Business Accounting - Vyde

What Are Liabilities?

We work with small business owners and entrepreneurs. Some are seasoned, others are just growing their side hustle. Their skills are varied and they have a wide variety of talents. We often get asked to explain the ins and outs of financial reports and have found that providing our favorite clients with a working knowledge of accounting terms is helpful. With that end in mind, we’re sharing that expert knowledge with you. So if you’re looking to get a better grasp on your small business books, want to understand your financial reports so you can make better business decisions, or even are just starting out and want to do it right… you can check out our word of the week and start expanding your working financial knowledge.

What Are Liabilities?

Simply put, liabilities are any existing debt that you owe to another business, organization, vendor or employee. That mortgage you have on your storefront – a liability. The tab you keep with your top vendors – yep, another liability. The money you’ll be paying your employees at the end of this pay period- yet another liability.

Liabilities make buying items for your business easier, because you don’t have to pay the amount in full immediately. And although that makes things easier on your business finances, it’s important to know who you owe, how much, and what you owe it for so you don’t get in over your head.

How Does Knowing Your Liabilities Help?

Keeping track of your liabilities will help keep your business functioning. As we mentioned before, a business owner that just dives in without keeping records of who they owe, how much, and what they owe it for, will usually end up in a financial mess.

Sorting liabilities can be done by categorizing them in 2 ways – short and long term liabilities. Long term liabilities include:

loans that last more than a year
mortgages
accrued expenses
deferred taxes

Some examples of short-term liabilities are:

employee wages
accounts payable
supplies or raw materials
invoices from vendors
utilities for your building or production site

When you know and track your liabilities you’re able to get a good grasp on your business’s profitability and that can guide you on making further purchases for your business. Additionally, with clearly outlined liabilities you’re able to move forward in the process of securing additional money for your business by applying for a bank loan or signing with an investor. Most banks and investors want to see your liabilities and are more likely to lend money or invest when they know how far in you are and that you’re committed to and consistent in paying back your debts.

Frequently Asked Questions

1. What are liabilities in the context of a small business?

Liabilities in a small business context refer to any existing debts or financial obligations owed to others. This includes items such as:

Mortgages on business property
Vendor accounts payable for purchases
Employee wages to be paid
Loans and accrued expenses

Understanding these liabilities helps you manage and track your financial obligations, ensuring you don’t overextend your business finances.

2. How can tracking liabilities benefit my small business?

Tracking your liabilities provides several key benefits:

Financial Control: Helps you maintain a clear overview of what you owe and manage cash flow effectively.
Informed Decisions: Assists in making better business decisions based on your financial obligations and available resources.
Loan and Investment Opportunities: Banks and investors often require a detailed account of your liabilities to assess your financial health before extending loans or investing.

By keeping a detailed record of your liabilities, you can avoid financial pitfalls and plan for future growth.

3. What is the difference between short-term and long-term liabilities?

Short-term liabilities are obligations due within one year, such as:

Employee wages
Accounts payable (e.g., invoices from vendors)
Utilities and supplies costs

Long-term liabilities are debts that extend beyond one year, including:

Mortgages
Long-term loans
Deferred taxes
Accrued expenses

Categorizing your liabilities into short-term and long-term helps manage and prioritize your financial commitments effectively.

4. Why is it important to categorize liabilities in my financial reports?

Categorizing liabilities helps in several ways:

Clarity: Provides a clear picture of what debts are due soon versus those that are long-term.
Cash Flow Management: Helps in planning for upcoming payments and managing cash flow.
Financial Planning: Aids in budgeting and financial planning by understanding when and how much you need to pay off your obligations.

Proper categorization allows for better management and strategic planning of your business finances.

5. How can understanding my liabilities help me secure a business loan or investment?

When applying for a business loan or seeking investment, understanding and documenting your liabilities can:

Demonstrate Financial Responsibility: Shows that you have a handle on your financial obligations and are committed to managing your debts.
Improve Loan or Investment Approval: Lenders and investors review your liabilities to assess your financial stability and risk level. Clear and well-managed liabilities can increase your chances of approval.

