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Download Volume 12, Issue 19 Document Here
BizBoost NewsVolume 12, Issue 19For distribution 3/20/23; publication 3/23/23
Do You Need a Business Savings Account?
If you have accumulated more money in your business checking account than you really need for daily operating expenses, that is a nice problem to have! It’s time to consider putting that money to work. A business savings account might be your answer.
Every bank is different when it comes to the features and benefits of their business offerings. Here is a list of some of the items to consider asking your banker.
There are other types of interest-bearing accounts besides savings accounts, including money market accounts and certificates of deposits (CDs). Money market accounts may have check-writing privileges, but the withdrawals may be limited. While CDs typically pay a higher interest rate than a savings account, they tie up your money for a specified period of time, and there are steep early-withdrawal penalties.
There are many institutions besides your main bank that are focused on savings accounts and will pay much higher interest rates. Typically, online banks and credit unions will pay a higher interest rate than a bank, but the money may not be FDIC-insured, so be sure to read the fine print.
An additional benefit of keeping money in a separate savings account is that you can save for many things:
Once you’ve set up your new savings account, consider setting up monthly automatic transfers from your checking account to your savings account so that you build up your savings balance.
Make sure your business cash works as hard as you do in your new savings account.
***
Tweets
Insert a link to your newsletter, website or blog before you post these:
Our latest blog: “Do You Need a Business Savings Account?” is available now! Subscribe here: [link]
Make sure your business cash works as hard as you do in your new savings account. Learn more in our latest blog article: [link]
Drone prices will vary depending on their size, features, and intended usage. Learn more in our latest blog article: [link]
#BusinessTip: There are many institutions besides your main bank that are focused on savings accounts and will pay much higher interest rates. [link]
A business savings account can help you save for an emergency “cushion,” lump sum tax payments, and future capital expenditures. Find out more here: [link]
DID YOU KNOW… Having your checking and savings accounts in the same bank might be more effective. Learn more here: [link]
While certificates of deposits typically pay a higher interest rate than a savings account, they tie up your money for a specified period of time, and there are steep early-withdrawal penalties: [link]
What are some questions to ask your banker when you open a new business savings account? Sign up for our newsletter to find out: [link]
Download Volume 12, Issue 18 Document Here
BizBoost NewsVolume 12, Issue 18For distribution 3/6/23; publication 3/9/23
Is Sunk Cost Bias Affecting Your Spending Decisions?
As business owners, we’d like to think that we make rational, logical decisions when it comes to our business finances. However, scientists have discovered that we have built-in biases in our brains and our thinking processes, and one of these biases is the sunk cost bias.
A sunk cost is simply money, time, or resources that you have already spent and can’t get back. Another word for them is retrospective costs. The bias comes into the picture when we consider those costs in future decisions.
One example is when you have already invested a lot of time and money in a losing project. You continue to do so even if the benefits are not worth it. Let’s say you have spent a lot on car repairs. You continue to repair the car, digging a deeper and deeper hole. Buying a new car would be the better decision because the benefits would outweigh the costs, but you are still emotionally (and irrationally) attached to all the money you spent on the clunker.
You can also fall into the sunk cost trap with relationships. Let’s say you have an employee that is a borderline performer. You keep investing in them, thinking you can “fix” them, and they don’t improve. You should have fired them a long time ago!
Scientists Daniel Kahneman and Amos Tversky studied cognitive bias, including the sunk cost bias, in case you want to read more about the topic. Kahneman won the Nobel prize for his work.
How can you avoid falling into the sunk cost bias trap? Here are some ideas:
1. Be aware that it exists and it affects more of our daily activities than we realize.2. Track key performance indicators regularly so that you can see whether you’re on or off track. 3. Detach emotionally, if possible, from your business project.4. Set goals and milestones on your projects and have a “walk away” plan if things spiral out of control.5. Stay future-focused.
Now that you’re aware of sunk cost bias, you can be more mindful when making financial decisions.
