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break-even analysis

 

In simple terms, handling your cash flow is knowing the “cash coming in versus cash going out”. Managing cash flow is also about making sure you have money to “keep the electricity on” and continue the business operations. You also want to have a plan in place for the unexpected.

Running out of cash can cause your business to close if not properly managed. Many start-ups close quickly because of poor cash flow management. While cash flow management is an essential subject, it isn’t difficult to understand and follow a break-even analysis. Good cash flow management for a new business is kind of straightforward than you might think, you just need to understand and practice a few things.

The Break-even Point (BEP)
The Break-even Point (BEP) is one of the most important metrics to understand about your new business, which is the point at which your current (or projected) revenues will allow you to meet all your operating expenses. The Breakeven Point is the absolute minimum amount of cash you need to keep your employees paid, to keep the lights on, and your doors open ‒ and the breakeven point usually changes frequently.

Break-even Analysis

Once you learn how to manage your breakeven point, you will be able to remain functioning, which means you can devote more attention to evolving your business into meeting your goals.

Having Cash Reserves for the Unexpected
If you examine other reasons why small businesses fail, you will see the reasons are closely related. According to one study, about 79% of businesses fail because they start out with insufficient cash. 77% run into troubles when they fail to price properly. 73% close because they were either too optimistic about achievable sales, about the money required to generate those sales, or both at the same time.
These types of issues are common with small businesses, and particularly with those controlled by an entrepreneur who may be running their first small business. These issues tie directly back into cash flow management.

The Importance of keeping a Cash Reserve
Every new business should plan on issues coming up. If you don’t have a “cushion” cash reserve, then every problem can evolve into cash flow issue. But if you have something to fall back on, you have the clarity you need to learn from the situation and double down with your focus on growing your business moving forward.

In the end, always remember managing your cash flow is something you need to be proactive about. Not only do you have to know where you are today, but also need visibility into where you’re headed tomorrow, and a break-even analysis can help. If you need answers on how to manage your cash flow, contact Total Accounting at cfo@mytotalaccounting.com.

tax credit

 

The Earned Income Tax Credit (EITC) has two purposes. First, it is an incentive to encourage people to work and discontinue public assistance. Second, EITC provides financial help for low-income taxpayers and their families derived from income, which the tax code identifies as “earned income.” EITC is a refundable credit, which means if any unused credit remains after offsetting a tax liability, the remainder is refunded to the taxpayer. Earned income tax credit cannot be used for married couples filing separately and can only be used on one taxpayer’s income tax return. Any children used to qualify the taxpayer for the credit are also required to have a SSN. Also, because this credit is meant for low income individuals, if a taxpayer is working overseas and can exclude foreign earned income, he or she cannot claim EITC. Taxable earned income includes:

• Wages, salaries, and tips;
• Union strike benefits;
• Long-term disability benefits prior to minimum retirement age; and
• Earnings from self-employment.

Taxable earned income does not include any form of earned income that is excluded from income, such as a clergyperson’s housing allowance, excluded military combat pay (but see the election for combat pay later), tax-deferred retirement contributions, or excludable dependent care benefits.

children eitc

Qualifying Children
In order to have a qualifying child for EITC, the qualified children must have lived with the taxpayer in the United States for more than half of the year. Generally, for EITC purposes, a qualified child must be younger than the taxpayer and be under the age of 19 or a full-time student under the age of 24 who had the same principal residence as the taxpayer for more than half of the tax year and is not married and filing a joint return (some exceptions may apply). Exceptions to the residence requirement include temporary absences from the home, such as for school, vacations, illness, and military service.

A “qualified child” is a taxpayer’s:

• Son, daughter, adopted child, stepchild, eligible foster child, or a descendant of any of them (for example, a grandchild); or

• Brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them (for example, a niece or nephew).

Many eligible taxpayers fail to claim EITC because they don’t fully understand the tax credit, or they may have not been properly informed by their tax professional. For example, the IRS estimates that 1.5 million taxpayers don’t realize that taxable long-term retirement benefits received before reaching minimum retirement age qualify as earned income, making them eligible for the EITC. The IRS also estimates 20% to 25% of eligible taxpayers fail to claim EITC for different reasons. Contact Total Accounting for any questions relating to EITC at cfo@mytotalaccounting.com.

