March 2024 Newsletter
www.cpa-services.com 
Phone: 978-463-9350 
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March 2024

A healthy, growing business has multiple key success factors to credit for its success. One important factor is having a set of books that is accurate and up-to-date. In this month's newsletter, learn about 7 ideas to set your accounting system up for success.

Also read about some areas where your business may be overspending that could be great candidates for cost cutting measures.

As always, please reach out with any questions and forward this information to anyone who may find it of value.

Upcoming dates
  • April 15
  • Individual income tax returns for 2023 are due
  • C corporation tax returns with year end of December 31 are due
  • First quarter 2024 estimated tax payments are due

7 Tips for Small Business Accounting Success

7 Tips for Small Business Accounting Success imageKeeping your company books in order can be a challenge. The following tips, though, can help set your accounting system up for success.

  1. Separate business expenses from personal expenses. Keeping your business expenses separate gives the IRS one less reason to deny legitimate business expenses, as the IRS is quick to toss valid tax deductions if personal expenses are co-mingled in your business account.
  2. Keep your books current. Setting a goal of having all business transactions recorded by the end of every week can help you accurately record on a timely basis. It is also easier to record one week of transactions at a time, rather than waiting until you have one month’s worth (or more!) of transactions to record.
  3. Accurately record capital assets. Because capital assets provide long-term value, they are entered on the balance sheet and depreciated over multiple years. So it is important to understand when a purchase is a capitalized item and record it properly. In addition, you will need to keep a copy of the invoice available for the life of the asset to help prove a gain or loss when you sell or dispose of it. Consider reviewing large purchases once a month to ensure that a capital asset wasn’t accidentally recorded as an expense and keep a file of the invoice and asset id.
  4. Perform monthly reconciliations. When you receive your monthly bank statements, ensure they are reconciled to your books within one week, as reconciliations often identify inaccurate transactions. Performing timely reconciliations can help you identify anything that may be amiss as soon as possible.
  5. Accurately record sales taxes. Sales tax that your business receives when a customer makes a purchase is recorded as a liability since it is the state's money, not yours. Conversely, sales tax that your business pays when making a purchase is booked as an expense.
  6. Save proper documentation. In addition to saving invoices and receipts for sales and purchases, also save documentation that supports all adjustments or journal entries recorded in your accounting system.
  7. Delegate your accounting tasks. Many entrepreneurs start their business for reasons other than spending hours working on their books. So ask for help. Partnering with an expert to handle your bookkeeping needs can free you up to use your expertise where it’s needed the most — running and growing your business.
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Great Cost Cutting Ideas

If your business needs to trim expenses, here are some areas where you may be overspending.

Great Cost Cutting Ideas imageKeeping a watchful eye on your business’s spending is a great way to be purposeful with where your money goes. Here are some ideas to help manage your key expenses.

  • Periodic vendor reviews. Create a list of your top ten or twenty vendors from last year's cash disbursement journal. Then create a monthly vendor review of a couple of them each month. During your review, determine how you pay the vendor, review payment terms, see if there were any billing problems and determine if an opportunity exists to receive better terms and pricing.
  • No auto renewals. While it may be convenient to put a contract on auto renewal, doing so can make it more likely that you’ll miss the next termination deadline, along with the opportunity to consider whether you still want the service. So with auto-renewal agreements, immediately provide a termination letter after signing the agreement. This will force your supplier to re-sell the benefit of their service to you each year.
  • Credit card interest rates. With interest rates increasing dramatically over the past several years, do not carry a balance your your business credit cards. EVER! Lines of credit are almost always a better deal. So is leveraging key vendor terms versus carrying a balance on a credit card.
  • Review other debt. Ask your banker about refinancing other debt, such as installment loans or revolving lines of credit, to a lower interest rate. Banks are always looking for well run businesses that proactively manage their risks.
  • Data storage. The cost of storing data in the cloud is now more affordable. At the same time, many businesses overestimate the amount of storage capacity they actually need. Consider conducting an annual audit of your storage needs and asking your provider about different capacity levels if you find you have ample, unused storage space.
  • Software as a Service. These services are popping up like weeds and every one of them is a monthly service charge that goes on forever. Review your cash disbursements and note any recurring charges. Once identified, review each one for their relevancy. Many of these services charge per user. Trim the user fee to one or two people. The savings add up quickly.

When reviewing your expenses ask yourself whether the expense is truly adding to your bottom line. If not, make it a candidate for the chopping block.

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As always, should you have any questions or concerns regarding your tax situation please feel free to call.

This newsletter is provided by

Riley Business Services Inc
Strategic and Smart Tax Planning and Preparation for Individuals and Businesses
5 PERRY WAY, STE 14
NEWBURYPORT, MA 01950
Phone: 978-463-9350  Fax: 978-462-2109
Mobil 978-270-9260
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www.cpa-services.com


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