What Are Assets?

What are Business Assets?

When it comes to your business, assets can come in a few different forms. So let’s break it down. Assets, are either tangible (physical) or intangible (valuable, but cannot be touched) items that are considered property of a business or individual, have value, and are available to meet commitments and debts of said business or individual.

Our short list of business assets and what category they fall in (tangible vs. intangible) is as follows:

copyrights or trademarks (intangible)
vehicles or machinery (tangible)
buildings, office furniture (tangible)
goodwill or patents on processes or products (intangible)
computers, printers, or inventory (tangible)

Breaking Assets Down By Type

Additionally, you can categorize assets as either current or long-term. Current assets or short-term assets included items that could be converted in to cash easily within a 12-month period. Your accounts receivable or the balances of your current business checking or savings accounts are a good example.

Long-term assets are items that aren’t intended to be turned into cash within that short 12-month period. Goodwill with your customers and vendors along with things like buildings, your machinery, and long term investments (more than 12 months to maturity) are things are considered long-term assets.

Once you have them categorized, assets have to be valued – and the value of an asset isn’t always what you paid for it. When putting a current value to your assets, you or your accountant will need to consider the following:

fair market value – when the value of an item is agreed upon by a motivated buyer and the seller
depreciation – the process applied by your accountant to spread the expense of your asset over time. (This is a big one for tax deductions, so you’ll want to make sure you hire an expert or that you’ve got it down by checking out the rules with the IRS if you’re going it alone on your books)
accounting basics – calculating your assets can vary depending on your accounting method, type of business and so on. You’ll want to make sure that you’re staying consistent and that you’re using the right methods…

How to Put Your Understanding of Business Assets to Work

You may be thinking this is all fine and good, but what does knowing all about your business assets really do for you? Well, that’s a good question that definitely deserves an answer.

Knowing your business assets can help you run your business in a variety of ways. Often you’ll hear those finance guys talking about working capital, which is just a fancy term for the money you need to cover your day-to-day business operations. Knowing what it costs to run your business means you’re armed with the info to make sound business decisions – and your short-term assets and current liabilities is what you use to compute that working capital number.

As a business owner, you’ll want to grow your business and might need to take out a loan to do so. The bank or investor might ask you to put up collateral – your tangible and intangible assets can be used for that collateral and help you secure the loan.

And finally, when you’re putting your heart and soul into something you want to make sure that you’re mitigating risk. One way to do that is to have insurance. You’re sinking your hard earned cash into equipment, an office space or building and so on. Having a list of both tangible and intangible assets and their current value can help you determine what to insure, and that you’ve insured it with the right amount of coverage.

The Best Way to Pay Yourself as a Business Owner

Knowing how to pay yourself as a small business owner may seem simple, but there are quite a few options when it comes to doing it right. The information below will help you learn the basics of how to pay yourself as a small business owner, but we highly recommend talking to a tax or financial expert (we’d love to chat with you!) when it comes to the specifics of your business.

Establish Your Business Type

Before we get into the money side of things, it’s important to know what type of business entity you have so you know what your options are for getting paid. Because you’re the owner of your small business, it seems simple enough to just withdraw money from your business account and go on your way – but selecting the best way to take your pay and being consistent with that method will make things easier in the long run when it comes to the financials.

Business entities include, sole proprietor, LLC, or a partner in a partnership. You’ll want to verify which entity type you have if you don’t know already and then read on to see what options you have based on your business type.

Salary or Draw?

If you’re not quite sure what the difference is between a salary or a draw, we’ll tell you.

A salary is a fixed amount being taken out each pay period.

A draw, also known as a owner’s draw refers to an owner taking funds out of the business for personal use.

The benefit to the salary option is that tax withholdings and benefit payments come out of your gross pay automatically, whereas with a draw they don’t. A draw of company profits is taxable income on the owner’s personal tax return, and owners are required to pay estimated tax payments as well as self-employments taxes on draws. So additional personal tax planning may be required to make the draw method a benefit.

