Business Accounting - Vyde

FAQ – What Qualifies as a Home Office?

If you own a small business, you undoubtedly work from home, at least on occasion. If you’re like many small business owners in today’s world, you might even work exclusively from home. Whichever category you fall under, claiming a “home office” on your taxes can be tricky. Here’s a quick step-by-step guide to make sure you’re in line with IRS standards when it comes to your home office.

Home Office for a Small Business Owner

First, to claim a home office on your taxes, both of these things must apply:

You use the part of your home exclusively and regularly for your business. If an auditor were to come to your home, they would be able to easily identify your home office. This means the area can’t double as a play area for children or living room for your family. It should look just like a regular office would.
The business part of your home must be one of these to qualify:
- Your main place of business
- A place where you meet or deal with clients
- A separate structure (not attached to your home) that you use for your business

Exclusive Use Explained

Exclusive use means you use the area in your home for business purposes only. The area must meet these requirements to be considered “exclusive”:

A room or other separately identifiable space, but it doesn’t necessarily need to be separated by a wall or permanent partition
The space cannot be used for business and personal purposes
The area cannot contain personal-use furnishings like a TV or a couch, even though these items are common in many businesses

Regular Use Explained

Regular use means you use part of the home on a continuous, ongoing, or recurring basis. You can use the space for more than one business, and you can have more than one business location (other than your home office) for each business as well. However, if you’re deducting a home office on your taxes, your home must be the principal place of business. Factors considered in “regular use” of a home office include:

Meeting clients or conversing over phone, Skype, or email
Selling or delivering goods or services
Administrative activities of your business like billing customers, bookkeeping and accounting tasks, ordering supplies, setting up appointments, contacting customers
Updating your website, managing SEO, and other computer-based tasks

If you’re employed by another company and work from home, you can also claim a home office. Here’s how:

You must meet the home office requirements above.
Factors determining home office eligibility as an employee may also include:
- The employer requires you to maintain a home office as a condition of employment.
- Your work for their business isn’t possible without a home office.
- The employer doesn’t provide a space for you to work outside your home office.
- You don’t rent any part of your home to your employer and use the rented portion to perform services as an employee.

If you’re already working from home and haven’t set up a home office, now is the time. Home office deductions can save you big money on your taxes and help keep your small business activities more organized.

FAQ – What Home Office Expenses are Tax Deductible?

When it comes to home offices, it’s all about the tax deductions, baby! You could sit on your couch, watch tv, and do your small business bookkeeping and billing...but there’s no tax benefit to that. By creating and maintaining a home office for your small business, you can claim home office deductions that in turn reduce your taxable income at the end of the year. If you have already set up a qualifying home office, start tracking expenses and keeping meticulous records for your income taxes.

Here’s a lengthy, though not comprehensive, list of common home office deductions. Keep in mind these do not include typical business expenses that you would normally deduct whether or not you had a home office.

Tax Deductible Home Office Expenses

Paint
Carpet
Repairs or additions to the structure of the office
To learn about the unlikely deduction a bathroom as a portion of your home office, read this post.
Office decorations
Office furniture including desks, chairs, rugs, lamps, and that fancy painting you just had to have to hang above your desk
A separate business phone line (you cannot deduct a landline used for your home phone calls)
Other home-related expenses or repairs including snow plowing, roof repair, and trash removal. These types of expenses are deductible, according to the square-footage percentage of your home used as a business.
*You cannot deduct expenses for landscaping or lawn care unless you show off your lawn for your business, like if you own a landscaping company.

You can deduct a portion of these expenses, based on the square footage of your home office:

Depreciation
Rent or mortgage
Property Taxes
Home insurance
Utilities (electricity, heating, water, sewer)
Maintenance
General repairs

Home office deductions can be tricky. While claiming a home office is not a red flag for the IRS, you want to be careful and not get overzealous when it comes to deductions. The simplified method can make it easier for you to claim the deduction but might not provide you with biggest deduction.

Interested in Learning More?

Schedule a free consultation with our team!

FAQ – Can I Claim a Bathroom as Part of My Home Office?