Our latest blog: “Is Sunk Cost Bias Affecting Your Spending Decisions?” is available now! Subscribe here: [link]
As business owners, we’d like to think that we make rational, logical decisions when it comes to our business finances. However, scientists have discovered that we have built-in biases in our brains and our thinking processes, and one of these biases is the sunk cost bias. Learn more in our latest blog article: [link]
A sunk cost is simply money, time, or resources that you have already spent and can’t get back. Another word for them is retrospective costs. The bias comes into the picture when we consider those costs in future decisions. Learn more in our latest blog article: [link]
#BusinessTip: To avoid falling into the sunk cost bias trap, be aware that it exists and it affects more of our daily activities than we realize. Learn more here: [link]
Want to avoid falling into the sunk cost bias trap in your business? Try tracking key performance indicators regularly so that you can see whether you’re on or off track. Find more here: [link]
DID YOU KNOW… To avoid falling into the sunk cost bias trap, you can set goals and milestones on your projects and have a “walk away” plan if things spiral out of control. Learn more here: [link]
#BusinessTip: To avoid falling into the sunk cost bias trap, detach emotionally, if possible, from your business projects. Learn more in our latest blog article: [link]
Are you aware of sunk cost bias and how it plays out in your business? In our latest blog article, we explain what the sunk cost bias is and how you can be more mindful when making financial decisions. Sign up for our newsletter to learn more: [link]
Download Volume 12, Issue 17 Document Here
BizBoost NewsVolume 12, Issue 17For distribution 2/20/23; publication 2/23/23
Knowledge Panels
Are you looking for new ideas to market your business? If so, knowledge panels might be something to consider. Most people haven’t heard of them, but they are widely used in search results every day.
Knowledge panels are an invention from Google. They are the information panels that appear on the bottom right corner of your search results when you search for certain people or brands. They are different from the business profiles provided by Google Business Profile.
Knowledge panels display information that Google has collected in its Knowledge Graph, which is one of Google’s information databases. Search for your favorite author or your Congressperson, and you will be able to see an example of a knowledge panel. Famous historical figures and extremely popular entertainers may have more of an entire page displaying all of the information about them, but there will typically also be a right column of text (you may have to scroll a bit to see it), which is the knowledge panel.
How can you use knowledge panels in your business? When your leadership or brand is represented by a knowledge panel, it brings instant credibility to your organization. It boosts reputation and helps to build trust with all stakeholders. It increases your firm’s visibility.
Who typically has a knowledge panel? If you are an author of a book that has a formal ISBN (International Standard Book Number), you will automatically get one. If you are a leader of certain organizations, you will also get one. If your brand is well-known, it will have a knowledge panel.
You can’t create a knowledge panel, but you can claim it once it appears. Google determines who receives a knowledge panel. But you can “lobby” for one, and there are marketers you can hire to help you execute the steps it takes to get one. The main thing is to be active and visible online.
If you already have a knowledge panel, there are procedures documented on Google Help that you can follow to claim it. You can also make edit suggestions and submit them to Google. You can’t directly edit your knowledge panel; Google has final control over what is displayed.
Hopefully, you are now more aware of knowledge panels and how they can help your business become more visible.
Our latest blog: “Knowledge Panels” is available now! Subscribe here: [link]
Are you looking for new ideas to market your business? If so, knowledge panels might be something to consider. Most people haven’t heard of them, but they are widely used in search results every day. Learn more in our latest blog article: [link]
Knowledge panels are an invention from Google. They are the information panels that appear on the bottom right corner of your search results when you search for certain people or brands. They are different from the business profiles provided by Google Business Profile. Learn more in our latest blog article: [link]
#BusinessTip: How can you use knowledge panels in your business? When your leadership or brand is represented by a knowledge panel, it brings instant credibility to your organization. It boosts reputation and helps to build trust with all stakeholders. Learn more here: [link]
DID YOU KNOW…You can’t create a knowledge panel on Google, but you can claim it once it appears. Google determines who receives a knowledge panel. But you can “lobby” for one, and there are marketers you can hire to help you execute the steps it takes to get one. Find more here: [link]
DID YOU KNOW… Knowledge panels display information that Google has collected in its Knowledge Graph, which is one of Google’s information databases. Learn more here: [link]
Already have a knowledge panel on Google? There are procedures documented on Google Help that you can follow to claim it. You can also make edit suggestions and submit them to Google. You can’t directly edit your knowledge panel; Google has final control over what is displayed. Learn more in our latest blog article: [link]
Do you know what knowledge panels are and how they can help your business become more visible? Sign up for our newsletter to learn more: [link]
Download Volume 12, Issue 16 Document Here
BizBoost NewsVolume 12, Issue 16For distribution 2/6/23; publication 2/9/23
Understanding Equity on the Balance Sheet for a Sole Proprietor
The equity section of the balance sheet looks different depending on the legal structure of your business. The most common entity types are corporations, partnerships, and sole proprietors. In this article, we’ll take a look at what the equity section of the balance sheet looks like for sole proprietors.
The Equity Section
As a reminder, the balance sheet has three major sections: assets, liabilities, and equity. The equation Assets = Liabilities + Equity is true for all entities. For a sole proprietor, equity is called Owner’s Equity. There are typically two accounts listed: the Owner’s Capital Account and Owner’s Draw Account.
Owner’s Capital Account. This balance represents how much money the owner has put into the business. Also included are cumulative business income or loss amounts from prior years.
