Evaluate Your Financial Situation and Loan OptionsThe first step is to organize your finances to get a better understanding of your costs, expected cash flow, and options when it comes to securing additional financing. Create a cash flow projection and test different scenarios. How long will you be able to pay essential bills given a reduction in or absence of sales? Depending on what your cash flow projections show, you may want to increase liquidity in your business through either credit cards or a business loan. For many small businesses, payroll represents a large expense that can be very difficult to cut. On the one hand, if customers are not coming through the doors (physical or virtual), keeping employees on the payroll may seem like an unnecessary expense. On the other hand, employees are often the backbone of your business. So you’ll want to approach the termination of contracts with consideration. The Paycheck Protection Program (PPP) offers one option to ease the expense of payroll without having to let any employees go. The SBA will forgive loans if all employees are kept on the payroll. And the money is used for fixed expenses. Such as payroll, rent, mortgage interest, and utilities.
Rethink Your Business OfferingsNow is the time to get creative about ways you can offer your products and services to customers. Discounts, product bundles, and gift certificates are all obvious choices, but there are ways to go beyond that. Any service-based small business will benefit from coming up with a couple of online event ideas. For example, if you run an agency that offers consulting services, you can offer the same services in virtual form. Or, if you run a hair salon, you can offer online consultation and customized color kits for delivery. The main question to ask here is, how can you adjust your products or services in a way that can help customers during shelter-at-home restrictions? It may also be a good idea to partner up with other local small businesses in industries that are complementary to yours. Giving customers the ability to buy goods and services from both businesses in a single transaction can provide much-needed convenience. It’s also a great way to round out your offerings. For example, if you’re a graphic designer, find a marketer or a digital marketing specialist to work with and offer packages that companies can purchase. Or, if you’re a small accounting firm, perhaps you can team up with a lawyer to provide better guidance to people in these challenging times.
Make It Easy for Customers to Buy From YouEven if you had to close your physical doors to customers. It doesn’t mean you need to close down your operations completely. There are numerous ways you can keep your business running without physical interactions with customers. You can, for example, extend the home delivery of your products, or offer curbside pickup. If you can’t afford to hire delivery personnel, explore different delivery apps. If your products aren’t physical, increase your virtual offerings. Making payments easier for your customers can go a long way as well. Switch to paperless payments as much as possible and allow customers to pay you online via credit card or ACH. To avoid contamination risk on your end, you can use FINSYNC Lockbox to handle check payments, which will be remotely deposited into your account for you.
Utilize Your NetworkYour customers are not the only group that’s affected by changes in your business. It’s a great time to reach out to your entire network. Get in touch with all of your key business relationships — suppliers, partners, consultants, etc. — and ask how they’re doing. Open up a conversation where all of you can work together to find ways to make it through the current situation, and beyond. Perhaps you have experience in areas like how to work remotely or deal with a disaster that you can share with others, and vice versa. Sharing your knowledge will earn you some goodwill as well.
Increase the Liquidity In Your BusinessIn light of the COVID-19 situation, the U.S. government passed the CARES Act, which offers small business relief. You can apply for either an SBA Disaster Loan or a Paycheck Protection Program loan, which can be partially or fully forgiven. You can apply for both of these SBA Disaster Loans online. Additionally, you can turn to private sector programs. For example, Facebook dedicated $100 million in grants to small businesses. Other fintech companies that specialize in small business loans are also expanding their offerings. In order to help small businesses get through this challenging time. You can also renegotiate the terms of your current debts. Because many banks and financial institutions are now offering better terms for new loans, some existing loans are eligible for better terms as well. Finally, as you await your small business PPP funding or Disaster Loan assistance, you can increase the liquidity of your business by tapping credit you already have. FINSYNC makes it simple to use your credit card to make payments for traditionally cash-only expenses, including everything from rent to vendor payments. Taking these five proactive steps now will not only help you weather the current disruption, but prepare for a full recovery when this storm passes.
