If you use QuickBooks or you’re a power Excel user, you know you can create reports that provide tremendous insight into your company’s financial status. They can tell you what you own and what you owe down to the tiniest detail.

But capable as they are, these tools have limits. They can’t provide you with a number you may need for a variety of reasons: the economic value of your business. There are numerous business valuation methods professionals use to get there, and they’re all quite complex.

Why You May Need One

You may already have plans for 2019 that would require a business valuation. For example, you could be planning to sell your company, or buy another. You might be going in a new direction whose expenses will require financing. You may also simply want to know what your business is worth so you’ll have a baseline to consult when measuring future growth.

These are all common reasons for taking on this formidable project. There are many other situations where you’d need this information. For example:

• Succession planning. If you’re preparing to retire or move on to a different venture, you’ll need to know the value of your business so you can develop a strategy for any restructuring that may be necessary.
• Gift tax planning. Are you considering transferring a portion of your company’s value to a relative, a charity, or some other party? You’ll need to understand the tax implications.
• Disaster recovery. You can’t, of course, plan for a natural disaster. But if you’re affected by one, you’ll want to have a basis for comparison to know how much you lost.
• You know there are numerous ways to raise capital if you’re planning to expand, or if recent growth has made it necessary to acquire new property so you can better accommodate it. Any individual or other third party you approach will surely want a business valuation.
• Personal rancor. Whether it’s a divorce or a relationship-ending disagreement among partners, serious interpersonal clashes can mean someone who has a stake in the business wants out. To know how much their exit will cost, you need to know the value of the company as a whole, as well as what individual elements may be worth.

An Annual Event?

Some financial professionals recommend that you do a business valuation once a year. Why? Two simple reasons. One, you never know when you might need one. And two, you can’t determine your company’s worth by simply plugging numbers into a spreadsheet. It takes time to assemble both the financials required and additional variables, like location, industry, and market forces.

To get a business valuation that will be considered credible by the parties involved, you need a financial firm that has done them before and can apply its expertise to your unique situation. We can help you with a valuation analysis. Contact us to set up a meeting to discuss this important topic with our experts.

Whether or not you make New Year’s resolutions, you may have decided that 2019 is the year you’re going to organize your company’s finances by using QuickBooks.

The transition from manual accounting to QuickBooks should be an orderly, well-planned process. If you just jump in and start creating transactions, you will soon give up and/or lose critical financial data. Here are five ways to avoid that.

Take setup seriously

Read everything on every screen after you have installed the software. Our attention spans have shortened thanks to the barrage of online content coming at us constantly. QuickBooks can tell you what you need to do. Or, call Lutz to assist in setup. It is worth it!

Familiarize yourself with the Chart of Accounts

Your company’s Chart of Accounts is the backbone of your accounting system. You will be assigning transactions to accounts that are divided into multiple types, like assets and liabilities. It’s very important that you make these designations correctly, as they will have impact on reports and taxes. So look over the list, but please don’t make any changes.

Prepare to run both manual and QuickBooks recordkeeping simultaneously

It can be dangerous to just switch over from one system to another without running them both for a while. This takes extra time, but not as long as it takes to untangle a tangled-up company file. You will need to set up a system for this so you’re sure everything is being recorded correctly both ways.

Take a tour around QuickBooks’ user interface and navigation system

QuickBooks actually has three navigation aids: the icons on the home page, the vertical toolbar, and the standard windows File menu. There’s a lot of duplication among them, so you can decide which will work best for various tasks.

Explore a sample company

You might be a little hesitant the first few times you enter transactions in QuickBooks, thinking you are going to do something wrong that’s irreversible. For that reason, the software comes with two sample files that you can use for practice sessions. Don’t worry: You can’t “hurt” this data.

Open the File menu and select Close Company. The No Company Open window will be displayed. Click the arrow next to the icon in the lower right that says Open a sample file and choose between product-based and service-based. When you want to go back to your own data, click File | Open Previous Company and click on your company file. Please be sure that you always know what file is open before doing any real work. The name will appear at the top of the screen.

Moving your company’s accounting over to QuickBooks is a major step, but we think you’ll be pleased with how it tracks your finances once you’re used to it. We’d like to help by working with you on installation, implementation and training. Connect with us, and we’ll see if we can’t make your New Year a little happier by streamlining your accounting.

Many thought leaders tell us that the future of accounting lies in integrating bookkeeping tools with related applications that complement them. In fact, QuickBooks can already be connected to hundreds of apps.

One area where integration has worked particularly well is Customer Relationship Management (CRM). QuickBooks’ contact records and reports can tell you everything about your customers’ financial activities, but add CRM features, and that profile becomes even more comprehensive.

Numerous Benefits

CRM applications provide a central location for recording and tracking the communication and other interaction you have with customers and prospects. They’re typically used by salespeople who must know exactly where all of their contacts are in the sales process, but their usefulness extends to business managers and others who are responsible for building better customer relationships.

