Signs You Have Outgrown Your Bookkeeper

Signs You Have Outgrown Your Bookkeeper

Signs You Have Outgrown Your Bookkeeper

Bookkeepers play a vital role in managing financial records for small businesses. However, as a business undergoes development and growth, its financial needs may surpass the capabilities of a bookkeeper. Depending solely on a bookkeeper may become insufficient during these stages of growth. It becomes imperative for the business’ success to adapt to its evolving financial needs. But how does a business owner know when it is time to make these changes? The key is recognizing the signs that indicate the business has outgrown its existing bookkeeping setup.

Here are four signs your business has outgrown its bookkeeper:

You Are Too Involved in Bookkeeping

Business owners should be focusing on growing their business, not closing their books. An owner that is heavily involved in the day-to-day bookkeeping tasks is a clear indicator that the business may have outgrown its bookkeeper. It is natural for owners to be hands-on in the beginning. However, ongoing heavy involvement can become a bottleneck as the business expands. Business owners are most effective when they focus on strategic decisions, driving growth, and enhancing core business aspects.

Technological Adaptation is Limited

Leveraging advanced accounting software and integrating financial systems with other tools is essential for efficient financial management. A business’ bookkeeper must keep up with these advancements and improve their knowledge continuously. Without this development and knowledge in technology, there is a misalignment with the evolving needs of your business. Ultimately, a clear indicator that you have outgrown your bookkeeper.

Lacking Internal Controls

At times, a business’ ‘bookkeeping department’ includes one person performing multiple tasks. Internal controls are essential for detecting and preventing errors in financial processes. As a business expands, the volume and complexity of financial transactions grows. Without proper internal controls, including segregation of duties, risk of errors in record-keeping, reconciliation, and financial reporting increases. Lacking internal controls may be another sign you have outgrown your bookkeeper.

Your Business is Too Complex

As your business grows, its financial needs often become more complex. This is where strategic planning comes into play. Strategic planning involves forward-thinking, which focuses on forecasting and anticipating future goals. A bookkeeper’s role should evolve with the company. However, if your bookkeeper’s primary focus is on routine tasks and does not actively participate in the planning, this is a clear indicator you have outgrown your bookkeeper.

Recognizing the signs that your business has outgrown its bookkeeper is not an indication of failure. It presents you with an opportunity for strategic enhancement.  At Cheryl Jefferson & Associates, we focus on accounting and forward-thinking development for small businesses.

Contributed by Elizabeth Partlow

 

 

Year End Checklist

Year End Checklist

Year End Checklist

Businesses worry about more than just gearing up for holiday festivities at year end. During this time they experience ‘crunch mode’ in order to complete many year-end tasks. Including closing their books, compiling annual statements, and meeting tax deadlines. Year-end requires a diligent approach to financial reporting. There are several steps that will help your business at year-end to ensure accuracy and compliance. To ease this process for you, we have put together a checklist for a seamless year-end review.

Get Organized

  • Now is a great time to embrace that accounting software you have been eyeing for awhile. It will help with efficiency, as well as accuracy.
  • Not ready to take on an accounting system? That is ok! However, you will want to organize your paper trail. Performing this task through out the year, helps to ensure you have comprehensive documentation of expenses.

Review the Trial Balance

  • After organizing your financial data, review the Trial Balance report. You will want to review the balances of your business’ accounts. Also, make sure to review the activity of accounts with zero balances.
  • Analyze balances for variances—incorrect debits or credits, unexpected account balances. Also, review the classifications of all transactions. If there are any misclassifications, be sure to resolve these.
  • Make sure to prepare reconciliations for the bank statements, credit card statements, and statements from third-party providers.

Payroll Expense Reconciliation

  • Payroll expenses are prone to error; therefore, it is important to reconcile the payroll expenses with the 941, 940, and SUTA tax returns.
  • To avoid penalties, ensuring compliance with the IRS regulations is essential.

Review Accounts Payable and Receivable

  • Review both the A/P and A/R aging reports
  • Ensure there is no missing information, and the outstanding balances, not only are accurate, but reconcile to the Trial Balance report balances.
    • Accounts Payable: this means that all bills and bill payments have been recorded.
    • Accounts Receivable: All invoices are recorded and have been sent out to customers. Any payments from customers have also been recorded.

Work-from-Home State Tax Implications

  • Asses the state tax implications for remote workers
  • Document all employees’ work locations, accounting for potential tax liabilities for different states.
  • Review rules for additional tax filings based on each state’s regulations.

Take Inventory of Property and Equipment

  • Do not forget to review your fixed assets, including those with remote employees.
  • Document any new assets, disposals, and modifications and update the fixed asset listing.
  • Ensure the depreciation balance is accurate for the year.

Review Trends

  • Reviewing trends helps to ensure that all financial data is complete and accurate.
  • Fluctuations will pose red flags and will require a deep dive into what is going on. Ultimately, identifying misclassifications, missing entries, etc.
  • Assessing the trends should be done over several periods. At year-end it is recommended to perform this over multiple years.

