January 14, 2022

Payroll

Understanding the W9 Form & How to Complete in 2022

By Jess Brown

There are several boxes to check after a business hires its first contracted employees or vendors. The W9 Form is one of the many tax documents required by the IRS to estimate the taxes owed by contract or freelance workers within a given year.

It is easy to push all tax-related tasks off until tax season as a business owner. However, the W9 Form is critical when paying for non-employee services, and failing to provide the 1099 form to vendors by the January 31st deadline can create risks for your organization.

This article will provide the purpose of a W9 form and how it differs from the 1099 tax form. We will also walk you through a checklist to ensure you have the information you need. Lastly, we will go over some items to keep an eye out for when collecting this information.

1099 Form

To understand the W9 Form, it is beneficial to have first-hand experience with 1099 forms.

Businesses file 1099 forms when they have paid more than $600 to an independent contractor or non-employee during the year. You do not need to withhold any money when you provide payment; however, you must use the 1099 form to declare the exact dollar amount your company disbursed to the IRS.

Therefore, the 1099 form serves as a record for the total amount of compensation a non-employee received. Before a contractor begins a work assignment, your business must deliver the W9 Form; then, the contractor must complete it before starting their project. This Form gives your business the necessary information to provide the 1099 form at the end of the tax period.

Purpose of W9 Form

The W-9 Form, officially titled “Request for Taxpayer Identification Number and Certification,” is used to verify your independent contractor’s tax withholding status. They will supply you with their TIN or Tax Identification Number, which you use later in conjunction with the 1099 form.

Besides non-employee compensation, here are a few other examples of W9 income.

◦ Cancelation of debt

◦ Acquisition or abandonment of secured property

◦ Dividends

◦ Real estate transactions

◦ Mortgage interest

◦ Miscellaneous income

Blank W9 forms are found on the IRS website and can be downloaded and given to new contractors as part of the hiring process.

Checklist for Completing

Form W9 is one of the most straightforward IRS forms to complete.

Here are the required fields that all non-employed staff must complete.

Box 1: Contractor name goes here as it appears on their tax return.

Box 2 – Business name. Enter LLC, S-Corp, or sole proprietor name here.

Box 3: Box check required to distinguish between LLC, S-Corp, or sole proprietor.

Box 4 – Exemptions. Certain businesses are exempt from backup withholding, and this is when the employer is required to withhold a percentage of any future payments to ensure the IRS receives the tax due on this income.

Most likely, backup withholding will not apply unless a vendor refuses to provide a Social Security number (SSN) or tax identification number (TIN)

Box 5 – Business street address, city, state, and zip code.

Box 6 – Option box to include requestor’s name or payer’s name.

Box 7 – Social security number or tax identification number. If a business is a partnership, LLC, or corporation, there should already be a TIN, also referred to as an Employer Identification Number (EIN).

Box 8 – Signature required to attest to the truthfulness of all information.

Things to Look Out for

If you have a contractor who will not provide their completed W9 or TIN, the IRS requires your company to start withholding 24% of their compensation for tax money. There are penalties for failing to submit this backup withholding, and it is better to avoid this altogether and require W9 completion before work begins.

Since the W9 Form contains sensitive information, always make sure to use secure channels to send it. If your organization uses email for the hiring process, ensure the contractor sends the form back encrypted.

If a single person owns the LLC, list the name of the owner on the “name” line in box one and the name of the LLC on the “business name” line in box 2. If the business owner provides both SSN and TIN, the IRS would prefer the owner’s Social Security number.

At the end of the tax year, the information contained on the completed Form W9 gets used to prepare 1099 forms like 1099-NEC, 1099-MISC, 1099-INT, and 1099-DIV. Therefore, ensuring the W9 Form gets completed accurately will save you time during tax season.

How FINSYNC Can Help

FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.

Business Practices

The Sales Funnel – How to Improve Your Customer Experience

By Jess Brown

Online woman sellers working for e-business commerce checking product order.

The sales funnel, or marketing funnel, is a great relationship-building framework that will take an individual who has never heard of your business and guide them along the way until they become a happy and loyal customer.

Sales funnels are a graphical representation to illustrate these customer experiences, as they can often be challenging to visualize.

We will take you through these individual stages while detailing the advantages of developing a sales funnel for your organization.

How Sales Funnels Work

Today, many business sales cycles are long and don’t deliver a new customer right out of the gate. There is so much competition and opportunity to set yourself apart from others. One has to explain, shape, and even mold the users to comprehend how you are different and what you can deliver where others fall short.

By utilizing a sales funnel, sometimes called a marketing funnel, you are offering your potential customers a map to learn about your organization. The funnel provides all the tools and data necessary to take them through the process while nurturing a relationship with your business. This customer journey begins when they first learn about your company until they become dedicated customers.

A sales funnel is composed of three stages: awareness, consideration, and conversion. As we move down the funnel, our number of leads decreases because we aim to target those more likely to convert, which inevitably reduces the pool.

Know Your Audience

Before defining the funnel stages, it is important to understand the way your business acquires new customers. Maybe your prospects find you on social media, paid ads, or by a Google search that utilizes search engine optimization (SEO). The important thing is to understand where they originate.

Creating a sales funnel works most effectively when you understand your target audience’s habits.

Once traffic origin is confirmed, the sales funnel stages will guide prospects through a series of data and communications that make it easy for them to learn more about your company.

Awareness

Prospects at the first stage typically don’t know much about your products or services. This stage is called the awareness stage, which is at the very top of the funnel.

