Best Business Practices

Is your business thinking of moving to a new location? No need to worry, we got you covered with some tips for the journey!

Why are you relocating?

It’s important that you first consider why it is necessary to change your location. If you’re certain about the move, you should be able to fully answer the following questions.

• Are you moving for a new market to give you more opportunity than your previous one?
• Are there lower costs to run a business in this new area? Following that, are there better tax rates in this new area?
• Do you intend to keep the same employees or hire new ones?
• Do you have access to a better hiring market for new employees?
• Will there be a better quality of life in the new area?

Create a Moving Plan 

1. Figure Out a Specific Location

You need to figure out a specific office location for where you want to move. This space should be considerate of the market of clients you want your business to reach. You also should be paying attention to the leasing options, given that you most likely will be renting space in a new area. It’s also important to consider how far away this new location would be for your employees. Are the employees still going to be able to commute or will you need to give relocation bonuses to incentivize employees to follow your business?

2. Create a Moving Budget

Moving isn’t going to be expense-free. It is crucial to figure out the logistics of the move and calculate the expected expenses in advance. This also includes choosing a reputable moving company to help you move as easily as possible. It’s important to ask for quotes ahead of time so you can properly plan your budget, as well as read reviews so you have the best movers.

3. Give a Heads-up

You must let people know that you are moving before you do so. Tell employees and clients that you are changing locations. Give as much notice as possible so everyone can manage this situation in their own way. Some people are going to part ways with your business because they can’t also change locations. Be mindful and respectful of their decisions.

4. Dealing with Equipment

Make sure to have a plan when moving your important servers and technical equipment. Having IT support professionals create a plan for your move is very important. They can help create an easy transition that otherwise could have been a nightmare. It’s also important to figure out if you need more equipment and to order that ahead of time. Determining storage needs is also important because you may not need as much equipment if moving to a smaller office area.

5. Update Location Online

Don’t forget to change your office location on Google and other local listings, as well as your social media profiles so customers will be able to find you after the move. You should update your company website and email signatures to reflect this. Another important aspect to consider is getting new business cards and signs to reflect your business move.

6. Final Details

Make sure your information is registered with the government so you have the correct tax information with the IRS. Also, be sure you understand the mailing situation with your new business location because you will get an influx of mail and shipments during the transition.

Good luck with your new business location!

Your accountant or CPA is a business asset that you should put to good use year-round, not just at tax time. There are several topics beyond taxes that business owners should discuss with their trusted financial professionals. In this article, we cover five of them for you. While the new year is traditionally when business owners think of making financial, strategic, and other business-related plans, any time is the right time to speak to your accountant to discuss the following aspects of your business. You can’t begin the conversation too early, but it could be too late in some cases, so don’t put aside these five essential talking points.

1. Financial Planning

Budget is front of mind for business owners, but other financial issues impact your business, too. Consider a full portfolio review with your accountant to plan your financial future. Some critical topics to cover include strategies to improve cash flow, existing business loans, capital investment, charitable contributions, employee-related expenses like bonuses and health care, retirement planning, and asset management.

2. Company Growth

The goal of all businesses is growth. With growth comes change. As your business objectives shift, your valuation and tax liability often shift, too. Any changes you experience in your business should be conveyed to your accountant or CPA so that they can apprise you of liabilities or status changes. For example, suppose you plan to expand, add additional locations, make significant staffing changes, merge companies, acquire new businesses, or plan to sell your business. In that case, you should set up an appointment with your accountant to develop a logical strategy to address the change.

3. Inventory

If your business sells or resells tangible goods, inventory is vital. Sales tax laws and regulations can be challenging. Many states have rules about nexus (i.e., how much presence a business has in a city or state) related to where businesses warehouse inventory and fulfill orders. Your accountant can assess your order process to verify your restocking and ordering processes to maximize cash flow, ensure unsold inventory is accounted for, and ensure that sales tax is collected everywhere your company has nexus.

