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Cash Management

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As the end of 2017 nears, small business owners should consider strategies to maximize tax savings while increasing cash flow. Used wisely, these five tax strategies will help small business owners save on taxes, minimize tax liability and increase deductions.

 

1. Defer Income. Most small businesses are taxed on what’s known as a cash basis. A “cash basis” means when you receive cash or money from your customers, it's taxable in the year you received it. You also receive a deduction in the year expenses are paid. One way to minimize the income that comes in this year is to defer receipt of that income until the next year. For example, if you perform services for somebody in December, encourage your customer to pay you in January. That way you can defer income to 2018 and pay taxes on that income the following year.63623641_s.jpg

 

2. Invest for the Future. Pay for expenses in advance for things you plan on using in future years. For example, purchase new vehicles for your fleet, computers, furniture or other major items you considered making next year now, so you can get the deduction for them. Additionally, if you have a depreciable asset like a car, furniture and fixtures, you may be eligible to take a full deduction using IRC Section 179. That allows you to deduct the complete amount you paid for an asset the year in which you purchased it. Finally, consider purchasing additional inventory – especially if you know that you're going to use that inventory, the inventory is going to be sold, or you have a client who will want to buy it. Accelerate your expenses in the current year to defer the benefit for future years.

 

3. Accelerate Retirement Contributions. If you and your employees have a retirement plan for your business, encourage your employees to accelerate what they will do to contribute before year end. If you have a matching program, you may have the ability to take a deduction for the amount you match. Also, if you offer bonuses or incentive pay and you're not an accrual base tax payer, consider paying the bonus before year end, so you can take the deduction on your business return. Note that an “accrual basis” means income is taxable when an income event has occurred but cash hasn’t been received yet. Expenses are deducted when they have been incurred or when they are owed.

 

4. Pay State Taxes Now. If you are taxed on a cash basis, you can get a deduction on state taxes paid before the year’s end. If you know you have a state tax liability for 2017 to be paid in 2018, make the payment before December 31 so you can take the deduction.

 

5. Be Charitable. Ever wonder why there's a line of people at Goodwill stores days before the end of the year? The simple reason is many people want to be able to take a tax deduction for items donated to charities.  Make sure you talk to your tax advisor or CPA-enrolled agent to find out your eligibility and to determine how much you'll be able to deduct on your tax return.

 

Implementing the right tax strategies at the end of the year can put you in greater control of your cash flow – always a good plan when heading into a new year.

 

About Ebong EkaEbong+Eka+Headshot.png

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective on small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

     

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

So here it is the end of the year and despite your best efforts, you haven’t quite hit your revenue goals. What do you do?

 

a) Panic or b) Give up?

 

How about we go with c) None of the above.

 

It’s sort of like that old saying from Alfred E. Newman of Mad Magazine: What, me worry? Worry? Not us. Here are four things you can do right now to deal with that unwelcome financial situation  – with one bonus idea.

 

1. Have a sale: The tried and true way to get more money in the door right now is to have a sale. People love sales, they love saving money, and they will definitely flock to your store to take advantage of a sweet deal. 83334132_s.jpg

 

A few caveats:

 

    • Lead with a loss leader: As you likely know, a loss leader is a popular product that, when put on sale, catches people’s eye. Putting one of your best-selling products on sale will do just that for you. But, and this is critical, ensure that other products make up for the “loss” you will take on this leader.

 

  • Help them help you: Of course, you have to get the word out about your sale – as you do, be sure that your best customers not only know about it, but maybe even are given preferential treatment.

 

  • Be different: Everyone had a Black Friday or a Cyber Monday sale. You need to be different. Have a Super Sunday sale, or a black tie optional evening event, for example.

 

More on timing your promotions

 

2. Market your business, and then market it some more: Aside from the sale, if you want to increase revenues quickly before the end of the year then you have to create some buzz. Market your business online and off. Market it places where you have never marketed it before. Try a guerilla marketing trick you have never used.

 

By trying new things and marketing and advertising in new places, you will expose your business to new people, and that’s the ticket.