Another benefit to a draw is that a business owner can not only withdraw profits generated by the business, but also can take out funds that were previously contributed to help run the company. Many new business owners who are just starting out choose to use the draw method because they can pull additional funds they originally invested if needed while they work to build their company and build a stable monthly income.

Knowing which option is right for you takes looking at your personal circumstances and the happenings within your business. If you’re not sure which option provides you with the best advantage – that’ the time to seek out expert advice.

How Much Should I Pay Myself?

No matter which way you decide to pay yourself or even what type of business entity you have – the most frequently asked question we hear is How much should I pay myself? And that’s a very good question.

When it comes to deciding how much to include in your paycheck you need to think about the the amount of money that is needed to keep your business operations moving forward as well as if you’re willing to do more personal tax planning by using a draw method rather than paying yourself a salary. Weighing your options will help you decide which is the best fit and also help you decide just how much you’re willing to pay yourself so you get the most benefit.

What other questions do you have regarding paying yourself as a small business owner? We’d love to chat and provide you with custom advice unique to your business.

How to Know If Your Small Business Needs an Attorney

It takes a lot of different skill sets to keep a small business running. As a small business owner or entrepreneur you’re probably used to wearing a few different hats and overseeing things such as production, marketing, customer service, and so on. But even though you can do things, doesn’t always mean that it’s in your best interest to do so. One such expert might be an attorney. But when might you need one and how do you go about hiring the right one? We’re sharing some of the when’s and how to’s below.

When To Know if You Can Do it Yourself or Should Hire an Attorney

We’ll cut right to the chase. Doing it yourself often saves you money and that’s important for a small business owner – every dollar counts. Here’s our short list as to when you can do it yourself compared to when you might consider hiring an attorney:

When You Could DIY It

writing a business plan
filing for a business license and deciding on a business entity
reserving a domain for your website
applying for an EIN for tax purposes
applying for licenses & permits
creating contracts for use with customers, clients or vendors
creating a buy-sell agreement with partners
updating any partnership or shareholder’s agreements under which you are currently working
handling audits by the IRS

It’s important to note that these items are things you could potentially take care of yourself, but that you could also hire any reputable attorney to take care of for you. Remember, just because you can do it, doesn’t mean that’s always the best option. When in doubt, seek expert advice before deciding to DIY it.

When To Hire an Attorney

former, current or prospective employees sue for wrongful termination or a hostile work environment
state or federal investigations of your business because of claims of law violations
negotiating the sale of your company or an acquisition of another entity or it’s assets

What You Should Be Looking for When Hiring an Attorney

Not all attorneys are created equal. Yes, they should all have a reputable law degree but just like doctors they specialize in a variety of areas. Making sure you understand what types there are to choose from and which you need for your particular concern is a great place to start. When looking for an attorney to help you with your business, you’ll want to find as many abilities as you can in the same person. Here are a few specialties that might come in handy:

contracts – this comes in handy if you’re hiring employees, setting up contracts with suppliers and so on.
business organizations – if you’re not sure what type of business entity you should be setting up, an attorney is a great person to ask. They’re also able to prepare the necessary paperwork.
real estate – this may not be an essential if you’re an online business but it might be if you’re looking to lease commercial space or build and run a brick and mortar store.
taxes & licenses – yes, an accountant will file your taxes annually, but you’ll need an attorney to help you get the proper licenses and they should also understand the more basic legalities that come with basic business transactions, etc.
intellectual property – if you’re creating new products or work in a creative field it’s important that your attorney understand how to register for trademarks and copyrights or at least know a specialist that can help if needed.

Once you’ve got the specialties down, you’ll need to also consider the following:

Communication is Key

JP Morgan once said, “I do not pay my lawyers to tell me what I cannot do, but to tell me how to do what I want to do.” A good attorney will outline your options, keep you posted on potential outcomes and make sure you stay above the law and out of any harmful legal action. Make sure that the attorney you hire is wiling to give you more than just “don’t do that” or “I’ll take care of it”. This is your business after all, they’re there to advise and that means they’ll need to use more than just a few brief sentences to keep you informed.

