It's important to have a sound accounting process in place to keep everything connected in your small business. This can be divided into three phases, which include stabilization, analysis, and growth. When you have specific strategies implemented, it will help make sure your small business bookkeeping stays accurate and you have a strategy in place for your small business tax planning process.
There Are Three Phases Of Keeping Everything Connected
By initiating the first phase of your accounting system, it helps keep everything connected and focuses on stabilization. When handling this phase, a small business accountant from Fusion CPA will assist with discovery and clean up your small business bookkeeping. Typically, bank and credit card accounts, escrow accounts, and loan payments need to be updated, which includes reconciling each of these accounts. This helps ensure accuracy and safeguards against having the wrong figures in your financial records. When you have this completed by a small business CPA who is experienced and knowledgeable with this process, it's done easily and efficiently.
Stabilization often begins by accessing your accounting system in the cloud, whether that's via QuickBooks or another type of accounting software, and compares the balance of assets held in each institution with the figures listed in your financial records. If you're doing this by yourself and notice any differences, it can help to get the assistance of a small business CPA. Often, accounting errors are due to missing transactions or double-counted transactions, which may be due to missed importing of data or other discrepancies. This can take time to find unless you have the trained eye of a small business accountant.
Analyzing The Financial Records Of Your Small Business
The second phase of your accounting process deals with analyzing your financial records and depends on the accuracy of the stabilization phase. A major focus of this phase is placed on tax deductions as well as depreciation. The IRS recognizes qualified deductible expenses as ordinary and necessary expenses that are incurred in the carrying on of your business, which often brings up the question of what this exactly means. When a small business accountant works on your books, they will consider these as being expenses that help to further the growth and sustainability of your venture, such as payments for real estate taxes on your commercial property or paying your vendors.
When handling depreciation, it can be more technical for your business if it is associated with a more capital intensive industry like commercial real estate or the restaurant industry in comparison to a business that is associated with marketing. In some cases, depreciation can be sped up by utilizing it in earlier years, which helps reduce taxable income during the current year versus later years. In other situations, you might have other properties generating losses in the early years and not be required to pay as much in taxable income. These types of scenarios help determine the small business tax planning strategy you'll want for your business and aids in having enough money available to pay your estimated tax liability each quarter.
Working On Growing Your ROI
The last phase focuses on finding ways to make more money and maximize your cash flow, which uses data from the stabilization and analysis phases to formulate estimates and goals. By utilizing small business financial advisers from our small business CFO advisory service, you'll have experienced specialists helping you who can analyze the individual aspects of your business that help fuel growth such as sales and marketing.
Small business financial advisors can answer questions and find solutions by diving deep into your financial records. They will look at the factors driving important areas of your business, like sales and the associated costs. For example, if you have a large marketing budget, small business financial advisers from our small business CFO advisory service may analyze each of the mediums in your marketing budget and determine which ones are creating the highest ROI. This type of analysis can be highly instrumental in increasing profitability for your company.
When you have these three phases in place as a streamlined process for your small business, it helps create a strong foundation that can be utilized to create accurate financial targets you can aim for. Here at Fusion CPA, we employ these three phases to help you revolutionize your approach to your small business management. Our goal is to help you facilitate streamlined strategies to increase your long-term value. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.