 

3. Get a loan: You have yearly revenue goals because you have expenses. You run a business. Given that, sometimes you can’t leave such things to chance or the whims of a sale or the market, so what can you do to ensure certainty?

Get a loan.

 

Your options are many. You could get a short-term loan, a line of credit, a loan against receivables, etc. What we know is that your bank wants to help your business succeed.

 

4. Cut overhead: The other side of the financial balance sheet equation, when increasing revenue isn’t possible, is to reduce your overhead by cutting expenses. The key here is to be sure that the expenses you do cut are not ones that will eat into revenue. Don’t cut that marketing budget!

 

And finally, our bonus tip:

 

5. Let it go: A goal is just that – a goal. If your situation is such that your revenue goals are not a matter of life and death and really are “just” goals, then you might want to redo your calculations, say that whatever you made this year is good enough, and call it a day.

 

Learn how to call it a day and make the worry go away: How to Enjoy Vacation and Keep Your Business Humming

 

What, you worry?

 

About Steve StraussSteve Strauss Headshot New.png

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss.

 

Web: www.theselfemployed.com or Twitter: @SteveStrauss

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

Over 2.4 million small businesses are owned by military veterans, according to the Small Business Administration. In fact, a recent SBA study found military service has a significant impact on self-employment: Veterans are 45 percent more likely than non-veterans to be self-employed.

 

For the self-employed, finding the right business and tax deductions to lower liabilities is important for proper cash flow. With this in mind, here are the top four tax breaks and strategies for veteran-owned small businesses:

 

1. Moving Expense Deduction: If you have unreimbursed moving costs to a new location, you may be able to deduct some of those costs on Form 3903. Speak with your CPA or Enrolled Agent to get more information, ensure your eligibility, and determine how much you may be able to deduct.62488489_s.jpg

 

2. Reservists’ Travel Deduction: If you’re a reservist whose reserve-related duties take you more than 100 miles away from home, you can deduct your unreimbursed travel expenses – even if you don’t itemize your deductions.

 

3. Uniform Deduction: You can deduct the costs of certain uniforms you can’t wear while off duty. This includes the costs of purchase and upkeep. You are also required to reduce your deduction by any allowance you receive for these costs.

 

4. Work Opportunity Tax Credit (WOTC) for unemployed people and veterans: Hiring veterans also provides tax advantages and the credits can be sizable. But look closely at your situation, because there are a number of variables to consider:

 

    • Qualified Long-term Unemployment: If you hire a veteran that begins work between January 1, 2016 and December 31, 2019 – and the individual is employed for 27 consecutive weeks or more and works at least 120 hours – you can claim 25 percent of first-year wages paid up to $6,000 for a maximum income tax credit of up to $1,500.

 

Additionally, if your new hires work 400 hours or more, you can claim 40 percent of first-year wages up to $6,000 for a maximum income tax credit of up to $2,400.

 

    • Short-term Unemployment: You may be eligible to receive a credit of 40 percent of the first $6,000 of wages (up to $2,400) if you hire veterans who have received unemployment benefits for at least 4 weeks.

 

    • Long-term Unemployment: You may be eligible to receive a credit of 40 percent of the first $14,000 of wages (up to $5,600) if you hire veterans who have received unemployment benefits for longer than 6 months.

 

    • Veterans with Services-Connected Disabilities: This is part of the existing Work Opportunity Tax Credit for veterans with service-connected disabilities who are hired within one year of being discharged from the military. The credit is 40 percent of the first $12,000 of wages (up to $4,800).

 

    • Long-Term Unemployed Veterans with Services-Connected Disabilities: There’s also a new credit of 40 percent of the first $24,000 of wages (up to $9,600) for companies that hire veterans with service-connected disabilities who have received unemployment benefits for longer than 6 months. The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations.

 

By using the right tax strategy, you can lower your taxes as small business owner. Make sure you speak with your CPA, enrolled agent, or tax advisor to check if you and your business are eligible for any of these tax credits and deductions.