4. Risk Management

Do you have a plan in place to protect your business from disruption? Many do not. If that applies to your business, contact your accountant to discuss continuity planning to protect your business. They can provide professional insight regarding how to mitigate risks should a disruption occur. Some topics to address are whether your insurance policies are up to date, if all compliance, security, and privacy standards are met, whether your business has fraud protection in place, and if the existing internal controls protect your business. Given the time and capital small business owners invest in their passion, they must take time to manage any potential risk that could destroy what they worked so hard to create and build.

5. Tax Compliance

Lastly, as a business owner, you always want to be tax compliant. And this doesn’t apply only to federal taxes. It is just as essential to make sure state-imposed taxes are addressed on time. Regulations and tax laws change frequently, so it is vital to have a firm grasp on these. The best way to ensure you do this is to have your accountant guide you. They can inform you of any changes that affect your business and advise you on addressing them. Discuss collecting and filing W2s and 1099s for any contract employees; ensure exemption and resale certifications are collected and stored correctly; comply with online sales and nexus rules; and have an internal review to find any issues that might trigger a sale tax audit.

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It helps to think of your business accountant as an extension of your team, an impartial adviser who will assess the risks and rewards associated with your business. They will answer your questions and illuminate unclear topics for you. They may bring up important points you’ve yet to consider, so make that call today and get a meeting on the calendar to discuss these critical points with your accountant. And remember, you can do your part by making sure you keep business and personal finances separate and maintaining complete, organized records.

Many owners of small businesses would love to see a family member take over their business. If you have children, grandchildren, nieces, or nephews that you think might be interested in running the business in the future, you can help lay the groundwork for that potential transfer of ownership in several ways. Use the following strategies and tips to encourage the next generation to become part of the family business.

See Who Is Interested

One or more of your children may already have shown some interest in the family business and asked about its operations. It’s important to encourage that interest. Talk about the company’s history and your vision for its future. Share the excitement you experience as a business owner.

Over time, you can teach an interested child more about the business’s operations. Consider putting the child to work doing various tasks around the business on weekends and over school holidays.

Education Is Key

Over the years, the child’s interest in the business may wane or it may become more intense. If the child (or children) continue to express an interest in working for the family business, you might want to bring up future education plans. You can suggest that the child should consider obtaining a degree that would be beneficial in running all or part of the family business. For example, a degree in engineering could be a huge asset if the family business is involved in property development, construction, or design/build. A degree in accounting or finance can be helpful for businesses of all types. In addition, a degree in a related field would give your family member credibility when it comes to interacting with clients, bankers, and employees.

Insist on Outside Experience

Promoting a family member to a leadership position within the family business when that person has little experience can be a recipe for trouble. It can cause discord among employees, especially those who have worked hard with the expectation that they could move up in the ranks. Additionally, it can undermine the family member’s credibility in the eyes of clients and other business owners.

It often makes more sense and can be hugely helpful to have the family member obtain a post-college job outside the family business. Working in a different company in a similar industry to yours can give your family member a level of experience, confidence, and credibility that would not be obtainable by simply transitioning to the family firm. The skill set established through working elsewhere may help propel your family business in a new, more growth-oriented direction. Family business experts suggest that a child expected to take the reins of a family business should spend at least five years working elsewhere before joining the family firm.

When Multiple Children Are Involved

What happens when more than one family member is interested in becoming part of the business? Encourage them to follow the areas of the business that interest them most. With the appropriate education and experience working for other firms, they may be ready to run their own areas of the business when they rejoin the family firm. This is when their talents can develop and shine.

Bring in Outside Experts

The input of outside professionals who are skilled in different business areas, such as operations, finance, manufacturing, logistics, or marketing can be invaluable to the upcoming generation of family members joining the business. Mentors can guide and serve as a sounding board for the ideas of the child or children working for the family business.

Consider Staying on as an Advisor

You could consider making yourself available as an advisor to the incoming new generation of family members. Whether the arrangement is formal or informal, it should not be open-ended. Determine how long you will offer your services. The goal is to ensure that the new generation of leaders in the family business will be able to run the business independently.

Successfully transitioning a family business to the next generation takes time and planning. For planning assistance, consult an experienced financial professional.

