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IRS Business Owners

Interacting with the IRS: New Business Owners

Did you start or acquire a new business this year? If so, you may feel a little overwhelmed with the new responsibilities and you could be a little intimidated interacting with the IRS for the first time. The first thing you should do as a new business owner is get a tax ID number or Employer Identification Number (EIN). You can apply for this directly through the IRS online.

Your Tax Responsibilities:
  • File your business’s annual income tax return
  • Pay estimated taxes for you if you own a pass-through entity or for your C Corporation
  • Payroll Tax Activities: withholding, depositing payments, and filing employer tax returns
  • Submit information returns if you have independent contractors, maintain qualified retirement plans, or offer other benefit programs to your staff

You can and sometimes must handle certain tax responsibilities electronically. Many online activities can be facilitated utilizing government provided resources listed below. Not everything listed below may apply to you so remember to consult your accountant if you have any questions.

Depositing Taxes
  • If you have a payroll or make estimated tax payments, schedule your tax deposits in advance by using EFTPS.gov.
  • Transmit W-2s to the Social Security Administration
  • Submit copies of employees’ W-2s with an IRS transmittal form (Form W-3) to the Social Security Administration through the Business Services Online. This suite of services allows organizations, businesses, individuals, employers, attorneys, non-attorneys representing Social Security claimants, and third-parties to exchange information with Social Security securely over the internet. You must register and create your own password to access Business Services Online.
  • Remit Information Returns to the IRS
  • You may have to file annual information returns to inform the IRS about your payments to independent contractors you utilize. Complete this task through the Filing Independent Returns Electronically (FIRE) System
Filing Annual Retirement Plan Returns

If you want or need to file a form in the 5500 series electronically, do this through the Department of Labor’s EFAST2. This is an all-electronic system designed by the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation. The purpose is to simplify and expedite the submission, receipt, and processing of the Form 5500 and Form 5500-SF. These forms must be electronically filed each year by employee benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code.

If you need assistance with any of the required tasks above, our professionals can help. Click here to contact us today!

When to Hire a CFO

As your company grows, both in size and revenue, it becomes necessary to have a leader who can manage and think strategically about financial decisions. While CPAs are critical to the success of the organization, they may not have the time to dive in and focus on the financial future of the company. When you hire a CFO you have the opportunity to add value through a variety of resources and collaboration.

Here are a few indicators that it is time for you to hire a CFO:
  • CEO is working more “in” instead of “on” the business
  • Complexity of the business begins to erodes profits
  • Business decisions are hindered by lack of timely financial data
  • An early warning system would have prepared the business for significant up or downturn
  • Lack of planning unexpectedly interrupted cash flow
  • Lead bank is concerned over quality and timeliness of financial reporting
  • The business growth plans include an acquisition strategy
  • Company experiences higher than expected tax liabilities due to lack of tax strategy

The resources the CFO provides can add value to and enhance the strategic direction of the company.

If you are interested in learning more or would like to hire a CFO, contact us today!

The Role of the CFO

Over time, the role of the CFO has evolved from transaction oversight to one of strategic importance. The CFO has become a true business advisor which both business owners and senior leaders rely on.

Typically, the CFO will model the owner and leader’s vision into a financial pro-forma to evaluate whether they can and will make the necessary investments (primarily financial and cultural) to achieve their goals.

Business owners need an in-house counselor, who is invested in the financial future of the company, to aid in decision making. The CFO provides resources needed to help make these decisions and “monetize” the company’s vision.

Resources the CFO provides:

Business Planning

  • Provide your business plan with financial rigor

Financial Projections

  • Create a bottom-up forecast and detailed budget with spending plans by department

Rolling Cash Forecasts

  • Enable you to respond, in real time, to emerging business conditions

Annual Operating Budgets

  • Help you keep track of maintenance operations, salaries, and interest payments

3 and 5 Year Plans

  • Forecast expenditures and revenue for three and five year periods
  • Create corresponding strategic goals

Monthly Management Reports

  • Create reports with previous and current financial data

Pricing

  • Build a financial model to set price

Managing Debt

  • Establish company budget and payment schedule to repay and keep debt low

Mergers and Acquisitions

  • Advise on M&A initiatives
  • Complete business valuation

Equity and Debt Negotiations

  • Restructure your debt to improve liquidity

Liquidations

  • Ensure proper redistribution of your company’s assets and property

With the resources they provide, the CFO is vital to driving business improvement initiatives. Not only do they want to sustain your accounting function, they want to improve it. To learn more about how our CFO Services can help you and your accounting department reach the next level, contact us today!