Location is Convenient

It goes without saying that keeping things close to home is always a good rule of thumb. Sure, there may be legal counsel that is highly acclaimed in a big city, but if it’s difficult to get there or even set up a time to meet, the odds are you won’t do it unless it’s absolutely necessary. Picking an attorney that is closer to home means they’re invested because you’re a client that isn’t going to be infrequent and you’ll also be a great referral to others in the area if they accommodate your needs well. Besides, usually things are dicey or complex when you need an attorney – so it’s best to make the process of meeting with them as simple, an time efficient as possible.

Trust Your Gut

It’s not always important that those you work with are your best friends, but it is important that you trust your gut feel with those that you hire to represent your business and give legal advice. If you get a funny feeling that the attorney you’re meeting with isn’t going to be a good fit – keep looking. This individual is going to need to be a good communicator, they’re going to have to understand your business and get along with you. Just because their legal advice comes with a great referral or at the right price doesn’t always mean it’s a good fit. Legal stuff is hard to deal with – so you’ll need to be comfortable with the person that you’re going to ask the hard questions to. You’ll also need to be ready to hear the tough stuff from your attorney as well, so be sure it’s someone that you can trust.

FAQs:

1. When should I consider hiring an attorney for my small business?

You should consider hiring an attorney for matters like employee disputes, investigations, or business sales and acquisitions.

2. What are the key tasks I could potentially handle myself as a small business owner?

Tasks like writing a business plan, filing for licenses, creating contracts, and handling IRS audits could be handled by yourself or an attorney.

3. What specialties should I look for when hiring an attorney for my business?

Look for attorneys specializing in contracts, business organizations, real estate, taxes and licenses, and intellectual property.

4. What role does communication play in choosing the right attorney for my business?

Communication is crucial. Ensure your attorney communicates clearly, provides options, and keeps you informed about potential outcomes.

5. How important is it to trust my instincts when hiring an attorney?

Trusting your instincts is vital. Your attorney should be someone you trust, communicate well with, and feel comfortable discussing tough issues with.

What is an Overhead Expense?

What Is An Overhead Expense?

First things first. If you’re wanting to know more about your business expenses we have to start at the beginning. You can read more about Expenses here. An overhead expense is one of two types of business expenses and includes the costs of running your business. These costs could include but aren’t limited to rent, utilities, employee wages and more. These type of costs ARE NOT related to the COGS but instead are things that do not generate revenue. Overhead expenses are costs that have to be paid even if business is slow and a smart business owner keeps some cash to fulfill these obligations just in case there’s a month or two that go by where profits might not be what they’d like.

How Does Knowing Your Overhead Expenses Help?

Knowing your overhead costs can help you set your prices for the products you sell or the services you render so that you’ll end up with profits. Factoring in the overhead will show you just how much money your business needs to bring in so you can stay afloat or even grow. You can also use your overhead expenses to help you figure out your net profit or bottom line. Knowing what you’re spending on overhead expenses can be the first step in strategizing a way to bring those costs down. Simply reducing the amount you put towards overhead expenses can increase your net profit.

Frequently Asked Questions

1: What is an Overhead Expense?

Overhead expenses are the ongoing costs of operating your business, such as rent, utilities, and employee wages. These expenses are not directly tied to generating revenue (unlike the cost of goods sold or COGS) and must be paid even when business is slow.

2: How Can Understanding Overhead Expenses Benefit My Business?

Understanding your overhead expenses helps you set appropriate prices for your products or services, ensuring you cover costs and make a profit. It also allows you to better calculate your net profit and strategize ways to reduce expenses, ultimately boosting your bottom line.

3: Why Should I Track Overhead Expenses Regularly?

Tracking overhead expenses regularly gives you a clearer picture of your financial obligations, helping you manage cash flow more effectively. It also helps you plan for periods of lower profits, ensuring you have enough cash on hand to cover these essential business costs.

