How Can Your CPA Help Your Business Save Money?

Saving business money is not as simple as it sounds. A business starter might be unfamiliar with the useful ways of saving money or may indulge in practices of blindly saving money. It is crucial to identify the areas that help you build your business savings.A professional like a CPA can help you save business costs in the most suitable manner. Learn about the ways in which a CPA can help your business save money from the following discussion:Planning a Business BudgetBudgeting is the first step on the ladder toward successful business money saving. With a budget plan in place, you can expect a balance between the money spent and money earned by the business. A CPA can help you with monthly business budget planning so that you are able to learn the exact figures of all business expenses. This further helps you avoid or cut off unnecessary expenses.Most small business owners usually avoid the procedure of preparing a monthly budget. On the other hand, hiring a professional CPA helps them maintain discipline when it comes to monthly business budgeting.Maintenance of Key DocumentsSome of the key documents of a business include balance sheets and profit and loss statements. The development of detailed and accurate documents is an important part of the overall business money saving process.Again, the least that is expected from a small business owner is to maintain these important documents. On the other hand, a CPA shoulders the responsibility of updating these documents on regular basis, as they ultimately help in learning about the ways in which your business cash flows in and out.Management of Business DebtOne important aspect of business money saving is to avoid the accumulation of business debt. This is possible if the business owner is able to relay the business loans on time. Besides, it is important to clear the monthly bills so that they don’t add to the late payment costs.Scarcity of time may push a business owner into the situation of debt accumulation. A CPA can help the business owner avoid this situation by keeping records of loans and bill payments and reminding the business owner about the same.Management of Business CreditJust like the management of business debt, it is important that the business credit should be managed so that it doesn’t lead to business money loss. If your business has a credit lending policy, it is important that you receive the credit payments on time. If you find it difficult to manage your business credit, an expert CPA can help you by maintaining the records of business credit lending.Saving Money on TaxesA small business owner should be concerned about saving money on his tax returns. This can be done in a number of ways, and only a professional has the right knowledge to assist you with this. For example, a CPA can help you save business money on taxes in the following ways:• A CPA makes a business owner familiar with tax credits and the ways to achieve them. For example, setting up business in the enterprise zone of your city can help you earn tax credits. Employer hiring credits is another way in which a business owner can build his business savings, and a CPA can make you familiar with it. There are many other similar ways in which a CPA can help you earn tax credits.• A CPA makes the small business owner familiar with tax deductions that play a significant role in business money saving. You must know how to include deductions on business travel expenses, equipment buying expenses, and donations. Your CPA can educate you on these aspects.• Again, the maintenance of important business records throughout the year is important to pay an accurate amount toward taxes and also to avoid IRS penalties.Clear Investment PictureBusiness investments are great ways for building business cash flow. The idle cash should be utilized in one way or another to build business cash flow. However, you must have enough information about the most profitable investment plans and products that exist in the market.A CPA has the capability and experience to analyze the investment market. He can advise you about stocks, bonds, mutual funds, and other investment vehicles that you can utilize for receiving good profits through business investments. You can rely on the information presented by a CPA to make sound investments.A CPA can advise you on various other things that are useful in saving business money and avoiding unnecessary expenses. For example, he can advise you on maintenance of inventory, about business mergers and acquisitions, and about business expansions. A CPA also helps in maintaining an efficient employee payroll system.A business owner should be concerned about maintaining the good financial environment of his company. A CPA can help in this matter by employing all great measures of business cost saving.

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A Sample Business Plan for a Small Business May Not Be the Best Way