Perhaps the number one action you can take to support the financial health of your small business is to stay on top of accounting. Make sure you’re aware of most small businesses’ accounting challenges and learn how to overcome them. We’ll tell you how here!

Banking

You’ve been banking for years, and you know how to manage the task. However, when you own a business, banking isn’t like managing personal checking and savings accounts. Unfortunately, many small business owners use their personal funds to pay for business expenses, especially when first starting out. Even small costs add up over time. This “cross contamination” of spending between personal and business accounts can lead to costly mistakes, not to mention headaches for your accounting team. Keep personal expenses, and business expenses separate all the time. Have dedicated bank accounts and credit cards only used for one or the other. If you need to track down an expenditure, you only need to look in one place.

Budget

When bank accounts are separated, budgeting becomes exponentially easier. You can even use an accounting software program to help you keep up with money coming and going to and from your business. However, recognize that simply entering information into a software program is not the end of the work when balancing a budget. Thinking that is true ends up being the downfall of many small businesses. Budgeting for a business means forecasting to ensure that unexpected expenses can be covered, managing inventory, taxes, and more. A shift in any direction can throw off any budget. That’s why many small businesses opt to outsource their accounting. The known upfront expense of doing so can far offset costly budgeting errors down the road.

Unexpected expenses

As mentioned above, you must consider the unexpected as part of your budget. Additional (new) taxes, payment delays from customers, rising costs of materials and supplies, new employee training, etc., are all possibilities. A qualified accountant is aware of these unexpected expenses and others that your business could face and knows how to prepare you for them. Awareness of what could financially happen in business is crucial to long-term profitability.

Payroll

While unexpected expenses are likely the most daunting for a small business, payroll is almost always the most significant. Payroll entails more than what you pay employees. New employee classification, if incorrect, could cost you a bundle in penalties. Other payroll-related accounting challenges are pay accuracy, proper tax filing, compliance, and paid time off tracking.

Unless you’re an HR professional, and chances are you’re not if you’re the business owner, consider recruiting a qualified accountant to help you manage payroll. It will save you headaches in the short term and money in the long term.

Taxes

A conversation about accounting and small business isn’t complete without discussing taxes. The tax struggle can be daunting, from filing to making sure you pay enough but that you don’t overpay. A significant challenge regarding taxes is merely keeping up with the ever-changing tax laws. A qualified accountant or CPA will be up-to-date on new regulations and guidelines so that you don’t have to be.

Overcoming accounting challenges like these is easy with a qualified accounting team on your side. Consider outsourcing your accounting needs so that your focus remains where it should – on running your business your way.

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Contact our accounting professionals now for help managing your small business finances.

Comparing a business’s key financial ratios with industry standards and with its own past results can highlight trends and identify strengths and weaknesses in the business.

Financial statement information is most useful if owners and managers can use it to improve their company’s profitability, cash flow, and value. Getting the most mileage from financial statement data requires some analysis.

Ratio analysis looks at the relationships between key numbers on a company’s financial statements. After the ratios are calculated, they can be compared to industry standards — and the company’s past results, projections, and goals — to highlight trends and identify strengths and weaknesses.

The hypothetical situations that follow illustrate how ratio analysis can give company decision-makers valuable feedback.

Rising Sales, Rising Profits?

The recent increases in Company A’s sales figures have been impressive. But the owners aren’t certain that the additional revenues are being translated into profits. Net profit margin measures the proportion of each sales dollar that represents a profit after taking into account all expenses. If Company A’s margins aren’t holding up during growth periods, a hard look at overhead expenses may be in order.

Getting Paid

Company B extends credit to the majority of its customers. The firm keeps a close watch on outstanding accounts so that slow payers can be contacted. From a broader perspective, knowing the company’s average collection period would be useful. In general, the faster Company B can collect money from its customers, the better its cash flow will be. But Company B’s management should also be aware that if credit and collection policies are too restrictive, potential customers may decide to take their business elsewhere.