Small business tax credits that will add money to your pocket

 

A small and medium sized business should review all sorts of tax credits available. Tax Credits are designed to offset the actual tax liability associated with a business. Tax Credits are not the same as a tax deduction. Tax Deductions decreases a business’s actual income. Tax credits are commonly used to incentivize businesses in ways such as hiring more staff to stimulate the economy for making meaningful contributions to business needs.

General Business Tax Credit (Form 3800)
“General Business” tax credit, can be considered as a “kitchen sink” tax credit because it is made up of smaller individual credits. Together, they are designed to motivate savvy business owners to participate in certain activities. For example, if you purchased a qualified electric vehicle for your business, branched out into a new market, or retained a certain number of employees, you may qualify for a General Business Tax Credit.

Paid Family and Medical Leave Tax Credit (Form 8994)
This Employer Credit for Paid Family and Medical Leave is a tax credit frequently overlooked by small businesses. The Employer Credit Paid Family and Medical Leave is relatively new, enacted in 2017. The purpose for which this tax credit, was created was to incentivize employers to provide paid leave to all employees who are protected by the Family and Medical Leave Act. All eligible employees are entitled to a maximum of up to 12 weeks of unpaid leave for a serious medical condition and retaining access to their group health benefits at the same time.

The credit itself is equal to a percentage of the wages that an employer pays to those qualified employees while they’re on leave for things like unexpected medical emergencies or even giving birth.

The Alternative Motor Vehicle Tax Credit (Form 8910)
This tax credit can be up to $8,000 and is in your best interest to claim it if you qualify. As the name suggests, it’s a way to incentivize small business owners to purchase an “alternative fuel source” vehicle. Note that the cars that fall into this category would be those that use hydrogen fuel-cell technology, not hybrids or electric vehicles since those are still considered to be “traditional” types of fuel.

Tax Credits for Qualified Research Expenses (Form 6765)
Depending on the specific type of small business you’re running, you may have to engage in a significant amount of research and development in order to better serve your own customers. The United States government would like to encourage you to do as much of that as possible, which is how the “Credit for Increasing Research Activities” came into being.

In order to qualify for this credit, you need to engage in domestic research and development for the purposes of things like certification testing, environmental testing, developing or applying for patents, prototype and model development, and more. Research associated with the development of new or even improved products, processes, and formulas would also qualify.

This tax credit can cover up to 20% of all of your related expenses that fall under this umbrella.

The New Markets Tax Credit (Form 8874)
Last but not least, we have the New Markets Credit — one designed to encourage investment in Community Development Enterprises and Community Development Financial Institutions, otherwise known as CDEs and CDFIs, respectively. These are the types of organizations that assist lower income communities around the country and, obviously, they need all the help they can get.

Many of all qualified projects involve either purchasing, renovating or constructing real estate in areas that have a 20% poverty rate or with median family incomes that don’t exceed 80% of that of the larger area. This means building or renovating hospitals, for example, or industrial buildings that go on to create jobs.

While all these small business tax credits are important, they are only a small percentage of tax credits that may be available to you. Contact Total Accounting at cfo@mytotalaccounting.com for more information on how to use tax credits for your business. Tax credits will help put more money in your pocket!

filing taxes for self employment

Self Employment Tax can come to a surprise for many first time business owners. Here is some helpful information for self employed individuals (SE). Unlike employees, self employed individuals are not withheld Social Security or Medicare (FICA) taxes along with pre-payments toward their federal or state income tax from their income during the year.

SE individuals are not being paid a wage; instead, they must keep their books showing income and expenses associated with their self-employed business allows them to determine their taxable profits or losses. Note; an employer and an employee each pay half the FICA taxes due on an employee’s wages and a self employed individual (SE) pays 100% of these taxes, termed the self employment tax, on his or her self employment profit. If the individual has more than one self-employment activity, the net profits and losses from the self-employment activities are combined to determine the SE tax.

Estimated Taxes: Since self-employed taxpayers don’t have taxes withheld on their self employment income, they need to pay estimated taxes quarterly based upon their taxable profits for the quarter and, after the first quarter of the year, taking into account prior quarterly profits and estimated taxes already paid for the year. These estimated taxes are paid with an IRS Form 1040-ES and include the taxpayer’s income and SE taxes.