There are numerous CRM solutions available that integrate easily with QuickBooks desktop and QuickBooks Online. When you combine the tools provided by these two types of applications, you’re likely to discover that this partnership can add depth to your relationships and convenience to your workday, while enhancing your customer service overall. Benefits include:

• Faster access to critical data. When you have a customer on the phone or staring at you from across a desk, you need to be able to access elements of his or her financial profile quickly. If you’re looking at the screen of a CRM solution that’s been integrated with QuickBooks, you don’t have to exit it to answer a question about your customer’s sales history and waste your time and your customer’s. Being able to answer questions quickly and accurately instills confidence.
• Reduction of duplicate data entry. Imagine if you had to replicate a customer’s sales history in each record in your CRM solution. Creating that kind of documentation would take way too much time and would have to be updated frequently. When you use CRM software, that QuickBooks information is in both, and is refreshed in real time. In some applications, you can even import lead information from websites and elsewhere.
• Protect sensitive accounting information. When using a CRM, your sales staff has access to customer information without being able to see other sensitive accounting records within QuickBooks. Utilizing a CRM that integrates with QuickBooks allows your sales staff to enter customers and sales information that syncs over to QuickBooks avoiding the need for duplicate entry.
• Clean records. Do you ever enter prospects in QuickBooks just so you have a record, and then have to delete them when sales don’t pan out? No need to do that if you’re using a CRM system: It can document and track your leads until they become customers.
• Quick access to payment status. Nothing like closing a sale and then learning the customer is in arrears.

Enabling Integration

If you’ve never set up an integration between applications, you’re probably going to want our help setting it up and understanding how it works. QuickBooks Online is fairly easy to connect, but the desktop version may be a challenge. We can help you decide from among QuickBooks-friendly CRM software like Method:CRM, Insightly, and Zoho CRM. Get in touch with us, and we’ll get you on a path to better customer relationships.

One in five jobs in the United States is held by an independent contractor today, according to a recent NPR/Marist poll. By 2028, half the workforce could consist of freelancers and contractors. If your company hasn’t yet hired a remote worker, it’s possible that you may in the future.

Taking on an independent contractor can be more fiscally feasible for your business. You are not on the hook for payroll taxes, nor will you feel pressure to provide benefits like health insurance, retirement plans, and paid time off. You also have a much larger pool of potential candidates since your workers don’t have to live near your business location.

But the IRS has very strict rules about the differences between freelancers and employees. When a company hires independent contractors, an employer can, “… control or direct only the result of the work and not what will be done or how it will be done.” The agency has been known to conduct investigations when employment status is questionable.

If you have determined that your new hire will indeed be a contractor, there are a few steps you must take to be compliant.

paperwork

Your employer responsibilities will be minimal, but every task is important. Here’s what you need to do if you’re hiring an independent contractor.

• Apply for an Employer Identification Number (EIN), if you don’t already have one. You can apply online here and get your EIN instantly.
• Ask the contractor to complete a Form W-9. You will need the information entered on the form when you report annual earnings to the IRS. You’ll find it here. You do not have to send this form to the IRS. It’s for your information only, but the IRS wants you to keep it for four years.
• At the end of the tax year, issue a Form 1099-MISC for each contractor. If you paid them $600 or more over the course of a tax year, you are required to provide a Form 1099-MISC to both them and the IRS by January 31 of the year following payment. In some cases, this is not required. See the 1099 instructions for more information.

When you submit your 1099-MISC forms to the IRS, you will need to include a Form 1096. You will find instructions for obtaining this document and filing electronically here. Read this page carefully, as the form provided is for informational purposes only.

A DIFFICULT DETERMINATION

You may think that the distinction between an employee and an independent contractor is fairly obvious. In many cases, it’s not. The IRS looks at behavioral and financial factors, as well as your overall relationship, and there’s no magic formula for making the determination. We can help you evaluate your facts and circumstances, and ensure that you’re compliant with the IRS in terms of this critical classification. Contact us when you’re ready.

Traditional business plans usually consist of dozens of pages of text and data tables. They can take many days or even weeks to produce. But if your small business is seeking financing, you may need one.

Or do you? Can you get by with a one-page look at your company’s structure and financials?

There may be occasions when you can. Even if you’re required to present a lengthy, by-the-book business plan to a potential lender or partner or other interested party, summing it all up on one sheet of paper can be a helpful exercise. There may be numerous occasions when you can introduce your company with a document that’s longer than an elevator pitch but shorter than your average Executive Summary. In fact, that may be all that some investors want to see.

Many Elements

What would a “business plan lite” look like? It could consist of several short sections, answering questions you had to ponder yourself as you prepared to launch your company.

First, what problem(s) did you hope to solve with your products and/or services?

Many businesses have been started because the founder had a personal or professional need and didn’t like the available solutions. The founder of a popular invoicing website, for example, created his application because he saved over an important invoice created in Microsoft Word.

What is your solution?

It will be hard to boil your dream down into a paragraph the size of a Tweet. Try to frame your product description in terms of how it will benefit buyers.

How/why will your product make money?

You don’t have room for a spreadsheet here, but you can touch on issues like production, distribution, and pricing.

What does the competitive landscape look like?

Who else is selling similar solutions, and in what ways is yours better (cost, quality, geographical location, effectiveness, etc.)? If you’ve come up with a unique product that has no serious rivals, the rest of your mini-plan needs to be especially robust and convincing.

Who’s going to buy it?

Other businesses, or consumers? Is it a local solution, or one that might have national or even global appeal? Who do you picture as your customers (age, gender, economic status, interests)?

How will prospects find their way to you?

Do you anticipate needing a sizable marketing/advertising budget, or are you planning more cost-effective ways to spread the word?

Why are you the right person to launch this venture?

Toot your own horn a little here, but avoid over-selling yourself. Point to any experience or expertise that will increase the chances that your entrepreneurial vision can be a successful reality.

If you do find yourself in need of help with a comprehensive business plan, we can help, particularly with the complex financial reports required. We can take a look at your entire business plan and suggest how you might make it more effective. Contact us soon, and we’ll get started.