How to Grow Your Business: Marketing Strategy Part I

In our last post, we covered how to find your target audience. Now that you’ve defined your target audience, how do you talk to them in a way that makes them convert?

When thinking about your marketing strategy, it’s best to define a core message. Some refer to this an elevator pitch—a short blurb that explains what your business does, who your business is targeting, and why your business exists.

Here are some examples of elevator pitches:

Mama Boutique exists to provide trendy and affordable styles to new mothers who want to look cute, be comfortable, and feel confident.
Mountain Realty exists to create an easy, stress-free experience when buying or selling a home so that you can save money and close quickly.
Mazuma exists to help small business owners with their bookkeeping and accounting needs so you can focus on growing their business.

Create your own elevator pitch as a foundation of your marketing. This will also be useful when talking to potential clients because you know exactly how to explain your business thoroughly without being long winded.

As you start to create marketing collateral (print, emails, digital ads, etc), you’ll want to consider these tips:

Stay on Brand
Your brand is an important piece of creating a lasting impression on your customers. Your brand doesn’t just consist of colors, logos, and fonts. It also consists of your voice and how you position yourself in the market. For example, if a brand prides itself on being luxurious, expensive, and exclusive, they probably wouldn’t send out an email with a whacky gif inside of it. Make sure all your marketing exudes your brand so that your customers feel comfortable with your business and can recognize it easily—allowing your marketing dollars to go further.
Tap into emotions
Humans are emotional beings. If your marketing can tap into the emotions of your customers, then you’ll be able to connect with your customers on a deeper level to help them convert. You can try a few different angles: fear of missing out, loss prevention, nostalgia, joy. When going with the fear of missing out or loss prevention tactics, you’ll want to focus on the problem. Ask yourself, “what does my customer lose by not purchasing from me?” Do they lose time? Do they lose confidence? Do they lose money? Your marketing should tell the customer what the problem is—then enter your product/service as the solution and savior. If you’re trying out the nostalgia or joy tactic, consider what positive things your customers value. Do they value time spent with their family? Do they value the good old days before cell phones and the internet? Do they value their friendships? Take those values and show how your product/service back them.
Keep it simple
It can be tempting to try to explain all the details about your products/services in your marketing. However, keeping your marketing clear and concise can help your advertising to better convert. Most people will not read entire paragraphs, so get to the point quickly and effectively.
Clear call to action
Lastly, be sure you have a clear call to action so that your customer knows what to do. A link to a website, a button that says “Shop Now” or “Schedule an Appointment”, or a phone number to call will help take your customers from discovery to decision.

A good marketing strategy will help you to grow your business. Next week, we’ll talk about where to market to reach your audience—so stay tuned.

Dangers of DIY Accounting

It can be tempting to cut corners when laying the foundation of your business. Most new business owners try to pinch pennies where they can—even in areas they shouldn’t. For almost all businesses, making money is a priority, but how you manage that money is equally important. When you try to manage the accounting and bookkeeping for your business yourself, you may run into trouble. Here are some things to consider before you try DIY accounting for your business.

Time:

When you’ve got a million things on your plate, things can fall through the cracks or get deprioritized. Your business’ bookkeeping should never be put on the back burner. The time spent reconciling reports, figuring out finances, and learning how to keep your books correctly could be put to better use. You should be able to spend time on ways to grow your business, not accounting and bookkeeping.

Incorrect Data Entry:

When you’re busy, rushed, or distracted, it’s easy to enter incorrect data into your books. This incorrect data trickles down into your reporting and business records.

Unreliable Reports:

How can you make business decisions with incorrect data? When your books are wrong, your reports will be too. When your reports are wrong, you can’t make data-driven decisions for your business.

Missed Deductions:

Because you’re a business owner and probably not an accountant, you may not know all the things you can deduct. Missing deductions costs your business money.

