by Sarah | Aug 3, 2022 | Expenses
Everyone in the news has been talking about a possible upcoming recession. Whether or not it comes, the economy has been getting tight for all businesses and is affecting profits. What are some tips that you can use to prepare for harder times?
Recurring Charges
One thing I recommend is to go through your expenses and see if you have redundant or unnecessary expenses. Do you have monthly charges for services that no longer fit your needs? Did you sign up for multiple news services and only have time to read one of them? This is especially true for things that you were using and it is auto-charged so you don’t even think. Until it renews for another year. Do you have a subscription service for office supplies that are purchased on a regular basis? You may have enough on hand right now to skip a few months.
Fuel
Another savings area is fuel costs, especially in the current economy. Have you kept up with maintenance to ensure your vehicles are running properly and efficiently? There are tons of tips on the internet that can help save fuel costs. Some of my favorites are not letting the gas tank go lower than half and accelerating at a steady pace. If your fleet is older and needs replacing, make sure to look for more fuel-efficient vehicles.
Credit Card Fees
One last tip that I have is to review the fees that you are paying if you accept credit cards. If it has been a while since you reviewed what you are paying in merchant fees, reach out to a few companies and see if you can get a better rate. I don’t have any that I strongly recommend but I don’t recommend Square if at all possible due to high fee rates. Now that most companies accept credit cards, those fees can add up quickly. Especially if you do a lot of smaller charges because there is a per charge fee as well as a percentage of the sale.
Make it a Habit
If you go through your expenses and look for waste, you can put your business in a much better state whether or not we end up in a recession and will raise your profits. I recommend doing this annually when you are working on your budget for the upcoming year.
by Sarah | Mar 7, 2021 | Business Tools, Uncategorized
Why is Audit such a bad word that gives people nightmares? I know that most people flinch when they hear the term audit because they automatically think of the IRS or other government agencies but it doesn’t have to be a bad word. Audits are really just in-depth reviews of certain things, usually your expense accounts. You can find out important information if you really look into your accounts.
Accounts that need minimal review
What accounts should you review? Really, all of your accounts should be reviewed on a regular basis. Some could use more insight than others. For example, your utility bills rarely change but during certain times of the years, is your electric or gas usage getting too high or has your internet and phone package been inching up? Your utilities only need a review yearly or seasonally and do not need to be reviewed too closely each month but other accounts may need to be reviewed much more often.
Other Accounts need frequent review
Do you sit down and review your job materials and labor or your vehicle maintenance on a monthly or semi-monthly basis? These can change drastically depending on how busy your business is. Did these accounts go up when you were busy and not come down when your business slowed down? Did some processes quit working for you and are costing you more money now? Have the job costs gone up but your pricing hasn’t? Are your vehicle costs inching up or the gas usage getting worse?
How to use the reviewed information
A great way to make sure that you know exactly where your profits are going is to review the costs on a regular basis. Make sure that all non-used project items are returned and that the credits are actually received. Look to see if your vehicles are not starting to cost more to maintain than they are worth. Other accounts to watch carefully are shipping and freight, can you combine orders throughout the day to meet the minimum amount for free shipping or will a vendor offer discounts or free shipping if you order more of your regular purchases through them?
If you do not know exactly where your money is going, you do not know how you can cut costs or if you need to raise your rates. You won’t know the best way to invest better in your company if you don’t know what isn’t working anymore. Please set up a call with me here if you need help to audit your expense accounts.
by Sarah | Jan 31, 2021 | Business Tools
When you go to a client’s house or business to do work, do you leave a great invoice for their records? What makes a great invoice? One that gives detail as to what was done, what the breakdown of costs was, unless it was a quoted bid, and your business name and contact information.
Make sure that your business name is obvious on the top of the invoice and not hidden below in the text or even worse, left off altogether. The pre-printed invoice books from the local supply store are great but they do not show you or your personality. Let your customers have an easy way to remember who gave them the wonderful service and a way to get hold of you to schedule more. Give them all the ways to contact you that you use, which can be email, a website, or a business page, and absolutely leave your phone number. It is frustrating to pull out that old invoice and there isn’t contact information on it. Google isn’t always perfect at sharing your information so relying on google searches for phone numbers or business categories is risky business.
Breaking out the costs and leaving a detailed report of the work done gives your clients a sense of transparency and helps build their trust in you. If they can go back later to that invoice and are able to see exactly what was done, they won’t be questioning whether a new issue is related to your work or not. They will know that you worked on A and B but not on X or Y. You could also have your terms of service printed on your invoice and let the customer know that you will warranty your work for however long that it is, that helps them to know that if there are any issues to call sooner than later and they will not be upset if they call and are told that there is nothing you will do since it has been too long.
Will you be allowing customers to set up an account and pay later than the time of service? Make absolutely sure to put all of the information about late fees or finance charges and I highly recommend that you have that section checked by someone that deals with collections before you have your invoices printed. There is nothing worse than finding out your wording can’t be enforced because your late fees are too high for your state or that you did not put in the wording that you will add attorney fees so you are not awarded the money that it took to collect the past due money. You do not have to give your customers the chance to pay later but it might turn off some customers that have emergency issues but no emergency funds. Or you didn’t get a signature agreeing to the collection process and now can’t even send them to collections or take them to court for your lost fees.
I recommend having multiple part invoices so that you can leave one copy with the client and keep a copy for yourself that has the same detail. When the client calls again, you can look at their information and refresh your memory on what you have already worked on so that you go to the job site with knowledge and confidence. It is also a great way to get the client’s contact information for any email or text marketing that you might do, just have a spot on the invoice by their signature asking for a cell phone number or email and asking permission to add them to your list.
If you have a great invoice to back up your talent and skills, you can use it to keep clients and when they share your information with friends, family, and neighbors, you will also gain new clients.
by Sarah | Sep 28, 2020 | Tax
Did you know that the 1099-MISC has been changed for 2020? An old tax form that hasn’t been used since the early 80s is being brought back, the 1099-NEC (Nonemployee Compensation). This form is for payments of more than $600 made to any independent contractors, freelancers, consultants, and vendors in the course of your business during the year. This would include an electrician that you hired to wire in a condenser that you installed; a drywaller that worked for you on a broken pipe repair job; or a virtual assistant that you hired to design your website.
If you have paid any independent contractor more than $600 this year, you will need to file a 1099-NEC with the IRS instead of the 1099-MISC that you have been filing. Box 1 will be used for reporting what was paid to the independent contractor, Box 4 is where you will enter any amounts that you held for backup withholding requirements which is when a tax id number (TIN) was not provided, the IRS informs you that the TIN is incorrect, or the W-9 that the independent contractor provided was not signed. Previously, this amount paid to an independent contractor was entered in box 7 on the 1099-MISC.
The changes came about from legislation that was passed called The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). It changed the deadline for filing 1099-MISC from the end of February to the end of January and caused a lot of issues at the IRS. This opened the door to fraud so the 1099-NEC was brought back. By separating the non-employee compensation payments from the other funds that are reported on the 1099-MISC, it should make the process more streamlined.
To see more information, see the Instructions for Forms 1099-MISC and 1099-NEC. If you need help deciding what forms you need to file and to who, contact us for a free consultation.