Breaking: Businesses Are Partnering With CPA Firms To Run Accounting Departments

The hiring of CPA firms as the accounting function of companies is growing. Once thought to be contained to smaller businesses, the use of a CPA firm as an accounting department is spreading to mid-sized companies.  Whether it is going to be called an “epidemic”, a “pandemic”, or an “outbreak” is yet to be seen.  The good news is business owners now have options on how to run their business.  In fact they have more options than at any point in history.

What does this mean?

Mid-Sized companies are facing many of the same issues that smaller businesses are going through.  They are wanting to run leaner businesses with less overhead, and are wanting to do so more efficiently.  This means that companies are continuing to look outside their own company for help.  Sure accounting firms have been offering accounting services to companies for decades – but what is new is that we are now offering accounting solutions to business owners.

Business owners are now asking, “Why would I pay a lone individual to handle my company’s accounting duties, when I can instead hire an entire team of professional accountants at a CPA firm to handle my accounting at a fraction of the cost?”

Good question – and one that every business owner needs to ask his or herself.  Hiring a CPA firm with an accounting solutions department is the here and the now, but also the future.

Accounting Solutions: What You Need To Know

There are many benefits to hiring an accounting solutions team.  The list of accounting solutions offered include: AP management, AR management, budget development, credit card processing, financial statement preparation and analysis, payroll management, QuickBooks support, and much more!  Companies aren’t just looking to maintain the status quo anymore, they are looking to better themselves and find competitive advantages over their competitors.  Companies are demanding efficiency and experience out of their accounting departments – when these demands are going unmet – you need solutions.

If hiring a CPA firm to be your accounting team is something that you are considering, be sure to consult with a number of CPA Firms and choose the one that best fits your company and your vision.  Make sure that they have the right staff in place to handle your needs, make sure you are not going to be charged by the hour, and make sure you choose a firm that you feel comfortable with.  You want to be able to call your CPA at any time throughout the year with questions, so make sure you feel comfortable with your accountant.  This person is going to effectively become a member of your team, so finding a CPA that meshes well with your personality and can fit into your office culture is an important part of the process.

Remember – you are running your organization.  When you use an independent accounting firm, you are in a better position to do so.  Let your CPA handle your daily accounting functions and you can better focus on the core competencies of your business!

Ready to learn more about the Accounting Solutions team at LBA Haynes Strand? Contact us for your free consultation!

What’s New At LBA Haynes Strand? Introducing The Accounting Solutions Group

LBA Haynes Strand, PLLC has decided to fill a need in the business marketplace and offer our clients with not just accounting services, but to offer legitimate accounting solutions. Our firm has announced the creation of an “Accounting Solutions Group” that will focus on offering flexible, scalable accounting and bookkeeping solutions for businesses and institutions of every size.

Principal Member David D. Fraser, CPA will lead a highly trained, qualified staff offering a streamlined accounting support and infrastructure that local businesses and organizations desperately need. Fraser had this to say about the group, “We have seen an increasing need in the marketplace for a third party accounting function in businesses. While we do look to provide services to these businesses, we are more focused on providing real world accounting solutions to the business community.  We are excited about this offering and look forward to helping start-ups and established companies grow.”

The Accounting Solutions Group at LBA Haynes Strand will offer the following menu of solutions:
  • AP management
  • AR management
  • Budget development
  • Business plans and forecasting support
  • Chart of accounts clean-up
  • Consulting services
  • Credit card processing
  • Deposit management
  • Expense reimbursements
  • Financial statement preparation & analysis
  • General ledger review
  • Monthly or Quarterly meetings to review
  • Payroll management
  • QuickBooks support
  • Sales and use tax reporting
  • Year End 1099s

Business owners will now have a third party to go to that supplies them with a full team of accountants and professionals that have the accounting knowledge of an entire accounting department at a fraction of the cost. The firm looks forward to taking the accounting off of stressed business owners hands and allowing those business owners to re-focus on leading and running their businesses.