Why get help with HR?Many businesses need HR assistance to scale during periods of expansion or big projects, or to bring in specialized talent for unique needs. For example, a small media production team may typically operate with less than five full-time employees, but in the event of a project that involves something like a website buildout or more robust production needs, that same team may decide to bring in added staff or contractors to fill the immediate need. Successfully managing your HR activities requires a commitment of both time and financial assets. Going it alone has the potential to consume more time and mental energy than many small business owners have to spend. Managing all these tasks can feel like a daunting to-do list. Outsourcing HR offers the opportunity for busy owners to pay more focused attention to other mission-critical tasks. In the case of the small production team, the core staff can pay vital attention to managing the account, drafting pre-production creative and ramping up for filming, while outsourcing other key activities to contractors and support staff.
What functions does HR serve?
Developing Employee Handbooks and Manuals
HR works with you to document, enforce and update various protocols, policies and expectations for your business. An employee handbook outlines these items for your employees, and keeps everyone clear on goals and expectations. Relating employee performance to concrete, real-world examples prevents internal conflicts and mitigates risk for all parties involved.
These documents also work to cover you in case of employee disputes, in areas such as sickness, annual holiday entitlement, and maternity/paternity. Owing to its legal importance, it’s wise to have an employment attorney review all documents to ensure compliance standards.
Handling Compensation and Benefits
While your small business may not be obliged to do so, offering health insurance and other benefits attracts and retains talent. With the support of an HR professional, you can better identify exactly what benefits your employees desire. You can also choose a plan while cutting business costs. For example, HR can negotiate lower rates on a group healthcare plan.
Streamlining Training and Development
Establishing HR protocol with the help of a qualified professional allows you to do several things. The first is engaging in performance reviews to gauge how your employees are doing. Additionally, you can determine if you’re working with the right talent. Last, HR can help show you how to set these individuals up for success.
Assessing Risk Management
HR can put measures in place to improve and standardize workplace safety. Should a worker get injured on the job and argue that the workplace is unsafe, HR would have the appropriate compliance documents to help avoid incurring damaging costs.
In keeping and managing records, a meticulous HR partner may be able to discover ways to lower standard workers’ compensation rates and unemployment taxes. Maintaining thorough employee performance records is advisable in the event of having to defend yourself or the company against any potential claims.
- Handling Termination
- Assisting with Employment Laws
Employee FilesEach of your employees must have three files: an I-9 file, a medical file and an employment file. Keep these properly to avoid fines of up to several thousand dollars. HR professionals can assist with storing and updating, as well as keeping all of your important documents organized. Should you decide outsourcing your HR needs is the best solution for you, FINSYNC’s services network includes human capital management that helps small businesses get up and running with professional, on-demand HR services on an as-needed basis. The network of experienced and fully vetted professionals are there to help when you need it. This holds true regardless of the size of your team or customer base.
How to Reduce Your Small Business Insurance Costs
Consider Raising Your Deductible
Limit Your Company’s Risk
Inquire About Discounts & Packaged Deals
Trim Unneeded Coverage
Shop the Market for the Best Rates
Visibility“We had tried QuickBooks and several other solutions, and they all prevented us from getting visibility into where our cash pain points were going to be. Early on in the business we often found ourselves running out of cash unexpectedly. Whether something someone had purchased on a credit card wasn’t foreseen, or a client receivable wasn’t paid on time and we didn’t anticipate that, these situations became a problem. Working with FINSYNC we were able to get a lot of visibility to anticipate the crunches and prepare for those situations. With the cash flow tools that allow us to see where our financial trends are, we’ve been able to look forward and see where potential problems might arise. This allows us to plan accordingly rather than having sudden surprises.” Travis Peters, Impelos