 

    CLICK HERE TO READ ARTICLES MORE FROM SMALL BUSINESS EXPERT EBONG EKA

 

Related Article: Service Members & Veterans

Related Article: 7 Resources for Military Veteran Small Business Owners

Related Article: Why Veterans Make Great Entrepreneurs

 

 

About Ebong EkaEbong+Eka+Headshot.png

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

      

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

“I've got to keep breathing. It'll be my worst business mistake if I don't.” – Steve Martin

 

Because mistakes and business are not uncommon, it is a fact that once you get started with your own business, you will make a few of your own. Mistakes are OK of course – they are normal and most of them have a solution. The trick is not to avoid making mistakes but to avoid major mistakes and learn from the ones you do make.

 

For small business owners, the real issue is that mistakes can cost money – money we don’t have. And the thing is, big money mistakes usually start as small money mistakes with good intentions behind them, but the business owner fails to correct them before they get too big to manage.

 

Here are the five most common money mistakes made by small business owners, and how to avoid them:

 

CLICK HERE TO READ MORE FROM SMALL BUSINESS EXPERT STEVE STRAUSS

 

  • Not controlling overhead. I used to practice bankruptcy law. Do you want to know the number one thing people going through bankruptcy had in common? They did not control their spending. This typically happens to business owners after they’ve had a comfortable amount of money consistently flowing into the business, only to be badly hit by an abrupt drought. Because they spent so much when money was good, they neglected to prepare for the downturn that would inevitably hit (such is the nature of business cycles).

 

The solution? Keep your overhead low. 68940255_s.jpg

 

  • Thinking small. Conversely, some small business owners are so careful with their budget, they end up delegating every task to themselves instead of to a qualified team. It is a good entrepreneurial habit to be resourceful and self-sufficient, but it is important to know how to develop your business and continue growing.

 

The solution? Don’t be afraid to get the help you need and make investments to land bigger contracts.

 

  • Not diversifying. One of the most important things you can do for your business is to have multiple profit centers, or multiple products/services that make money. Only having one main profit center is a lot like only owning one stock, which any educated investor would never dare to do. That one stock could go up . . . or it could go down. Diversification is the key to stability. That’s what having multiple profit centers does for you – it creates a financial safety net.

 

The solution? Think outside the box and come up with at least one new profit center.

 

  • Not incorporating. One frequent but easily correctable mistake a small business owner can make is running their business as a sole proprietorship/partnership rather than a corporate entity (an S or C corporation, or an LLC). Incorporating your business allows it to become a separate legal entity, which means that you as an individual cannot be personally liable for any problems that may arise. In short, this means that your personal assets are safe, no matter what.

 

The solution? Incorporate. Now.

 

  • Not separating business and personal credit. Finally, it is imperative for you to separate your personal credit from your business credit. Like incorporating, separating your business and personal credit will protect your personal credit as well as your personal wealth. This move is essential.

 

The solution? Create a separate business credit account altogether.

 

RELATED ARTICLE: How Your Personal Credit Impacts Your Business Credit

 

 

These five business money mistakes can become major financial issues if not dealt with in a timely manner. The good news: there are simple solutions for all of them.

 

 

About Steve Strauss

Steve Strauss Headshot New.png

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss.

 

Web: www.theselfemployed.com or Twitter: @SteveStrauss

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2017 Bank of America Corporation

 

Do you own a seasonal business, such as a summer camp, sailing school or ski manufacturing company? Maybe you sell patio furniture or own a car wash. Any business where sales rise and fall drastically based on the seasons can benefit from these ideas for season-proofing.

 

  1. Expand geographically. Can you sell your products or services to parts of the country (or world) with similar seasons? For instance, a patio furniture company in New Jersey could season-proof the business by selling to customers in California or Florida. It could even expand internationally to a country that’s warm during New Jersey’s fall and winter, like Australia.

  2. Expand your product or service line. Think of things you could sell during the off-season that make sense with your business model. For example, could that ski manufacturing company retool its equipment to manufacture surfboards? In a mountain community near me, a lodge that does most of its business during snow season built a giant waterslide to attract families who stay at the nearby lake in the summer.

