15 Tasks Our CPA Will Perform for Your Small Business – Are You Ready to Rumble?
You visit your doctor every year for a checkup, take your car in for regular maintenance, and schedule a service
call
in autumn before turning on your furnace, but when was the last time your business got a FREE CHECKUP from
an expert Certified Public Accountant?
Many business owners are so busy running their companies, they don’t take the time to check in on their
businesses’ financial and tax
liability health. And that can be an expensive mistake.
Have a CPA provide you with an expert analysis, especially when it's free and with no obligation!
Your business’s financial health is a critical part of its success. Take this rare opportunity,
contact us now
,
and have a Certified Public Accountant examine how your business is running and then provide you with a
comprehensive
written report to assist you in making sure you are taking the steps necessary to achieve your goals.
Here are the 15 tasks our expert CPA will perform during your business' free health checkup:
Revenues
Revenue is the amount of money your business brings in or earns before any expenses are taken out. Without
revenue, your
company cannot make a profit and stay viable in the long run. Here’s how our expert CPA will analyze whether your
revenues lead to positive
financial results.
Task 1: Compare Revenue Goals to Actual Revenue
Every business needs a budget that breaks down anticipated revenues and expenses. But keep in mind that a budget
isn’t meant to collect dust once it’s drafted. It’s a living document that can help you make better decisions and
identify areas of improvement throughout the year.
If you have a written budget plan our CPA will compare your revenue goals to your actual results. Did you miss
your target? If so,
why? You may need to adjust your spending to make up for revenue shortfalls.
If you hit or exceed your revenue goals, what did you do right? Can you do more of it in the future? Use some of
your
revenue surplus to build up your emergency fund.
If you have no written budget, our CPA will assist you with a checklist on creating a budget that you can look
back on to see your progress.
Not having a written budget could prove to be disastrous during uncertain times in the future. While it may entail
more work upfront,
the cost savings to your business in the future is immeasurable. Please do not scoff at the idea of having a
written budget at all times.
Task 2: Examine Your Business' Diversification
While reviewing your company revenues, our CPA will take a look at how much of your income comes from one client
or one product. If a
significant portion comes from one source, what would happen if that revenue stream dried up tomorrow? Would your
business be in serious trouble? Diversifying into new products or markets can be risky, but it can also help you
maintain a measure of stability.
Task 3: In House Work that Would Be Cheaper if Outsourced
How much of your time is spent on non-revenue-generating tasks such as social media, bookkeeping, website
maintenance, or dealing with a seemingly bottomless email inbox? If the time you’re spending on these tasks is
hindering growth, it’s time to outsource those areas of the business so you can focus on growing your revenue.
Our CPA will analyze your time and company labor costs in matters not directly related to producing income and
determine
if your sales force is spending too much time on administrative as well as whether it would be most cost effective
to
outsource those tasks, especially when considering payroll taxes, health insurance and company retirement sharing
plans.
Task 4: Review Your Client List
Do you have any clients or customers who deplete your energy? Maybe they’re the ones who
are always haggling over price or complaining no matter how hard you work to please them. Perhaps it’s time to cut
those clients loose.
When starting a company, it’s common for business owners to take on any paying client, no matter how difficult
they
are. But at some point, those problem clients can cost you more in lost time and revenue than they’re worth. If
the
time you’re spending on energy-draining clients cheats you out of working with clients you love, politely and
professionally fire them.
No business owner wants to give up customers, but if they are slow to pay, want freebies, have a high return on
product, or unusually
high discounts, it may be worth politely talking to them about this, or perhaps stop having them as customers.
Remember: Time is money,
and there is an opportunity cost for doing one action instead of another. Time spent with what we call
"toxic" customers/clients, might
better be spent on attracting new ones.
Our CPA will discuss your accounts receivables turnover and help you analyze it on a per customer/client basis if
applicable.
In addition, if records are kept on discounts as well as returns, if applicable, our CPA will examine them, and
compare them to your industry standards.
Again, at the end of the day, it is not what you make that matters, but what you keep.
Expenses
It’s important to focus on sales and growth, but if you’re not managing costs, revenues fly out the door as fast
as
they come in. Here’s how our expert CPA will help you become more aware of your business spending.
Task 5: Look at Year-Over-Year Trends
Take a look at your profit and loss reports for the past few years. How have your expenses changed from year to
year?
If your business is growing, some increase in costs is reasonable. After all, expenses often drive revenues.
However,
if you aren’t paying close attention, some expenses can get out of hand. Our CPA will do a 3-year comparison of
your spending,
via your tax returns, if available, and see if you can cut some of your "fixed/overhead" costs without negatively
impacting quality.
Task 6: Review Recurring Expenses
The subscription-based business model is booming. Instead of buying products and services as needed, you pay a
monthly or annual fee to receive them on a regular basis. It’s convenient because you no longer need to worry
about
running out of a product or having your service suspended. But this convenience comes at a cost if you’re paying
for
subscriptions you’re not using.
Review your subscriptions and cancel any you’re no longer using. For those you decide to keep, consider whether
the
plan tier is still right for you.