Unfortunately, no. You can’t claim a bathroom as part of your home office, even though you likely take a potty break or two during your work day.

Remember the two most important words when it comes to home offices?

Exclusive and Regular. Even if you mostly use the bathroom closest to your home office while you work, the second you use it as a guest bathroom, for your children, or “off the clock,” it’s not exclusive anymore. In all reality, that’s not happening in most homes. Nine out of 10 times you can’t claim a bathroom as part of your home office.

Take this case study, for example:

“In T.C. Memo. 2011-201, Luis Bulas, Petitioner, v. Commissioner of Internal Revenue, Respondent, Docket No. 18977-09, U.S. Tax Court Judge Haines agreed with the IRS that taxpayer Luis Bulas was not entitled to a deduction for his use of the bathroom as a home office expense.

Bulas, a Florida taxpayer, knows a little something about the tax system. He has a master’s degree in accounting from Florida International University. Even better, he worked for the IRS for seven years as a tax technician, revenue agent, Appeals auditor, and Appeals officer, prior to starting his own tax agency. So, yes, for a long while, he was the guy who helped make decisions about whether a taxpayer was complying with the tax laws (cue music).

Bulas also happens to be a father of two daughters, one in high school and one in college, that helped him out with the business from time to time. This is only relevant because he claimed that he paid wages to his daughters and yet managed not to issue any forms 1099 or forms W-2 to them, a fact that also came up as part of his examination.

But, yawn. That’s kind of run of the mill boring stuff. Let’s get to the potty humor.

Bulas was flush enough (wince, I know, terrible pun) to have a personal residence which included a house, a garage, and a guesthouse. The total amount of space worked out to about 2,677.34 square feet.

Like many professionals, Bulas used one of the rooms in his home – in this case, a spare bedroom – as his office space. The total amount of the space for the bedroom was 226.3 square feet. Bulas eventually put an additional bathroom in his home, ostensibly for his clients’ use.

The IRS issued Bulas a notice of deficiency, denying the deductions for the wages paid to his daughters and the business use of his residence. Bulas, of course, appealed, which is how the case made it to Tax Court.

Bulas claimed that he used one of the bedrooms in his house exclusively for his office. Um, okay. That seems reasonable.

Bulas also argued, however, that he used the hallway – wait, he’s losing me here – and the bathroom exclusively for his accounting business. He went on to testify that his children and personal guests also used the bathroom.

The IRS was willing to grant him the use of the bedroom. The bedroom was, as mentioned earlier, about 226.3 square feet, which worked out to about 8.45% of the total square feet associated with Bulas’ residence. That means that he was entitled to pro-rate his allocable expenses and take 8.45% as a business deduction. No more. Bulas could not offer proof that the personal use of the hallway and bathroom met any exception under section 280A(c) of the Tax Code and thus, the personal use of the space trumped the business use. The result? He lost the deduction.”

Even though a regular office has a bathroom (let’s hope anyway!) you can’t claim one on your home office. There are, however, a plethora of other deductions available when claiming a home office. Capitalize on those and let go of that extra 100 sq ft you thought you might be able to claim this year.

FAQ – What If I do Business Outside of My Home Office?

If you read our last post, you know that in order for a home office to be claimed on taxes, it must be used exclusively and regularly for business use. However, that doesn’t mean it has to be the one and only place you do business. Here’s how to keep your home office status as an entrepreneur and still be able to conduct business where you need to.

You can still claim a home office if any of the following apply:

Other people conduct administrative or management activities for your business at their business location. Ex: Your accountant does your small business bookkeeping from their office.
You conduct administrative or management activities at places that aren’t fixed locations of the business, like in a car or a hotel room.
You conduct a substantial amount of these non-administrative and non-management business activities at a fixed location outside your home, like meeting clients for lunch or traveling to conferences.
You have suitable space to conduct administrative or management activities outside your home, like at your regular business office. However, you choose to use the home office for those activities.

If you own multiple businesses and work on them both at home AND at an office:

Follow IRS guidelines to find out if your home office is the principal place of business for each. It might be for one and not the other.
A home office might be the main place of business for more than one activity. However, each activity you conducted in the office must meet all requirements for the deduction. Otherwise, you won’t meet the exclusive-use test for any activity.