A thorough year-end checklist is an indispensable tool for any business. While this checklist provides guidance, it does not cover every detail of the year-end process. Our team helps facilitate a proactive approach ensuring your business is prepared for year-end challenges throughout the year.

 

Originally written by Cheryl Jefferson Cooke

Updated and additional content provided by Elizabeth Partlow

 

Joint Ventures

Joint Ventures

Joint Ventures

 

A joint venture is a business arrangement where two or more businesses work together on a specific project or business activity. They combine resources and expertise to achieve common goals.  This collaboration is a way for businesses to pursue opportunities, share risks, and leverage each other’s strengths. However, businesses can still maintain a degree of independence. These ventures do require careful planning and clear communication between the parties. This helps to ensure the success of the venture and to manage potential conflicts. While there are many types, each provides a number of benefits for businesses.

Types of Joint Ventures

Joint ventures come in many different forms to meet the specific goals and needs of the parties. There are four common types, which are:

  • Project Based Joint Venture: Is a temporary and strategic collaboration between two or more independent entities. Entities execute a specific project or a series of interconnected projects. It has a beginning and end date and focuses exclusively on the successful completion of the project’s goals and objectives. Common industries for these ventures are construction, engineering, and real estate development.
  • Function-Based Joint Venture: Multiple entities perform specific business functions or activities. Each entity brings unique strengths, capabilities, and/or resources to the table. These ventures leverage the distinct skills of each entity to attain common objectives. The manufacturing, marketing, and research and development are a few industries that use this joint venture.
  • Vertical Joint Venture: Is a strategic collaboration between multiple entities at different stages of a supply chain or production process within a specific industry. The primary goal is to improve coordination, efficiency, and competitiveness. This is done by leveraging the unique strengths and capabilities of each entity. Also, they formalize their collaboration through a structured agreement. Some of these ventures create new legal entities to oversee joint operations. The agriculture and automotive sectors often used these ventures.
  • Horizontal Joint Venture: A strategic collaboration joining entities that operate within the same industry. This venture is designed to combine the entities resources, expertise, and capabilities to achieve their goals. While improving their competitiveness within the industry. Additionally, these joint ventures promote resource sharing, risk reduction, and the ability to capitalize on economies of scale.

Benefits of Joint Ventures

There are many advantages businesses that seek when choosing to collaborate and form joint ventures. First, there is resource sharing. The entities combine their resources, while reducing their costs.

Also, risk mitigation occurs. Risk is spread amongst all the businesses, helping to provide a safety net regarding unforeseen challenges. Joint ventures also open doors to new markets, and new customers. Lastly, by combining forces, companies can achieve a stronger competitive position in their industry, making it more challenging for competitors to match their capabilities.

 

Joint ventures provide many benefits to businesses. However, not understanding them can cause joint ventures to seem somewhat daunting. Allow our team of experts to help you!

 

Contributed by Elizabeth Partlow

 

Debunking Myths: Why Not Outsourcing Your Accounting Is a Missed Opportunity

Debunking Myths: Why Not Outsourcing Your Accounting Is a Missed Opportunity

Debunking Myths: Why Not Outsourcing Your Accounting Is a Missed Opportunity

As businesses evolve, the complexities of handling financials internally can become overwhelming. Despite the apparent advantages of outsourcing your accounting, many decision-makers hesitate due to certain prevailing misconceptions. Let’s dive into these misconceptions and shed some light on the realities. 

Debunking Common Misconceptions About Outsourcing Accounting

 1. “I’d be relinquishing control over my finances.”

Fear of losing control: The thought is that by outsourcing, one might be handing over too much power and could be kept in the dark about their own finances. 

Reality Check: Outsourcing is about collaboration. You’re delegating tasks, but you remain in the driver’s seat, making informed decisions. You’re merely lightening your workload, not surrendering control. 

 2. “What if they mess up.”

Concern over reliability: There’s a belief that an external team might make mistakes, leaving the primary business responsible for cleaning up. 

Reality Check: Established accounting firms prioritize precision and reliability. Their reputation hinges on delivering quality work. 

3. “Outsourcing seems cost prohibitive.”

Misconception about cost: The presumption is that outsourcing accounting will cost an arm and a leg. 

Reality Check: While there’s a cost involved, the potential returns in terms of time efficiency, error reduction, and insightful expertise are substantial. 

 4. “External parties might breach our confidentiality.”

Concerns over privacy: Some business leaders fear sharing sensitive financial data with external entities. 

Reality Check: Any reputable accounting firm has stringent confidentiality policies in place. They’re committed to safeguarding client information. 

Wrapping Up the Discussion

Having dissected these common reasons for not outsourcing your accounting functions, it becomes evident that many of these concerns might be unfounded. Embracing external expertise can pave the way for more streamlined operations and informed financial decision-making. 

Looking to shift your focus to growing the business? Virtual CFO provides GovCon-centric strategic accounting for small businesses providing services in technology, architecture, engineering, aerospace, and project management industries.   

We know your pain points – let us help you relieve them – schedule a consult.  