Value“We were using QuickBooks because that’s what our accountant had asked us to use, and I was looking for more cost-effective alternatives. FINSYNC had everything that I wanted at a much more attractive price point. Plus, they were much more responsive to inquiries, really friendly in the onboarding process. They seemed much more concerned with our success and happiness than with just signing us up. The fact that there was a personalized onboarding process speaks directly to the difference between FINSYNC and the gigantic companies.” Andy Rostad, Media Beyond
Service“In the past, I’ve used various versions of QuickBooks and was never completely satisfied. FINSYNC has been a wonderful and affordable alternative to other accounting packages out there. It’s easy to use and the customer service is outstanding! I’ve found the software very easy to learn. Whenever I have a question, Nathan has been readily available to help me figure things out. I like FINSYNC’s all-in-one model, the ability to accept many different methods of payment from a single platform, and that everything is synced from my bank account.” Kathy Pieper, Learning Cycle Tutors
Payments“Before FINSYNC, we focused primarily on online sales and used Stripe and QuickBooks. This presented a limit for how many online invoices I could send. I needed a platform that would allow unlimited invoices and vendor payments since that is a large part of what I’m doing in my business. FINSYNC can do that and has many other features that are valuable to me. Callie Ogden, Event Vines
Project Cost Accounting“We were using various tools and none of them talked to each other. We were using QuickBooks Online for our receivables. Later, we added the payables part to it. However, it wasn’t connected to payroll, nor was it connected to time tracking, nor to our project management data in Excel for project cost accounting. Our time tracking vendor didn’t connect to QuickBooks. We couldn’t really have a project cost accounting solution other than Excel spreadsheets, so I was spending a lot of time trying to get the data we needed from one tool and then patch summary information to other tools and make sense out of it all. It was very costly and very burdensome. I knew we had to have a better sense of where we stood as a company. FINSYNC pulls all the data together so I can make sense out of things. It was the only platform we found that did everything we wanted. QuickBooks can do payables, payroll, receivables, and general ledger kind of stuff, but the project cost accounting was virtually non-existent. Time tracking didn’t exist at that point either. Our accountant was a certified QuickBooks professional, but he couldn’t figure out how to use QuickBooks to get what we wanted. The only platform that really seemed like it did project cost accounting well in a way that made sense to me was FINSYNC.” Galen Dalrymple, Polymath Want to see for yourself how FINSYNC can help you save time, money, and maybe even your sanity? Try the software free for a week.
Do the ResearchThe first step to such a big decision is research. Look into the overall industry landscape:
- How quickly is your industry growing?
- When and how do other businesses your size generally scale?
- What are your competitors doing?
Shore Up Your FinancialsTake stock of your business’s financial health. First things first. With all business expenses accounted for, be sure that you have more money coming in than going out. Take a holistic look at your books to see what you can optimize — cut back on an expense here, add some money to a successful marketing campaign there. For example, much of the software that businesses use is purchased through small monthly subscriptions. It’s easy to overlook some of them. It’s a good idea to list and audit all of your monthly software subscriptions to determine if you actually need all of them. For a clear picture of when and where all your money is coming in and going out, it helps to have everything together in an easy-to-read, intuitive dashboard. This type of tool will make it simple to get visibility on past, present, and projected income and expenses, all in one place. You can see summary data at a glance, or drill down into the nitty gritty details to understand your business’s financial data in detail. Growth is expensive. New inventory costs, rented space, higher payroll, and unforeseen changes all drive up the cost of scaling your business. Be sure that your finances are currently strong, but also that there’s enough money in the bank to cover the new costs associated with scaling. In addition to the potential influx of new operating expenses, small businesses seeking bank financing to grow should be able to show at least three consecutive months of profitable operations. Many expansions will require outside financing, so shoring up your finances has the dual purpose of strengthening your cash flow and setting the company up to qualify for funding.