Self Employment Tax: All self employed taxpayers who have more than $400 in net profit from their SE must pay self-employment tax, which is made up of Social Security tax of 12.4% on the first $132,900 (2019) of profit from the business and a 2.9% Medicare tax on all of the profits. In addition, there is an additional 0.9% Medicare tax to the extent the profits exceed $200,000 for single taxpayers, $250,000 for married taxpayers filing jointly, and $125,000 for married taxpayers filing separately. In addition, half of the self employment tax can be deducted from gross income. There are special rules for determining the self employment taxes for farmers and fishermen. If a self-employed taxpayer pre-pays less than 90% of his or her current year’s tax liability, including Social Security and Medicare taxes for the year, then the taxpayer can be subject to a penalty that assesses interest on underpayments by the quarter.

Estimated-Tax Safe Harbors – Instead of having to determine the quarterly profits and estimate the income tax and SE tax liabilities, some SE individuals instead choose to use the quarterly safe-harbor-payments method allowed by the IRS, which eliminates the underpayment penalty if correctly used. Note the two safe harbors available:

1. 100% of the prior year’s tax liability paid evenly for each quarter, provided the prior year’s adjusted gross income was $150,000 or less ($75,000 if using the filing status of married filing separate).

2. 110% of the prior year’s tax liability paid evenly for each quarter if the prior year’s adjusted gross income was greater than $150,000 ($75,000 if filing married filing separate).

The underpayment penalty does not apply if the final amount due on an individual’s tax return is less than $1,000. The penalty also does not apply if a taxpayer did not have a prior year tax liability for a full 12-month year. One thing to consider when deciding whether to use the safe harbor method is that because the safe harbor estimates are not based on the current year’s profits, a self employed individual could be in for an unexpected substantial tax liability at tax time.

Please contact Total Accounting for your tax needs or questions related to self employment tax. You can also call us for a free consultation at (727) 449-1835 or send us an email at CFO@mytotalaccounting.com.

CFO strategy

 

A CFO that impacts a business will have great communication skills and is comfortable communicating financial data to board members and investors. Today, CFOs are responsible for measuring and monitoring performance. Along with managing performance, CFOs must manage risk and create value for stakeholders, investors, and business owners.

Here are 4 key points a CFO uses to add value to a business using a CFO strategy:

1.) A CFO needs to be aware of risk.

Risk Management is a key component in analyzing growth forecast. To perform the role effectively, CFOs should look beyond prevention and acknowledge strategic risks, communicate risks in strategy planning discussions, and focus building a teamwith advanced analytical skills. Knowing the weaknesses and short comings of internal departments within a company, helps CFOs to look at the level of risk that demands creativity and limits mistakes to drive the best performance solutions.

2.) CFOs need to be supportive of innovation and new business models.

Working together with entrepreneurs and startup companies helps to drive innovation. CFOs have a key role in building successful relationships with new businesses, reorganizations, and potential business partners. CFOs need to align incentives for Investors and increase value for business owners.

CFO Strategy

3.) Providing creativity by delivering effective aggressive strategies.

Value strategies should provide competitive dynamics, business needs, emerging technologies, and an evolving regulatory environment. For example, a CFO can find ways to generate capital for new business opportunities for long-term growth. XYZ company purchases in new plant or equipment to generate additional revenues and income. A way to generate capital for investments is to use funds from a company’s operations. Also, earnings by the company belong to the owners or investors and can be given back in a dividend or can be reinvested back into the company (reinvesting back into the company is a better option).

4.) Be an inspiring leader with ethics and strong purpose.

Incorporating purpose in a business and establishing ethical guidelines motivates staff and employees to meet new challenges. CFOs are the frontrunners and leaders for ethical business practices. They build and provide purpose in any business by leading through example, and by providing outstanding performance measurements.

If you need a CFO strategy, contact Total Accounting for more information at (727) 449-1835 or email us at CFO@mytotalaccounting.com.

4 Tax Issues To Keep In Mind for Tax Deductions

1.) Understand the tax rules and deductions to avoid any fines or penalties.

The whole reason for tax deductions is for business owners to limit their tax liability. Remember, you cannot include expenses from a vacation you take with your family. The IRS has regulations on how much of each expense you can deduct, what type of expense can be deducted, and under what situation. You can get flagged for an audit if you include a deduction that is questionable. Deductions can be tricky, and you should talk to your tax preparer for more information.

2.) Don’t wait past the deadline to file your taxes.