Inventory Management

Company C has several product lines. Inventory turnover measures the speed at which inventories are sold. A slow turnover ratio relative to industry standards may indicate that stock levels are excessive. The excess money tied up in inventories could be used for other purposes. Or it could be that inventories simply aren’t moving, and that could lead to cash problems. In contrast, a high turnover ratio is usually a good sign — unless quantities aren’t sufficient to fulfill customer orders in a timely way.

These are just examples of ratios that may be meaningful. Once key ratios are identified, they can be tracked on a regular basis.

Small business owners cite the unavailability of workers as one of their biggest challenges1. The labor shortage means that employers cannot, in some circumstances, operate at full capacity and must forgo some revenue opportunities. Businesses may have to delay planned expansions or the addition of new products or services because of the scarcity of workers.

Employers understand that having a skilled, trained, and committed workforce is key to growth and profitability. In the competition for a decreasing pool of skilled employees, employers have to assess their current hiring practices, identify any deficiencies, and develop and implement policies that help ensure that they can hire the employees they need when they need them.

Here are some issues employers need to consider when developing a strategy to attract and retain key employees.

Sharpen Your Hiring Process

Use every available tool. If you are not using social media to reach out and contact potential hires, you are not taking advantage of a very helpful medium. Social networks like LinkedIn and Facebook can be productive resources. They can be particularly effective if you ask family members, friends, and current employees to reach out and talk up job opportunities with your company on the sites they frequent.

Posting available positions prominently on your company website can also be effective in reaching out to a pool of potential hires. Traditional avenues, such as headhunters and employment agencies as well as radio and television ads, remain helpful.

Revisit Your Compensation

Some industries, such as information technology, pay more in wages and benefits than other traditionally low-paying industries, such as food services and retail. Still, if the job opening you want to fill is critical to the future growth of your business, you may want to consider paying above market salary if you can afford to do so. You may even have to get into a bidding war with other employers.

The reality is that employees with in-demand skills typically command a premium salary. Before you make a prospective employee an offer, find out how much other employers in your area pay for similar jobs. One place you can find useful employment and wage statistics is the Bureau of Labor Statistics website (bls.gov). The BLS information covers most geographical areas in the United States and is broken into type of occupation as well as various levels within that occupation.

Rethink Benefits

Most employees look for health care coverage, paid vacation days, and an employer-provided retirement plan. If you can’t be competitive with these benefits, you may have to step it up with others. Think of offering employees the chance to work remotely for a few days a week if it is feasible with your business’s operations. Consider summer hours, employer-provided snacks and drinks, and casual dress days.

Coping With a Labor Shortage

Not every incentive has to have a price tag attached. Non-monetary awards — from recognizing an “employee of the month” to a heartfelt face-to-face expression of gratitude for a job well done — can be remarkably constructive and can leave a lasting impact on employees. Inexpensive incentives can include gift certificates, cash spot awards, and even extra paid vacation days.

Offer Training

While costly, offering courses and educational opportunities that can help employees advance in their area of expertise is a potent way to attract ambitious, committed employees. Courses that develop well-rounded team players who can take on other roles within your business are especially cost-effective in the long run.

Consider Incentive Plans

Incentive plans reward employees for their achievements and create a sense of accomplishment. Plans can be used on a one-time basis or as an ongoing program. Some incentive plans include:

• Annual incentive plan: Rewards for this type of plan are tied to expected results that are identified at the beginning of the performance cycle.
• Discretionary bonus plan: The owners/managers determine the size of the bonus pool and the amounts that will be given to individuals after a performance period. Typically, payouts from this type of plan are not guaranteed, nor is there a predetermined formula.
• Profit sharing plan: A profit sharing plan allows employees to share in their employer’s profits. Such plans typically include a predetermined formula for allocating profit shares among participating employees and for distributing funds accumulated under the plan. Some plans are tied in with the employer-provided retirement plan and some plans are discretionary.

Work With Your Financial Professional

Structuring an effective compensation and incentive package can be a complex and time-consuming task. The help of an experienced financial professional can be invaluable during every stage of this undertaking.

1″The America Works Report: Quantifying the Nation’s Workforce Crisis,” U.S. Chamber of Commerce, June 1, 2021.