Missing Revenue:

Incorrect books can cause you to miss revenue, and you may never know. By having up-to-date, clear financial records, you’ll be able to ensure that you know what is happening with every penny.

Unpaid Invoices:

When your books are messy, you may not notice an unpaid invoice—by you or someone who owes you. Unpaid invoices can collect interest or be found at a time where the budget it tighter than usual.

Underestimate Tax Bill:

When it comes to paying taxes, no one likes to be surprised by a larger number than what they were expecting. Incorrect books can cause a miscalculation and underestimation of your tax bill.

Everything is Legal:

Accountants and bookkeepers are specially trained to be compliant with current laws and regulations. When you DIY your accounting, you may find yourself accidentally breaking the rules and in trouble.

By using a train bookkeeper or accountant, you save time, money, and headache for yourself and your business.

How To Take Advantage of Your Vyde Portal

Here at Vyde, we live by three simple phrases: stay compliant, stay organized, and save on taxes. Our goal is to ensure your small business is compliant with the IRS, your books are organized and you save on taxes during tax season. We accomplish this goal by our Vyde Portal Dashboard. Our portal is the software we use to connect our client’s information with our tax professionals. The portal includes the following:

Vyde Portal Dashboard:

Your financial statements
Bank and credit card reconciliation
Announcements
Instructional videos
To-do list

Vyde Dashboard Portal pages

Home Page: The home page provides a summary of the projects Vyde is working on for you. It gives details of each steps we’re taking, and the steps you need to take to complete your projects. This page also provides announcements for upcoming webinars, articles, reports, events, and other relevant information. The important dates section will keep you informed of any deadlines for taxes.
Bank Accounts: This page allows you to link your business bank and credit card accounts directly. Our easy-to-use software shows you easy steps on how to link those accounts. Once your accounts are linked, Vyde will automatically download those transactions and complete your bookkeeping and reconciliation service.
Financial Reports: Your reports page is a great resource to see where you company stands financially. Your reports page includes an income statement, balance sheet, and a cash flow statement. The income statement, for example, is a perfect document to view your income, expenses and net profit.
My Files: Digital statements can be uploaded on this page. This simple file structure is used to upload all of the files you send us. You can easily drag and drop your files or browse your files.
BootCamp: This page is full of instructional videos regarding bookkeeping, accounting, and taxes. Although Vyde does all the work for you, it is nice to gain as much knowledge about each subject in our BootCamp video page.

Getting started

In order to get started with your Vyde Portal, follow these steps:

Link your business and credit card accounts.
Ask questions.
Respond to us.

Take advantage of your portal and see how you can stay organized, stay compliant and save on taxes. Click here to log into your Vyde Portal. Don’t have a portal? No problem, Click here to try Vyde and our portal for free! If you have further questions about your portal, taxes, accounting or bookkeeping, please reach out to us at [email protected]

Social Media Tips For Your Small Business

Social media has become a game-changer for small businesses. It has become the marketing platform that provides the best results for the lowest cost. Accounts are free and easy to maintain. In this article, we’ll explore five things you can do to get the most out of social media.

Post Consistently

Consistency is key. Those who post consistently are more likely to have better interaction with their audience. A part of being consistent is making sure your business is visible on all major platforms. Make sure you have accounts on Instagram, Facebook, Twitter, and LinkedIn. Youtube is another great option if you often share videos.

Have a Plan

When you plan your posts out by week or by month it makes being consistent easier because you know what you need to post and when. If you struggle to get your posts out on time try using a platform like Hootsuite or Later to pre-schedule your posts. These sites allow you to post on all your social media accounts at once. Hootsuite is user-friendly and allows you to schedule only posts in advance. Later allows you to schedule both posts and stories. Beyond these two, there are several other options for scheduling posts. Find one that best fits your needs.