  3. Expand demographically. Investigate whether there’s a demographic market you aren’t serving that needs your products or services during your slow time of year. For instance, when sales at your ice cream store decline during the colder months, make up for it by marketing catering services to event and party planners and setting up ice cream sundae bars at their events.

  4. Manage cash flow and working capital carefully. When you own a seasonal business, it’s vital to keep a close eye on your cash flow. You need to keep on top of both short-term and long-term cash needs. Monitor your cash flow weekly and set aside cash reserves for the slow season to ensure you have enough working capital.

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  5. Open a business line of credit before you need it. This way, you’ll be prepared with a source you can draw upon for working capital during slow times. Build up your credit rating by borrowing small amounts from the line of credit and paying it back on time. Eventually, you’ll be able to get a bigger line of credit, which will give you more flexibility to manage seasonal ups and downs.

  6. Plan ahead for seasonal staffing. Determine whether using a temporary staffing agency, reducing permanent employees to part-time status during the slow season, or hiring seasonal employees each year makes sense for your business. Make sure you train employees before the busy season hits so you don't waste time getting them up to speed while a line of customers snakes out the door. Pulling from the same pool of seasonal employees every year can help you cut the time it takes to train employees. When you find a good seasonal employee, keep their information on file for next year.

  7. Sell more during your busy season. Some entrepreneurs wish their seasonal businesses could operate year-round, while others love having downtime. If you’re in the latter camp, boost your cash flow by selling even more to customers during your busy season. Could your surf school start selling surfboards, wetsuits and other surf gear in addition to giving lessons? Could you charge more by providing surf students a boxed lunch during their midday break so they don't have to bring food from home?

  8. Market early. When you only have a short season to make the most of your sales, it’s important to keep last year’s customers coming back. Stay in touch with your customers all year long via email or direct mail so they don’t forget about you. Send them special offers before the season starts, such as discounts if they book your summer camp early or buy a new snowboard “before the rush.” Emphasize the benefits of purchasing before the season starts, such as better selection and prices. This helps you get cash flowing before the busy season starts.

 

CLICK HERE TO READ MORE ARTICLES FROM SMALL BUSINESS EXPERT RIEVA LESONSKY

 

It’s normal for seasonal businesses to experience ebb and flow, however, it’s still important to remain lucrative. To succeed at a seasonal business, you must prepare for your busy season year-round.

 

RELATED ARTICLE: The 4 Cash Flow Management Mistakes that Fail Small Businesses

 

About Rieva Lesonsky

Rieva Lesonsky Headshot.png

Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years.

 

Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous

local and national television programs, including the Today Show, Good Morning America, CNN,The Martha Stewart Show and Oprah.Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.

 

Web: www.growbizmedia.com or Twitter: @Rieva

You can read more articles from Rieva Lesonsky by clicking here

 

Bank of America, N.A. engages with Rieva Lesonsky to provide informational materials for your discussion or review purposes only. Rieva Lesonsky is a registered trademark, used pursuant to license. The third parties within articles are used under license from Rieva Lesonsky. Consult your financial, legal and accounting advisors, as neither Bank of America,its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC. ©2017 Bank of America Corporation

Steve-Strauss.gifOne of advantages about being self-employed is that a lot of things that were not deductible as an employee suddenly become so once you start working for yourself. The tax code is chock-full of potential tax deductions for the self-employed. However, many of them can be easy to overlook or miss.

 

Here are the top 10 overlooked tax breaks for the solopreneur. Doing your taxes may never be fun, but at least this way you can hold onto a little more of your hard-earned money:

 

1. Startup Costs: In your first year of business, all expenses you incur before beginning operations can be deductible – as much as $5,000. The costs can be amortized over time if you spend more than $5,000.

 

CLICK HERE TO READ MORE FROM SMALL BUSINESS EXPERT STEVE STRAUSS

 

2. Health Insurance Premiums: Because so many self-employed folks pay for their own health insurance, this deduction is definitely one of the big ones. If you are self-employed and buy your own medical insurance on the open market, you can deduct 100 percent of what it costs to cover you and your family.