Owner’s Draw Account. This balance represents how much money the owner has taken out of the business. Since a sole proprietor does not get a paycheck, taking money out of the business via a draw is how they get their money.
A third account will show up if you run a balance sheet report in your accounting system on any date during the year: Current Year Earnings.
Current Year Earnings. This balance is the same as the net income on the year-to-date income statement. It represents the profit in the business.
On a formal balance sheet for external purposes, only one account will show and that’s the Owner’s Capital Account. The draw and the current year earnings will roll into that account.
Salary vs. Draw
It’s important to distinguish between the idea of a salary and a draw. In corporations, owners receive salaries in the form of paychecks, where payroll taxes are taken out and W-2s are issued at year-end. The salary and taxes are deducted as expenses in the corporation’s income statement. For a sole proprietor, this is not at all how it works.
A sole proprietor has no salary. There is no payroll expense or payroll taxes on the income statement for the owner. The owner could have employees, and those payroll expenses would be shown on the income statement, but there is nothing for the owner.
The owner takes draws, which is not an expense. Draws are a reduction in equity. They do not affect profits. They do not change taxes owed. An owner can take a lot of money out of the business, and there is no impact on profits. There is definitely an impact on cash flow though!
A sole proprietor does pay payroll taxes in the form of self-employment taxes. They simply do it on their IRS Form 1040 as opposed to payroll tax forms that a corporation would use.
The equity section can be the most difficult section to understand on the balance sheet. Hopefully, the explanation above will provide a bit more clarity so you can better understand how to read your business’s financial statements.
Our latest blog: “Understanding Equity on the Balance Sheet for a Sole Proprietor” is available now! Subscribe here: [link]
The equation Assets = Liabilities + Equity is true for all entities. For a sole proprietor, equity is called Owner’s Equity. There are typically two accounts listed: the Owner’s Capital Account and Owner’s Draw Account. Learn more in our latest blog article: [link]
The Owner’s Capital Account balance represents how much money the owner has put into the business. Also included are cumulative business income or loss amounts from prior years. Learn more in our latest blog article: [link]
#BusinessTip: The equity section of the balance sheet looks different depending on the legal structure of your business. The most common entity types are corporations, partnerships, and sole proprietors. In this article, we take a look at what the equity section of the balance sheet looks like for sole proprietors: [link]
It’s important to distinguish between the idea of a salary and a draw. In corporations, owners receive salaries in the form of paychecks, where payroll taxes are taken out and W-2s are issued at year-end. The salary and taxes are deducted as expenses in the corporation’s income statement. For a sole proprietor, this is not at all how it works. Find out more here: [link]
DID YOU KNOW…The Owner’s Draw Account balance represents how much money the owner has taken out of the business. Since a sole proprietor does not get a paycheck, taking money out of the business via a draw is how they get their money. Learn more here: [link]
A sole proprietor takes draws, which is not an expense. Draws are a reduction in equity. They do not affect profits. They do not change taxes owed. An owner can take a lot of money out of the business, and there is no impact on profits. Learn more in our latest blog article: [link]
The equity section can be the most difficult section to understand on the balance sheet. In our latest blog article, we provide a bit more clarity so you can better understand how to read your business’s financial statements. Sign up for our newsletter to learn more: [link]
Download Volume 12, Issue 15 Document Here
BizBoost NewsVolume 12, Issue 15For distribution 1/23/23; publication 1/26/23
10 Ways to Slow Down in Business (and Why You’d Want to)
Sometimes we just need to slow down. It could be our body telling us it needs a break. It could be our mind experiencing the first signs of burnout. Even if you own your own business, you are subject to burnout, especially if you are a people pleaser or say “yes” to everyone!
But how do we do that? It might have been so long since we’ve changed our pace, we don’t know where to begin. Here are some tips on the best ways to slow down in business.
Take a deep look at your to-do list. Identify one task that you’ve always done that adds nothing to your business. Does it really need to be done? Try to find tasks that don’t make any sense to do any more that you’re still doing just because you’ve always done it.
You should be able to free up a lot of time! For now, use it to slow down. Take a nap, call a friend, visit your employees with no agenda and really listen, take a walk and smell the roses, or simply hug your child.
A friend recently suffered from a concussion and her doctor told her to stay off electronics to help her brain heal faster. She limited herself to one hour a day for two months. What would you do if you had to stay off electronics? My friend read all the paperbacks she had that she hadn’t gotten to (for 15 years), cooked more, went shopping for things she had wanted for years, took walks, and learned a new language.
If you spend any time on social media, eliminating it even partially can be a huge pickup in time. Getting off electronics and using that time to get back into nature is healing for everyone.