You’re not the only one, if you filed your taxes past the deadline. Millions of taxpayers wait until April to file their taxes every year. But filing late is a mistake and can cost you. You can end up paying more when you file your taxes past the deadline just in interest alone, not including fines and penalties. Also, you are more likely to make errors that can make the process take longer and can lead to more delays.

Tax Deductions

3.) Not staying current with tax laws.

Tax laws can change each year. When I was in college, my Professor once told the students not to memorize the tax literature because taxes laws are ever changing. Every year tax codes are updated, which can make a big difference on your tax return and many taxpayers fail to take advantage of them. Take some time to stay up to date with the tax laws or ask your accountant or tax preparer to do a thorough tax review so you can take advantage of all the updated tax laws.

4.) Make sure to use the correct filing status.

This can easily be overlooked. Are you filing Single, Head of Household, or Married? It can be very confusing to know which benefits you should use when filing your tax return. There are tax deductions and tax credits that married couples are entitled to if they file jointly and some disadvantages to filing single. Take the timeto know which status to file under. Ask your tax preparer to guide you for the most optimum filing status.

What if you encounter any of these tax problems?

You may find yourself facing one or more of the tax issues in this column (or something different we haven’t included). Feel free to contact us immediately for professional tax help at (727) 449-1835 or email us at CFO@mytotalaccounting.com.

Rental properties

We are now mid-year 2019 and taxpayers are still skeptical if rental properties will be classified as a trade or business under the new IRC Sec 199A 20% pass-through deduction (known also as the 199A deduction). This is important information for tax savings.

On January 18, 2019, the IRS issued a notice which provided “safe harbor” conditions for which a rental real estate activity will be treated as a trade or business under the 199A deduction. It is important to know the qualifications that are needed for a rental real estate enterprise (a tax term introduced by the IRS in this notice) to be deemed as a trade or business and eligible for the section 199A 20% deduction. For purposes of the “safe harbor,”a rental real estate enterprise is defined as an interest in real property held to produce rents and may consist of an interest in multiple properties. Keep reading for tax savings.

Failure of the taxpayer to satisfy the requirements of this “safe harbor” does not preclude a taxpayer from otherwise establishing that a “rental real estate enterprise” is a trade or business for purposes of section 199A. The following are the requirements that must be satisfied for the “safe harbor” and can be used for tax savings.

  1. Separate books and records must be maintained for each rental real estate enterprise;
    A.) A real estate enterprise can have of a single or multiple rental.
    B.) Commercial and residential rentals cannot be combined in the same real estate entity. 
  2. Before 2023, at least 250 hours of rental services must be performed by the taxpayer and workers for the taxpayer for the year in question with reference to each rental real estate enterprise. A three-year lookback rule applies for taxable years for 2023 and beyond. It specifies that the taxpayer must meet the 250-hour requirement for the rental enterprise for any three of the five prior consecutive taxable years.
  3. The taxpayer must maintainexisting and consistent records, including time reports, logs, or similar documents, to document the following:) Hours of services performed.
    B.) A description of services performed.
    C.) Dates on which such services were performed.
    D.) Who performed the services?

Before the safe harbor requirements were issued and after the close of 2018, the requirement for existing and consistent records for 2018 will not apply.

Rental services that may be counted toward the 250-hour guideline include:

  • Advertising to rent or lease the real estate.
  • Negotiating and executing leases.
  • Verifying information contained in tenant applications;
  • Collecting rent.
  • Daily operation, maintenance, and repair of the property.
  • Management of the real estate.
  • Purchase of materials for operation such as repairs.
  • Supervision of employees and independent contractors.

                                              

Also, rental services do NOT include financial or investment management activities, such as arranging financing; procuring property; studying and reviewing financial statements or reports on operations, planning, managing, or constructing long-term capital improvements; or hours spent traveling to and from the real estate.

Rental services counted toward the 250-hour requirementmay be performed by owners or employees, agents, and/or independent contractors working for the owners. 

Triple net leases are ineligible. Real estate rented or leased under a triple net lease agreement is not eligible for this safe harbor. A triple net lease includes a lease agreement that requires the tenant or lessee to pay taxes, fees, and insurance, and to be responsible for maintenance activities for a property in addition to rent and utilities. Also, ineligible for the safe harbor is a property leased under an agreement that requires the tenant or lessee to pay a portion of the taxes, fees, and insurance, and to be responsible for maintenance activities allocable to the portion of the property rented by the tenant.

rental properties

Vacation rental properties are ineligible. Real estate used as a residence by the taxpayer for any portion of the taxable year is not eligible for the safe harbor rules.