Access CapitalIt costs money to grow, and securing financing for small businesses is notoriously difficult. The good news is there are more opportunities to access capital than ever. While traditional lenders often require 2+ years of financial records and collateral, and generally tend to favor larger loan requests, alternative lenders approve loans with as little as 90 days of financial information. Alternative lenders are also able to approve smaller loan amounts, and are less likely to require collateral. With one simple application, FINSYNC’s Lending Network can connect small business owners with fast, flexible, and affordable financing from alternative lenders. Once you complete the application, you can compare loan options and even receive feedback to improve the strength of your application over time. Beyond a traditional small business term loan, there are several types of loans that may be more accessible to small businesses, and are designed to support growth:
Line of Credit
Build Your TeamIs your team ready for expansion? Take stock of who is currently on staff, where the team’s strengths lie and what support each team needs. First, evaluate how employees are currently performing, and then look at what additional capacity will be necessary for growth. For example, when opening a new location, not only will a small business need additional staff, but preferably some key managers with experience in opening new locations. When evaluating what your business will require in order to scale, it can be helpful to bring in expert support for strategic insight. For some help from someone who “has been there and done that,” FINSYNC’s corporate strategist consultants can provide you with specific experience scaling businesses in your industry without the commitment of making a full-time hire. No long-term contracts are required. Your business can benefit from executive-level expertise and guidance without committing to paying an executive salary. Even if you decide not to scale at this time, your business will be stronger for the groundwork you do to research the landscape, clean up your books, evaluate your team, and look into financing opportunities. If you’ve gone through these steps, and determine that it is time to take the leap, you can move forward with the confidence that you’ve done your due diligence and have access to the tools and expert support that your small business needs to scale.
Will You Name a Successor?One of the most important decisions you can make about the fate of your business after you're gone is whether you want it to continue, or whether you plan on closing it out. Not every small business is set up to outlive the owner. Let's say you're a dentist or a graphic artist. You may have one or two support employees, perhaps a bookkeeper or receptionist, but no one else has the skills to continue providing your business' services to customers once you've passed. In this scenario, it's likely you'll want to formally establish your intent to close the business upon your death or retirement. By making it clear in your estate plan that your business will no longer exist after your death and isn't transferable to your family, for example, it will reduce the risk that they will owe estate taxes.
Have the Tough TalksLet's say you want to entrust your business to a family member or employee to run once you're gone. The first step is to communicate your intention early on and ensure they’re willing to take over the business. Once there’s a verbal agreement, ask an estate attorney to draft your business plan of succession. You'll want that succession plan in place right away in case of your untimely passing. Doing so will help avoid discord among family members and others, and ensure that your wishes are followed. Remember, without an estate plan, you won't be able to determine successorship or the distribution of business assets. Take the case of a business with a single owner. Without an estate plan, the owner's estate has to liquidate the business' assets to pay off any debt, including taxes. Whatever is left would then be parceled out according to the owner's personal will. Of course, if the person didn't get around to making a will, their remaining business assets and everything else will be distributed according to state probate law.
Go Beyond a WillAn effective estate plan for a business owner will go beyond what you would include in a standard will. You'll need to spell out exactly what you want to happen with your business, should you become incapacitated or die. If you're the sole business owner, here's where you document how you want to transfer ownership of your company and to whom, assuming you've lined up someone for the job. If you have business partners, you'll need to craft what is known as a buy-sell agreement, which lays out how the partners can buy each other out. Let's say you share ownership of your company with someone else. Such an agreement would dictate how you could buy their share in the company upon their death from their estate. While you're laying the groundwork for the orderly disposition of your estate, remember to also establish whom you'd like to have the power to make financial decisions in the event you're incapacitated and upon your death.
Minimize the "Death Tax"One of the perks of having an estate plan in place is that it will enable you to take steps to reduce the so-called death tax that your estate may be required to pay once you die. As a business owner, your estate could be on the hook for taxes ranging from 35% to 50% of your company's value. Many families faced with this tax bill often have to resort to selling the business to raise the funds within the nine-month window required by the IRS to pay off estate taxes. Fortunately, the IRS allows some flexibility to business owners who establish an estate plan. Including selling stock at a lesser tax cost and the ability for the business owner's estate to pay estate taxes in installments. As the saying goes, you can't take it with you. But with proper estate planning, you can ensure that the fruits of your hard work will end up in the right hands.
