how much data you have used and how much is left for the month, or billing period.

Using WiFi service as much as possible lowers your mobile data usage tremendously. If you’re looking for a deeper dive, there are many apps that break down data usage by type. This is helpful for managing data when WiFi is not readily available.

The Right Plan

Having a plan with limited or little data can be very costly. Conversely, a plan with a great deal of unused data is essentially giving away money.

Monitoring your data allows you to average your monthly usage and select a plan that is the best possible fit for your needs.

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WiFi Calling for Businesses

Businesses appreciate the convenience of WiFi calling in order to keep costs down. Larger businesses may have employees on mobile business plans with pooled data. WiFi calling is preferred because saving data is paramount.

Many businesses have shifted to VoIP systems due to convenience. But how does that help executives and team members on the go? Nextiva shows how a WiFi network provides the same experience as a VoIP setting.

As detailed in this blog, the increased functionality provided by WiFi gives professionals greater flexibility. Connecting to WiFi provides a sense of professionalism with clear, high-quality calls that don’t drop.

Furthermore, a great VoIP network over WiFi increases productivity and efficiency, which have a direct impact on bottom line.

Voice Packets vs. Data Packets

Today’s best VoIP systems implemented over WiFi prioritize the transmission of voice packets over data packets.

What does this mean? Consider an example…

Think about standing in a line to board an airplane. In most cases, VIP and first-class passengers board first. Then, the economy or coach passengers board next.

Voice packets are the VIP/first-class passengers, and data packets are the economy passengers.

Prioritizing information transmission in this order ensures higher quality calls. The data arrives at its destination without any disruption or noticeable delay.

The needs of a voice call – clarity, reliability, and immediate connection upon dialing – get lost in the shuffle, if this prioritization is not in place.

Why WiFi Calling is the Answer

All in all, WiFi calling is clearly more cost effective than data availability and usage. Furthermore, WiFi calls are often clearer, higher quality, and are more reliable than similar calls on mobile networks.

Therefore, adopting and implementing a VoIP solution and WiFi network for calling is a great way for business to cut costs while also increase quality.

One of the best ways to make sure this process is done correctly is partnering with a trusted partner in this field. Nextiva is a leader in the field of VoIP calling. Give your business the cost-effective calling solution today with Nextiva.

Source: https://smallbiztrends.com
Image Credit: Shutterstock

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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Cloud Accounting: It’s The Present And The Future

Has your business accounting made the leap to the cloud? If not, why not?

Cloud accounting has exploded in popularity in the past few years. Online accounting software company Xero has over 1.38 million subscribers and rival QuickBooks has over 2.55 million subscribers. Another main player is Sage Business Cloud Accounting, and there are a growing number of software companies offering a wide range of cloud accounting choices to the business world.

With HMRC’s digitalisation of tax reporting due to be phased in from next year, there’s never been a more pressing time for businesses to review their current accounting requirements. Choose cloud accounting and you will most certainly be future proofing your business accounting processes.

What is the cloud?

The ‘cloud’ is short for cloud computing and is essentially a vast global network of servers, which are linked together as a single ecosystem. The services cloud computing delivers includes storage, databases, networking, software, analytics, intelligence and more.

The Microsoft Azure beginner’s guide to cloud computing is a good read for further insight.

What is cloud accounting?

Cloud accounting is accounting using software accessed over the internet that is hosted remotely on the cloud. All functions are performed off-site and users access the applications remotely through the internet.

What’s the difference between cloud and desktop accounting software?

Desktop accounting software is installed onto and run on your computer. With desktop software all data relating to your accounts is stored on your computer’s hard-drive. Cloud accounting software runs on the internet. Cloud accounting is more flexible because it can be accessed on any device with an internet connection, whereas desktop accounting is only available on the on-premises computers where it has been installed.

Cloud accounting can also update financial information automatically enabling real-time reporting. There’s also far less maintenance required with cloud accounting as back-ups and updates occur automatically.

Which cloud accounting software is best for my business?