You can find a sample business plan for a small business in all kinds of formats. There is a sample business plan for a small business where you basically fill in the blanks or you can have access to a sample business plan for a small business where you can pattern yours from it or you can develop a business plan that is centered on what you want for your dreams and your life.I don’t know of better way than to let your business give you what you want for your lifestyle. Whether it’s a sample business plan for a small business or one where your business gives you a plan, it should tell you what is needed to take you where you want to go and when and how you can get there and it should be in clear simple terms, supported with all the specifics.So using a sample business plan for a small business is just one of many ways to make a business plan but frankly I think designing one that will have your business give you exactly what you want is by far the best way.So, why not start out with what you would like to have in life for you and your family? Then develop a business plan that could show you exactly what your business would need to do to give you that life style. If you think about it, there is no other way where you have more control over what you want in life than letting your own business do it for you. If you work for someone else, you’re sure not going to have as much control over your future.So how would you go about making a plan like this? Well if you know a fair amount about business, you can. It will take some special calculations and some work but if you know how to put together a Profit & Loss Statement, you can probably do it.You would first do a P&L for the present year for your existing business and the first year and as many years after as you would like to have your plan cover. Your existing business financials will be the foundation for building yourself a business plan for as many years out as you want. This data will tell you a number of things but first if you want to build your plan around what you want in life, you would need to decide some things about your life:1. You would need to decide how much income you would like to have for yourself for each of the years you plan for.
2. You would need to determine what kind of profit margin you would want from your business for each of the years.
3. And by combining these 2 things into a P&L format you can develop a financial business plan that can extend as for into the future as you would like.
4. The first thing it will show you is how much sales you would need each year to give you the income and profit you would like. Once you see the sales needed, if you know your business well enough, you should be able to estimate those additional expenses needed to overcome capacity constraints that will occur as your business grows.With this information you can actually predict not only what your sales will be, but you can see how much your fixed and variable expenses will be, what your labor cost will be, your material cost, and your profit.1. So let’s first look at what exactly are fixed expenses? They are exactly what they say they are; they are fixed. This simply means these are expenses that are ongoing whether you have a lot of sales or “0” sales. They are expenses like utilities, taxes, rent, salaries other than the wages used in the making of the actual product or doing a service, business fees, telephone, etc. See how these expenses would continue on even if you have 0 sales? Any expenses that fall into this category are fixed expenses. Far too many small business owners never divide their expenses into fixed and variable. As a matter of fact, if you could have a business that had “0” fixed expenses; this would be the best of all worlds, why? If you had “0” sales, you would have “0” expenses. So the closer you could get to this the better you would be.2. Variable expenses are those expenses that track directly with sales. If sales stop they stop. These are expenses like supplies used to support in the making of your product or doing your service. Such things as shipping cost for raw materials for your product or service. If you have no sales then you’re not going to be purchasing materials so your shipping cost for those materials will stop as well. As an example, if you have a lawn mowing business and there are no lawns to mow, then you wouldn’t be buying gasoline to travel to your lawn mowing site. These kinds of things are variable expenses. If you’re producing a product, it would include supplies used to produce that product like sand paper, glue, finishing materials, cutting tools, etc.3. Labor and material costs are also directly proportionate to sales. These are things that go directly into the making of the product or into doing the service.a. Labor cost is the actual direct labor used in the making of product or doing the service. The cost would also include all the fringe benefits like social security, payroll taxes, vacation pay, holidays, sick pay days, etc.
b. Material costs are all the materials used in the making of product or in doing the service. In the lawn mower service as an example it would be the gasoline used in the mower and any other materials used directly in that service. For producing a product it would be all the materials used in the product that is sent to the customer including all the packaging materials.Average Selling PriceNow when you calculate your average selling price which is your cost of sales (material + labor) divided by (1-gross profit), you can determine how many customers you would need and then come up with what you think your conversion rate would be for converting leads to customers, you can determine how many leads you would need. Then from this and with the aid of the U.S. Census Bureau and some basic research on your own you can actually have a pretty decent idea of what size your market is and is going to be in the future so you can see if it will support your business plan or not.So if you can put this all together, you can have a complete business operating plan that would show you exactly what your business would need to do to give you the income and profit you would like to have and a rough idea whether your market would support it or not. All you would have left to do would be to figure out how to make it all happen.It’s like planning backwards.1. Determine what you want in life
2. Figure out what your business would need to do to give you that life.
3. Figure out how long it would take you to reach it.
4. Figure out how big of a market it would take each of the years you’re planning for.
5. Then see if that market is big enough.Isn’t this a much better way to go about planning your business? Shouldn’t your business be designed to give you want you want instead of you working yourself to death just hoping for the best?So how would you go about calculating all this?There is quite a bit of calculations and you should know a little about business principles but it isn’t that complicated. So first let’s look at figuring out your future needed sales with this formula:Projected sales = fixed expenses divided by (1-(var exp % of existing sales + mat cost % of existing sales + lab cost % of existing sales + desired net prof %))So, let’s say you existing sales is $850,000 annually, your fixed expenses are $275,000, variable expenses is $55,000 or 6.5% of the $850,000, material cost is $236,000 or 27.8%, labor cost is $109,000 or 12.8%, and your existing profit margin is $175,000 or 20.6%.Now let’s say next year you want to have a profit margin of 25% so what would your sales need to be to give you that profit margin? Now you might think you would simply tack on 4.4% more to sales (25% – 20.6%) and you would have it. Well not quiet. it doesn’t work that way because you are going to have the additional variable expenses, material cost, and labor cost too. Remember, the more sales the more each of these expenses and cost will be.So here is how you would do it:Projected sales = fixed exp ($275,000) divided by 1-(6.5% + 27.8% + 12.8% + 25% (your new profit margin) = $896,057 (new sales)You can do this for as many years out as you want. Obviously this is based on your first year’s fixed expenses remaining constant and no consideration of depreciation, inflation, or taxes.But most likely you would need to increase your fixed expenses because you’re going to probably have more rent, utilities, or such as your business grows. So, you would simple put in your new fixed expense number in place of the existing one for each of the years you would be planning for.So, you see if you decided you wanted a 35% profit margin at year 5 then you could see how much sales it would take to give you that.Now it’s also important to know how many more customers you would need as well so you should always look at that unless you have another way of growing your sales other than with new customers.Let’s say your average selling price for your service is $925.50 and you have one transaction per year per customer.Using that first years sales example we used above, you would calculate it this way.$896,057 divided by $925.50 = 968 customers needed for the year. Now if your average transactions per customer are more than 1, then you would need fewer customers. As an example, let’s say your average transaction per customers per year is 2.5 then 968 divided by 2.5 = 387 customers per year.Now let’s say you estimate your conversation rate to be 3% of turning leads into paying customers with the advertising method you’re going to use, how many leads would need to contact to get 387 customers? Simply divide 387 by 3% and you get 12,909 leads you’re going to need to contact.Then the question is; is your market going to be big enough to provide you with 12,909 leads for the next year and how many will you need each of the following years?It may be easier than you think to figure this out. You would do some research and with the aid of the U.S. Census Bureau you can roughly determine whether your plan can be supported by your market or not.So what do you think? Is it better to build a business plan around what you want in life then see how your business can maybe give you that or is it better to use a sample business plan for a small business where you are probably guessing?I’d love to help you some more. Please go to http://www.StrategicBusinessSolutionsLLC.com and see what might be available.

