The process of starting and expanding a business through founder leadership brings both thrilling and overwhelming challenges. The founder serves as the company’s visionary while handling multiple responsibilities which include marketing and sales and human resources and financial decision-making. The practice of handling multiple responsibilities at once proves effective during startup development but becomes detrimental when businesses expand.

A fractional CFO provides essential support to businesses at this stage. The strategic financial expertise and discipline which founder-led companies need to achieve sustainable growth becomes accessible through part-time outsourced CFO services. The implementation of fractional CFOs serves as a strategic financial advantage which enables founders to pursue expansion while maintaining business financial stability.

What Is a Fractional CFO?

A fractional CFO (Chief Financial Officer) provides executive-level financial guidance to businesses through part-time or project-based engagements. The part-time CFO model provides businesses with access to expert financial guidance at reduced costs since they charge less than full-time CFOs.

The financial strategist role of a fractional CFO helps founders through the following tasks:

• Building forecasting models
• Optimizing cash flow
• Creating budgets tied to growth goals
• Preparing for fundraising or investor discussions
• Overseeing compliance and reporting

A fractional CFO provides financial guidance through data-driven decisions which replace the practice of making financial choices without strategic planning.

Our Fractional Controller Services work in conjunction with fractional CFO leadership to provide complete financial management solutions.

The Financial Support Provided by Fractional CFOs to Founder-Led Businesses

The founders of companies possess visionary abilities yet they typically lack expertise in financial management. The process of fast business expansion exceeds what one person can handle even when they demonstrate numerical understanding. The implementation of fractional CFOs provides founder-led companies with exceptional value through their services.

1. Freeing Up the Founder’s Time
The delegation of financial oversight duties by founders allows them to avoid spending their nights working on cash flow spreadsheets.
The additional time enables founders to focus on activities that generate high value such as sales development and product enhancement and organizational culture growth.

2. Adding Strategic Financial Discipline
The process of building a company from scratch makes it simple to make financial choices based on emotions. The objective financial analysis of a fractional CFO helps organizations make data-driven choices instead of depending on instinct.

3. Navigating Rapid Growth
The excitement of revenue growth brings dangerous consequences when businesses expand their overhead costs and inventory and payroll expenses too quickly. The implementation of structured growth management by fractional CFOs enables companies to direct their resources toward sustainable expansion.

4. Creating Investor Confidence
Investors seeking funding or partnerships require financial stability evidence beyond compelling narratives because they need to see concrete financial data. A fractional CFO helps businesses create financial projections and responds to challenging questions while showing investors that the company operates from a stable base.

The implementation of specific strategies by Fractional CFOs leads to successful outcomes for founder-led businesses.

Cash Flow Mastery

The management of cash flow represents the primary financial challenge which founder-led companies face. A fractional CFO develops precise cash flow projections and tracks working capital while maintaining business visibility at all times.

Growth-Aligned Budgeting

Fractional CFOs develop flexible financial models which transform when business growth occurs. The ability to make strategic investments becomes possible for founders through these systems which prevent resource overextension.

Investor-Ready Financials

The financial expertise of fractional CFOs enables founder-led companies to present investor-ready financials which build credibility with investors and partners and lenders.

Risk Management

Every organizational choice involves some level of danger because it includes market entry decisions and product line additions and workforce expansion. The financial risk evaluation process of fractional CFOs leads to data-based solutions which minimize business exposure.

Scenario Planning

The ability to plan for different scenarios becomes essential when dealing with unpredictable market conditions. The modeling expertise of fractional CFOs enables them to create scenarios for supply chain breakdowns and revenue decreases which gives founders peace of mind about any market development.

Fractional CFO vs. Outsourced CFO: What’s the Difference?

The terms share common usage but they maintain distinct meanings in professional practice.

A Fractional CFO maintains ongoing part-time work with one company by delivering executive-level support as a shared resource to that organization.

Outsourced CFO Services deliver flexible advisory services through project-based work which scales according to business requirements.

The services at Fully Accountable include both options so founder-led businesses can select the appropriate level of support they need. Our Outsourced CFO Services page explains how our services match your current business development stage.

Real-World Scenarios Where Fractional CFOs Add Value

Preparing for a Merger or Acquisition

The process of acquisition or exit planning requires fractional CFOs to perform due diligence and valuation and deal structure development. The combination of M&A Advisory expertise with professional services enables you to achieve the highest possible value from your business efforts.

Scaling an eCommerce Business

The combination of thin profit margins and numerous transactions creates major difficulties for eCommerce business owners. A fractional CFO who works with specialized eCommerce Accounting Services helps businesses optimize their operations to achieve better profitability.