If you are sleep-deprived, everything takes longer. Slowing down and getting enough sleep each night can make you more productive, reducing your work hours. Plus, you just feel more refreshed.
Slowing down your normal routine can help you gain perspective. You might have been fighting fires in the trenches for so long, you’ve forgotten why you’re in business to begin with. Take time to re-connect with your mission, vision, and purpose. Make sure your employees understand their grander goals as well.
Almost everyone thinks they are good at multi-tasking, but it turns out science says only a minority percentage of people can really multi-task effectively. Become self-aware of your own habits related to multi-tasking. Do things take longer when you multi-task? Do you make mistakes you have to go back and correct when you multi-task? If so, you may be in the majority of people who simply shouldn’t do it.
If you are really fixated on billable hours, you may need to just let them go for a while until you can get your perspective back. There is more to life and business than billable hours.
If there has been no time to connect with your co-owners, customers, and employees, slowing down can provide that time. The most important thing is to simply show up and listen. You will learn a lot!
If your business is headed in the wrong direction, that is the ultimate time-waster! Slowing down allows you to re-visit your strategy, making sure you are working on the right projects, that you have the right company culture, and that your business goals are in alignment with your big-picture purpose.
It’s really okay to do nothing when you’re the business owner. You need time to come up with ideas, think about the hard issues, and even daydream. You have to stop working in the business so you can work on the business.
If you get interrupted every five minutes, you will be drained of energy at the end of your work day. Get smart about managing interruptions so you can be more productive. This will free up more time for you to take breaks and slow your pace during your workday.
Try at least a few of these ideas to slow down before your mind or your body insist on it.
Our latest blog: “10 Ways to Slow Down in Business (and Why You’d Want to)” is available now! Subscribe here: [link]
Sometimes we just need to slow down. It could be our body telling us it needs a break. It could be our mind experiencing the first signs of burnout. Even if you own your own business, you are subject to burnout, especially if you are a people pleaser or say “yes” to everyone! Learn more in our latest blog article: [link]
How do we slow down when our body or mind is telling us we need to? You can find a list of tips on the best ways to slow down in business in our latest blog article: [link]
#BusinessTip: It’s really okay to do nothing, even when you’re the business owner. You need time to come up with ideas, think about the hard issues, and even daydream. You have to stop working in the business so you can work on the business. Learn more about the benefits of slowing down here: [link]
Looking for a way to slow down in your life? Try taking a break from electronics. Getting off electronics and using that time to get back into nature is healing for everyone. Find more here: [link]
DID YOU KNOW…Almost everyone thinks they are good at multi-tasking, but it turns out science says only a minority percentage of people can really multi-task effectively. Become self-aware of your own habits related to multi-tasking. Learn more here: [link]
Slowing down your normal routine can help you gain perspective. You might have been fighting fires in the trenches for so long, you’ve forgotten why you’re in business to begin with. Take time to re-connect with your mission, vision, and purpose. Make sure your employees understand their grander goals as well. Learn more in our latest blog article: [link]
Are you looking for ways to slow down in your business? You can find a list of 10 ways to help you slow things down in our latest blog article. Sign up for our newsletter to learn more: [link]
Download Volume 12, Issue 14 Document Here
BizBoost NewsVolume 12, Issue 14For distribution 1/9/23; publication 1/12/23
Prioritizing Capital Expenditures
Most small businesses own fixed assets, which include items like land, buildings, equipment, and automobiles. The investments of adding, replacing, or improving upon fixed assets is called capital expenditures (capex).
It seems like there is never enough money for all the capital expenditures that need to be done in a business. To make the best spending decisions, the business owner needs to put processes in place for capex activities.
The first step is to make a list of all the capital projects you want to do. Here are some examples:
Once you’ve made your list, you can begin to formalize your capital expenditure process. Each project should be detailed and estimated, with bids from vendors so that you have a very good idea of the cost.
The next step is the most important. What are the estimated savings for each project? In other words, what will your return on investment be? In capital expenditure spending, this answer is crucial. For each project, estimate the expected savings in time, money, and intangible benefits, and what the breakeven time will be.
This step can be extremely difficult because the savings might not be concrete. It could be that the benefit is improved customer service, which should result in future sales. In this case, you still need to estimate future sales. In most cases, it can take years for a capital expenditure to start paying off from a cash flow standpoint.
Now, make a summary table of your results.
Project
Cost
Anticipated Savings
Benefit
Notes
Truck
$40,000
Increases sales by $1,000 per week.
Marketing spending (non-capex) increases by $3,000/year.
Assume cash sale – if loan, figure interest expense.
First year: $9,000 savings.
Second year savings: $49,000. Breakeven comes in second year.