To learn more about the Accounting Solutions Group, contact us for your no-cost consultation!

3 Benefits of Hiring a CPA Firm for Your Accounting Needs

A CPA Firm can offer flexible, scalable, bookkeeping solutions to businesses and institutions of every size. Growing your business and sustaining the success of your organization is likely your overall goal. In order to achieve this, business owners must make sure that they have a strong, reliable accounting function in place.

As the leader, you should spend your time finding ways to increase the overall value of your business. If you find yourself crunching the numbers of everyday finances, a CPA firm’s accounting services could be invaluable to getting both you and your business back on the right path to success.

What are the benefits to hiring a CPA Firm for your accounting?
1. The Offering Of A Full Suite of Accounting Services

One benefit to hiring a CPA firm for your accounting function is the full suite of fully customizable services to fit your needs. You may have people in your accounting department, but what happens when they have limited knowledge or experience?  Hiring a CPA Firm gives you access to a full team of accountants and professionals that have that knowledge and experience.

What services are included?
  • AP management
  • AR management
  • Budget development
  • Business plans and forecasting support
  • Chart of accounts clean-up
  • Consulting services
  • Credit card processing
  • Deposit management
  • Expense reimbursements
  • Financial Statement preparation and analysis
  • General ledger review
  • Monthly or Quarterly meetings to review
  • Payroll management
  • QuickBooks support
  • Sales and use tax reporting
  • Year end 1099s
2. Hiring a CPA Firm For Your Accounting Saves You Time and Money

Your accounting department shouldn’t require a babysitter. You might think it’s your duty as the business owner, to manage workflow, or you might just be intent on keeping a close eye on your company’s finances. Is this really the best use of your time as the leader of your business? What you should be doing is checking in to each of your departments, ensuring smooth sailing, and then getting back to running your business as a whole. Hiring a CPA Firm allows you to do this by taking all accounting issues off your hands. You will be relieved from the day-to-day oversight of your company’s finances. Your available time increases, and you feel confident in taking that time to tackle other business issues.

Look at the budget and resources you currently have allocated towards your in-house accounting department and compare it against the investment of hiring an independent CPA firm. When examining these costs, remember to factor in all the extra costs of other salary factors, including employee benefits and payroll taxes. We are confident that you will be surprised at the price difference and the overall cost savings that hiring an independent CPA firm will provide your business.

3. Hiring A CPA Firm For Your Accounting Puts You In Control

If you are a business owner, there is no doubt that you have control over your business – but are things being managed according to your guidelines and vision? Are the financial policies and procedures your company requires being put into place? You may not have a tremendous amount of accounting knowledge, but you certainly have ideas on how you would like to see reports compiled and presented.

A good CPA firm will abide by these ideas. A good CPA firm will take your business plans and reporting preferences and arrange them into an easy to read, comprehensive format. For example, if you are not 100% in tune with 100% of your expenditures, a CPA firm might recommend a weekly, monthly, or quarterly cash flow analysis based on your needs.

The fact that you may not be an accounting expert should not prevent you from creating policies around your finances and a CPA firm can help you put those policies in act and strengthen them.

Leading your business means guiding the business to a brighter future. You should be focused on the overall picture, not busying yourself with daily duties throughout your departments. Even if your accounting department is performing adequately, as a leader, it is your responsibility to turn “adequate” into “effective” if you want to achieve sustainable business success. A CPA Firm’s accounting services ensure this effectiveness, and give you the time and tools you need to lead your business forward.

Want to learn more about the benefits that a CPA Firm’s accounting service can provide for your business? Contact us today to begin your conversation about your financial future with an experienced accountant at LBA Haynes Strand.

How Well Do You Know Your CPA Firm?

How well do you know your CPA Firm? Can you honestly say that your CPA is a partner in your success and that of your business? These two questions should produce the same answer: “Well enough to be confident in our collaborative success.” If this is not your answer, you may want to think about rekindling the flame between you and your CPA firm.