Essentially, your home office doesn’t have to be the only place you do business. Your daily business activities as an entrepreneur will undoubtedly take you further than the walls of your home. However, the regular and exclusive use guidelines are most important when determining if your home office is tax deductible.

FAQ – How do I Claim a Home Office on My Taxes?

If you use part of your home for business, you may be able to claim a home office on your taxes this year. The home office deduction is available for homeowners and renters, and applies to all types of homes. Learn more if your workspace qualifies as a home office, here.

There are a few ways to claim a home office on your taxes. In 2013, the IRS rolled out the Simplified Method for home offices which can significantly reduce record keeping burden by allowing a small business owner or employee to calculate square footage of a home office and multiply that by a prescribed rate ($5 per square foot for a maximum of 300 square feet), instead of calculating actual expenses.

The Regular Method requires a small business owner to calculate the actual expenses of their home office. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Generally, when using the regular method, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.

Either method is fine for claiming a home office, and some small business owners find one way to be more beneficial than the other. Keep in mind that the method you use to claim your home office is not as important as the use of the space being used exclusively and regularly for business use.

For a full list of deductions and qualifications for a home office from the IRS, click here. Be sure to consult a professional accountant and virtual bookkeeper before claiming a home office on your taxes to make the most of your deductions. Vyde can help with any questions you may have about your home office.

FAQs about Claiming a Home Office on Your Taxes

1. Who qualifies for claiming a home office on taxes?
Homeowners and renters who use part of their home exclusively for business may qualify.
2. What are the methods available for claiming a home office deduction?
The Simplified Method and the Regular Method are the two options provided by the IRS.
3. How does the Simplified Method work?
It involves multiplying the square footage of the home office by a prescribed rate, offering a simplified approach to calculating deductions.
4. What expenses can be included when using the Regular Method?
Expenses such as mortgage interest, insurance, utilities, repairs, and depreciation can be considered.
5. Is it necessary for the home office to be a separate room?
No, as long as the space is used exclusively and regularly for business, it qualifies regardless of whether it’s a whole room or part of one.

Vyde’s Updated Holiday Gift Giving Guide for Small Businesses and Entrepreneurs

The holiday season is the perfect time to show your clients and employees just how much you appreciate them. However, figuring out what to give, when to give it, and what’s tax deductible can be a daunting task. Vyde has made it easy with our comprehensive, deductible-focused Business Holiday Gift Giving Guide.

To get the most bang for your buck, you’ll want to give gifts that are tax deductible. While the IRS doesn’t list specific client gifts that you can or cannot deduct, there are limits on how much you can deduct for each client receiving gifts from you. So how do you know what is tax deductible when purchasing a holiday gift to a client or employee?

Purchasing Business Gifts that are Tax Deductible

Currently, the limit is $25 per recipient per year. There is no limit on how many people you can give business gifts to in a year, but the deductible portion for each recipient is $25. That means if you splurge on a $50 gift basket, only half of that amount is actually deductible. If you’ve already sent your clients a gift this year, be mindful of that running total and the $25 yearly limit.

The actual gift isn’t the only tax deductible portion of business holiday gift giving. Wrapping paper, cards, scissors, tape, ribbons and bows are all tax deductible so fancy it up before shipping it out! And when you get to that mile-long post office line this December, keep your receipts because shipping and stamps are deductible as well. These costs are an addition to the $25 per recipient limit, so the actual gift itself can be valued at $25 and these expenses are still deductible.

If the $25 limit feels restrictive to you, there is a way that can help you deduct even more—and probably cut your work in half, too. According to the IRS, if you give a gift of “entertainment,” you can deduct 50% of the cost.

Examples of entertainment gifts are concert tickets, sporting event tickets, movie passes, restaurant gift cards, vacations, hotel stays, etc. Clearly that $25 limit per recipient can quickly be surpassed in these categories, so your deductions may actually be greater than $25 each if you spend $50 or more. Your clients are sure to love the gift of entertainment and you won’t have to bother with the ribbons and bows. In fact, most of this shopping can be done online and sent to your client electronically.

