All posts by TL Wall

I'm the owner of TL Wall Accounting, located in North Syracuse, NY
Budgeting

4 Business Financial Considerations

As we head into the last quarter of the year, most business owners will start pulling together some of their receipts for the year and other items to give to their accountants (while some will wait until the last minute next March; which one are you? lol). That’s pretty important, but it’s more reactionary than progressive thinking when it comes to working on the financial stability of one’s business.

We like to talk about the process of budgeting when it comes to managing money. Most of the time it’s all about paying bills. For businesses, it’s a much different thing. It comes down to 4 specific financial considerations businesses should be looking at so they can plan their future.

1. Receivables

What we’re calling receivables you might just be calling “pay”. It all depends on whether you collect your money up front or if you bill people and they pay you later. You need to budget this for three reasons. One, it tells you how much money you’ve made. Two, it helps you figure out how much money you want to make the next year. Three, if you haven’t been paid by some of your clients it lets you know who they are, who to follow up with, and who you might not want to work with in the future.

2. Liabilities

Liabilities for business are different than just thinking about bills that need to be paid. Liabilities in this case are those things that are pretty much set in stone where, if you don’t pay them you could lose something as far as it concerns your business. If you’re paying for your office space monthly, that’s included here. If you’re paying for insurance for your employees, or a company to handle your payroll, it all goes here.

3. Expenses

Expenses are those things where the value changes from month to month, as well as being something you might be able to control and reduce. Mileage is one of those things that changes monthly. General supply costs such as paper, pens and other things like that are another. When things are tough financially this one could spell the difference between shutting down or monitoring costs for better efficiency.

4. Capital Equipment

Many businesses will try to buy equipment for their business before year end. If it’s budgeted for the previous year, you might be able to buy that equipment whenever your needs hit because you know how much you’ve going to make and how much you’re already paying out. Things like computers, printers, or other equipment that’s costly and that you can write off should be a part of the process, especially if there’s something you need to purchase once a year.
 

Finances

How Are You Protecting The Financial Security Of Your Clients And Yourself?

Unfortunately it’s time for us to own up to this particular fact; our financial information is no longer secure, which means that if we’re business owners dealing with customers who are paying us, or we’re paying for our own business or personal products, we need to be more careful and try to protect ourselves as much as possible.

In the last few years there have been countless reports on major retail outlets that have been hacked with all kinds of financial information stolen on its customers. We’re also hearing about businesses such as insurance, the government, and banks that don’t seem to be able to stop these criminals from breaking in. If these organizations can’t stop them, then what the heck can we do to protect ourselves and our customers?

Truthfully, if someone really wants to get into our records there’s not a lot we can do. However, just because we may not be able to initially stop them doesn’t mean we should lay down and make it easy for them. Here are three things to think about as they pertain to your customers and your own finances.

1. Find a secure way to collect credit card information.

If you’re still using paper and the swiping machine to accept credit card payments it’s time to move into the 21st century. There are much more secure ways that are also faster such as setting up a link to PayPal or using something you can attach to your smartphone like Square. It’s easy to figure out how to use both of these, and these companies were created by people who know a lot about security.

2. Think about alternate ways to pay for things online.

Unless you’re buying something from a major company, or the URL (web address) begins with “https”, it’s probably not the smartest thing to buy things using your regular credit cards or debit cards online. The two better ways of handling this are to either send someone a check or call them and ask them if they can take your information over the phone. Yes, there are a lot of people who get scared to give out that kind of information over the phone, but these days that’s a lot safer than buying things online when you don’t know if those websites have been hacked and your information is being redirected.

You could think about purchasing a prepaid debit card, where you put only so much money on it and use that to make purchases. The problem with that is that some of them come laden with a lot of fees that, even though they hurt less than people stealing your money, eats up the amount of money you’ve put on your card way too fast.

3. Apply for a low balance credit card.

This is a very good idea because the hackers could only get so much off of the card. Also, credit cards are easier and faster to get satisfaction from the issuer, because banks usually want to send you all kinds of forms to fill out about the fraud that’s taken place.

These three ideas are worth taking into consideration to protect both you and your customers financial information.
 

Managing Money

A Way To Pay Your Bills On Time

Here at T L Wall Accounting, one of the things we talk about helping people with is paying their bills. A part of that is helping people budget their money, personally and professionally. Another part, which we don’t talk about all that often, is setting up processes to pay your bills.

Did you know that you can set up every single monthly bill you owe to be paid automatically through your bank? It’s not only a way to make sure your bills get paid each month, but it puts you in better control of your money than allowing a third party to take money directly out of your account. That might not be an option when it comes to things like life insurance, but in general everything else can be set up that way.

Depending on the bank, it can be a pretty easy process, although in many cases people feel more comfortable having someone else help with it. As long as who you have to pay has an account number it can be done. Many people pay their mortgages this way, along with things such as utility bills, car insurance, cable… everything.