 

 

Navigating the Roller Coaster: The Top Reasons Small Businesses Bite the Dust

Navigating the Roller Coaster: The Top Reasons Small Businesses Bite the Dust

Navigating the Roller Coaster: The Top Reasons Small Businesses Bite the Dust

 

Introduction: The Thrills and Spills of Small Business Ventures 

Embarking on a small business journey is like hopping onto a roller coaster of entrepreneurship. It’s a wild ride with steep climbs, heart-pounding drops, and unexpected twists and turns. While some businesses manage to secure their seatbelts and thrive, others plummet to the ground. But what exactly causes these businesses to nosedive? Let’s unravel the mysteries behind their fates. 

1. Unforeseen Financial Abyss 

Money makes the world go ’round, and the lack thereof can quickly halt a promising business. Many startups underestimate the financial demands of running a business, leaving them without a cushion to weather tough times. From operational expenses to unexpected emergencies, not having a solid financial plan can be a one-way ticket to failure. 

2. Blind Spots in Market Research

You can’t shoot in the dark and expect to hit a bullseye. Similarly, diving headfirst into a market without proper research can leave you shooting blanks. Failing to understand your target audience, competitors, and market trends can lead to products or services that miss the mark entirely. 

3. Leadership Limbo

A ship without a captain is destined to drift astray. In the business realm, effective leadership is the rudder that steers the ship toward success. Inexperienced or ineffective leadership can create confusion, lack of direction, and a disengaged team. It’s essential to have a strong leader at the helm who can navigate through challenges with finesse. 

4. Marketing Mayhem

If a tree falls in the forest and no one’s around to hear it, does it make a sound? Similarly, if a business offers fantastic products or services but fails to market them effectively, it might as well be invisible. Poor marketing and lack of brand visibility can lead to a lackluster customer base and, ultimately, business failure. 

5. Scaling Stumbles

The grass might be greener on the other side, but attempting to expand too quickly can lead to a tumble down the hill. Premature scaling, without a strong foundation and a clear growth strategy, can strain resources and destabilize a business. It’s important to crawl before walking and walk before running. 

6. Quality Quagmire

Cutting corners on quality might save a dime today, but it can cost you a dollar tomorrow. Delivering subpar products or services can tarnish your reputation and drive customers away. Maintaining high quality should be non-negotiable to build trust and credibility. 

7. Technological Turmoil

Living in the stone age while your competitors zoom past on the information superhighway? That’s a recipe for disaster. Ignoring technological advancements or failing to adapt to them can render your business outdated and inefficient. 

Conclusion: Navigating the Entrepreneurial Maze

In the turbulent world of small businesses, the journey from startup to success is far from predictable. It’s a thrilling ride that demands resilience, strategic planning, and adaptability. Understanding the potential pitfalls and taking proactive measures to avoid them can significantly increase the odds of staying on the track to triumph. 

Looking to shift your focus to growing the business? Virtual CFO provides GovCon-centric strategic accounting for small businesses providing services in technology, architecture, engineering, aerospace, and project management industries.  

We know your pain points – let us help you relieve them – schedule a consult. 

Payroll Management

Payroll Management

Payroll Management

For most businesses payroll is one of the largest expenses. It includes not only employee salaries, but also benefits, taxes, and other related costs. Due to this payroll management is a vital function for businesses. The payroll process is more than just paychecks and requires meticulous record keeping. Regardless of your business’ size, effectively managing payroll is essential from a compliance standpoint, as well as for overall business success. 

Importance of Payroll Management

Payroll management is the process of overseeing the financial aspects of employees’ compensation. It is crucial for businesses as it plays a pivotal role in its overall financial health. There are several reasons proper payroll management is important for a business. To begin with, businesses must adhere to various federal, state, and local labor laws and tax regulations. Accurate payroll ensures compliance with these laws. Also, having accurate payroll records is vital for both internal purposes and regulatory compliance. These records provide a historical record of employee compensation, deductions, and tax withholdings, which is crucial during audits or when dealing with employee inquiries. It can also help businesses budget for labor costs, ensuring financial stability and preventing cash flow problems. Lastly, and in some regards, the most important, it maintains employee morale and trust. Errors or delays in payment can lead to dissatisfaction and affect employee retention.

How Outsourcing Helps Small Businesses with Payroll Management 

Outsourcing is a strategic decision that can benefit businesses in many ways. First, by outsourcing payroll responsibilities, your business can streamline their operations. Allowing you more time to focus on core activities. Also, this allows the experts to navigate the complex tax laws and labor regulations. Ultimately, increasing accuracy, while simultaneously minimizing the risk of costly errors and penalties. Another benefit is that it reduces costs for your business. The need for in-house payroll staff and software no longer exists.  Lastly, outsourcing payroll management redirects resources towards other important aspects of the business. You now have the opportunity and resources to focus on growing and developing your business.

Payroll management is key for businesses to ensure legal compliance, financial stability, employee satisfaction, and operational efficiency. Outsourcing payroll to a team of experts can help your business achieve all this, and more.

Contributed by Elizabeth Partlow