Who to Send Business Gifts to this Holiday Season

Start making a list of those you’d like to give a holiday gift from your business this year and your list may be as long as Santa’s in no time. Here’s a little tip: focus your holiday gift giving on the people who make your company great.

Your business certainly wouldn’t be what it is without the people who support it–your clients. And if you’re not a one-man band, don’t forget about your employees either. Both of these lists of people are essential on your business holiday gift giving list. Other people you may consider sending business gifts to may include some service providers, potential clients, resources, consultants, contract workers, guest speakers, or those who have referred clients to you.

When it comes to client gift giving, things get complicated in a hurry. Maybe you have a lot of clients who pay only a small amount of money to your business each year. In this case, you’ll want to give smaller, more general items as gifts to your clients. That doesn’t mean a pen and notepad with your logo on it, or something cheap bought in bulk from Oriental Trading. This isn’t about promoting your business, it’s about strengthening that relationship you’ve worked so hard to form. Even if you’re on a tight budget for a lot of people, you can still send a thoughtful, meaningful gift.

If you’ve got too many clients to manage individualized gifts and would rather not send an actual item (inexpensive or not), a handwritten card is a genuine gift that shows your client that you care about them as an individual. Think about the message you want to convey, make it personal, express your gratitude, and hand write it. A personal message directly from you to a client occupies a larger space in their mind than a plastic yo-yo with your company name on it.

Or perhaps you have only a few clients with large accounts. In this case, you may want to invest more money in holiday gifts that show you care and value the business relationship you’ve formed.

Regardless of your situation, cost is undoubtedly on the forefront of your mind when it comes to gift giving. We’ve compiled a list of ideas, categorized by cost, to get you thinking.

Holiday Gift Giving Ideas for Clients and Employees

Gifts Under $15

Candy, such as a small box of chocolates, peanut brittle, gourmet butterscotch hard candies, or fudge
Refillable water bottle or insulated mug
Page-a-day desk calendar
Your favorite business book
A small bouquet of flowers or holiday arrangement, hand-delivered (maybe even handmade!)
A desk toy such as a kinetic motion toy or a clock
A small potted plant
A gift certificate to a local ice cream or cupcake shop
Electronic cleaning kit, complete with microfiber cloth and cleaning spray

Gifts under $25

Small meat and cheese tray with fine mustard or dipping sauce
A set of personalized stationery
Amazon gift card
Gourmet cookies
A subscription to a business magazine or website that interests them
iPad case or cover
Engraved and/or personalized pen
Movie tickets
A gift certificate to their favorite restaurant

Gifts under $50

Digital photo frame
Large box of chocolates (suitable for office sharing)
Carry-on bag for business trips
Sporting event ticket(s)
A gourmet food basket
A messenger or laptop bag
Wrist or clip-on fitness tracker/activity monitor

Entertainment Gift Ideas

These gifts can actually be deducted 50% no matter the cost, rather than the $25 per recipient limit.

Sporting event tickets
Theme park tickets
Restaurant gift cards
Movie tickets
Vacations/hotel stays
Ski lift tickets
Golf cart / green fee passes
Play/show tickets
Concert tickets

Keep in mind that not all holiday business gifts are created equal. You don’t have to give your $100 a month client the same gift you give your $1,000 a month client. It’s ok to send some clients cards and others more expensive gifts. Select a price range that feels right to you based on your relationship with each recipient and go from there.

The Do’s and Dont’s of Business Holiday Gift Giving

DO:

-Give. Don’t promote. You have all year to promote your business; allow the holidays to be a time to focus on your clients and let them know you’re grateful for them.

-Send a card. A handwritten card or personal email can be meaningful and memorable. Gift giving has lost its personal touch over the years and your client will love getting a special note from yours truly, with or without a gift.

-Keep an ongoing list of employees, clients, service providers, and others who make your business great throughout the year. The holidays are a busy time of year, making it easy to forget someone. Keeping a list throughout the year will ease your holiday stress and keep you from overspending at the last minute.

-Set a budget. Not all client gifts are equal, but you do need to have a budget in place before you start shopping.