Once it’s set up, you can always go online and change the amounts at any time, since it’s accessed the same way you access your bank account. For instance, say you and your spouse or partner make payments on something and one of you pays more than normal at some point. If you have the ability to skip a payment or make a reduced payment for one month, you can adjust it easily. Also, suppose that you’ve gone over your data usage on your smartphone and they’ve imposed a penalty, then you could go in and adjust the payment to make it higher.

Your payment will go out on whatever date you tell it to. It might take up to 3 days before it registers as a payment for some vendors, but for most they’ll see it in a day, even if it takes a few days to clear. No mess, no fuss, and no more late payments.

If this is something you’d like to do and you’d like some help with it, feel free to ask us to help you.

Tax Preparation

Why You Should File Your Corporate Taxes

This is a true story of someone we know regarding corporate taxes and why it’s important to file them.

This particular person has some interesting breaks that most people don’t get. He’s retired from the military so he gets tax breaks. He’s also retired from a state job so he gets a few other breaks. He gets his military pension and is only a couple of years away from adding his pension from the state, as well as going on Medicare.

He’s also in business for himself, a S-corp instead of a C-corp, a photographer as well as doing a few other things to make money. He’s not rich by any means, but being incorporated and former military, he qualifies for a lot of tax breaks.

The problem? Because he knew that if he filed his taxes he would qualify for a refund, he didn’t file on time, figuring that any penalty would be taken out of his refund. He was good with that. He was so good with it that he went more than 2 years without filing. He told his accountant to file an extension for him, figuring that would alert the IRS and the state that he wasn’t ignoring them. Yet, he never made a payment and didn’t pull his papers together for his accountant for more than two years.

When he was finally ready and had everything together, his accountant wasn’t ready. It was after tax season, but accountants do more than taxes. So he had to wait another month before his accountant could look at his paperwork.

What happened? My was partially correct. Because of all his tax breaks he basically “pushed”. In other words, he didn’t get a refund because of the lateness but he didn’t owe much either; around $25. That sounds like a pretty lucky deal doesn’t it?

It wasn’t. Turns out there are penalties for not filing one’s corporate taxes. After 60 days, there’s an automatic $100, and it’s added monthly. On top of that are penalties and fees that can eventually reach 47.5% interest, especially if personal taxes weren’t filed either; unfortunately, these things usually go hand in hand.

This guy went from the possibility of a refund to owing the IRS more than $5,000, and the state more than $2,200. His accountant filed the taxes finally, but he wasn’t in a position to pay even a small portion, let alone the full amount.

Luckily, both the state and the IRS allows you to get on a payment plan, which he’s going to do. He’s also planning on making sure to file his taxes next year to take advantage of his tax status, but unless he’s fully paid up he’ll end up with the state and federal government keeping whatever he might have gotten back.

It’s a double edged sword when it comes to paying one’s taxes, even if you know you’re getting a refund. We can’t stress enough how important it is to at least file your taxes on time so you can avoid penalties, whether you owe or not. The penalties are never worth it, as this gentleman realized.
 

Managing Money

Work Towards Now, Plan For The Future

A couple of years ago we posted an article here titled Setting Financial Goals. The, at the end of 2014, we posted another article asking people if they were going to set financial goals for the new year.

Riches
Creative Commons License Sheila Sund via Compfight

Like almost everyone else, we like to stress the reality of knowing how much money you’re making, being able to pay your bills, putting money away for a rainy day and still being able to have a fun life. Yet, we’re not sure that there’s enough emphasis put on the “now”, the more immediate needs of life.

Talking about the ability to pay one’s bills is pretty immediate, but maybe not immediate enough. For most bills, you’ll get them and have at least 21 days before there’s an expectation of payment. If you don’t have enough money and you know the bill is coming, that’s an extreme amount of pressure to deal with. If it’s multiple bills… way more pressure.

An article we wrote 3 years ago talked about whether it was better to pay off bills or save for retirement. Our conclusion was that paying off bills with higher interest rates is the wisest move, which is something one has to address while still working, because carrying debt into retirement will drain your limited income faster. Thus, you should be working towards a “now” mindset instead of thinking only of long term goals.

There was also an article on another blog on financial issues that gave a plan where, if you started young enough, you could have significant savings when you retire by learning how to put money away monthly, increasing it by $10 every year from age 20 to 40, then continuing that same investment amount for the final 25 years.

It’s a good plan but it still means that one has to think more of “now” than later. As a general question, how many of you are ready to start investing $100 a month into a long term savings plan and still pay all your bills and have a regular life? Actually, hopefully most of you do, but it’s something you might not think you’re ready for, which means a mindset change is needed into understanding the “now”.

What if you really don’t have that $100? Scary to think about isn’t it? This is why we talked about finding ways to increase income a couple of years ago, as well as talk about budgeting all the time. It’s also why we often mention working with an accountant if you need help in figuring things out; it never hurts to work with professionals on your financial goals.

Working towards “now” involves these things:

* having a significant enough income now
* paying down your most significant debt now
* budgeting what you have now
* being comfortable now

Think about it, and if you have anything more to add, let us know.