Awareness content should have a very low barrier of entry and will appeal to a broad audience. Adding materials such as a landing page or infographic that is simple to follow can help entice your target audience.

It is crucial to include a call to action or CTA, which will make this newly formed association more solidified and urge them to continue down the funnel.

A great approach is to provide free content in exchange for an email address. Providing free beneficial information could be in the form of a video, blog article, or ebook. Those who complete an action at the top of the funnel will move on to the next stage.

Consideration

The consideration stage represents the middle funnel. We now produce content that should align with the users’ interests. Here, we lean into cultivating the relationship by earning their trust and drilling down on their pain points.

Retargeting ads are a great way to increase brand awareness. Retargeting is serving an ad to an individual who has already seen your business and has been previously marketed to in some fashion. A retargeting ad could be as simple as an email that answers common questions. Include additional product features along with successful case studies. Make sure to include your next CTA.

It might even be the right time to introduce a special offer and let them know how you can help them along their journey. The goal for the mid-level funnel is to get prospects to take the next step and for you to gain authority in the subject you are representing.

Conversion

The conversion stage, or bottom of the funnel, is the last stage where prospective customers go before they convert. By now, these individuals are more familiar with the brand offerings and recognize how you provide value.

At this stage, these prospects are more likely to have the intent to purchase. It is crucial to make the final action as easy and seamless as possible. You want the idea of becoming a customer to be the next logical step.

Time to get direct and specific about what you do and what you can provide. Create price comparisons, testimonials, and information around common objections. Leave multiple CTAs and easy buttons to connect, like social media and website links. Now is a great time to schedule a demo, set up a free trial, and get them set up.

Summary

The continued follow-up with potential buyers is a great way to organize traffic and increase conversions. The sales funnel creates a process around those interactions. As your business continues to drive strangers through your funnel with multiple campaigns, perfecting and optimizing, you will be able to identify what messaging is working for your audience and what isn’t.

As you develop a relationship throughout the customer experience, it makes their eventual conversion easy and expected and your sales more predictable. Why? Over several weeks, months, and even years, your prospects have become fully educated on your business offerings and how your organization is aligned with their needs.

Lastly, make sure you are tracking your results throughout the entire process. Understanding metrics such as cost per acquisition (CPA), lifetime value (LTV), and conversion rates will increase your sales funnel’s success.

How FINSYNC Can Help

There are three primary ways FINSYNC helps business owners. (1) CO.STARTERS courses through FINSYNC can help turn your business idea or side hustle into a thriving business. (2) You can apply for a business bank account on our website. (3) FINSYNC’s software allows you to run your business on One Platform – invoice customers, pay bills, process payroll, automate accounting, and manage cash flow. Contact us today to learn more about how we can help your business start, scale, and succeed.

January 11, 2022

Accounting

How Cost of Goods Sold (COGS) Shapes Business Goals

By Jess Brown

Portrait of beautiful smiling Caucasian female worker with short blonde hair standing in bicycle shop with arms crossed.

All businesses need to track each and every cost within the organization meticulously. This is why understanding the cost of goods sold is such a vital component of your company’s success.

Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a business.

This article concentrates on the accrual accounting method within production-based industries. Service industries are not considered as they do not retain inventory, and COGS mainly looks at the cost of inventory items sold during a given period.

The cost of goods sold is recorded in the income statement, also known as the profit and loss (P&L) statement. We will learn what is included, how COGS differs from operating expenses, and how to calculate it.

Included in COGS

When determining COGS, a good rule of thumb is to ask the question–Would the cost exist if no products were produced? If the answer is no, then there is a good chance that cost is part of the cost of goods sold.

Cost of goods sold examples:

◦ Raw materials

◦ Electricity to run the assembly line

◦ Labor needed to make a product

◦ Storage of products

◦ Processing

◦ Other overhead costs for running the production facility

Do not factor things like administrative costs or other expenses into the cost of goods sold since our only focus is on production costs.

Operating Expenses vs COGS

Both operating expenses and cost of goods sold are expenditures a business incurs to create goods and services. However, unlike COGS, operating expenses are not directly related to the production of goods.

Operating expenses are SG&A: selling general, and administrative expenses. These are costs to keep the business open that would occur regardless of how many products are produced. Here are some examples below.

Operating expenses examples:

◦ Rent

◦ Office supplies

◦ Sales and marketing

◦ Insurance

◦ Equipment

◦ Legal costs

Businesses within the production industry need to budget for operating expenses even though they don’t directly affect production costs.

Calculating Cost of Goods Sold

Here is the general formula for calculating COGS

We will take a deeper dive into this formula as there are four steps involved in performing this calculation.

1. Identify the beginning inventory of raw materials and completed goods, which are the previous period’s ending inventory.

2. Determine the total cost of purchases for any raw materials and parts used in production.

3. Find ending inventory – determine the total value of all items in inventory at the end of the period.

4. Total all other direct costs of production, including labor, shipping, and variable costs.

5. This calculation is based on the change in inventory between accounting periods. The result is the cost of the inventory made and sold by the company during the year.

FIFO and LIFO

Inventory is the biggest business asset within production-based organizations, which directly affects gross profit. Inventory valuation allows you to evaluate your Cost of Goods Sold (COGS) and your profitability. The most widely used method of inventory valuation is FIFO & LIFO.

Since COGS subtracts ending inventory from the beginning, any change in the value of products over time could drastically alter our final calculations. Here is where FIFO or “first in, first out” comes into play.

FIFO assumes that the oldest items in the inventory were the first to be sold for accounting purposes. This does not mean that the oldest items are always sold first, but this assumption simplifies the accounting process.