The statement must be attached to the tax return. A statement signed by the taxpayer, or the person responsible for keeping the records with personal knowledge of them, must be attached to the return declaring that all of the safe harbor requirements have been met and must include the following language: “Under penalties of perjury, I (we) declare that I (we) have examined the statement, and, to the best of my (our) knowledge and belief, the statement contains all the relevant facts relating to the revenue procedure, and such facts are true, correct, and complete.”

Two-edge sword. The 199A deduction is 20% of a taxpayer’s qualified business income from all the taxpayer’s trades or businesses subject to certain limitations. Many rentals do not show a profit and a rental properties that are treated as a trade or business and show a loss for the year will reduce the qualified business income of other trades or businesses of an individual, and as a result, reduces the 199A deduction of that individual.

If you want to learn more about tax savings regarding rental properties as a trade or business, or other issues related to this new 199A deduction, please contact Total Accounting at CFO@mytotalaccounting.com or call us at (727) 449-1835.

 

If your company is not a “specified service businesses,” you may qualify for the 20% pass-through tax deduction in your current business or by restructuring your existing business to an S-corporation to avoid taxable income limitations that apply to the new 20% Sec. 199A pass-through deduction. Pass-through business owners who qualify for the 20% Sec. 199A can take a deduction of up to 20% of their net business income on their tax return, reducing their effective income tax rate by 20%.

Congress created the new 20% tax deduction to make up for the tax reform’s reduction of the C-corporation tax rate to 21%, from which other forms of business activities do not benefit. The 199A deduction is for taxpayers with other business activities such as sole proprietorships, rentals, partnerships, and S-corporations. Unlike C-corporations, which are directly taxed on their profits, the income from the other business activities flows through to the owner’s tax return and is taxed at the individual level at the individual’s tax rate, which can be as high as 37%. The 20% Sec. 199A tax deduction is 20% of the pass-through income from these business activities. But not every owner of these flow-through businesses will benefit from this deduction because of certain tax limitations.

So, the question is, what is a pass-through business? A pass-through business is any business that is owned and operated through a pass-through business entity including any business that is: a Sole Proprietorship, S-corporation, Partnership, Limited Liability Partnership (LLP), or Limited Liability Company (LLC).

Qualifications also depend upon a taxpayer’s 1040 taxable income figured without the Sec. 199A deduction. Married taxpayers with a taxable income below $315,000 (or below $157,500, for others) will benefit from the full 20% deduction.

Limitations begin to apply when a taxpayer’s 1040 taxable income exceeds those amounts. The most restrictive limitation is the one placed on “specified service businesses.” Once married taxpayers filing jointly have a 1040 taxable income exceeding $415,000 (or above $207,500, for others), they receive no Sec 199A deduction benefit from any pass-through income derived from a specified service business. Specified service businesses include trades or businesses involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, or brokerage services or any trade or business in which the principal asset of the trade or business is the reputation or skill of one or more of its employees or owners. It should be noted however, engineering and architecture businesses are not considered a specified service business for the pass-through deduction, which allow these businesses to take advantage of the pass-through deduction.

Some taxpayers can still benefit from pass-through income from other business activities, even when the taxpayer’s 1040 taxable income exceeds the $415,000/$207,500 limits, provided the business activity pays wages and/or has qualified business property, the combination of which make up what is referred to as the wage limitation. Without getting too complicated, the Sec. 199A deduction is the lesser of 20% of one’s pass-through income or the wage limitation. If the wage limit is 0, then the Sec. 199A deduction would also be 0 for these high-income taxpayers. The wage limitation itself is the greater of 50% of the wages paid by the business activity or 25% of the wages paid plus 2.5% of the cost of qualified business property. Let’s look at some examples:

1.) John and his wife have a 1040 taxable income of $436,000. John has a self-employed business, from which he has a net profit of $300,000, and his tentative 199A deduction is $60,000 (20% of $300,000). Because John’s taxable income exceeds $415,000, his Sec. 199A deduction is the lesser of $60,000 or the wage limit. John has no employees or qualified business property, so his wage limitation is 0; thus, his Sec. 199A deduction is also 0.