Restoring Financial Visibility

The combination of unorganized systems and delayed financial reports creates problems for many businesses operated by their founders. A fractional CFO will help your company achieve standardized reporting through better tool implementation which results in clear financial data.

Why Fractional CFOs Are the “Secret Weapon”

The common advice for founders during growth stages involves building a complete executive team. A fractional CFO serves as a strategic leadership bridge that delivers executive-level guidance to your company at present without requiring C-suite salary expenses.

Our team at Fully Accountable has assisted numerous founder-led businesses to solve their exact business problems. Our Reviews section contains testimonials from satisfied clients who have benefited from our services.

Hire A Fractional CFO Today

The role of founder brings exceptional business rewards yet it does not require complete self-sufficiency. The financial expertise and strategic guidance of a fractional CFO enables founders to maintain their visionary leadership role while avoiding operational tasks.

A fractional CFO hire will bring you both financial stability and business confidence that your organization has solid financial structures for enduring success.

Your organization needs to determine if this solution matches your business requirements. The pricing page at our website provides transparent options to show how affordable fractional CFO support can be.

The post Why Fractional CFOs Are the Secret Weapon for Founder-Led Companies appeared first on Fully Accountable.

A fractional CFO provides professional financial leadership on a part-time or outsourced basis. They bring expertise in critical areas like strategic planning, risk management, and profitability optimization while allowing startups to allocate resources efficiently. 

Below, we showcase how fractional CFOs could help transform startups, featuring real world examples including an e-commerce brand.

How Fractional CFOs Improve Startup Profitability

Fractional CFOs are more than financial managers. They are strategic advisors who streamline operations, maximize resources, and align financial planning with growth objectives. Here are the key ways fractional CFOs can boost profitability:

• Cash Flow Management: They analyze inflows and outflows, ensuring businesses have the liquidity to scale operations without financial strain.
• Strategic Budgeting: Fractional CFOs create efficient budgets, focusing on high ROI initiatives and cutting wasteful spending.
• Financial Reporting: They deliver accurate, actionable data so founders can make informed decisions in real time.
• Risk Mitigation: From compliance to market fluctuation risk, they implement strategies to minimize potential setbacks.
• Scalable Solutions: With flexible engagement models, startups can tap into expertise as needed, reducing overhead costs.

Now, let’s explore some real world examples of how fractional CFOs can make a difference.

Real World Example 1: Scaling an E-Commerce Startup

For e-commerce businesses, scaling can often expose financial inefficiencies. Imagine a startup experiencing rapid growth, but struggling with the complexities of multi-state sales tax compliance, fluctuating inventory costs, and inconsistent cash flow.

A fractional CFO could help by:

• Implementing software to automate sales tax compliance.
• Creating cash flow forecasts to anticipate high-demand periods.
• Optimizing vendor payment terms to align with revenue cycles.

With this type of support, the company might save on operational costs, improve compliance, and increase profit margins—equipping leadership with the data-driven insights needed to scale nationally.

Client Review: 

“Exceptional group of accountants and book keepers. These guys helped our firm out big time with ecommerce accounting and we could not be more pleased. Attentive service, great attention to detail, lively and friendly team who knows how to properly get your books done. If you’re in the digital services space, definitely check out Fully Accountable.” 

— Peaks Digital

Real World Example 2: Tech Startup Avoids Cash Flow Crisis

A tech startup might find itself scaling quickly without adequate financial planning. As the business secures funding and expands operations, cash flow gaps could emerge and endanger its ability to meet payroll during slow periods.

A fractional CFO could address this by:

• Reviewing cash flow processes in detail.
• Developing a rolling 12-month cash flow model to identify potential gaps.
• Negotiating revised payment schedules with suppliers and implementing timely invoicing systems.

These strategies can help a startup avoid cash flow crises and free up working capital, ensuring a more stable foundation for growth.

Client Review: 

“The entire Fully Accountable team has made running my business so much easier. They truly take the stress of financial management and planning off my shoulders as the CEO and give me the data and strategic insights that I need to grow my company.” 

— Gabe Arnold

Vodafone Top Up

Real-World Examples of How Vodafone Top Up Supports Business Agility and Connectivity

Startups and growing businesses often operate in fast-paced environments where consistent communication and reliable connectivity are critical. However, managing mobile expenses and ensuring seamless service across teams can be a challenge—especially for companies with remote employees or international operations. This is where Vodafone Top Up becomes an essential tool.

Vodafone Top Up allows businesses to stay agile by offering flexible, on-demand mobile credit that supports voice, data, and international usage. Instead of committing to long-term contracts, teams can manage usage efficiently and respond quickly to changing needs. Whether it’s topping up a team member’s data plan on the go or ensuring constant availability during travel or client meetings, Vodafone’s recharge system makes it simple and reliable.