LIFO, or “last in, first out,” is the opposite of FIFO. Last in, first out assumes the newest items are the first to be sold. This inventory method can offer companies significant tax advantages if a company’s inventory costs are rising.

An example of older inventory affecting valuation is seen with new car sales. A newly arrived car is worth more than a similar model that has been sitting on the lot for the past 8 months. Therefore, the longer a car is in inventory, the lower the value is over time.

Using LIFO, an increase in the product’s value over the period would result in the cost of goods sold being skewed toward a higher value and vice versa if the product’s value dropped.

Overview

Tracking your cost of goods sold regularly will give you a lot of information about the productivity of your business. You will be able to tell if you are paying too much for raw materials or labor. You can also determine if you need to change the price of your finished product.

Moreover, COGS determines the profitability of your organization and is subtracted from a company’s revenue to determine the gross profit. The cost of goods sold is a direct indicator of how efficient a company is in managing its labor and supplies in the production process.

Lastly, you can take advantage of the COGS deduction on your tax return. You will need to keep meticulous records throughout all manufacturing and inventory expenses incurred during the production or acquisition of sold goods.

How FINSYNC Can Help

January 5, 2022

Business Practices

What Is an NFT? A Waste of Money or Cryptocurrency

By Jess Brown

Note with NFT being dropped into piggy bank

It was only a matter of time before someone began monetizing our digital culture. NFTs are currently shaking up art, gaming, and other digital platforms selling items up to millions of dollars. This begs the question, are NFTs a short-lived trend, or are they here to stay?

In 2021 alone, $22 billion was spent on trading NFTs. As the industry expands with new art assets generated and more widely-accessible platforms created, many believe this number will increase. But how can a market exist at all when nothing is physically sold?

What are NFTs, and how are they related to popular cryptocurrencies? We will answer these questions and more as we dive into this relatively new space that boasts dazzling promises of making its investors very rich.

What Is a Non-Fungible Token?

An NFT or non-fungible token is a digital asset of sorts that represents digital items such as art, photographs, and videos. Think of an NFT as a sort of digital title to something. As a digital creator, you can create an NFT that establishes ownership of your digital creation. If you’re a graphic artist, your NFT would reference a particular JPG creation in a similar way to how a deed references a particular piece of real estate.

These digital items can be used within gaming platforms, on social media, or just stored on a computer with the hopes that the digital creation to which the NFT “title” has been created will appreciate in value.

These tokens are one-of-a-kind assets that can be bought and sold like any other piece of property. However, these items have no tangible or physical form, and they exist only as code within the digital space that references the digital item/object owned.

Each NFT is unique and ideally, should be the only “title” to a piece of digital work. For example, in less than ten minutes, William Shatner sold 125,000 non-fungible tokens containing digital photographs of the actor’s memorabilia. One of which was an x-ray of his teeth.

Most non-fungible tokens are part of the Ethereum blockchain. A blockchain is a list of transactions that anyone can verify. Somewhat comparable to a property title search, a blockchain additionally guarantees the fidelity and security of a data record without any third-party verifications so tracing the ownership of an NFT through multiple sales can be accomplished without a visit to the local county records.

Tied to Cryptocurrency

Cryptocurrencies such as Bitcoin, Etherium, and Dogecoin are all fungible. Meaning another identical item can replace them.

If you trade one bitcoin for another, you end up with the same item. However, if you trade one Bored Ape card for another, you would end up with something completely different. Both the art and its value would differ since owning one of these “unique” cards unlocks a membership into an exclusive club.

The pushback for Bored Ape and other “unique” digital assets is the ease with which very similar versions can be created. Alter a few pixels in a JPG and you have a new work of art that could have its own NFT.

How to Create an NFT

To create a token, you must first inscribe some metadata about a piece of art, such as a link to a video or image, onto the blockchain of Ethereum cryptocurrency. This metadata gives the creator a contract after the required “gas fee” is paid. Gas fees are the transaction fees from Ethereum.

Once the gas fee has cleared, Ethereum puts a timestamped permanent metadata record onto the blockchain. You are the owner, and now your new, non-replicable (theoretically), an original digital asset can be sold if desired.

Also, non-fungible tokens have a nifty feature that allows the original creator to continually get paid a percentage every time the token is sold or changes hands.

Christie’s remains the top non-fungible token seller to date. They sold one digital asset called Everydays: The First 5,000 Days for over $69 million.

Duplication Is Okay for Now

The non-replicable piece mentioned above is challenging as well since any image found on the internet can be copied, screenshotted, etc., and saved by anyone else. Perhaps we’ll see businesses cropping up to help identify unauthorized use of digital creations for which an NFT exists.

There are endless copies, prints, photos of the Mona Lisa, only the original holds value. NFTs are similar, and the metadata timestamp acts as an electronic receipt; therefore, it has only one owner.

Since digital images can easily be “right-click copied” again and again, this doesn’t decrease the value of the original image. On the contrary, the more attention an asset gains, the more likely the value will increase. Just like traditional marketing strategies, the hype will increase the demand.

On the flip side, there have been recent lawsuits for copyright infringement involving non-fungible tokens. Quentin Tarantino sold tokens created from Pulp Fiction, and the assets included the original screenplay, “secrets” about the film and his process as a creator. Miramax has since filed a suit against Tarantino, stating they own all the intellectual property for Pulp Fiction.

Wrap Up

NFTs will be around for the foreseeable future, and it is no wonder other companies are jumping on board to create an accessible landscape. Samsung announced earlier this week they plan to release their new smart TV line, and their interface will allow users to purchase non-fungible tokens.