Weekly Small Business Bookkeeping
- Record Client Payments
- Pay Your Vendors
- Sort or File Receipts
Monthly Small Business Bookkeeping
- Send Invoices to Clients
- Follow Up on Unpaid Invoices
- Pay State Withholding Taxes
- Reconcile Bank and Credit Card Accounts
Quarterly Small Business Bookkeeping
- File a Form for Federal and State Income Tax
- Take Distributions
- Evaluate Annual Profit and Loss Estimates
Yearly Small Business Bookkeeping
- Close Your Books for the Year
- File Any Necessary Forms
With proper planning, bookkeeping doesn't have to be a time-consuming task, and we hope this checklist helps along the way. To get organized with your bookkeeping, take advantage of FINSYNC’s all-in-one payment platform, which automates many of these time-consuming tasks so you can spend less time buried in spreadsheets and more time running your business. Need some bookkeeping help? Get virtual bookkeeping assistance with a small business bookkeeper in FINSYNC’s Service Network.
Outsourcing Saves TimeWhether you’re still trying to do it all or you already have a staff. There are often more jobs to get done than there are hours in the day. Hiring freelance talent frees you and your staff up to focus on critical business needs. Contractors often have a specific expertise that can be outsourced while you work on the industry-specific needs of your business. If you own a landscaping business, you'll want to focus your time on beautifying outdoor spaces. Outsourcing back-office tasks such as bookkeeping and HR frees you up to get back to (professionally) smelling the flowers. Some times of year are busier than others for small business owners. Outsourcing is an ideal solution for seasonal and project-based needs. For example, it might not make sense to hire a full-time accountant year-round. Working with a contractor during tax season can ensure that your business saves the most money on taxes. Working with contractors rather than hiring also saves small businesses on the time it takes to recruit potential employees. Hiring can be quite an undertaking (although if you do need to hire full-time employees, we have some tips for you.) For many small businesses, it just requires too much time and money. Especially without a dedicated HR staff. It can take an average of 36 days for a company to fill a job opening, according to a study by the Society for Human Resource Management. Even with all that time spent, it can be difficult to choose the right candidate. By working with pre-vetted professionals from FINSYNC’s Service Network, you can ensure that the contractor you hire is right for the job. Fill out a quick questionnaire about your needs, objectives, industry, and budget. Then we’ll match you with the right professional for your business.
Outsourcing Saves MoneyNot only does hiring cost small businesses time, but also be expensive. The average hiring cost for the vetting and negotiation process in 2016 was $4,425 per hire. Hiring can be a full-time job in and of itself, and your time is money. If you have to stop working on your business to write a job description, figure out where to post it, monitor and sift through responses, screen candidates, set aside times to schedule and conduct interviews, you’ve already lost valuable time and money before even hiring. Outsourcing work also allows small businesses to save money on payroll. Because contractors are generally not full time, businesses pay them for hours worked. This saves on the expense of a full-time salary. Small businesses are not required to pay taxes or provide benefits such as healthcare for freelancers. Their hourly rate is exactly what you pay. This is significant because with taxes and benefits alone, businesses pay 1.3 to 1.6 times the base salary for each employee. Many freelance workers are also remote, meaning businesses can save on office space and supply costs.
Getting Expert Support Helps Businesses GrowWorking freelance or what is now commonly known as “gig economy” work is becoming more common. In fact, 56.7 million Americans freelanced in 2018, and that number is only growing. This means that by hiring freelance talent you can get access to expert advice without paying the expensive full-time price. Small businesses that don’t need the year-round support of a financial professional can benefit from a yearly or quarterly check-in. This ensures that their books are in order and their business is optimized for growth. Of course, tax time is another prime opportunity to get insight from a financial professional. Not sure which expenses you can write off? Curious if there are any recent changes or little known tax codes that could save you some money? Don’t bother wasting your time and money with guesswork. You can hire a freelancer to help you get the most out of your tax return. Freelancers are hired on an as-needed basis. This way you can scale your workforce up and down to fit the demands of your business. Freelancers are perfect to fill in while you scale. Especially if your business is ready to grow, but you’re not sure you’re ready to hire more full-time employees. Does your business no longer need the particular expertise you hired contractors for, at least for now? You can easily pause a contract, knowing that you’ll be able to re-engage a freelancer should you need them again.