-Check into a company’s gift giving and receiving policy before shipping your presents. The larger the company, the more likely a specific policy is in place. You don’t want to spend unnecessary cash on a contact who is not allowed to accept your gesture.

DON’T:

-Don’t wait until the last minute. Keep in mind many people take a lengthy break from work to travel during the Christmas season, so sending a gift to a client’s office on December 23^rd may not work. Try to have your gifts sent out early in December to ensure on-time delivery.

-Don’t feel pressure to run out and buy a nice gift for everyone who sends you one. This is a quick way to go over budget and is not always necessary. Be sure to send a nice thank you card expressing your gratitude or a holiday card, and add that person to the list for the next year, if need be.

-Don’t send gifts that are too personal or religious. Keep it professional in the work place and avoid gifts like clothing, perfume, and other items people have personal (and sometimes very strong) opinions about.

-Don’t be a brown-noser. Give gifts because you’re grateful and keep it at that. Don’t try to out-do another employee or company, just give from the heart.

Regardless of what you actually send, clients and employees are sure to appreciate a genuine gesture that shows your gratitude for their business and service throughout the year. When in doubt when it comes to holiday gift giving, keep it simple and track expenses closely.

10 Ways to Ensure Great Customer Service During the Holiday Season

As customers and clients prepare for time off and holiday celebrations, you may find yourself knee-deep in the endless tasks of preparing your small business for the season. While you’re ordering extra supplies, planning events, amping up your marketing strategies, and closing out the year, it’s easy to let customer service slip.

So How Do You Keep up Your Customer Satisfaction During the Most Important Time of the Year?

1. Start early. As in, right now. It’s best to start planning at least three months before peak periods to ensure things flow smoothly. (Christmas in July, anyone?) This time is needed to determine personnel needs, research and launch marketing campaigns that are most appealing to your customers, plan a schedule, and set goals. This is especially important for fast-growing companies that have experienced rapid growth in the previous months.
2. Hire and train employees before October. You simply can’t be everywhere at once. For this reason, your employees will be the most critical factor in providing high quality customer service during the holiday season. Avoid hiring employees the week before Black Friday and other busy days for your business. Give yourself at least a month to train employees thoroughly before expecting them to handle the chaos gracefully.
3. Take care of your employees. Speaking of employees, getting your team to buy into what you’re doing and why it’s important will ensure that your customers are well-taken care of. The best way to do this is to take care of your employees, especially as they’re likely working more hours during the holiday season as well. Take the office to lunch, provide donuts in the breakroom, offer a simple compliment, provide an incentive or award system for holiday sales, or hand out a small Christmas bonus or gift. Gratitude goes a long way this time of year, especially for those who work long, hard hours to make your company great.
4. Help customers help themselves. While most customers want a direct line to the boss’ number at the first sign of a problem with their product or service, many appreciate several sources of customer service being available. Make sure your website contains an FAQ section, along with multiple ways of contacting your customer service team (ex. phone, email, live chat, etc.). Provide ample information to help your customers help themselves. This will (hopefully) alleviate some of your stress and responsibility and boost customer satisfaction this holiday season.
5. Review the numbers. Look over past holiday reports and make predictions about what this year might bring. Having a small business bookkeeping system can greatly simplify this. Doing this will help you know whether you need to hire a few extra hands to help, what to do to boost your marketing efforts, and come up with ways to ensure great customer service before the busy time arrives.
6. Increase efficiency. Holidays always seem to come with long lines, last minute deadlines, and at least a small bunch of grinches who aren’t interested in being sold something they’re not out looking for. Do what you can to promote your product, without overdoing it. Hold a team meeting to brainstorm ways to expedite checkout lines and speed up the transaction process. If you’re running a brick and mortar business, organize the store so it’s easy to navigate, even providing maps or booklets explaining your sales and where to find things.
7. Get your greeting on. Customers should always be greeted when they walk into your store. Help employees find a happy medium between “hello,” and “hi, how can I help you, would you like to sign up for a credit card, be sure to check out aisle five, how’s the family?” Decide on an appropriate greeting for customers and do your part to make them feel welcome in your business. Customer satisfaction increases when they feel welcome in your store.
8. Make it fun. The holidays should be fun, but sometimes harried shoppers lose sight as they’re rushing through their errands. Make your store a sanctuary by livening it up a bit. It can be a simple thing like offering candy every Saturday through October, asking your employees to wear ugly sweaters on Black Friday, passing out a jingle bell to all customers who come through your door, or having Santa at your business a few times during December.
9. Monitor social media sites. Rather than a face-to-face confrontation, many unhappy customers are turning to social media to vent their frustrations. Be sure to carefully monitor your business’ social media sites and make sure any complaints that arise there are resolved quickly and politely.
10. Focus on the customer, not the sale. While this may sound counterintuitive to your holiday sales goals, focusing on the customer rather than the sale will boost customer service and increase employee satisfaction. It’s better to have a customer leave without a sale, but feel comfortable to come back again, rather than pushing them out the door with $100 worth of items they didn’t really want or need.