Other brands will follow as new Metaverse platforms align.

But don’t expect it to be a smooth ride. After all, the idea of paying real money for a digital asset that may not actually be that fun to own or unique may cause wild fluctuations.

FINSYNC continues to support your small business with updated accounting and business knowledge to help you grow, scale and succeed.

December 27, 2021

Business Practices

How the Metaverse Could Affect the Future of Businesses

By Jess Brown

Earth with Digital code through and around it

Facebook recently changed its name to Meta, a reference to the sci-fi term metaverse, to describe their vision of working in the virtual world. Since this announcement, searches on Google for “metaverse” have soared.

But everyone seems to have their unique interpretation of what this word means.

What is the Metaverse? This article tackles this very question and the companies involved, and what it could mean for the future of small businesses and our society as we know it.

Defining the Metaverse

Neal Stephenson first coined the term Metaverse in his 1992 novel, Snow Crash. The book centers around life-like avatars who meet up in a 3D, holographic, virtual-reality world.

But we don’t have to visit a dystopian world to experience this virtual reality world.

If we think of the internet as something we look at, the Metaverse is what happens inside. We will explore this new realm with an avatar, a virtual representation of ourselves that we control and interact with others.

Available in virtual reality (VR), augmented reality (AR), or your standard screen, this virtual universe promises to combine our digital and physical experiences to enhance our lives. This new spatial construct has one ultimate goal, to be immersive.

The Players

Since the Metaverse term originated, online community platforms have grown immensely within the last 30 years. Currently, several businesses are first movers, who realize the potential to create the most return. Here are a few:

Epic Games

Video games probably have the lowest barrier to entry for a virtual experience as users are already accustomed to avatars and interacting in a digital environment. Epic Games is developing photorealistic digital humans so that one day you can customize your digital clone in games like Fortnite.

Additionally, Epic has already held VR concerts, movie trailers, and a re-imagining of Dr. Martin Luther King, Jr’s “I Have A Dream” speech.

Microsoft

The software company is developing virtual meeting rooms where businesses can train new employees or have virtual meetings on Mesh, part of Microsoft Teams.

Since the pandemic, we learned two things about working from home: remote workers are far more efficient than most business leaders imagined, and they miss the spontaneous opportunities to build relationships with colleagues.

In 2022, Mesh will enable users to send chats, collaborate, and share documents with an avatar. Many believe this will be the gateway to this virtual world.

Nvidia

Unlike the three companies listed above, Nvidia isn’t designing their piece of the Metaverse. Since all versions will be more graphically intense than your typical 2D interactive platforms, we need a killer GPU or graphics processing unit to render simulated users, plants, buildings, and other responsive objects.

Nvidia has already heeded the call. It currently occupies around 83% market share for GPUs and is the largest maker of graphics and artificial intelligence chips globally.

In addition, Nvidia has focused on what it calls the omniverse, a technology based on its computer chips. This tech brings engineers and designers together virtually to make mechanical products.

The Metaverse is shaping up to be a modern age space race. Instead of rocket science, companies battle with VR headsets, ultra-fast graphics cards, cryptocurrencies, and a copious amount of computing power.

Business Implications

Many are not even questioning the massive popularity this new augmented reality world will attract. Millions of people are already spending hours per day in virtual worlds such as Roblox and Minecraft.

Imagine combining this technology with E-commerce.

The ability to shop for shoes using an avatar that tries them on and walks around in them might make you more likely to throw down the cash for those Nike Air Zoom GTs.

We can only assume that this emerging technology will affect nearly all digital industries. Especially the marketing world. Looking at the data, we can verify that the current trends in marketing initiatives that elicit a consumer’s emotional connection to a product are working spectacularly. This virtual world will allow companies to target audiences in an entirely new way.

NFTs are currently a $17 billion market. Gucci developed a virtual luxury shoe called Gucci Virtual 25. These sneakers sell for $12.99; however, they are used only within partnered apps like Roblox and VR Chat. In May 2021 Gucci and Roblox partnered to create the Gucci Garden, a virtual reality experience that allows users to purchase digital products.

The Future

Imagine walking into a restaurant and putting on slim AR glasses, which allow you to view the menu and reviews from your friends and family—or having coffee with a friend and noticing the woman’s shoes at a nearby table. Envision yourself identifying the shoes by looking at them (with AR glasses) and then placing an order before your cappuccino arrives at your table. While great-looking glasses are not available yet, you can get a feel for this technology with Google’s Lens app.

Of course, these future predictions are only an artistic impression, not necessarily accounting for every technological advancement. In truth, it could be 5-10 years before the technology can make these types of scenarios real.

More realistically, 2022 will most likely introduce us to the VR world bit by bit by providing us with a richer, more immersive version of what already exists today. Soon interacting within the Metaverse will be considered normal as life in the everyday world carries on.

Is there an opportunity for your business in the Metaverse? It might be worth exploring.

Stay up-to-date with the latest trends and other tips and tricks FINSYNC brings to small businesses.

December 23, 2021

Success Stories

Spotlight on Small Business Owners: Traci Kelly of Kelly Limestone

By Jess Brown

Small Business owners Doug and Traci Kelly with Kelly Limestone

Building relationships with her community and supporting small businesses ranks among the top of Traci Kelly’s key pillars for life enjoyment. Hear about how she and Doug, her husband of 33 years, have successfully managed their business, Kelly Limestone.

Learn more about her story, what brought Traci to FINSYNC, and why she is passionate about connecting with small organizations.