Benefits of Outsourcing TasksOutsourcing tasks to professional freelance talent allows small businesses to save time and money and also to scale their workforce up and down to fit business needs. Bringing in highly skilled professionals also allows you to benefit from high-level expertise without the expense of hiring full-time employees. Does your small business need help with bookkeeping, accounting, financial analysis, corporate strategy or human capital management? Get matched with a financial professional in FINSYNC’s Service Network that’s best suited to help your business grow.
- Be necessary for business. This can be a business meeting with a client or an investor, or a tour of a potential supplier.
- Take you out of your local area, which for most business owners means outside of their home city.
- Last for more than a normal workday, which means that day trips don’t qualify.
Qualified Business Income DeductionIf you operate your small business as a sole proprietorship, partnership, or S corporation, you can deduct up to 20% of your qualified business income. You can also deduct 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. C corporations are not eligible for this deduction. For example, if you are a single-filer, sole proprietor with a taxable income (adjusted gross income (AGI)) of $100,000, you can deduct $20,000.
Deduction of Net Operating LossesStarting from Dec. 31, 2017, only 80% of any net operating losses may be deducted for the previous tax year. This means that the two-year carryback rule for net operating losses is no longer in effect. Only a few farming and insurance-related businesses are exempt from the new regulations. For businesses that experience losses, you will see a decrease in deductions associated with these losses.
Business Expense DeductionsThere have been a few changes to the kind of expenses that are considered deductible business expenses. Any expenses that are for the purpose of entertainment, amusement, or recreation can no longer be deducted. This excludes food to some extent. As long as the meals are not lavish or extravagant, you can deduct 50% of the cost. When it comes to interest expenses, any business that has average gross receipts of 25 million or less can deduct all of their interest expenses. According to Juan, “This is a good deduction to utilize if your company has many loans.”
Fringe Benefit DeductionsDeduction of fringe benefits has also been changed to a certain degree. First, reimbursement for transportation related to commuting can no longer be deducted. However, you as an employer can deduct qualified bicycle commuting reimbursements. In addition, moving expenses must now be included in employees’ salaries. For example, if one of your employees is reimbursed for daily travel expenses, these do not qualify as a deductible expense for your business. However, if you cover an employee's moving expenses if they relocate for the job, these expenses are deductible as part of the employee’s salary.
Changes in Employer Credit for Paid Family and Medical LeaveSmall business owners can now claim a credit for a percentage of paid wages related to any leave employees take because of their own health or the health of their family. The credit can be between 12.5% and 25%. The exact percentage depends on the amount of paid wages in a tax year. For example, an employee with a monthly salary of $2,500 takes two weeks off as a medical leave. If you pay only 50% of their wage ($625), you may deduct 12.5% of that sum. However, if you pay 60% ($750), you may deduct an additional 2.5%, making a total of 15%. To claim this credit, a small business must:
- Have a written policy about family and medical leave
- Offer at least two weeks of paid family and medical leave
- Pay at least 50% of the wages normally paid to the employee
Changes to Depreciation DeductionsThe new depreciation laws are much more generous. In general, small business owners can now expense more, because:
- The maximum deduction increased from $500,000 to $1 million
- The phase-out threshold increased from $2 to $2.5 million
How to Prepare for Next Tax SeasonIn order to maximize your deductions next tax season, it’s important to prepare. “Make sure you document any deduction you want to include,” says Juan. “It’s very important to keep all the details about the deductions in case of an audit.” With FINSYNC, you can track all your expenses in a complete general ledger, which makes it easy to access any necessary documentation when you need it for tax purposes. If you’re unsure what deductions are applicable to your business, talk to your bookkeeper or accountant. They will be able to help you figure out the correct documentation and fill out the correct forms. Need tax help? Get matched with an independent accountant that’s best suited to help your business grow through FINSYNC’s Service Network.
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