With a little focus, planning, and goal-setting, you can make sure your customer satisfaction is high and the complaints are low. What is your small business doing to amp up customer service this holiday season?

Frequently Asked Questions:

How far in advance should I start planning for peak holiday periods to maintain customer satisfaction?
Start planning at least three months before peak periods to ensure smooth operations.
When should I hire and train employees for optimal customer service during the holidays?
It’s best to hire and train employees before October to prepare them adequately for the holiday rush.
How can I ensure my employees are motivated to provide excellent customer service?
Taking care of your employees by showing appreciation and providing incentives or rewards can help ensure they’re motivated and engaged.
What are some strategies to help customers help themselves and reduce customer service inquiries?
Provide an FAQ section on your website, along with multiple contact options and ample information to assist customers in resolving issues independently.
How can I effectively monitor and address customer feedback, especially on social media?
Regularly monitor your business’ social media platforms and promptly address any complaints or concerns raised by customers to maintain satisfaction levels.

Top 20 Accounting Tips for Insurance Agents

As an insurance agent, there is no one who understands the importance of protecting your assets better than you. You’ve got your clients covered when it comes to their vehicles, home, business, assets, family members, and every other important aspect of their life. Why not do the same for your insurance agency? Proper accounting and bookkeeping practices help protect your business from potential disaster by ensuring your finances are always in order, no matter what comes your way.

Top 20 Accounting Tips for Insurance Agents to Protect Your Business and Keep It Running Smoothly