Almost certainly cloud accounting is the way forward for any business looking to update their accounting processes. PC Magazine has a review of the best accounting software of 2018. There are many online accounting software services to choose from.

Consider ease of use, the facility for multi-currency transactions, how easily you can integrate the system with other business software, system flexibility, customer support and pricing. Also consider the availability of add-ons or modules, such as payroll and connecting to your ecommerce system.

Here are 23 FAQs on choosing and using accounting software to help you.

The benefits of cloud accounting

• Data in the cloud can be more easily shared, for example with HMRC and your accountant
• It’s more efficient, which means cost savings
• Cloud software can download transactions from your bank. With a few simple set-up requirements your bank statement can be reconciled in minutes, rather than hours
• Easy to use
• Effective reporting
• Software as a service (Saas) offers huge cost savings and enables businesses to scale accounting requirements as they grow
• Quick and easy technical support
• All ready for Making Tax Digital

Why accountants love the cloud

“Cloud accounting streamlines certain tasks, enables accountants to access client data in real-time for accurate forecasting – and also offers a significant reduction in data discrepancies. With time saved on number crunching, we are able to offer better value to clients and focus more on business strategy and advice.” OS Accounting

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Why your business should make the move: Making Tax Digital

In the UK, the government’s plans to end the paper tax return under its ‘Making Tax Digital’ proposal is forcing UK businesses to look at the compatibility of current accounting systems for future tax reporting. As part of this move, businesses will be required to keep digital records and submit quarterly updates digitally to HMRC.

Making Tax Digital is due to be phased in from 2019, with the mandatory reporting of VAT for those with a taxable turnover above the VAT threshold. As for further implementation, Brexit may interfere with project release dates. HMRC are scaling back digital projects to support EU exit work, such as the frictionless movement of goods and revenue collection at the border between the Republic of Ireland and Northern Ireland.

But, despite possible delays, the UK’s tax system is getting an overhaul and in the very near future is expected to be one of the most advanced tax reporting systems in the world. For this reason alone, cloud accounting should be a serious consideration for businesses of all sizes.

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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The Simple Pros and Cons of Accepting Cash in Your Small Business

A growing number of small and midsize businesses are going cashless—accepting payments only by debit card, credit card or mobile wallet. The Los Angeles Times is one of several outlets reporting on the trend. Last year Visa held a “Cashless Challenge” giving $10,000 to each of 50 small business owners who went cashless. Winners were uniformly enthusiastic about the benefits of being cash-free.

Cashless Businesses on the Rise

So far, the no-cash trend is mostly limited to restaurants, usually fast-casual chains that want to keep lines moving during busy day parts. However, 44% of consumers in a TSYS survey prefer paying with debit cards and 33% prefer paying with credit cards; just 12% prefer using cash. Is the time approaching when going cash-free in your retail store will be a smart move?

Cash Cons

Entrepreneurs who’ve banned cash payments tick off a list of complaints about cash:

• Cash payments slow down the line at the register as customers count their money and salespeople make change.
• Having cash in the register makes a store more susceptible to employee theft and can also expose employees to the risk of robbery. You and your employees may not feel safe leaving the store at closing time with a lot of cash to deposit.
• The time needed to count and recount cash, reconcile the registers at the end of the day, and take cash to the bank to deposit could be better spent on growing your business and providing better customer service.
• Accepting cash means you risk accepting counterfeit bills by mistake, particularly if you accept bills over $20 in denomination.

Cash Pros

Of course, there are some reasons to accept cash, too.

• You get the money immediately — you don’t have to wait for a payment to process.
• Unlike credit card payments, there’s no merchant fee to your business for accepting cash.
• By not accepting cash, you’re shutting out some customers, such as:
• Teenagers who may not have credit cards or bank accounts but have cash to spend
• People who prefer operating cash-only as a budgeting tactic
• People who don’t have bank accounts, have bank accounts without debit card functionality, or don’t have credit cards. According to the Federal Reserve, 5% of Americans are unbanked (meaning they have no bank account) and 18% are underbanked (meaning they have a bank account but frequently use alternative financial services like payday lenders and check cashing services).
• A bill introduced in Washington, DC, last year would make it illegal for retail food businesses to insist on card payments, based on the belief that refusing to accept cash is discriminatory against low-income consumers.
• Before you decide not to accept cash, you need to assess the risk of offending some customers who may stop shopping at your store.