Tell me about your company and what inspired you to start.

Kelly Limestone is a family business that Doug’s parents started in the 1940s. After Doug’s mother passed away in 1991, we moved from Aspen, CO, back to Missouri to help with the family business. At the time, this business was a rock quarry, mining rock, and manufacturing limestone, which ultimately grew into the business today.

In 2002 we officially purchased the entire business from Doug’s father. We sold the rock quarry section of the company in 2007 and concentrated on manufacturing limestone and gypsum products.

The limestone contains calcium deposits which feed the plants and makes other nutrients work better. Calcium is critical to the human body and plant growth as well.

Our target markets include golf courses, agricultural farms, and lawn care. We manufacture this product in Missouri and ship it to over 38 states and countries.

What are some of the challenges you’ve faced as a small business owner?

Over the years, the challenges we have faced are the growing pains of a capital-intensive business, and raw material sourcing has been a big challenge.

We have been blessed and have always had wonderful employees. We have not had a lot of employee turnover, high employee retention, and we are grateful for that.

What’s the best thing about being a small business owner?

This is so easy! We forge meaningful relationships with our customers and our employees. We have come to know many of them personally and their families; we are truly blessed. They have made our lives fuller.

Many of the companies who have been our clients since 1991 are also small businesses. We have known them personally over the years, and we go to their funerals when loved ones pass. Their lives are intermixed with ours in lots of wonderful ways.

What prompted you to start using FINSYNC?

I researched all the bigger companies because I knew our software had to be web-based since our secretary was working from a different location.

I have always been a supporter of small businesses. In fact, I told our friends and family that I am buying all Christmas presents locally this year.

I felt like FINSYNC was a small company where I could call and talk to an actual person if I needed help. Since I have always been a big supporter of small businesses, I felt you fit me.

What are the biggest benefits your business has experienced using FINSYNC?

There are actually a lot of things I like about you. I like working with real people. When I have a question, David, or another customer support member, get back to me quickly. When I send an email, I like that someone will get back to me within a few hours. That’s a big thing for me.

I recently had a banking glitch which was kind of frustrating. But it is incredibly great to know I could talk to a person and they would help me through it, and we would figure out the solution together even if it is just a connection issue that was the root cause of my problem.

Keep doing your customer service the way you’re doing it because that is such an asset for your company!

What financial institutions do you have connected to FINSYNC?

I previously was with US Bank, and during COVID they closed the lobby of their branches. I was tired of calling these 1-800 numbers, not reaching a real person. My husband and I decided we were going to try a small, local bank instead. We switched to OakStar using FINSYNC. I am so thrilled I made this change and have nothing but good things to say about that decision.

Moving away from giant conglomerations and supporting small businesses is kind of a theme for me.

How does having FINSYNC connected to the accounts mentioned above make your business life easier?

The bank sync is definitely a game-changer for me, and I can compare transactions and click “done” from my car. So quick and easy.

I also like Lockbox for checks. This feature is a good thing for me because I am always on the move.

What advice do you have for those thinking about owning their own business?

I would say go for it! It has been an incredible ride for us since 1991. It is rewarding, yet exhausting. If you are fortunate enough to do it with someone you love, it makes it all the better. I am very blessed to be in business with my husband.

We have a joke in our family that he is the “rainmaker” because he is that guy that goes out and makes everything happen, and I come home and put together the details. We really complement each other.

Anything else you would like to share with other potential and actual small business owners?

If you are thinking about starting your own business, I highly recommend going with FINSYNC and the smaller banking institutions. I feel both are readily available and interested in your success.

Learn more about FINSYNC’s all-in-one cloud-based accounting platform.

Business Practices

Employee Retention Definition: Create a Positive Strategy within Your Organization

By Jess Brown

For businesses to thrive, they need to cultivate a safe and rewarding work environment, making employee retention a key differentiator in today’s competitive landscape.

The Bureau of Labor of Labor Statistics reported that 2.9% of the entire American workforce quit their jobs in August 2021. This percentage equated to 4.3 million individuals and represents the highest month ever recorded to date.

The “Great Resignation” shocked many employers because it was contrary to traditional management’s relationships with labor markets. Therefore, a company’s ability to hold on to its talent is of utmost importance.

Learn the definition of employee retention and the benefits and cost savings of low employee turnover. In addition, you will learn how to accurately calculate your business retention rate and develop a strategy to monitor and improve the length of time your employees remain within your organization.

What Is Employee Retention

Employee retention refers to the organization’s ability to prevent employee turnover. The retention rate is the percentage of employees who remain with the organization during a fixed period.

Individuals may resign from their employment due to a variety of different factors. When looking at retention, we focus mainly on the voluntary reasons an employee has left an organization.

Retention strategies tend to focus on preventable turnover. The first step to building a system for retaining employees is to discover the reasons behind their leaving during their exit interview.

Voluntary resignations can include the following:

◦ No clear path to advancement

◦ Low morale

◦ Boredom

◦ Feeling overworked

◦ Low pay

◦ Lack of benefits

◦ Unhappy with management

◦ A need for better work-life balance

◦ Dissatisfaction with company culture

◦ The desire to make a change

Exit interviews provide valuable insight into your employee turnover. Recording and categorizing these reasons can help you determine if your employee retention strategies need improvement.

Costs of High Turnover

Gallup estimates the cost of employee turnover to be more than $1 trillion annually to replace individuals who voluntarily leave. The costs associated with recruitment, training, and loss of productivity equate to one-half to two times the position’s salary.