Increases sales capacity and reduces delivery times.
Redo the dock area
$20,000
Time saved – payroll costs decrease by 1/2 headcount. Savings of $27,000. If attrition used, defer savings.
First year savings: -$7,000. Second year savings: $27,000. Breakeven comes at end of second year.
Employee happiness, reduced turnover are intangibles.
When deciding which project to do, return on investment is only one factor to consider. You must also consider employee satisfaction and turnover issues, customer service, capacity management, tax breaks, breakeven time, cash flow, lending limits and financial ratios, and other factors that might be specific to your industry.
The key is to have a process. If you don’t, you might off the top of your head say “let’s do the cheapest project first.” But it might not be the one with the highest return, which can cause cash flow and profitability issues down the road.
Taxes need to be considered, which have been left off of the above example. Especially if it’s just before year-end and you have high profits, December could be the best timing for a higher return on investment.
Another consideration is if you will need a loan to make these improvements. Interest rates have been rising, and these costs, plus your cash flow impact, need to be evaluated. As your debt increases, your financial ratios also need to be evaluated. You have to be careful not to go into too much debt overall.
Once you have documented all of these considerations, you can make a much better-informed decision on your capex spending and which project to do first. You might consider creating a capex committee to help you make a decision. Be sure to include your accounting advisor on the committee!
Three Processes for Capital Expenditures
You need three processes to properly evaluate capital projects:
We’ve talked about the first two; let’s talk about managing the project. You’ll want to appoint a project manager that can oversee the project’s progress and make any course corrections needed. Once the project is complete, set milestones so that you can see how accurate the estimates were of both costs and benefits. You might need to set milestones every year for several years in order to accurately measure actual return. Doing this will make you a better estimator in the future.
Spending at the right time on capex projects is surely still more art than science. Putting formal processes in place will improve your chances for a better return, smoother cash flow, and improved profits. And, since this is an incredibly complicated area, we are happy to step in and help with any of these capex processes, so feel free to give us a call.
Our latest blog: “Prioritizing Capital Expenditures” is available now! Subscribe here: [link]
It seems like there is never enough money for all the capital expenditures that need to be done in a business. To make the best spending decisions, the business owner needs to put processes in place for capex activities. Learn more in our latest blog article: [link]
Most small businesses own fixed assets, which include items like land, buildings, equipment, and automobiles. The investments of adding, replacing, or improving upon fixed assets is called capital expenditures (capex). Learn more in our latest blog article: [link]
#BusinessTip: The first step in capital expenditures is to make a list of all the capital projects you want to do. Once you’ve made your list, you can begin to formalize your capital expenditure process. Each project should be detailed and estimated, with bids from vendors so that you have a very good idea of the cost. Learn more here: [link]
When deciding which project to do, return on investment is only one factor to consider. You must also consider employee satisfaction and turnover issues, customer service, capacity management, tax breaks, breakeven time, cash flow, lending limits and financial ratios, and other factors that might be specific to your industry. Find more here: [link]
DID YOU KNOW… You need three processes to properly evaluate capital projects:
Learn more here: [link]
Spending at the right time on capex projects is more art than science. Putting formal processes in place will improve your chances for a better return, smoother cash flow, and improved profits. Learn more in our latest blog article: [link]
Do you know how to approach capital expenditures in your business? You can learn about the processes to follow and find example tables in our latest blog article. Sign up for our newsletter to learn more: [link]
Download Volume 12, Issue 13 Document Here
BizBoost NewsVolume 12, Issue 13For distribution 12/26/22; publication 12/29/22
Five Ways to Welcome in a New Year: 2023
A new year is a perfect time for a fresh start for you and your business. Here are five ways to welcome 2023 and make it your best year ever.
1. Decide on a theme for 2023.
Setting a theme for the year can help you remember what you want to focus on. Some examples of themes might be:
From here, you can create a plan of tasks and timelines that are aligned with the theme you’ve chosen.
2. Go on a retreat.
If you need to regroup and rejuvenate from a stressful holiday season, then a retreat can do the trick. A retreat is a time to set goals for your business and make a plan. You could discover that you are on track or that you need a course correction in your business.
A retreat can be made alone or with certain team members. Typically, the events of a retreat include a combination of planning and brainstorming sessions, education, team-building, and social activities.
If a retreat sounds like too much work, then a quick vacation might be in order, just so you can enter the new year with a relaxed mind.
3. Learn from 2022.
If 2022 was a bumpy time for your business, it might be a good idea to perform a detailed review. This will help you learn what went wrong and explore why. You can then brainstorm ideas on how to avoid the pitfalls of 2022 as you move into 2023. You can make it as informal as you want, or structured as an after-action review.