How To Get Your Business Funded Writing A Great Business Plan

It is not uncommon for small businesses with limited resources to be challenged at the thought of facing their bank manager to apply for business funding. The reason is simple; regardless of how long you have been with your bank, you will still have to comply with formalities when it comes to funding your business start-up or business growth. Fundamentally, you will be asked to write a business plan for funding which must be presented with your application form. You may wonder why you need to present a business plan to lenders or investors. Let’s think about why banks want you to prepare a business plan and then you will fully understand why investors ask for this precious document that will cost you some time and money to put together, but ultimately, if done well, will help you raise the much needed finance.Some Reasons Why Banks Need A Business Plan1. Banks are taking a risk on you and your business and they need to understand that risk and compare it against the expected reward from your business. Have you ever thought about how banks make their money for their shareholders? Well, they do so investing their capital (money – usually investors’ funds and borrowed funds) in your business with full expectations of earning higher returns than the costs they must pay for borrowing or raising their own capital. If you fail to deliver the returns on their investment from your business, they will end up being a victim of your problems which will cost them their business. In short, your risk of business failure becomes their risk too.2. They want to gain a better understanding of your management team who will be responsible for managing the funds invested in your business. This is a concept many small businesses and start-ups, don’t grasp fully. They may think their business ideas or wonderful products are sufficient ingredients for business success. Nothing can be further from the truth. A business is an organisation of integrated functional activities designed to accomplish a desired objective. These integrated activities must be managed competently by different people inside or outside the organisation for successful results to be accomplished. The bank manager reviewing your application must be satisfied that your team possesses competencies both at the level of technical knowledge and correct attitude – the critical ingredients for success when present and vice versa. A business that is poorly managed will fail irrespective of the quality of its products and benefits offered to its target market. With this in mind, you must be aware that when you apply for funding from a bank (or any other types of funders), your management team’s quality will have to be judged based on past performance. They also want to know if your management team possesses industry, business and market knowledge. Of course, if you are a one man business, you need to ensure you put in place a team, virtual or physical that brings the balance of expertise critical to give assurance to the bank that your business will not expose them to unmeasured risks.4. They want absolute assurance that your business model is robust. That you have thought about the pros and cons of each option and have a viable business proposition that is not devoid of reality. This will be tested with questions in areas where gaps are detected and you will be expected to give answers that are credible to ensure their funds are not exposed. Banks want to see positive returns on their investment in your business, they won’t make any compromise for your own short-comings and the sooner you address the weaknesses in your business plan the faster you will be able to raise funding for your business.Taken together, irrespective of whom you wish to raise funding from, if you want to successfully fund for your business as a start-up or an existing business seeking growth, you must address all the four areas mentioned above in your business plan. I have merely summarised some of the key points for you to bear in mind and you can find more of my articles to learn about the subject thoroughly. In my experience of writing and reviewing hundreds of business plans for funding, a clearly written concise 10-15 pages business plan is sufficient. This should include 3-4 pages of financial information and may I also caution you to stress-test your financial plan for variation in assumptions underpinning cash-flow projections to ensure you have plans to mitigate risks revealed by the tests, as the bank will do so as part of their own due diligence test. This is referred to as sensitivity analysis.Good Luck