Losing highly productive employees can lower morale and decrease efficiency, especially if the increased workload falls on the remaining team members. This vacancy can easily affect your bottom line.

Benefits of Employee Retention

Besides the high cost of turnover, retaining good employees has other benefits. Here are a few examples:

◦ Higher employee job satisfaction – this goes hand-in-hand with employee retention. Worker happiness and fulfillment affect the individual commitment to their team and organization.

◦ Better customer experience – employees who have been with a company a long time will develop relationships with specific customers. These individuals are more familiar with troubleshooting and more able to implement the company’s core values.

◦ Lower recruiting costs – by focusing on retention, a business will have to eventually pay lower recruiting costs. Expenses include recruiter fees, airfare, and accommodations for the potential candidate, and training and onboarding once hired.

Calculating Employee Retention Rate

Employee retention rate is the percentage of workers a company can keep consistently, long-term employed, within a fixed time period. This rate is different from employee attrition, as the attrition rate shows the percentage of employees a company loses and does not replace.

Some experts believe that a worthy goal for a retention rate is above 90%, and this number will vary across different companies and industries.

Improving Retention Strategy

Developing your retention strategy for your company should be at the forefront of your goals. Besides more apparent techniques like hiring people who want to stay longer and performing exit interviews, here are some brief points you can incorporate into your retention strategy.

◦ Promote from within – many surveys revealed that employees leave due to feeling stalled in their careers. Lack of salary increase, training, and skill development impede career advancement. Promoting from within rewards current workers and makes them feel valued.

◦ Provide childcare – the pandemic has made childcare a family problem and a business issue. One survey found that 20% of workers had to cut back or leave their occupations due to a lack of childcare. Set your business apart and provide a childcare subsidy, remote team abilities, or a flexible schedule to allow various drop-off times.

◦ Implement internal rewards – everyone from the CEO to the interns craves validation. Not just from a direct manager, but shout-outs to co-workers, project leaders, and service providers can increase hard work and make individuals feel recognized and appreciated. You can also include rewards such as premium notebooks, ergonomic desk tools, or team-branded custom sweatshirts to make the acknowledgment feel meaningful & memorable.

◦ Earn the trust of your employees – employees perform better when they trust the people who are giving them their work. Building personal connections, creating transparency, and radical candor in communication are great ways to build trust. Also, implementing an unlimited PTO policy is a strategy many companies implement to instill confidence.

◦ Encourage feedback – you don’t have to wait until an employee’s final day to receive feedback. When employees don’t feel their complaints are addressed, they assume the company is not interested in improving. Ask your employees for their opinions on a specific project or the business as a whole. Sometimes, being heard can go a long way to encouraging great employees to stick around.

Creating a successful employee retention strategy takes significant effort. A great place to start is to identify the most pressing issues and where you can make the most impact out of the gate.

Also, add your own unique strategy points. Perhaps your culture would benefit by allowing individuals more creativity and less micromanagement, or maybe they would benefit from more training.

The data suggest that the labor shortage will increase rather than decrease, and retaining your best employees will become harder and harder. Adding just a few key strategies will enable your company to attract and keep top talent while building employee engagement and preventing unwanted turnover.

How FINSYNC Can Help

December 17, 2021

Payroll

The Pros and Cons of Offering Unlimited Paid Time Off (PTO)

By Jess Brown

Portrait of hairdresser with dye hair at hair salon

It sounds like living the dream if you are permitted to take as much time off work as you wish. However, there are a few particulars to review before you begin offering unlimited PTO at your organization.

Unlimited PTO became a trend that started in the tech industry within the last decade. Currently, this trend has become more commonplace, with companies competing for top talent due to the “great resignation.”

But what does it mean to have unlimited PTO? This article covers the pros and cons, and strategies to create the perfect paid time off policy for your business.

What Is Unlimited PTO?

Paid time off (PTO) is a benefit an employer provides their employees to receive payment when they take off work for vacation, personal days, holidays, and sick time.

A company’s PTO policies establish the guidelines that determine when and how an employee can receive payment for time off work.

Unlimited PTO means that employees can take time off at their discretion and utilize it whenever needed. Manager approval is often required to ensure there aren’t too many employees requesting it at the same time during high workload demands.

Pros of Unlimited PTO

• Great Recruitment Tool – Even though unlimited vacation is gaining popularity, many organizations still haven’t implemented it. Therefore, those with this competitive edge show they value and trust their employees.

• Saves the Company Money – Unlimited PTO began with Silicon Valley start-ups. Tech companies wanted to keep employees’ vacation rollover off the books while providing an extraordinary benefit. Now many organizations are taking advantage of not paying out unused vacation at the end of the year or when employment ends, simplifying cash flow management as fewer liabilities are accrued.

• Less Paperwork – Monitoring paid time off creates a lot of work in approving requests, tracking, and reporting. When a business incorporates unlimited PTO, all administrative burdens go away—removing the additional tasks and paperwork for managers and human resources.

• Boosts Morale – Employees feel more satisfied when given the autonomy to take their leave as they wish. If your employees are engaged, you might see up to a 21 percent increase in profitability.

Cons of Unlimited PTO

• Employees May Abuse the Policy – When a business has established unlimited PTO, there is the risk of employees taking advantage of the policy. Some may use more time off than others without fear of their employment ending. Most studies suggest this is very uncommon; however, some individuals may exploit this policy.

• Not Truly Unlimited – Obviously, under this policy, workers cannot take off months at a time. If this consistently happened, unlimited PTO would become a costly failure. Because of this fear, many organizations have developed specific parameters around appropriate use. Requiring manager approval, 4-6 week limits, or making it performance-based are all stipulations you may want to convey in your policy.