4. Select a word for 2023
If setting a theme is too complicated, how about selecting one simple word for 2023? Here are some ideas:
I’m sure you can think of one that will be perfect for you. Once you do, write the word on several sticky notes and paste it everywhere you work and maybe even at home. Your postings will serve as a reminder of what your intention is throughout 2023.
5. Make a profit plan (AKA budget)
Making a profit plan for the new year will help you hone in on the profit amounts that you want to achieve. Understanding how much volume you need to reach and what you can spend will avoid surprises at year-end. At mid-year, it’s a good idea to see if you are on track for the rest of the year.
Whether you do one or all of the ideas above, we hope you have an awesome 2023 and that it’s your best year ever.
Our latest blog: “Five Ways to Welcome in a New Year: 2023” is available now! Subscribe here: [link]
A new year is a perfect time for a fresh start for you and your business. Learn five ways to welcome 2023 and make it your best year ever in our latest blog article: [link]
Setting a theme for the new year can help you remember what you want to focus on. Some examples of themes might be:
Learn more in our latest blog article: [link]
#BusinessTip: A retreat is a time to set goals for your business and make a plan. You could discover that you are on track or that you need a course correction in your business. Learn more about how to get ready for the new year here: [link]
If 2022 was a bumpy time for your business, it might be a good idea to perform a detailed review. This will help you learn what went wrong and explore why. You can then brainstorm ideas on how to avoid the pitfalls of 2022 as you move into 2023. Learn more here: [link]
DID YOU KNOW…Making a profit plan for the new year will help you hone in on the profit amounts that you want to achieve. Understanding how much volume you need to reach and what you can spend will avoid surprises at year-end. Learn more here: [link]
Do you want to have an awesome 2023 and make sure it’s your best year ever? Learn 5 ways to accomplish this in our latest blog article: [link]
2023 is almost here! Do you know what steps you can take to reflect on the past year and prepare your business for the new one? Sign up for our newsletter to learn more: [link]
Download Volume 12, Issue 12 Document Here
BizBoost NewsVolume 12, Issue 12For distribution 12/12/22; publication 12/15/22
Are Your Employees “Quiet Quitting?”
“Quiet quitting” is a very new term in 2022 that refers to one or more employees who remain working, but only do the minimum job during regular work hours. They are done going the extra mile, they are done working overtime, they are likely done caring all that much, and they may also be quite burned out.
The last three years have been anything but easy. Shortly after the closings occurred due to the pandemic, many people lost their jobs. While recovery was taking place, millions more people decided that they would either retire or take a rest for a few years. This made up what was called the Great Resignation. It took a few years for employment to come back to pre-pandemic levels.
A huge movement to work remotely simultaneously occurred, and many people have been reluctant to return to the office. Many more people suffered financial hardship, in spite of government help, and are still recovering.
All of these conditions and more have stressed employees and led to mental health challenges for millions. Thus, “quiet quitting” should not be too much of a surprise.
What Can an Employer Do?
There is quite a bit an employer can do about quiet quitting. For the entire staff, here are some tips to try:
Anything that can help to refresh and rejuvenate your employees will help reduce quiet quitting in your company. While many of these can cost quite a bit, a few of them are very affordable.
On the individual level, and especially for individuals you suspect may be quiet quitting, it’s a good idea to conduct a formal process of setting goals. While this is normally done during employee performance review time, it doesn’t have to be. It can be very effective to sit down with an employee and simply ask what they want to get out of this job and what they want their future to look like.
Goal-setting encourages well-being and can give an employee something to strive for. Refreshing goals quarterly can help an employee re-engage with their job. It can also help a supervisor identify an employee who might be happy doing another job, so that a re-assignment can take place that is advantageous for both parties.
Increasing Employee Engagement
Whether your employees are quiet quitting or not, it’s always a good idea to offer programs and benefits that help employees re-engage, rejuvenate, and refresh their work on the job.