 

Simply, wow.

 

3. Medicare Premiums: Similarly, for the older freelancer, Medicare premiums – as well as supplemental Medicare policies – can be tax deductible.

 

4. Education and Training: The cost of taking training classes, buying books, putting on or taking webinars, subscribing to magazines or newspapers or websites, traveling to trainings, etc. can all be fully deductible. As long as the expense is related to business education or training, then this is a legitimate deduction.

 

5. Retirement Plans: Your contributions to IRAs and 401k plans typically make for the most profitable tax deductions. Here’s why: As of 2016, 401(k) contributions up to $18,000 and 25 percent of net income are deductible. As much as $53,000 can be deducted into a SEP IRA.

 

RELATED ARTICLE: WHAT IF I DIDN’T PAY ALL MY TAXES BY TAX DAY?

 

In essence, the government is trying to prompt and reward you for taking steps to plan for your retirement by not taxing you on it (that is, until you eventually withdraw it).

 

6. Interest Payments: Interest paid for business expenses (credit cards, loans) can be a great yet often overlooked tax deduction. Make sure to keep track of these things.

 

18022330_s.jpg7. Big Purchases: Large items that you purchase for your business (for example, cars or computers) can be tax deductible – up to $250,000. As long as these purchases take place within a single fiscal year, then there is no value depreciation involved.

 

(However, keep in mind that for an auto, if you do happen to claim any depreciation in any given tax year, you will not be able to switch back to claiming the standard mileage rate for the next tax year.)

 

8. Vehicle Costs: Keep track of all the driving you do for business – these miles can go toward your business auto expense deduction. A lot of self-employed people don’t know about this one, despite how often people drive for work. The miles driven not for personal use count as business expenses.

 

Keep a log, and at the end of your business miles log for the year, multiply that number by the standard mileage rate – $0.575/mile. If you’d like, you can instead save receipts for things like auto repairs and gas, but if you just stick to the standard mileage rate, your deduction will probably be bigger.

 

9. Self-Employment Taxes: Because being self-employed means you are both employer and employee, you can deduct 50 percent of Social Security and Medicare taxes on your personal IRS Form 1040.

 

10. Home Office Deduction: There are a lot of tricky catches to this deduction, which is probably why only about one-third of all self-employed individuals claim it. There are two main criteria that the IRS looks for:

 

  • A dedicated space in your home used as your primary place of business, AND

  • This space must be used regularly and exclusively for the business.

 

If these two criteria are met, then things like homeowner’s insurance and utility fees related to the space can be deducted. If you are able to, this deduction is well worth claiming.

 

Given all of the above, for the self-employed, keeping records, receipts, and logs is one of the most important tax habits one can adopt. As long as you are mindful of the deductions available to you and have the paper trail to prove it, you are good to go.

 

Doing your taxes may never be fun, but at least there are tricks to make it a little more rewarding.

 

About Steve Strauss

Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business SuccessSteven D. Strauss.

 

Web: www.theselfemployed.com or Twitter: @SteveStrauss

You can read more articles from Steve Strauss by clicking here

 

Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

Cash is King.

Ebong Eka Headshot.png

 

Being a small business owner, having enough cash is really important while cash flow is paramount. If you want to stay in business and be successful, cash is one of the areas you must remain laser focused. Many small business owners focus on sales, which is good, but if you don't collect the cash from those sales, you may quickly go out of business.

 

I'm going to share the four cash flow management mistakes that may cause your small businesses to fail and why you must avoid them.

 

1. Poor due diligence on accounts receivable

 

In other words, poor credit granting procedures. If you give credit to people without doing the proper due diligence, collecting on those receivables may become a big problem. Imagine getting a mortgage and the mortgage company doesn’t check your credit history and credit report – that’s similar to not evaluating the credit histories of the customers you offer credit. There are several services that can provide this service for you as well as check your customers’ Dun and Bradstreet report. Not doing your due diligence is a huge problem to the success of your business, especially if you plan to offer credit to your customers.