2.) Now, let’s look at John’s entity. John’s business is organized as an S corporation. Of his net profit of $300,000, it is determined that a reasonable compensation (wage) John receives from the S corporation is $150,000. The other $150,000 is pass-through income. Now, John’s Sec. 199A deduction is the lesser of 20% of the pass-through income – $30,000 (20% of $150,000) – or the wage limitation, which is 50% of the wages paid by the S Corporation or $75,000 (50% of $150,000).

We can see in those examples how businesses can benefit from being organized as an S-corporation. S-corporations are required to pay working shareholders a reasonable wage for their services provided in operating the business. They can divide the pass-through income between reasonable wages and pass-through income to enable a 199A deduction for a higher-income taxpayer. Other business entities do not provide this option, which is the reason why high-taxable-income taxpayers might explore the benefits of organizing new businesses as an S-corporation or reorganizing their existing businesses to an S-corporation.

Some sole proprietors may not find it worth the effort to switch to a different business entity. However, the higher the taxpayer’s income, the more beneficial it becomes. The same issues also apply to partnerships. To determine if organizing or reorganizing your business into an S-corporation or another business entity can reduce your tax liability, call us for a free consultation at (727) 449-1835 or send us an email at CFO@mytotalaccounting.com.

 

Our economy is continuously growing. Businesses are expanding. The Federal Reserve continues to change interest rates which can create investment opportunities for lenders and banks. That all points to a promising outlook for the coming months. As a small business owner, it is a time to look closer at your profit and loss (P&L) statements to determine how you can increase your profit margins and make the most out of the current economy.

What Can You Do to Increase Revenue and Profit Margins In 90 days?
We know companies have a main goal to increase revenue and profit margins. However, there is always strong competition in most sectors. Let’s look at ways you can boost your profit margins in 90 days without having to use any capital.

1.) Increase Pricing Marginally
Inflation is a key component in a current market. As the U.S. consumer increases confidence in spending, it becomes effective to increase prices – we call that supply and demand. Analyze your current price points. Are you generating enough revenue from each sale to have a sustainable profit margin?

2.) Reduce Cost (Expenses)
Examine your books closely. For example, look at the cost of your Worker’s Compensation insurance. Worker’s Compensation insurance can be very expensive depending on certain risk factors such as industry and claims. You may reduce your Worker’s Compensation insurance by receiving price estimates from other insurance providers. Some states have Worker’s Compensation sponsored programs. Call your local state Worker’s Compensation agency for more details. Try to reduce risk by implementing safety procedures and processes.

3.) Eliminate Tasks that Do Not Add Value to Your Customer
Another way to reduce cost is by eliminating cost that do not contribute to customer value. Examine your cost for customer retention within your profit and loss. Are each one of the expenses directly contributing to your customers’ needs?

4.) Review Your Competitor’s Prices
Along with increasing your prices, take a good look at what your competition charges for services. Focus on three areas; if your competitor’s prices are higher, why? Are they offering something better for their product or service that encourages a higher price point? Are your prices competitively aligned with theirs? If not, what can you do to offer something extra to your customers?

5.) Reduce Overstock
Carrying a significant amount of overstock in your inventory does not improve business operations and it increases your costs. Overstock can drive up cost when product is lost or forgotten. It also hampers your company’s ability to keep inventory costs in line with your goals. Sell any overstock to reduce costs.

profit

6.) Find a Way to Increase the Value of Every Sale
Provide up-sales to your customers. Can you add a product, feature, or service to enhance the customer’s sale, transaction, or experience? Ensure your sales team is offering each customer a special offer, sales, and any discounts by bundling products or services. Up-sales can be done at the close of the deal. If you sell cars, offer an added feature for a certain additional amount or sell an extended warranty or service. If you sell professional services, determine if your customers could benefit from a monthly service or other monthly products.

7.) Expand Product Line or Service
Look for complimentary products and services that do not require a lot of investment and offer them to your customers. What additional products or services that generate revenue could enhance what you already provide? These products or services may not require additional equipment or a large amount of inventory.

8.) Enhance Your Team’s Skillset
Without a doubt, in a sales-oriented business, your company cannot build revenue if your sales team misses their opportunity. Always provide sales enhancement training to improve your sales team knowledge. Focus on moving away from traditional methods toward more efficient and brand-building methods for sales.