1. Find an efficient way to track income and expenses. The first accounting tips for insurance agents is to keep track of money coming in and money going out. It is important to track expenses as they really are and not how you want them to be. Having an efficient system for tracking expenses and income is the only way to know how your business is performing financially.
2. Create a budget and stick to it. Categorize and track all expenses for your insurance agency. Your budget should include monthly expenses for different aspects of your business such as payroll, marketing, utilities, office rent, office supplies, business meals, and vehicle expenses.
3. Separate business and personal expenses. One of the first orders of business for insurance agents should be to set up a business bank account and use it for all business expenses. That way, when tax time comes you will only have to review your business account bank statements for deductions and expenses, rather than reviewing your personal account and trying to remember which expenses were for your insurance agency.
4. Set aside time for business bookkeeping and accounting. If you prefer to do business bookkeeping yourself, try set aside at least one hour each week to pay bills and update your income and expenses.
5. Don’t miss out on deductions, big or small. Noting even the smallest tax deduction can add up over the course of a year and really help out during tax season. Any money spent on improving or maintaining your business is tax deductible, as long as the expense is ordinary and necessary. Visit our previous posts on business deductions here, here, and here.
6. Create a home office. If you use part of your home to conduct insurance business, you may be able to claim a home office deduction. The IRS requires that the space designated as your “home office” must be used regularly and exclusively for your insurance agency business.
7. Track vehicle expenses. While you can’t deduct your drive to and from the office, all the other driving you do for your insurance agency is deductible, like driving to see clients or taking the office staff to lunch. Make sure to keep an accurate log of all miles driven for business.
8. Pay close attention to important tax deadlines. The most important tax deadlines to be aware of for insurance agents are Estimated Quarterly Taxes, which are due four times each year.
9. Outsource payroll. Most insurance agents start out doing their payroll in-house; however, when your insurance agency reaches a certain point of growth, you may find the time and effort put into payroll isn’t worth the cost anymore. Outsourcing payroll frees up your time and provides access to the knowledge and expertise of professional accountants, who are less likely to make mistakes while processing payroll.
10. Choose benefits wisely. The most sought-after benefit for employees is health insurance, followed by retirement, life insurance, and paid leave. Employees also appreciate extra perks like wellness programs, gym memberships, and child care assistance.
11. File taxes early to prevent fraud. Not only does it relieve your stress, to get taxes done early, it reduces the risk of identity theft.
12. File a tax extension when you need to. Here’s how.
13. Employ your children. Whether they’re cleaning your insurance office or answering the phone, their wages are tax deductible and they can be a big help to your business. Teaching them work ethic at a young age is an added bonus, right?
14. Invest money wisely in your business. Don’t spend money carelessly, even if you feel like you can afford it. Make business purchases wisely and invest in the aspects of your business that will provide you with the most profit long-term.
15. Set your salary. Decide on a monthly amount or percentage of profit from your insurance agency for your take-home pay. For tips on setting your own salary as a business owner, visit this post here.
16. Develop an exit strategy for your insurance agency. If you’ve partnered with another insurance agent, an exit strategy helps keep the relationship professional and is an added security for the business. Make the tough decisions about how your partnership could potentially end now, rather than when things may be tough down the road.
17. Develop a succession plan for your business. Additionally, setting a plan of who will eventually take on more business responsibilities within your insurance agency helps keep things on track.
18. Save money where you can, but don’t cut corners.
19. Utilize technology. Stay up to date on the latest accounting software for your industry, in addition to utilizing tools like smart phones and tablets to track expenses.
20. Hire a professional accountant. Mazuma accountants can take care of all the taxes, catch-up bookkeeping, and accounting for your insurance agency for less than $100/month. It only takes ten minutes to upload your information monthly or stuff your Purple Vyde Envelope with receipts and invoices and send it off to Vyde accountants who take your financial records and turn them into neat and tidy profit/loss statements.

Protect your business finances like you protect your insurance clients and you’ll be prepared for any unexpected financial crisis that comes your way.

FAQs for Insurance Agents Regarding Accounting Practices

1. How does efficient tracking of income and expenses benefit my insurance agency?

Efficient tracking offers clear insights into financial performance, aiding informed decisions and ensuring accurate financial assessments.

2. Is it mandatory to set up a separate business bank account for an insurance agency?

Establishing a separate business account simplifies tax processes, enabling easy identification of business-related expenses during tax assessments.

3. Why consider outsourcing payroll for an insurance agency? Outsourcing payroll, especially with business growth, saves time and minimizes errors. Professional accountants handle complexities more efficiently.

4. What’s the significance of filing taxes early and considering tax extensions?

Early tax filing reduces stress and minimizes identity theft risks. Tax extensions offer flexibility, ensuring accurate filings without unnecessary rush.

5. How can utilizing technology benefit insurance agency accounting?

Adopting updated accounting software and tech tools streamlines expense tracking, enhancing accuracy and efficiency in managing financial records.

6 Benefits of Taking a Vacation from Work

Nearly 40% of Americans aren’t using all of their allotted vacation time. Why? Two reasons. 40% of workers stress about the pile of work they’ll find on their desk when they return, and 67% feel like their company doesn’t promote taking time off. Despite the negative connotations sometimes associated with using PTO for vacation, here are 6 benefits of unplugging and taking some much-needed time off:

