We’re finally getting some guidance from the IRS related to some of the subtleties of the TCJA (i.e. the new tax laws), specifically about the new rules for 100% depreciation of certain equipment in the first year.
If you have no earthly idea of what I’m talking about, either you don’t typically deal with capital depreciation in your business … or you simply haven’t had someone in your corner who has taken the time to help you navigate it.
These decisions can make a big difference in your business bottom line.
That’s why, last week, I posted some questions, and if you haven’t had a chance to look them over, here they are again:
2) I reviewed my financial statement with my bookkeeper or accountant within the last month to pinpoint the potential trouble spots and identify pockets of easy cash.
3) I know exactly which products, departments and services give me the highest ROI (return on investment).
4) I have a year-end tax strategy based on my figures to date.
5) I know how much cash I have and how much I will need next week.
6) I can sleep at night, knowing that my recordkeeping will support my deductions if the IRS audits me.
If you don’t have very many “yeses” from these, and/or any of these are concerns for you (especially with the tax and regulatory situation continuing to evolve), maybe it’s time you should discuss with your accountant ways they can fix that for you.
The reason I ask you to consider these questions is because I have seen far too many businesses in North Texas come to a sputtering halt because their decision makers didn’t have clarity about what the numbers should be telling them, and what they should do as a result.
It’s likely that they were making one of these four very common accounting mistakes…
You Can Easily Fix These Four Financial Mistakes With Competent Business Accounting Services
“Any idiot can face a crisis; it’s day to day living that wears you out.” – Anton Chekhov
These mistakes are common enough that most experienced accountants could fix many of them in their sleep (well, that’s not *exactly* true). And, sadly, they’re usually created by either inexperience on the part of the bookkeeper involved, OR by lack of communication from the business owner.
If you’re facing financial or accounting issues, rather than blaming your bookkeeper, perhaps the source of the problem is in fact YOU!
Either way, here are common accounting mistakes, all of which we can help you clean up.
1. Expense Tracking (or the lack thereof)
Too many business owners pay for expenses out of their own personal funds. And it’s no surprise that they often don’t keep accurate records of these expenses as a result. This very much needs to change if that’s you.
Here’s why: the IRS vehemently frowns at the co-mingling of business and personal funds, and the best way to protect yourself in the event of an IRS audit is to avoid doing it in the first place.
That aside, you need to maintain effective communication between your bookkeeper and the rest of your team, be it yourself, or other staff. Essentially, your bookkeeper needs to make sure that everything is coded properly, or you’ll be in some hot water.
2. Employee or Contractor? Whoops.
Many businesses have a combination of independent contractors and employees. And this is an area in which the IRS has been increasingly ruthless, as they search about for sources of additional revenue (i.e. penalties and additional taxes!).
Here’s the relevant IRS guidance on it.
Use it! Or at least have someone who knows, check it on your behalf. The IRS has recently been making significant noise about their cracking down on businesses in this area, especially with the new changes. Do NOT get caught unprepared.
3. Spending, Spending, Spending (Cash Controls)
Your business should have a monetary “line in the sand” on a monthly basis, the crossing of which should set off little alarms. These can range from the sophisticated (multiple trigger points and consequences), to the very rudimentary act of simply budgeting for each month.
But the main point is that your ACCOUNTING system should show you the way on this, on a monthly basis.
4. Not Keeping Up To Date
Sure, it’s painful to have to reconcile and keep every expense entered on a monthly basis — which is why so many business owners don’t keep up with it (even when they’ve “outsourced” the task to a part-timer). The problem with playing continual catch-up is that problems AND opportunities are spotted too late.
For example, say you think one of your service or product lines is the most profitable … but circumstances have changed (whether expenses or other cost factors), and now a different item is most profitable. Well, if you’ve been pushing for what you *thought* was most profitable for six months and only now realize that you should have been pursuing a different strategy, that’s a bunch of time and money wasted.
In short, get a professional to help you with this stuff.
Feel very free to forward this article to a business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax problem resolution and estate planning for families and business owners. And we always make room for referrals from trusted sources like you.
The Bronson Law Firm, P.C.