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Small Biz Accounting Tips, Nov2014
November 10, 2014
Hello small business owners!
Well, Halloween is over, and we're all looking forward to Thanksgiving - parades, football, turkey, pumpkin pie...suddenly I'm hungry. Anyway, where has all the time gone? Soon it'll be Christmas and New Years. Are you ready to close the year on your small business books? In this months newsletter we're going to talk about some issues to think about as the year draws to a close.
So let's get started!
Can you take the Home Office deduction?Do you run your business out of your home?
Even if you do your work at the customers place of business or someone's home, if you don't have an actual store or office, you can claim the home office deduction, under certain conditions. If that's where you do your paperwork, keep files and/or inventory or equipment, if you greet customers there, if you take phone calls there, etc., you can claim a portion of your home for the home office deduction.
The IRS allows you to deduct certain expenses - a portion of rent, electric and heat, internet, phone costs - as a business expense. You take the area you use for business, if it's a whole room or part of a room or even your garage, calculate it's percentage of your total home square footage, and use that percentage of your home costs.
Starting last year, though, there is a Simple Option you can use as well - you use a standard deduction of $5 per square foot of your home used for business - up to 300 square foot.
The IRS requires that you be able to prove that you use the space regularly for business, and that it's used as your principal place of business.
If you have any doubts on your situation, ask your tax preparer, or send me an email. I'm a tax preparer myself.
Speaking of home offices, do you want to check out some cool home office setups? I came across this the other day, not sure how I stumbled upon it, but it's kind of fun:
Journal Entries for Year End ActivitiesAre you thinking of purchasing company calendars or other promotional products like pens or mugs to give your employees / vendors / customers? You would post that cash disbursement to “Advertising Expense” because they have your company info on them and the products are meant to reinforce your biz presence and even to bring in new sales. You would post the entry like this:
There are a few ways to do this, but I usually post gift purchases journal entries like this:
Debit: Office Expense.....$400
Year End Cash Flow Planning.Have you gone thru the calculations yet? Do you know if you have cash to buy employee gifts or make that equipment purchase before year end?
Go thru the process of forecasting out the last weeks of the year, and place your expected income as cash in, and list out all the bills you plan on paying as cash out. For more details on the process of Cash Flow Analysis,
Using Promotional Items
If you have some extra funds available this time of year, think about giving promotional items out to your customers and vendors as a ‘thank you’ for all they do for your business.
Calendars are a great way to keep your business in front of your customers, and to remind them how important they are to you. I use Deluxe Products for checks and business forms, like W-2 and 1099 forms, but they also have a lot of promo items for some decent prices. Like this calendar:
And I found a special for you, 20% off 1st order.
And I found you a deal on these, too! 50% Off Holiday Cards at Deluxe.com.
Asset or Expense?
Some of you may not have a real, formal accounting system. So maybe you're not keeping track of each business purchase until the end of the year.
Certain items or services you purchase must be Capitalized, not Expensed.
What does this mean?
Capitalized means that item you purchased is treated as an Asset, and Depreciated each year it's used until it's useful life is used up.
Buildings, of course, are treated as business Assets,as are vehicles used by the business, equipment, furniture, computers, phone systems, heating systems, etc.
But so are major building improvements, improvements to a leased space, start-up costs for a new business, and major improvements to a business property, like sidewalks or parking lots. And computers, equipment, furniture, and things like that are considered Assets as well.
These items all have a useful life longer than a year, and need to be posted as an Asset, and then depreciated on your tax return.
If you have any questions about any item that you've purchased for your business, feel free to send me an email.
QuickBooks is having a sale.
QuickBooks is a full accounting software system, and it's the #1 small business accounting software package on the market. I use it, so I know it has a lot of great qualities. You can invoice customers, pay bills, pay your employees, track your jobs or projects, and prepare all manner of reports. So if your business has outgrown your manual system, check it out.
A New Option for Small Business Loans
You hear all the time how hard it is to get a small business loan. Banks aren't all that fond of loaning to small businesses, unless you've got great credit and several years of business behind you.
Well, there's a new option. I found it for a personal loan, and they're expanding into small business loans, so I thought I'd let you all know about this. I introduced it in the last newsletter, but I thought I'd include it again.
If you're looking for some funds for your small business, look into Lending Club.
To qualify, you need to have been in business at least 2 years, have annual sales of at least $75,000, and have some business credit (a credit card or some vendor credit).
As I said, I'm using them personally, and it was a quick, easy process. Check it out, and see if it makes sense for your business.
It's getting close to tax season, and if you need your small biz tax return done for a reasonable fee, send me an email. I do most small biz returns for $100 - $200.
Well, that's it for this months newsletter.
I'll be back next month with more news and tips to help you with your small business bookkeeping.
PS: Please feel free to let your fellow small biz owners know about this newsletter! Send them to my sign up page - the last button on my navigation panel.
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