 

CLICK HERE TO READ ARTICLES MORE FROM SMALL BUSINESS EXPERT EBONG EKA

 

2. Not negotiating with your creditors

 

Speak with your vendors about opportunities for different terms and pricing based on your credit history before purchasing products from them.  Some small business owners may not be used to negotiating the terms of purchase but if you don’t ask you will never know. Depending on the size of what you're buying, you may have flexibility in negotiating when you pay them back, how you pay them back, and a lower interest rate associated with paying them back. For example, there are a lot of situations where small businesses will buy inventory up front and not realize that they had the opportunity to pay later - therefore restricting cash on hand and less cash flow to manage operations.


3. Buying inventory too soon

 

Buying too much inventory before you have a proven sales channel is a waste of cash. If you buy too much inventory hoping you'll sell the products without knowing exactly how is one of the biggest problems small businesses face. If your product is susceptible to seasonality, changes in market sentiment or consumer behavior, you are running the risk of having tremendous amounts of inventory with no ability to sell them.

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10 CASH FLOW TIPS FOR SMALL BUSINESSES

 

4. Not collecting on your accounts receivable

 

As a small business owner, asking your customers to pay you on a timely basis may be difficult. In my experience, when a small business I have worked with in the past has a sizeable number of accounts receivable on their balance sheet, I'll ask them, "How long have your accounts receivable been outstanding and do you have a schedule of collections?” Remember, this is your money and you have to be relentless in collection because you've already performed the services or shipped the product – the cash owed to you is necessary to grow.

 

As the saying goes “Cash is King!” and without the cash, it becomes extremely difficult to stay in business – let alone grow your business.

 

About Ebong Eka

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

You can read more articles from Ebong Eka by clicking here

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only. Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

           

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

What is the first thing you think of when you hear the word “budget?” If you are like many small businesses I work with, you probably cringed.

 

Well, don’t cringe anymore. You don’t have to be a certified public accountant, financial wizard or Microsoft Excel genius to create a useful budget for your small business. Budgets are not foolproof but necessary if you want to scale your business.

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So why are budgets important to the success of your small business?

 

A budget is a financial forecast to help you estimate your income and expenses for a given period of time. Your budget also allows you to plan for necessary expenses to run your business. Budgets help you estimate the taxes you will owe the Federal and state government, determine your business cash flow needs, and evaluate whether you can buy new equipment or new office space.


As you plan for 2017, here are seven budgeting tips to consider:

 

1. Plan large purchases by order of importance

Think about what large purchases – from equipment such as computers to new office space – you may need this year and set aside funds. Doing this exercise is a major component of good cash flow management.

 

2. Revisit the relationship between expenses and sales

In other words, review your largest expenses to understand how they contribute to sales. If you purchase new equipment, ask yourself how using it will add to your bottom line. Doing this will help you justify and prioritize purchases.

 

3. Effectively communicate to employees

Make sure your employees are aware of how expenses impact the bottom line – favorably and unfavorably. If you need to decide between purchasing new laptops (that everyone would want) or expensive office equipment such as furniture, it is important for your people to know how such decisions impact the bottom line. Employees who understand the goals can help the business achieve them.

 

Click here to read more articles on budgeting

 

4. Monitor your budgets

Revisit your budget on a monthly basis to determine whether your business is on track to overspend or underspend this year.

                                                                                                                                                                                                  

5. Compare budgeted numbers to actual

There’s a saying that every small business owner should remember: “What gets measured gets accomplished!” Compare your year-to-date progress to what you budgeted to make sure your goals are on track. You will have some insight on the reasons if your numbers differ from the actual amounts.

 

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6. Cushion the pending fall

"No business plan survives the first contact with customers," says serial entrepreneur and Stanford University professor Steve Blank. In my experience, budgets generally don’t survive either – something always gets more expensive. It's imperative to create a cushion (room for overages) in the event you underestimated expenses for the year – and make it a given something unexpected will pop up.

