business budgeting: how to streamline your budget when cash flow slows
A volatile market and deflated consumer confidence have triggered talk of an economic turndown – because of their limited resources, small businesses may be the hardest hit…particularly those in housing-related industries or industries that depend on consumer spending in travel, luxury and entertainment.
The key to withstanding an economic turndown is having a strategy for staying afloat until conditions improve. Consider the following tips for managing your business:
- For example, downsize inventory rather than storing or warehousing needless overstock.
- Renegotiate contracts with vendors at lower prices.
- Examine the success of your marketing efforts. Focus on what gets results and spend your advertising budget accordingly.
For more ideas or assistance with ways to help your business during lean times, contact our office today!
Source: “Business Focus”, Spring/Summer 2008, Harleysville National Bank
new research shows small businesses most vulnerable to employee fraud
A recent independent survey by M/A/R/C Research revealed that approximately one-third of small businesses in the US do not have, or are unaware if they have, software, systems, or tools in place to inhibit or prevent employee fraud. Further results show that about one-in-four companies that have been prior victims to fraud continue to operate without protection or systems after the fact. These research findings confirm that small businesses are highly exposed to fraud in the workplace, and need to apply controls to reduce that risk.
Findings from the study also show:
- 21% of the small business interviewed stated that they did not have any system in place to prevent employee fraud. 13% were unsure if they did or did not.
- 28% of small businesses reported that they had been victimized by employee fraud in the past.
- Companies with 75-100 employees (42%) and those with $1,000,000 to $5,000,000 in annual revenues (34%) are most likely to experience employee fraud. The industries most likely to have experienced employee fraud are retail stores/outlets (16%), health care firms (9%) and finance firms (7%).
One of the most readily accessible tools companies can use to prevent fraud is within their accounting software, which often includes features that document and analyze processes for workflow efficiency, and can assist employers in spotting potential internal control weaknesses. Accounting software that allows for very user-specific access levels can also be extremely helpful in deterring fraud. By managing employee access at the module level, small companies can further monitor who’s able to access what, and when, in critical financial data.
Contact our office today and we’ll help you to implement fraud-prevention systems, as well as offering more “Helpful Hints” on employee fraud protection!
Source: www.sagesoftware.com
PARENTS CAN GET CREDIT FOR SENDING KIDS TO DAY CAMP
Here’s a tax break you can take advantage of this summer – many working parents must arrange for care of their children under 13 years of age during their school’s summer vacation. A popular solution is a day camp program – and it has a tax benefit!
The cost of day camp can count as an expense towards the child and dependent care credit. Expenses for overnight camps do not qualify. If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
The credit is generally 20% to 35% of non-reimbursed expenses; up to $3000 in expenses for one child and up to $6000 for two or more children. The actual credit is also based on your income. The 35% rate applies if your income is under $15,000; the 20% rate applies if your income is over $43,000.
Source: www.irs.gov
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filing extensions changing for some business taxpayers
Internal Revenue Service officials announced June 30, 2008 a change in the extended due date on certain business returns to help individuals better meet their filing obligations. The change, which reduces the extension period from six to five months, eases the burden on taxpayers who must report information from Schedules K-1 and similar documents on their individual tax returns.
Income, deductions and credits from partnerships, S corporations, estates and trusts are reported to partners, investors and beneficiaries on Schedules K-1 and other similar statements. The recipients then use that information to complete their own tax returns.
Currently, the extended due date for both businesses and individuals often falls on the same date, generally Oct. 15. This creates a burden for individual taxpayers who rely on the information from Schedule K-1 and other similar statements to prepare and file their personal tax returns in a timely manner.
The IRS issued temporary and proposed regulations that will reduce the extension of time to file tax returns for certain businesses that generate Schedules K-1 and other similar statements from six months to five. Requiring these statements to be issued one month earlier, generally by Sept. 15, will provide recipients time to prepare and file returns within the extended time frames.
This change will be effective for extension requests with respect to tax returns due on or after Jan. 1, 2009, and applies to business entities that file the following returns and forms that have a tax year ending on or after Sept. 30, 2008:
The regulation does not change the process for requesting an extension of time to file, nor does it affect extensions of time to file other types of business returns, such as those used by S corporations.The IRS initiated the proposal to reduce the extension of time to file, carefully weighing the impact on partnerships and other affected entities against the burden the existing deadline puts on individuals, who need this information to file timely and accurate returns.
Source www.irs.gov
ADDING FINANCE CHARGES
Collecting receipts from your customers on a timely basis is a key ingredient for a successful business. For those customers that continue to pay you late, it may be a good idea to start assessing finance charges on the original invoice. Your accounting software can help you do just that!
If you are a Peachtree user:
You must first activate and set up finance charges in Default Information.
- Go to MAINTAIN and select Default Information, then choose Customers. Peachtree displays the Customer Defaults window.
- Select the Finance Charges tab.
- Select the Charge Finance Charge check box if you want the default setting to charge your customers for late payments and set up finance charge calculations. If it is unchecked, by default, Peachtree will NOT charge any finance charges. You can override this setting for a particular customer.
- Enter the number of days overdue the invoice needs to be before you charge finance charges. (This allows a grace period for your customers.) Also enter the dollar amount that represents the cutoff point between different annual interest rates. Enter the annual interest rate for balances that are up to the amount you entered in the previous field & balances above that amount.
- Enter the minimum finance charge. If the calculated amount is less than the minimum, the program increases the amount to the minimum.
- If you want to compound finance charges, select Charge Interest on Finance Charges.
- Select the General Ledger account associated with finance charge revenue (for example, “Finance Charge Income”).
- Select OK to save your defaults.
You can now apply the finance charges:
- Go to TASKS and select FINANCE CHARGES.
- Select one customer or a group of customers and select the date that you want to assess the additional charge and click OK.
- Select if you want to apply the finance charge and the reports you want to review, and click OK.
- Select options to customize the way you want to review the report and click OK.
- The report will populate and the finance charges are calculated.
You can print a customer statement to mail to the customer showing the additional charges.
If you are a QuickBooks user:
You must first activate and set up finance charges in your Company Preferences. You must be logged in as the administrator to change your Company Preferences.
- Go to EDIT and select Preferences, then choose Finance Charges. Then select the company preferences tab.
- Enter your annual interest rate, minimum finance charge, and grace period. Also select the general ledger account associated with finance charge revenue (for example, “Finance Charge Income”).
- Select “assess finance charges on overdue finance charges” if you want to compound interest on the finance charges.
- Indicate the date (due date or invoice/billed date) that you want QuickBooks to calculate finance charges from.
- Select if you want to “mark finance charge invoices to be printed”.
- Click OK to save your preferences.
You can now apply the finance charges and print customer statements:
- Go to the Customer’s menu and select Create Statements.
- Select the dates that you want to print the statements and assess the charges; you have the ability to apply to one customer or several customers.
- On the right side of the screen, select the button to “assess finance charges”.
- A list of customers that have overdue balances will display. Select the customers for whom you wish to add the finance charges and click “assess charges”.
- Print the customer’s statement.
Doing all of this will bring additional income to your business and will encourage your customers to pay in a more timely manner. Please call our office if you need any further assistance calculating finance charges, or applying them to your customers.