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Ready to Ban the Buck?

Before you ban cash, do some math to make sure if it’s worthwhile for your business.

• What percentage of your customers actually pay by cash? Track this for a month.
• How much time do you and your employees spend dealing with cash (counting cash, reconciling registers, and making trips to the bank?) Track this for a month.
• What type of merchant card fees are you paying to accept payment cards or mobile payments? How much does this add up to in a month?
• Is your bank charging you to accept cash deposits?

It may actually cost you less to go cashless when you add up the time saved. (And check with your insurance agent to see if going cashless will lower your store’s insurance premiums.)

Federal law does not require a business to accept paper bills or coins. According to the Treasury Department, “Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.”

If your state laws say you’re in the clear and you decide to go cashless, you must also inform customers of your no-cash policy before goods are exchanged. You can easily do this with signage in your checkout area.

Not ready to go totally cash-free? Do what a growing number of entrepreneurs are doing: Post a polite sign letting customers know that you prefer card or digital payments, but that you’re happy to accept cash, too.

Source: https://smallbiztrends.com

Image Credit: Shutterstock

Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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New 20% Deduction for Small Business Owners Offers Tax Savings

As a small business owner or self-employed professional, you should be on the lookout for any tax savings possible. While you’ve given up some benefits associated with being a W-2 employee, you are now paying self-employment tax and probably have the additional expense of totally funding your company’s health insurance. All of these costs can add up very quickly!

Tax reform, or the Tax Cuts and Jobs Act signed into law in December 2017, offers something new and unique: a 20 percent deduction beginning in tax year 2018 (January through December 2018) on pass-through income from sole proprietors, limited liability companies, partnerships and S corporations.

In short, the 20 percent deduction applies to Qualified Business Income (QBI). This includes the net amount of income, gains, deductions and losses associated with a trade or business, but not investment-related items, such as capital gains or losses, dividends and interest income. In addition, the new deduction is taken below the line, which means it reduces taxable income not adjusted gross income.

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Two Limitations on High-Income Earners

The Act does set limits on how much people with high incomes can deduct:

1. Professional service industries. If you work in health, law, consulting, athletics or financial fields, for example, the new rules deter high-income taxpayers from trying to convert wages or other compensation from personal services into income that qualifies for the deduction. The 20 percent deduction would begin to be phased out for those who earn more than $315,000 (for couples) and $157,500 (for singles). The deduction is fully phased out when income reaches $415,000 (for couples) and $207,500 (for singles).
2. All industries. For high-earners in all other industries, the new act uses another calculation to limit the deduction. The limit would be set to whichever is higher: 50 percent of total wages paid or 25 percent of wages plus 2.5 percent of the cost of tangible depreciable property. This means pass-through entities that pay a large amount of employee wages or are in capital-intensive industries can take more of the deduction.

Tax Savings’ Opportunities

One benefit of working with a tax or accounting professional is the ability to explain this benefit in more detail as well as run various scenarios to optimize the 20 percent deduction.

Here are three examples:

1. Because of the phase-outs and threshold amounts, married taxpayers may want to compare married filing jointly versus married filing separately to see which status yields the higher benefit.
2. Generally, it’s advantageous to reduce W-2 wages to minimize self-employment taxes. However, increasing W-2 salaries to a certain level may be necessary to optimize the 20 percent deduction. Thus, converting a 1099 contractor to a W-2 employee could be beneficial.
3. Small businesses qualifying for the 20 percent tax deduction could see their effective marginal tax rate reduced to 29.6 percent. Under the new law, the top income tax rate for C corporations is reduced to 21 percent. C corporations are taxed twice (once on the income and then on the returns to investors), so it may not make sense to convert an S corporation to a C corporation.

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Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.

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