• Might Lead to Burnout – By far, the most common problem associated with unlimited vacation is that employees end up limiting the amount of time they take off. Underuse can be a bigger problem than overuse. The worst-case scenario is that employees end up getting paid less with no value attributed to their PTO while companies gain more of their employees’ productivity. Overall, if employees do not take enough time to rest and recharge, there is the potential that they will suffer burnout at work.

Solutions

Businesses should be transparent about using unlimited PTO within their organization before hiring. At the same time, job seekers should try to get precise details about the company’s policy prior to starting their employment.

Many companies will encourage employees to take time off to prevent employee burnout. Some will even make it mandatory, such as two-week vacation minimums when working in this environment.

Conclusion

A successful unlimited vacation policy can have a positive impact on your employees. You can build a culture of mutual trust which will boost both productivity and morale. A genuine interest in employee well-being and happiness motivates these employees to work harder.

An unsuccessful unlimited vacation policy lacks guidelines around how much time off to take. Employees who are unsure how many days are “too many” will likely default to less or follow the norms set by individual managers, who might not be taking enough time off themselves.

Finally, companies need to ask if they’re making these changes for employees or their bottom line. If employees use 100 percent of their PTO and the employer wants to reduce their small business expenses, then perhaps such a program makes sense. However, if the main reason to offer unlimited vacation is a marketing tool for recruitment but is severely underutilized, you might want to consider a different approach.

How FINSYNC Can Help

Accounting

How Net Income Affects the Operation of a Business

By Jess Brown

Successful cafe owner, a young woman, stands in her restaurant using a smartphone.

Net income is the key metric to determine an organization’s financial health. Many consider this number the most significant of all financial indicators because it determines whether your company has made a profit.

Fortunately, you don’t have to be a CPA to master the basics of net income.

In this article, you will understand the scope of net income, the calculations involved, and what it can tell you about your business’s bottom line.

Understanding Net Income

Net Income (NI), also called net earnings or net profit, is the total amount earned in a period minus expenses. Examples of the types of expenses include:

◦ Salaries

◦ Insurance

◦ Equipment

◦ Rent

◦ Utilities

◦ Advertising and Marketing

◦ Depreciation

◦ Taxes

All revenues and expenses are recorded at the top of the income statement, also called the Profit and Loss or P&L. Once all expenses have been subtracted from revenues, a company will see their profit remaining, the net income.

NI is also used to calculate an organization’s profit margin. This metric is net income expressed as a percentage of revenue. Following this percentage month after month is a good way to track whether a business is becoming more or less profitable over time.

If your net earnings increase over each period, you are likely on the right track. However, if your NI is going down month after month, it might indicate you need to start cutting costs.

Gross vs Net

The key to simplifying NI is by comparing and contrasting gross versus net. Whether you are looking at revenue or income, the gross number is always larger than the net.

Gross profit signifies the total amount of money a company makes minus the cost of goods sold. COGS are expenses incurred to produce the goods that a company sells. These expenses include raw materials, labor, packaging, and utilities in a manufacturing facility.

Gross profit does not include other costs associated with marketing or selling activities, administration, taxes, etc.

Gross revenue is the aggregate sale price of goods and services over a period of time. Gross revenue is also known as total revenue or the top line, as this is the starting point from which other financial metrics are calculated in a P&L.

Lastly, net revenue is how much gross revenue remains after deducting commissions, sales, losses, or returns. Knowing your net revenue can help you understand what discounts work in your business, for example.

Operating Income

The last of the three standard income calculations is operating income. Operating income is a more conservative approach than gross income as it also subtracts operating expenses. Like GI and NI, operating income is another way to view profitability and success.

All three forms of income are crucial when applying for financing. Banks and lenders typically look at your business’s income with and without expenses to predict a company’s future performance before approving a loan.

Calculations

Sometimes it is easier to differentiate between these terms by looking at the equations.

Net Income

Gross Income

Operating Income

You may need to do additional calculations to find your business’s total revenue.

These equations give a different perspective of the business’s finances and differ depending on which analysis you are running.

Conclusion

Revenue alone will not give you a comprehensive representation of your finances. It would be best to incorporate NI to fully understand your organization’s profitability.

NI and GI reveal different perspectives and thus can affect actions you might take as a business owner. Gross income can indicate the revenue generated year over year and give a perspective on how your business is doing. However, net income will tell you a slightly different picture of how much you are making after expenses are factored into the equation.

Even though net income is a critical metric within all three financial statements, it is not an indicator of cash flow. NI includes non-cash items like depreciation and amortization. Therefore, creating a separate process for your cash flow management is highly recommended.

How FINSYNC Can Help

December 14, 2021

Payroll

Tips for Small Business Success: Painless Payroll

By Jess Brown

Learn the “ins and outs” of doing payroll for small businesses, and how you can make it an easier, more accurate process. Learn the best ways to manage payroll software and choose the best option for your business.

By FINSYNC

Payroll is much more than just signing a check or making a direct deposit. Your employees’ paychecks are their lifeblood! As a small business owner, it’s important to understand all of the components of payroll. It’s not only about compensating your employees for their hard work, you must also withhold taxes, calculate deductions, and pay out benefits.

Doing payroll incorrectly can have serious consequences for your business, as payroll is often subject to scrutiny by federal and state agencies.

In theory, you can do payroll and track employee working hours manually, but given how complicated taxes and withholdings can be, and the many opportunities for error, it’s better to invest in payroll software for small business to make sure it’s done right.