Gain a new perspective. As you step away from the immediate demands of the workplace and ponder a question that’s been on your mind, you’re more likely to gain a clear answer. An example of this, according to CNN, would be when you ask your friend for advice on a situation. The friend is removed from the scenario, and thus can offer advice more easily.
Better physical health. A little time away from the office reduces stress and can even improve your physical health. According to studies on cardiovascular health, men who didn’t take a vacation for several years were 30% more likely to have heart attacks compared to men who did not take time off. Women who vacation only once every six years or less were eight times more likely to develop heart disease compared to women who vacation twice a year. Combine that with lower blood pressure and smaller waistlines, and you owe it to yourself to take a break from the office once in a while!
Better mental health. According to a study performed by the University of California Irvine, vacations can reset and refresh our minds. They reported that “if we had a huge amount of brain power in reserve, we might not need vacations. We could just tap those beach-lolling brain cells. But we don’t. Time off tunes up a well-functioning brain.”
Closer family relationships. Perhaps the most important benefit of vacation time is the bonds we establish with those we love. Psychology expert Susan Krauss Whitborne said, “Shared family memories and time spent together isolated from ordinary everyday activities (school, work and so on) help to promote these positive ties. Though family vacations can have their own share of stress, the benefits outweigh the risks, even in families that are not particularly close.”
Increased productivity. The best way to get more done may be to spend more time doing less. A study from Harvard University shows that sleep deprivation costs American companies an estimated $63.2 billion a year in lost productivity. Vacations help you unwind, recharge, and rest up. In fact, those who vacation more often score higher on end-of-year performance ratings from their supervisors.
Receive inspiration about your work. The best ideas often come when you’re not actively looking for them. Creativity is sure to blossom as you reconnect with nature, family, and friends, rather than under the immense pressure that comes from meeting work deadlines and attending meetings. Take it from Rieva Lesonsky, the CEO of GrowBiz Media: “Vacations help us change the view, which can spark an idea or kick start creative thinking.”

Top 5 Cyber Security Tips to Keep Your Small Business Safe

It can happen to any of us. In fact, it often does–and never at a convenient time. Hackers are working around the clock to infest millions of websites. So how do you keep your small business safe on the internet?

Here are the top 5 security tips to keep your company safe in an increasingly paperless world.

1. Protect information, computers, and networks. As annoying as all those “updates available” pop-ups can be in the middle of your work day, making sure you have the latest version of all browsers and security software will keep your computers running properly and protect you from cyber security threats.
2. Make backup copies of all business data and information. All of your important data such as word processing documents, spreadsheets, databases, financial records, and human resource files should be backed up either on a removable device or in the cloud. It is best to backup data automatically if possible, or at least do so weekly.
3. Protect passwords. Require employees to use unique passwords and change them every 3-6 months. Do not store your passwords on a word document, but rather, write them down and keep them in a locked desk drawer or other safe place. If password security has been an issue for your business before, consider implementing another level of authentication that requires additional information beyond a password to gain access to important company information.
4. Take measures to secure mobile devices. Mobile devices often create cyber security challenges, especially for small businesses. If employees regularly access any company information on their phones or tablets, require passwords to protect their devices, encrypt their data, and install security apps to prevent information from being stolen.
5. Keep payment card information safe. Perhaps the only thing worse than a cyber security threat on your company information is for a hacker to gain access to your credit card and financial information as well. Work with your bank to ensure the most trusted and validated anti-fraud services are being used. Isolate payment systems from other, less secure programs and don’t use the same computer to process payments and surf the Internet.

All small businesses need a cyber security strategy to protect their own business, their small business bookkeeping, their customers, and their data from growing cyber security threats; and, unfortunately, all companies are at risk. Protect your company by using these best cyber security practices.

FAQs about Cyber Security Tips:

Why is keeping software updated important for cyber security?

Regular updates patch vulnerabilities that hackers exploit. Ensuring browsers and security software are up-to-date enhances protection against cyber threats.

Why should small businesses backup their data?

Backing up data safeguards against data loss due to cyber attacks or system failures. Automatic backups or cloud storage provide secure redundancy for crucial information.

How can businesses enhance password security?

Encourage unique passwords changed every 3-6 months. Avoid storing passwords digitally; opt for secure offline storage. Consider implementing multi-factor authentication for added security layers.

Why is securing mobile devices crucial for small businesses?

Mobile devices pose security risks due to data access. Implement password protection, data encryption, and security apps to mitigate threats and prevent data breaches.

How can businesses safeguard payment card information?

Collaborate with banks for trusted anti-fraud services. Isolate payment systems from less secure programs. Implement stringent security measures to prevent unauthorized access to financial data.

Resources

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