Use Your Stories

According to SocialMediaWeek.org, Most people scroll through Instagram posts with the sound off, but 70% of them watch Instagram stories with the sound on, 20% of stories result in a direct message from the viewer. Stories on Instagram and Facebook are one of the best ways to engage your audience. They allow your audience to participate in polls, quizzes, open response boxes, and more. It’s a simple way to connect with your customer. Stories disappear after 24 hours, but that doesn’t meant they’re gone forever. You can save stories into highlight sections that remain on the top of your profile page. This is perfect for storing information clients refer to often such as pricing, FAQs, or some of your top content. When people visit your profile page they will likely click on one of your highlights to learn more about what you do. Both stories and highlights are features available on Facebook and Instagram.

Encourage Interaction

In addition to interacting via stories, strive to put a call to action at the end of each post. This lets your audience know what you want them to do because of this post. As valuable as it is for your followers to interact with you, it is also important for you to engage with them. Comment on their posts, respond to their stories, let them know you’re not just a computer spitting out content, you’re present, and willing to interact. Engaging with your customers online helps foster relationships that help small businesses thrive.

Stick to Your Brand

If you don’t have a branding guide, create one. Pinpoint the fonts, colors, textures, and common photos you use in your posts. Save them into one convenient folder to refer to later. When you post using the same colors, fonts, etc, it gives the visual clues needed to establish consistency and create a recognizable brand. Your followers should be able to see your post and identify that it was posted by your business without seeing your profile tag at the top of the post. Canva is a wonderful design website that makes brand consistency easy. There are free and paid options for this service.

Social media can make a big difference for your business if you use it in the right way. Applying these tips will make social media work for you. It takes effort, but over time you will see the positive results add up.

SMW, S. (2017, January 12). Ads and Analytics are coming to Instagram Stories. Retrieved October 06, 2020, from https://socialmediaweek.org/blog/2017/01/ads-analytics-instagram-stories/

FAQs about Maximizing Social Media for Small Businesses

1. How important is consistency in social media posting for small businesses? Consistency is crucial for small businesses on social media. Posting regularly keeps your audience engaged and increases interaction. It helps maintain visibility and credibility. Consistent posting across platforms like Instagram, Facebook, Twitter, and LinkedIn ensures you reach a broader audience.

2. What tools can I use to help plan and schedule my social media posts? Platforms like Hootsuite and Later are excellent for planning and scheduling social media posts. They allow you to schedule posts in advance, making it easier to maintain consistency. Hootsuite focuses on post scheduling, while Later offers scheduling for both posts and stories. Find the platform that best fits your needs and workflow.

3. How effective are Instagram and Facebook Stories for engaging with my audience? Instagram and Facebook Stories are highly effective for engaging with your audience. According to SocialMediaWeek.org, a significant percentage of users watch Stories with sound on, and they often result in direct messages from viewers. Stories offer interactive features like polls, quizzes, and open response boxes, enhancing audience engagement and connection with your brand.

4. Why is it important to encourage interaction with my audience on social media? Encouraging interaction on social media helps build relationships with your audience, which is essential for small businesses. Including calls to action in your posts prompts your audience to engage, whether through likes, comments, or shares. Additionally, actively engaging with your audience by responding to comments and messages fosters a sense of community and trust around your brand.

5. How can I ensure brand consistency across my social media platforms? Brand consistency is vital for establishing a recognizable identity on social media. Creating a branding guide that outlines your brand’s fonts, colors, textures, and common imagery is essential. Tools like Canva can help maintain brand consistency by providing templates and design features aligned with your brand guidelines. Consistent branding helps your audience easily identify your posts and strengthens brand recognition.

How to Prepare Your Small Business for a Tax Audit

When it comes to small business finances and tax filings – mistakes can happen. And when they do, tax audits usually happen too. Despite the fact that the best way to prepare for a small business tax audit is to not have to have one at all, there are a few things to keep in mind and prep so you’re ready for your small business tax audit. Lets get started…

Know Which Type of Audit You’re Having

Once you know you’re having an audit, the first thing you’ll want to do is know which type you’re having. The IRS carries out 3 different types of audits and you’ll want to know the differences so you can prepare for your tax audit. The three types of audits are:

Correspondence audit – happen by letter and the IRS is merely asking for you to verify, correct an error or provide additional documentation.
Office audit – this one requires you as the taxpayer to visit the IRS office and bring the documents they specify.
Field audit – this is the most intensive form of audit and requires you as the small business owner to host a IRS official at your workplace and allow them access to any forms, documents or tax return filings within the limits of their investigation.