Here is a detailed breakdown of everything you need to help you run your payroll smoothly every month.

Time-Tracking Tool

If you employ hourly employees, the first thing you will need to do is accurately record how much your employees work. Time tracking is mandatory for hourly employees, for several reasons:

Benefits tracking, if hourly employees work more than 30 hours per week
Overtime compensation, if your business offers it
Job costing in accounting, and for accurate customer invoicing
Tracking hours can make it easier for you to allocate costs to different projects that your salaried employees work on

While there is no lack of time-tracking tools on the market, the best payroll software comes with a built-in time-tracking tool. Having the time-tracking feature built into your payroll software will make it much easier for you to ensure your payroll is accurate.

If you’re using FINSYNC, a time-tracking tool is integrated with your project tracking and payroll software. Because FINSYNC is gig economy friendly, you can have both employees and independent contractors track their time in the same tool. Accurate time-tracking will provide the most accurate profitability calculations for your projects.

The FINSYNC platform also includes an expense reimbursement tool that all your employees can use. For example, if you hire Janna, a web developer, to build a landing page, and she purchases some stock photos for the project, all she has to do is upload the receipt in FINSYNC, and she will be reimbursed by direct deposit.

Calculating Benefits and Withholdings Correctly

The second and, as we stated earlier, most important aspect of payroll is the withholdings and benefit payments that you need to account for as the business owner.

Taxes are at the top of this list:

Federal income tax
State income tax
State unemployment tax
Federal unemployment tax
Social Security
Medicare
Court-ordered withholdings, such as garnishments or child support
Other withholdings, such as repayment for payroll advances, union dues or pretax contributions to healthcare savings accounts

It’s vital to make the right calculations when it comes to withholdings, or your business could be penalized. With the help of FINSYNC, you can calculate all the necessary taxes and fees automatically, and pay it to the right agencies accordingly.

For taxes that are paid quarterly or annually, the correct amount will be placed in an escrow account for later payment.

Additionally, you will probably have some or all of these employer-paid benefits:

Paid vacation
Paid holidays
Paid sick days
Time-off related to family illness
Workers’ insurance (health, dental, vision, life, and/or disability)
Contributions to retirement plans (401(k))
Profit-sharing and bonuses

These benefits will have to be paid together with salaries, generally on a monthly or bi-weekly schedule. With FINSYNC, you can set your own payment schedule, and pay your employees weekly, bi-weekly, monthly, or bi-monthly.

Managing Accounting

Once paychecks are deposited and all taxes and withholdings are calculated correctly, you have one last step to do: put the payroll information into the general ledger. If you’re working with an accountant, you will send over the payroll sheet to them, and they’ll take care of the rest. However, if you’re using FINSYNC, everything is automatically put into the general ledger. No need for manual work.

Full Financial Control with FINSYNC

One of the big benefits of using FINSYNC is the complete overview of all of your payroll expenses: salaried employees, hourly workers, and contractors. This type of payroll software for small business provides better financial insight into how payroll costs are affecting your bottom line, and what you can do to correct any bad projections.

You will also have a better chance of spotting irregularities in payroll. For example, is someone logging fictitious hours, or are an employee’s overtime hours not being submitted correctly?

Another helpful aspect of FINSYNC is customer support. You get a dedicated support representative that works with your business when you need help.

Whether you need help setting up a new payment method or updating the marital status and tax information of an employee, your dedicated FINSYNC representative can walk you through the steps. Having a dedicated rep saves you time and frustration as you won’t have to re-explain the particular situation of your business every time you need help.

Ready to tackle payroll management with less headache? See how FINSYNC can help you stay on top of your payroll responsibilities with a free trial.

Overview

One Platform. Every Step.

Overview

The Right People Accelerate Progress.

Overview

Financial, Growth, & Operational Partners.

FINANCIAL PARTNERS

growth & operational partners

Overview

Contact

One Platform. Every Step.

The Right People Accelerate Progress.

Financial, Growth, & Operational Partners.

1099 Form

Purpose of W9 Form

Checklist for Completing

Things to Look Out for

How FINSYNC Can Help

How Sales Funnels Work

Know Your Audience

Awareness

Consideration

Conversion

Summary

How FINSYNC Can Help

Included in COGS

Operating Expenses vs COGS

Calculating Cost of Goods Sold

FIFO and LIFO

Overview

How FINSYNC Can Help

What Is a Non-Fungible Token?

Tied to Cryptocurrency

How to Create an NFT

Duplication Is Okay for Now

Wrap Up

Defining the Metaverse

The Players

Meta

Epic Games

Microsoft

Nvidia

Business Implications

The Future

Tell me about your company and what inspired you to start.

What are some of the challenges you’ve faced as a small business owner?

What’s the best thing about being a small business owner?

What prompted you to start using FINSYNC?

What are the biggest benefits your business has experienced using FINSYNC?

What financial institutions do you have connected to FINSYNC?

How does having FINSYNC connected to the accounts mentioned above make your business life easier?

What advice do you have for those thinking about owning their own business?

Anything else you would like to share with other potential and actual small business owners?

What Is Employee Retention

Costs of High Turnover

Benefits of Employee Retention

Calculating Employee Retention Rate

Improving Retention Strategy

How FINSYNC Can Help

What Is Unlimited PTO?

Pros of Unlimited PTO

Cons of Unlimited PTO

Solutions

Conclusion

How FINSYNC Can Help

Understanding Net Income

Gross vs Net

Operating Income

Calculations

Net Income

Gross Income

Operating Income

Conclusion

How FINSYNC Can Help

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