Pro tip: If your business pays employees or contractors, having a reliable payroll company is a
must. But many charge an arm and leg. Our CPA will examine your outside payroll processing costs and make
recommendations
if it turns out you are paying too much of a premium with your current provider.
For example, you might be paying for premium features in your current accounting or
bookkeeping service. Or worse, you are getting shoddy service and advice for the money you are paying outside
experts to help your business grow and keep taxes low.
Our accounting and bookkeeping service, as example, is on a fixed costs basis. There are no hidden fees or
surprises from us.
And we tailor the service right for your business.
In addition, no matter what service our clients choose, we always make it mission critical
to teach our clients how to read financial statements, and understand crucial ratios such
as "current asset ratio", "acid test ratio", "debt to equity", "statement of changes in financial
position",
"days' inventory on hand" and more.
No successful business owner operates from 'the seat of his/her pants". If as the business owner, you
cannot read and understand financial statements,
you might as well work for someone else and collect a paycheck because any person who wants to work for themselves
must be able to read and understand financial statements and financial ratios! The good news is Nugent &
Associates has a zero percentage fail rate. All our business clients
do learn how to read financial statements and ratios. We will spend whatever time is required. We succeed when you
succeed.
Therefore, you must succeed if we are to succeed.
Receivables
Accounts receivable is money that customers owe for goods or services you’ve already provided. Many a business has
gone under because, although sales were strong, its revenue was sitting in accounts receivable instead of the
bank.
Our expert CPA will examine your receivables' policy/turnover to see if you can shorten the time money is
outstanding so as
to keep your cash flow strong.
Task 7: Review Collection Procedures
Do you have outstanding receivables that are 30, 60, or 90 days past due or older? If so, it’s time to review your
collection procedures. A study by Commercial Collection
Agencies of America found that the probability of collecting on a delinquent account drops drastically the
longer it goes unpaid. At 30 days past due, you have an 88.7% chance of collecting, but by 90 days past due, this
chance drops to 68.9%.
So, how do you avoid having your hard-earned revenue tied up in your balance sheet's accounts
receivable?
- Shorten Payment Terms. Mailing paper invoices and receiving checks used to be the norm. In that
environment, giving customers 30 days to pay made sense as it allowed for mail delays. Today, most business
email invoices and issue electronic payments. Change your payment terms from “net 30” to “payment due upon
receipt”
and follow up after two weeks.
- Follow Up with Customers as Soon as Payments Become Past Due. Written collection letters and
emails are easy to ignore. Pick up the phone and call customers when their payments are late. You’ll find out
quickly
if there’s a problem and can work to resolve it while maintaining a good customer relationship.
- Give Customers an Incentive to Pay. Incentivize clients to pay early or penalize those who
pay
late. A common incentive is a 10% discount if clients pay within 10 days. Late fees may be a flat fee or a
percentage of the invoice amount. For example, you might charge 1.5% of the unpaid balance per month starting
when an invoice is 30 days overdue.
Staying on top of receivables and calling past-due customers is an essential business task, but one for which many
small business owners don’t have the time or inclination. If these tasks are always at the bottom of your to-do
list, keep in mind they are excellent things to outsource.
Task 8: Review Terms in Contracts & Invoices
Your clients won’t pay on schedule if they don’t know what your schedule is. Our CPA will discuss with you about
whether
your client contracts and invoices set clear expectations for when payments are due and what happens when payments
are late.
For example, will you suspend service? Will you require payment up front for future services? Will you send them
to collections? When terms are spelled out in your contracts and invoices, you have a bargaining chip in
discussions
with late payers. Are you charging interest for late payments?
Payables
Accounts payable is money your business owes for things such as utilities, inventory, and supplies. Managing
accounts
payable is essential because if you don’t control your payables, you can quickly gain a reputation as a slow payer
with your vendors and suppliers. It can also cost you money in the form of late fees, increased interest charges
and even lost suppliers. Our CPA will discuss with you how to manage your accounts payable to ensure things
are working smoothly.
Task 9: Review Late Fees
Did your business pay any late fees last year? It’s one thing to forget a payment now and then, but if you’re
losing a chunk of your revenues to late fees on past-due payables, you need to identify the reason.
Perhaps you have trouble paying your bills because your clients are slow to pay you. Or maybe your books are
disorganized and you would benefit from a better bookkeeping system. Again, bookkeeping and bill payment are
easy areas to outsource if they’re something you struggle to handle on your own.
Assets
Assets are items of value that your business owns. These include tangible items like cash, inventory, furniture,
and
equipment, as well as intangible assets like copyrights, patents, and your business’s reputation. If you
aren’t keeping track of
your assets properly, you may not know how they’re being used, when they need to be repaired or replaced, or when
a loss occurs. In discussion with you, our CPA will determine whether you are protecting your assets.
Task 10: Review Your Fixed Assets Schedule
What do you own? Every business needs a fixed assets schedule that includes a description of each asset as well as
its purchase price and date. This can be a simple spreadsheet or a detailed depreciation schedule. At least once a
year,
a CPA should be called upon to review this list to make sure new items have been added so you don’t miss out on
any
valuable depreciation deductions on your tax return.