Our latest blog: “Are Your Employees ‘Quiet Quitting?’” is available now! Subscribe here: [link]
“Quiet quitting” is a very new term in 2022 that refers to one or more employees who remain working, but only do the minimum job during regular work hours. They are done going the extra mile, they are done working overtime, they are likely done caring all that much, and they may also be quite burned out. Learn more in our latest blog article: [link]
The last three years have been anything but easy. Shortly after the closings occurred due to the pandemic, many people lost their jobs. While recovery was taking place, millions more people decided that they would either retire or take a rest for a few years. This made up what was called the Great Resignation. Learn more in our latest blog article: [link]
#BusinessTip: Whether your employees are quiet quitting or not, it’s always a good idea to offer programs and benefits that help employees re-engage, rejuvenate, and refresh their work on the job. Learn more here:[link]
Anything that can help to refresh and rejuvenate your employees will help reduce quiet quitting in your company. Find a list of ideas you can implement in our latest blog article: [link]
DID YOU KNOW… There is quite a bit an employer can do about quiet quitting. Learn more about quiet quitting and how you can help your employees here: [link]
On the individual level, and especially for individuals you suspect may be quiet quitting, it’s a good idea to conduct a formal process of setting goals. It can be very effective to sit down with an employee and simply ask what they want to get out of this job and what they want their future to look like. Learn more in our latest blog article: [link]
Do you suspect some of your employees are “quiet quitting?” Sign up for our newsletter to learn how you can combat this and more: [link]
Download Volume 12, Issue 11 Document Here
BizBoost NewsVolume 12, Issue 11For distribution 11/28/22; publication 12/1/22
What Is an Audit?
The word “audit” can be thrown around a lot in casual conversation. When an accounting professional uses it, it means something very specific. We’ll discuss this and other uses of the term “audit” in this article.
Financial Audit
A financial audit is an official service designed to inspect the accounting records, technology, and processes of an organization. An audit can only be conducted by a licensed CPA that is independent of the organization.
Independence is a special term as well, meaning the CPA who audits the organization must have no relationship with the organization or its owners and employees. For example, if the organization’s owner is the sister of the auditor, that won’t work!
To conduct an audit, the CPA performs an audit program, which is a set of tasks that review the company transactions, balances, and accounting processes. The audit program is custom-designed to the company based on the risks perceived by the audit team, the type of organization being audited and other factors. Once the audit has been completed, the auditor will issue a formal report stating the findings of the audit. The report typically includes a letter, financial statements, and footnotes.
The auditor’s report can be utilized by the company’s management as well as third parties, such as lenders and stockholders.
While there are mandatory audit requirements for large public companies, government institutions, schools, and some larger nonprofit organizations, small businesses are not typically audited because of the expense. That’s when additional assurance services come in handy.
Other Assurance Services
An audit falls under assurance services in accounting, and it’s the most stringent of all. Other types of assurance services include:
Compilations. In this engagement, the CPA performs basic checks on your financial statements and puts them together with a cover letter. It basically tells a third party that you have a CPA, but it provides the least amount of assurance service.
Reviews. In a review, there are a few more checks and tests that a CPA will perform before issuing financial statements. This service provides more assurance than a compilation, but less than an audit.
Agreed-upon procedures. An engagement with agreed-upon procedures is a very specific engagement where one aspect of the business is reviewed in accordance with a specific goal.
For small businesses who are asked for documents from your accountant by a bank or lender, you can often provide one of these lower-level assurance reports and it will not only suffice, but save your money.
Auditing a Class
Auditing a class has nothing to do with accounting! It simply means you’re sitting in on a college course, but not getting any kind of credit or grade.
The Dreaded IRS Audit
The term audit can also be used informally to define an inspection that is narrower in scope, such as an IRS audit or a state agency audit. There is no assurance provided in this type of audit. The purpose of this audit is to produce whatever records you are asked for in order to verify the numbers you sent to the agency.
An audit may be somewhat of a stressful and unpleasant, but necessary, experience. Having your accountant support you along the way can be reassuring (pun intended).
Our latest blog: “What Is an Audit?” is available now! Subscribe here: [link]
The word “audit” can be thrown around a lot in casual conversation. When an accounting professional uses it, it means something very specific. We discuss this and other uses of the term “audit” in our latest blog article: [link]
A financial audit is an official service designed to inspect the accounting records, technology, and processes of an organization. An audit can only be conducted by a licensed CPA that is independent of the organization. Learn more in our latest blog article: [link]
#BusinessTip: While there are mandatory audit requirements for large public companies, government institutions, schools, and some larger nonprofit organizations, small businesses are not typically audited because of the expense. That’s when additional assurance services come in handy. Learn more here: [link]
-Compilations
-Reviews
-Agreed-upon procedures
Learn more about these services here: [link]
DID YOU KNOW... Independence is a special term in accounting, meaning the CPA who audits an organization must have no relationship with the organization or its owners and employees. For example, if the organization’s owner is the sister of the auditor, that won’t work! Learn more here: [link]
DID YOU KNOW… There is no assurance provided in an IRS audit or a state agency audit. The purpose of this audit is to produce whatever records you are asked for in order to verify the numbers you sent to the agency. Learn more in our latest blog article: [link]
Do you know what an audit is? Do you know the different types of assurance services? Sign up for our newsletter for an in-depth explanation: [link]
Download Volume 12, Issue 10 Document Here
All businesses, no matter their size, have bills to pay. The larger the business, the more formal the accounts payable process tends to be. That doesn’t mean small business owners can’t benefit from a formal accounts payable process. Too many “fake” bills are being sent, and all businesses should have safeguards in place. Let’s take a look at the workflow of accounts payable to see where we can put some controls in place to protect your hard-earned money.