9.) Make Sure You Are Meeting your Goals and Projections
Hiring an accounting team to help you explore your current profit margins is critical. However, having an accounting team to help with managing your financials is only effective if you apply the information and insights, they provide to you. In other words, find an accounting team you can sit down with and discuss your goals and projections with and apply the goals immediately.

10.) Build Your Customer Base
Build, Build, Build. Use a variety of tools to help get more customers. Complete a market analyses or survey to better understand who your target customers are. Work to modernize your marketing efforts to attract that specific audience. Always look to grow or expand your market.

Conclusion

Increased revenue and profits begin with knowing where you are specifically. Examine your prices, financial statements, and product and services closely. Always look for ways to reduce costs that don’t contribute to your profits. Look for areas to build your offerings, services, products, and prices to help your company grow its margins. Always have a focus on the bottom-line benefit of any investment you make. Contact cfo@mytotalaccounting.com for more information.

Outsourced CFO

What is an Outsourced CFO? – In simple terms, a virtual CFO is exactly what it sounds like. A virtual CFO is a person who administers all the accounting, taxation, and value proposition, normally associated with a Chief Financial Officer (CFO) – only in a third-party capacity, as an outsourced CFO. Instead of going through the trouble of hiring a CFO (and the cost associated with it), along with training a person with those qualifications in your company, you’re getting access to someone who can handle all the requirements of a CFO remotely on a schedule that works best for everyone.

An outsourced CFO was not available about 10 years ago. Technology has advanced to the point where not only is it possible to have an outsourced CFO, but more businesses now are using on demand CFOs, part time CFOs, or virtual CFOs to help their organizations soar in increasingly competitive marketplaces. That is true for many reasons, all of which are certainly worth exploring.

The Value of a Virtual CFO

The main reason why smaller organizations are finding virtual CFOs or outsourced CFOs increasingly helpful is that they’re a viable way to control costs almost immediately. Rather than paying the high salary to hire your own CFO on a full-time basis – which can cost in the hundreds of thousands of dollars, you get the same services you need; at a virtual capacity, for a fraction of the cost. Having an outsourced CFO is more valuable than hiring a full time CFO because an outsourced CFO provides the same amount of value as a full time CFO without having to pay any benefits. Let’s not forget, benefits alone can cost a company thousands of dollars per year for any employee, much less for a full time CFO.

That leads directly into the next reason why a virtual CFO can be so valuable. A virtual CFO can customize their skills and services to better meet the requirements of your business structure. Rather than paying a person for a lifetime’s worth of education, you’re only paying for the skills needed to perform the value aspect of growing your business. What is even better, is the services being offered from an outsourced CFO can also be adjusted on a regular basis as your business continues to grow and evolve. That provides you with unprecedented access of a wealth of knowledge that is used to meet your budget.

Outsourced CFO

Leveraging Experience to Meet Your Goals

A virtual CFO can create a positive effect across your enterprise in the best possible way. You’re hiring a professional who has practice and experience in many different companies like your business. That means that you’re in a unique position to avoid making the same mistakes that other companies have previously made.

Another advantage a virtual CFO brings to your company is the quality of the advice or consultation being offered. That is more than just an accounting setup. The focus goes beyond simply setting up a financial structure and putting a framework in place for you to effectively manage your books.

Consider the different challenges you’re likely to experience over the course of three to five years. Your business can become more complex as you add employees, suppliers, vendors, and all the contracts that come with them. If your company is growing rapidly, it can quickly cause your financials to grow out of control, unless you’re prepared for it.

Be Prepared for the Next Challenges

An outsourced CFO won’t just explain details of your business’ financial situation. An outsourced CFO will work with you to make sure you’re better informed of your current status, but also the pros and cons of the options that are available to you in the future. That level of strategic advice — and the advanced decision-making made possible because of it — would be difficult to replicate through nearly any other means.

With a virtual CFO or an outsourced CFO, you will find yourself in a better position to always make the right decisions, at exactly the right moment, as your company grows. As a result, your business can maximize its profitability as much as possible over the future years, thus allowing you to grow your business in a cost-efficient manner.

A large national company can easily afford to have a full-time CFO and it may make sense to do so. But for most smaller companies, using a virtual CFO isn’t just an effective way to provide the same value that naturally exist in a growing company — it’s a way to help your business grow for future years to come at a cost-efficient way.

Send us an email for inquiries about hiring an outsourced CFO at CFO@mytotalaccounting.com.