The relationship you have with your accounting firm should exceed standard service. Strategic planning, a strong partnership, and prolonged efforts toward ensuring future financial success should be at the forefront of your relationship with your CPA. If a close relationship with your accountant has diminished, or was never established in the first place, perhaps it is time to start rethinking things. Mutual understanding and a shared work ethic between you and your CPA firm are necessary to achieving financial growth for your organization.

Below are the primary components of a healthy CPA-to-business relationship, as well as the level of familiarity required for each element to be effective.

Ongoing Strategic Planning

What type of employee benefits do you offer? How about retirement plans? Your responsibility is to maintain a healthy, positive work environment. Part of the responsibility of your CPA is to factor your employees into the strategic layout of your current and future business endeavors.

Value Service Agreement

A strong CPA firm demonstrates the desire to cultivate close client relationships. You want your conversations with your CPA to be just that – conversations. How much value are you getting out of a consultation if you’re constantly monitoring the clock, keeping a closer eye on your bill than on the pertinent financial data laid out in front of you? Ensure that the value service agreement offered by your CPA is agreeable to your budget and beneficial to your finances. Work closely with your accountant to determine the plan that works best for YOU.

Growth Conversations

Are you and your CPA overdue for a growth conversation? You and your accountant should work together to create a strategic growth plan based on the specific goals you’d like to achieve in the future. Would you like to expand your business, or are you trying to downsize? Are you going to leave your business for future generations? Perhaps you are looking to sell your company. Whatever your plans may be, it is vital to converse with your CPA to determine the best formula for reaching those goals and to ensure financial security. You need an accounting team that is just as dedicated to fulfilling those plans as you are.

Long-Term Vision

What are your longstanding goals in terms of business development? Is your CPA familiar with them? Whether you’ve omitted this important information, or your CPA has neglected to ask, these objectives are vital in creating a strong and stable plan for your financial future.

Constant Connection

Your financial consulting needs will fluctuate from month to month, year to year, and so on. Regardless, contact with your CPA should not slip through the cracks during periods of lesser urgency. Both you and your CPA firm need to maintain a close relationship throughout the year. Communication is key!

There are several factors that contribute to your long-term financial success, but none of them are effective unless a sturdy foundation is established between you and your CPA firm. If you don’t feel as though a real closeness exists, all subsequent interactions are going to be out of sync with your future financial plans. To set and satisfy all of your financial goals, contact a professional CPA firm or work on strengthening the relationship with your current one.

Ready to get more out of your accounting services? Contact us to begin to understand the value of working with an accounting firm that provides much more than surface-level, mechanical tax preparation.

10 Common Internal Control Deficiencies Found in Small Businesses

The following 10 common internal control deficiencies found in small businesses can cause the loss or damage of assets, loss of resources, and a decline in revenue. These deficiencies can easily be rectified by slightly changing or modifying existing processes or introducing basic internal controls:

1. Inadequate documentation / records
Documentation provides evidence of the underlying transactions. It is the input to establishing proper financial records. Financial documents should be pre-numbered to ensure all transactions are recorded and accounted for. This will help to prevent recording of the same transaction twice, as there should not be any duplicate numbers in your system. With proper numbering of documentation, tracing documents that relate to follow up queries/claims and questions from customers or owners of prior transactions will be easy.Proper documentation would most probably provide satisfactory answers to most, if not all, financial transaction related questions. Furthermore, adequate documentation will ease the process of compiling financial records and completing tax returns.

2. Key business cycles not properly defined 
Managers and owners don’t see the need to create written policies and procedures or just even basic flowcharts defining the key business processes, as some small business processes appear to be uncomplicated. However, this is probably one of the most unused control tools where the most value can be added with little effort. An effective procedure can align business objectives and help establish best practice operating procedures. As businesses have different focus areas, different cycles will be important to your business but for most businesses the following processes will be critical. Sales and Accounts Receivable, Cash Management, Banking Procedures, Purchases, and Accounts Payable. For a business selling goods, inventory controls will be an important cycle. Documenting key controls in each of these cycles will provide transparency and consistency. Specific roles and responsibilities in each of these cycles can easily be assigned to specific individuals. When improvements and changes are made to your processes, employees can quickly be informed, trained, and brought up to speed.