 

Related article: Smarter Tax Moves for Small Businesses

 

7. How much will the largest expenditures really cost?

Get firm commitments or quotes from vendors for your large expenditures for the year. If necessary, sign contracts to ensure those costs. Budgets are important because it helps you determine how much cash is available and how much is available for new projects or expanded business goals.

 

Additionally, banks and investors may want to see your budget after they ask, “What will you do with the money we give you?” Investors want to know their funds will be put to good use and a budget will show how their funds will be maximized.

 

Whether you want to sign a new office lease, buy new equipment, hire employees, acquire a new business loan or estimate your business’ expected income and profits, budgets are not only important but necessary tools for a thriving and healthy business.

 

About Ebong Eka

Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.

 

Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.

 

Web: www.ebongeka.com or Twitter: @EbongEka.

 

Bank of America, N.A. engages with Ebong Eka to provide informational materials for your discussion or review purposes only Ebong Eka is a registered trademark, used pursuant to license. The third parties within articles are used under license from Ebong Eka. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

 

Bank of America, N.A. Member FDIC.  ©2017 Bank of America Corporation

SBC Team

5 Tips for Tax Season

Posted by SBC Team Jan 13, 2017

Tax season is upon us, and can be a challenge for even the best multitaskers. Help your small business be better prepared by viewing our latest infographic, “5 Tips for Tax Season”.

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Click here to download a PDF of this infographic.

Optimizing the cash in and cash out process works as a great formula for the success of any small business. But there’s much more you can do to improve cash flow. Check out our infographic for ideas you can implement both now and over time, such as forecasting, accelerating receivables, better engaging your customers and more.

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Click here to download a PDF of this infographic.

Did you know that more than half of small businesses spend one to five hours a month on in-house payroll? Save time and money with a payroll provider or software, and you’ll get industry-leading payroll capabilities at a price that won’t break your budget. Our latest infographic will show you all the ins and outs so you can make the best decision possible.

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Click here to download a PDF of this infographic.

It’s important to have a concise set of payment terms; you stand a better chance of getting paid and of getting paid on time. Let’s look at some different ways to receive payment for services rendered.

 

Offering your customers a line of credit gives them the flexibility to pay monthly with check or other transfer.

 

Net 7, 10, 30, 60 or 90 payment terms give your customer a set time frame in which to satisfy their invoice(s).

 

Payment is due when services are rendered or immediate payment made by cash, check or credit card is popular with small business owners as it allows the recipient quicker access to funds.

 

See the 10 Cash Flow Tips for Small Businesses Infographic article for more great Cash Management tips! ~Moderator Mel

Tax-Tips-Thumb.pngTax season is upon us, and can be a challenge for even the best multitaskers. Help your small business be better prepared by viewing our latest infographic, “5 Tips for Tax Season.”

 

Click here to view the infographic.

 

 

You can also download a PDF version
for printing by clicking here.

April 15th is almost here – D Day for many small business owners filing their own taxes. Whether you’re an individual or a business owner, filing taxes can be stressful, but the process for small business owners can be especially complex and overwhelming. With constantly changing tax laws and confusing regulations, it can be difficult for small businesses to keep up and ensure they are not penalized. The March installment of Bank of America’s Small Business Social Series will feature small business experts and tax professionals who will discuss strategies that small business owners should consider this tax season and beyond.

 

 

• Carol Roth, Moderator

• David Solis, National Sales Executive Bank of America Small Business

• Ebong Eka, CPA and Small Business Expert

• Steve Strauss, Small Business Columnist, USA Today

 

Video streamed live on Mar 22, 2016

SB-Thumb.gifThe majority of small business owners have an outside expert prepare their taxes, but that doesn't mean they're not dealing with tax issues throughout the year. About one-third of business owners spend 80 hours or more each year tending to administrative details.

 

To learn how much money small business owners are spending on taxes and what they view as their biggest tax headaches, take a look at our 2016 How Small Business Owners Manage Taxes infographic.

 

Click here to view the infographic.

 

 

You can also download a PDF
version for printing by clicking here.

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