Purchase Order
A good first step is to initiate a purchase ordering process. All spending over a certain amount, such as $500, should require pre-approval from a manager or officer of your company. This can take the form of a purchase order.
A purchase order (PO) is simply a pledge on the part of your company to purchase an item or group of items from a particular vendor. It should include the vendor’s information, the item(s) and quantities, the price that the vendor has agreed to, and who initiated and approved the proposed purchase. It will look similar to an invoice, but it’s not an invoice and should be appropriately marked.
If the price is not standard or the items are custom, there may be an estimate from the vendor that documents the price on the purchase order. The estimate document is written by the vendor, while the purchase order is originated by your company.
While the purchase order is important, it does not create any entry on your accounting records, as no transaction has taken place yet.
Invoice
The invoice is the documentation of the purchase with a request for payment and is created by the vendor you are obtaining goods or services from. It should be recorded on your accounting books once it is received from the vendor.
The invoice should be matched with the purchase order, checking to see if each item, quantity and price match the same on the purchase order. Any discrepancies should be explained.
The timing of the invoice can vary. It may be received before or after you actually receive the goods or services that it covers.
The invoice should not be paid yet (unless prepayment is required). We’ll cover that in a minute.
Packing Slip
If the goods you have ordered are physical and are to be shipped to you, then there will usually be a packing slip or shipping document included in the shipment. The shipping document will have quantities, but may not have prices. The document should be matched with the actual items received and any shortages or overages should be noted.
A process to stock the items into your inventory should then occur. A transaction should be entered into your system to increase inventory for the goods you receive.
The (corrected) packing slip should be matched with the invoice to make sure everything on the invoice was received. If there is a discrepancy, it should be noted.
Items may come in a later shipment if they have been back-ordered. You’ll need to set up a process for that, noting it on the appropriate documents.
Approvals
As you can see, a couple of processes need to be put into place. There should be a process for each document listed above. There should also be a process for matching the documents, and there should be a process for when there are discrepancies. Last, there should be approval processes all along the way.
Your workflow may vary from the one listed above, depending on the order the documents are received and when payment is required. You may even have a different workflow for different vendors.
Once the purchase order, shipping document, and invoice have been matched and corrected, it’s time to get them approved for payment by the appropriate level of management that you desire. This is something you’ll want to set up in advance: which of your employees can spend and approve what amounts.
Payment
Once your invoice is approved, it is time to look at the payment terms, noting when payment is due. It can then be set up to be paid. This can be done inside a system, using a company credit card, sending a bank transfer or wire, or writing, signing, and mailing a manual check.
Payment affects your books as well, so an entry should be made when payment is issued.
Workflow
A great accounts payable workflow will protect your company from unauthorized payments, missing items, and even hasty purchasing decisions. There are also many accounts payable systems to support the automation of many of the steps, but don’t forget you still need to set up the processes so they work for your company and the vendors you use.
As always, if you need our recommendations, we’d be happy to help.
Our latest blog: “The Accounts Payable Process” is available now! Subscribe here: [link]
All businesses, no matter their size, have bills to pay. The larger the business, the more formal the accounts payable process tends to be. That doesn’t mean small business owners can’t benefit from a formal accounts payable process. Learn more in our latest blog article: [link]
Numerous “fake” bills are being sent out lately, and all businesses should have safeguards in place. Learn more about the workflow of accounts payable to see where you can put some controls in place to protect your hard-earned money: [link]
#BusinessTip: A good first step for your accounts payable workflow is to initiate a purchase ordering process. All spending over a certain amount, such as $500, should require pre-approval from a manager or officer of your company. Learn more: [link]
The invoice is the documentation of a purchase with a request for payment and is created by the vendor you are obtaining goods or services from. It should be recorded on your accounting books once it is received from the vendor. Learn more here: [link]
DID YOU KNOW…A purchase order (PO) is simply a pledge on the part of your company to purchase an item or group of items from a particular vendor. It will look similar to an invoice, but it’s not an invoice and should be appropriately marked. Learn more here: [link]
A great accounts payable workflow will protect your company from unauthorized payments, missing items, and even hasty purchasing decisions. Learn more in our latest blog article: [link]
There are many accounts payable systems to support the automation of your accounts payable workflow, but don’t forget you still need to set up the processes so they work for your company and the vendors you use. Sign up for our newsletter to learn more: [link]