3. Lack of control with authorization of transactions 
Authorization of purchases should occur before the commitment of resources. Depending on the size of the business, levels of authority can be introduced to better eliminate the risk of inappropriate spending. For example, with orders above a certain dollar value, say $1,000, more than one quotation should be obtained which could ultimately reduce your overall expenditure. Authorizing of transactions before placing orders provides the owners/managers the opportunity to evaluate different purchasing options, and make sure items or services obtained will support the business objectives.

4. No oversight and review  
Small business owners many times get so involved in the day to day operations of the business that they tend to neglect performing basic review procedures. Business owners should take some time and interest in the financial records. This is an important aspect of fraud prevention. Not a lot of time is required to review monthly revenues, expenditure reports, inventory reports, budget vs. actual amounts, and variance reports. Having a more hands on approach will give the owner invaluable feedback on how the business is performing and where any potential problem areas or poor performance areas may exist. Review of the financial records is a critical component and input for better decision making. The frequency of the review of financial data depends on the volume of transactions and type of business, however, the review of financial data should generally be conducted on a monthly basis.  

5. Dated or ineffective information systems  
Small businesses run on lean resources and very little time is often spent evaluating information systems. Investing time in this area could add a lot of efficiencies in the long run.  List the systems in your business and the key performance measures you need from each. Working systematically though these will help you stay competitive and efficient. Many user-friendly software systems are out there which could shorten processing and operating cycles – and are not that expensive to operate. 

6. Lack of physical & logical security  
Lack of physical security of business assets and resources could result in the loss or damage to assets and resources. Access to equipment, petty cash, and check stock should be restricted to appropriate individuals and stored or locked in an appropriate secure location. Computer equipment and networks should be password protected and computer passwords should be changed regularly. Having firewalls and protective devices or software on computer systems is an important component to help prevent security breaches.  Protection of personal information and banking information are becoming increasingly important with the increase in risk of identity/credit card theft. Personal and employee data should be encrypted and stored in secure folders.

7. No formal ethical policies and procedures 
This control may not seem to be crucial for the success of a business, but without clear guidelines on the use of the business assets and expectations, in terms of integrity and ethics from employees, businesses can expose themselves to inefficiencies and misappropriation of assets.  A code of ethics is an open disclosure of the way an organization operates.  A well written and thoughtful ethics policy can serve as a communication vehicle that reflects important values and goals of the business.  It can provide guidelines of how employees should deal with potential misbehavior and/or misappropriation of assets and can provide alignment with regard to company values and commitments.

8. Job roles and responsibilities not clearly defined 
Employees are your most important assets and as a small business you are very reliant on your employees.  They are representatives with customers, suppliers, and competitors. For this valuable resource to be effective in your business you will need to provide clear direction and define appropriate roles and responsibilities for each employee.  Job roles and responsibilities should be clear and preferably be in writing.  This will ease the process of separating duties discussed in the next section.  New employees will quickly be able to reference back to their responsibilities and understand their roles better.   

9. Lack of separation of duties 
Small businesses are susceptible to fraud by their own employees as they may have a few employees with multiple roles. Each employee should have specific job responsibilities, preferably in writing to ensure there is no confusion in assigned job roles and responsibilities.  Generally, assigning different people the responsibilities of authorizing transactions, recording transactions, and maintaining custody of related assets such as cash and credit cards provides for more effective internal control and less opportunities for misappropriation of assets. 

10. Inadequate disaster recovery, backups and business continuity plans   
The importance of backups and business continuity are many times under-emphasized.  Systems can be designed so that back-ups are performed automatically and on a regular basis.  Backups should be made based on transaction volume and stored off-site.  To re-create data can be painful, time consuming, or not practical at all.  Business Continuity plans outline how recovery will be accomplished in case of a disaster.  Long term power outages or disruptions, offices not available for long periods of time, and loss of staff on a large scale are not that uncommon and can happen. Planning ahead for disasters before they strike is important to the survival of your business.  A disaster recovery plan typically consists of an emergency plan, disaster recovery plan, and a continuity plan.  

Changing your approach towards internal controls in your business in these 10 key areas, can make your business grow! Implementing control tools in these areas can be accomplished in a fairly easy manner and in a short amount of time. Consult your local accountant or auditor for advice with some of the technical financial processes and controls. Changing your focus in these 10 areas, will add a lot of value to your business over the long run!