Also items you’ve disposed of need to be removed from the financials. Often, businesses replace an old
piece of equipment or take it out of service but forget to remove it from their "fixed assets
schedule".
If you’re required to file a business personal property return with your state or local government, leaving old
assets
on the list can mean you’re overpaying this tax every year.
Inventory: Where Your Cash May Be Hiding
Many businesses that do well in sales but are constantly short on cash, can more often than not, find the culprit
is
in the inventory on hand. Often owners are fearful of being short on product and spend much too much to stock up
on inventory not realizing in the long run this can be hazardous to your company's health. As a general
rule, a business should have no more than 45 days' inventory on hand.
A most important step our CPA will perform, is analyze your "days' inventory on hand". Inventory
is not tax deductible, and
if you are over extending on your inventory purchases, you are reducing your money supply that could be better
spent on crucial expenses
and retirement plans that can not only lower your taxable income, but enrich your personal wealth.
Task 11: Do a Repair & Replacement Check
Our CPA will discuss with you about your physical assets, such as vehicles, equipment, furniture, and computers.
Do any of them need maintenance? Now is a good time to schedule that. While you’re at it, consider whether any of
your physical assets need to be replaced in the next year or two. If so, you might want to start setting aside
funds to cover the replacement now.
Task 12: Monitor Your Online Reputation
Your business’s reputation isn’t a line item on a balance sheet, but make no mistake: In today’s Web-focused
world,
monitoring your online reputation is essential.
Google your business name to see what comes up. Check reviews on Yelp and other review sites. If you find negative
reviews, respond to the constructive feedback in a way that shows customers you want to make things right. If you
see
information that is inaccurate or inappropriate, look into getting it removed.
Pro tip: Yelp can be great for more than monitoring your online reputation. You can also use
Yelp for Business to attract new customers. Right now they are offering $300 in free advertising.
Sign up for
Yelp for Business.
Other Areas
Here are some additional steps to ensure your business is healthy and headed where you want it to go.
Task 13: Review Your Legal Structure
Is your business a sole proprietorship, partnership, LLC, Sub S Corporation, or C Corporation? Does that legal
structure still make sense?
Is having the proper legal structure really that important? You bet it is!
Pro Tip: Most people do not realize almost any type of business entity can be a LLC. The acronym
LLC
stands for "limited liability company".
But that does not mean you are a corporation i.e. you can be a sole proprietor LLC.
But many businesses may have better tax advantages as
a "Sub Chapter S" corporation as example, than a sole proprietor. Our CPA will discuss with you
whether your business is structured as the proper entity that
would minimize unnecessary taxes and protect your personal wealth from legal suits.
Can your business be broken up into 2 or more entities? Maybe one with a December 31 year end and
the other with a June 30 year end? Having multiple corporations with different year ends
could help you come tax time.
Tax reform made several changes to tax rules for businesses. QBO, or "Qualified Business Income"
reduces most businesses taxable income by
20%. Are you eligible and taking advantage of the QBO 20% deduction? By having an expert CPA as a
resource, you will be able
to take advantage of new tax planning opportunities and lower your tax bill by being kept abreast of tax law
changes
which do occur often.
Task 14: Check Your Business Insurance Coverage
How has your business changed over the past year? Changes to your business size, structure, and business model can
impact the type and amount of insurance coverage needed to protect it. The insurance program you started out with
might not be a good fit anymore.
Schedule a meeting with your insurance agent to discuss whether you need to add coverage or increase your limits
on
general liability, property, professional liability, workers' compensation, or umbrella coverage. While you’re at
it,
get competitive quotes from other companies. Shopping around may get you a better rate for the same coverage.
Task 15: Test Your Online Security
Keeping your information, and your clients’ information, safe and private is important. Follow these steps from
the
National Cyber Security Alliance to ensure your data is protected:
-
Make sure the security software on all of your devices is current to protect against viruses, malware, and other
online threats.
-
Turn on automatic software updates if that’s an option.
-
Always use strong passwords and two-factor authentication whenever possible.
-
Back up data in the cloud or on a separate hard drive on a regular basis.
-
Ensure access to data or critical systems is limited to employees who need it to perform their jobs.
-
Have a clear policy for what employees can keep and install on their work computers and devices.
-
Train employees to never open suspicious links in email or visit unknown websites.
Final Word
A healthy company isn’t just about profits. It’s also about reading between the lines and asking the right
questions and having an expert CPA by your side, assisting you in your growth pursuits.
Not all businesses are alike, and perhaps some of these tasks are not applicable to your type of business.
Regardless of your company's uniqueness, having a
free and no obligation meeting with a CPA
about your concerns and desires for your business
is a smart decision.
There is no better way to see if an expert CPA is just the ticket your business needs than taking advantage of
our Free Business Checkup.
Contact us now
and set up a meeting. The sooner you do, the sooner you'll know if an expert CPA is what you need to help your
business grow.