How to Prepare

Once you’ve been notified of the type of audit you’ll be having, you’ll need to get right to work. Here’s our list:

You’ll want to visit with your tax preparer right away and provide them with the paperwork that you received from the IRS. Yes, expert help with cost you, but you’ll want someone that knows the ins and outs and can help you not only provide a good response to the IRS’s request but that can help you sort out the mess if there is one.
If your records aren’t already in order, nows the time. Start gathering your info and organize it according to year and type. A short list of relevant records would include, income, expenses, pension plans, and so on. You’ll want to also request bank or credit card records and any information you might need from your vendors. Whatever you do, don’t make up any records that aren’t available. However, if you have lost records or they were destroyed somehow (say a flood in your office, etc.) then you’ll want to make an attempt at reconstructing those records and document the efforts so it’s clear what you lost and what you’ve reconstructed.
Make sure that you don’t have personal expenses in your business records. And understand the difference between intentional and unintentional failures. If you’re intentionally minimizing your business taxes illegally that’s tax evasion. If you can show that your mistake was unintentional, the IRS tends to be more lenient.

What the IRS Can Request to See

Just because they’re the IRS doesn’t mean they’re allowed to ask for everything. Knowing your rights is a way to protect you and your business. It’s also a great way to focus in on the problem and get the ship righted quickly so you’re ready for your audit. Here’s what they can request from you:

any personal or business tax return within three years of the filing date
can collect back taxes for up to 10 years

There are exceptions – if you’re being audited due to tax evasion, filing a false return, or filing no return at all, the amount they can request for you can be a lot broader.

Even if you’re not getting ready for a tax audit for your small business, knowing is half the battle. One of pieces of advice we give most often to small business owners and entrepreneurs alike is to keep records and to update them regularly. If you’re tracking your finances you’ll have a better chance at your business succeeding, have less hassle when it comes tax time, and be ready to provide the records you have to the IRS in case you receive notice of an audit.

FAQs:

What are the different types of tax audits for small businesses?

There are three types: Correspondence audit (by letter), Office audit (in-person at IRS office), and Field audit (at your workplace).

How should I prepare once I know the type of audit I’m facing?

Consult a tax preparer promptly, organize your records by year and type, and gather relevant financial documents.

What if I’ve lost some records required for the audit?

If records are lost or destroyed, make efforts to reconstruct them and document your attempts for clarity.

What is the distinction between intentional and unintentional errors in records?

Intentional errors constitute tax evasion, while unintentional mistakes are typically treated more leniently by the IRS.

What documents can the IRS request during a small business tax audit?

Typically, they can request tax returns for up to three years and collect back taxes for up to ten years, with exceptions for cases involving tax evasion or filing false returns.

Resources

Category: Business Accounting

What Are Liabilities?

How Does Knowing Your Liabilities Help?

Frequently Asked Questions

What are Business Assets?

Breaking Assets Down By Type

How to Put Your Understanding of Business Assets to Work

Establish Your Business Type

Salary or Draw?

How Much Should I Pay Myself?

When To Know if You Can Do it Yourself or Should Hire an Attorney

When You Could DIY It

When To Hire an Attorney

What You Should Be Looking for When Hiring an Attorney

Communication is Key

Location is Convenient

Trust Your Gut

FAQs:

What Is An Overhead Expense?

How Does Knowing Your Overhead Expenses Help?

Frequently Asked Questions

Vyde Portal Dashboard:

Vyde Dashboard Portal pages

Getting started

Post Consistently

Have a Plan

Use Your Stories

Encourage Interaction

Stick to Your Brand

Know Which Type of Audit You’re Having

How to Prepare

What the IRS Can Request to See