Explore how Vodafone Top Up empowers startups to stay connected while controlling costs. Visit our site for real-world insights into how this tool supports flexibility and operational efficiency.

Real World Example 3: Marketing Firm Optimizes Profitability Through Data

Suppose a mid-sized marketing agency is generating solid revenue, but profit margins lag due to ineffective pricing strategies and poorly tracked expenses.

A fractional CFO could help by:

• Performing a deep-dive analysis of service costs versus revenue.
• Recommending price adjustments for high-demand services.
• Creating data dashboards for real-time expense tracking.

By implementing these steps, a marketing firm could see significant improvements in net profit margin and gain clarity to focus on the most impactful areas of the business.

Client Review: 

“We love the team at Fully Accountable. They have worked so diligently to change and adapt the Dashboard to our ever-changing needs. They are always able to pivot and meet us right where we are at. They have been fantastic. Would highly recommend them to anyone.” 

— Casey Stubbs

Why Startups Should Consider a Fractional CFO

These real world examples illustrate how fractional CFOs can fuel transformation in startups:

• Expertise Across Industries: Fractional CFOs work with a variety of businesses, bringing cross-industry insights to unique challenges.
• Cost-Effective Approach: Startups avoid the six-figure salaries of full-time CFOs while getting specialized financial oversight.
• Data-Driven Strategies: With comprehensive reporting and forecasting, fractional CFOs enable proactive decision-making, not reactive fixes.

Clients of Fully Accountable consistently express satisfaction with their experience:

Client Review: 

“If you or anyone you know are looking for a reliable, affordable, and extremely efficient accountant or if you own a business and looking for a company to assist you with your taxes and business handlings you MUST choose this company. I literally can NOT believe how awesome every single person is in their office.” 

— Micaela Minner

For growing startups, ignoring the financial complexities that come with scaling can lead to missed opportunities and reduced profitability. A fractional CFO allows businesses to stay agile, utilizing expert guidance exactly when it’s needed.

Partnering with Fully Accountable for Fractional CFO Services

With a proven track record of driving profitability and growth, Fully Accountable is a trusted partner for startups across industries. Their experienced team of fractional CFOs tailors solutions to meet the unique needs of each business, ensuring financial stability and clarity while reducing risk.

If your startup is ready to streamline its finances and accelerate growth, Fully Accountable is here to help. Reach out today to learn how you can benefit from their fractional CFO services.

Focus on what you do best—growing your business—and leave the financial complexity to Fully Accountable. Contact them now for more information!

The post Real World Examples of How Fractional CFOs Drive Profitability in Startups appeared first on Fully Accountable.

It’s difficult to conceptualize a world where small business data analytics and big data coincide. But even though the global big data and analytics industry is worth over 274 billion dollars, and large tech giants, such as Oracle, IBM, and SAS own the lion’s market share, small businesses still greatly benefit from big data.

But how? Aside from the rapid and accurate forecasts, the analyses big data in business unlocks lead to long-term financial strategies that lead to a sustainable increase in your bottom line. Big data lets companies (both large and small) better prepare advertising and marketing campaigns, define their customer base, and plan product launches and inventory.

It provides benefits to companies as far-reaching as HR and R&D. There’s no reason to shy away from the term big data just because it sounds like something a large company would only have access to. Continue reading to learn more about how big data can help your small business. 

At Fully Accountable, we’re committed to providing a first-rate financial service that streamlines your company’s finances in an ever-increasing business landscape. Our financial professionals are up-to-date on the latest technologies and use advanced data analytics consulting for small businesses financial business intelligence to determine the most effective financial strategies for your business. Contact us today to schedule a 30-minute strategy call. 

Why Small Companies Can’t Ignore Big Data

A Window Into Your Customer’s Mind 

Utilizing the correct small business analytics within an organization is monumental for the success of a business, no matter the size. You can’t measure your company’s performance if you fail to input the correct customer data. Data analytics reveals all to your company.

It provides your customers with the voice they didn’t know they had. It speaks what they won’t. Consider the possibilities of gathering customer behavior on your website, where they spend the most time and when they leave it. The possibilities of data are limitless.

You Don’t Want to Lose Your Customer-Base to Large Companies; They Use Big Data.

Your largest competitors already use big data, shouldn’t you? You might feel tentative about dipping your toes into the ocean of data, but one thing that can dissuade you is the knowledge that everyone else is swimming and loving the water.

Big data can help in a multitude of ways. You might need to migrate all your financial customer data to the cloud. You can use business analytics for small companies and benchmarking to develop financial strategies. You might even want to hire a fractional CFO who understands how to integrate and interpret the small business data analytics that fits your company’s needs best. Big data is the answer to all these problems.

Most small companies have been compiling data in some form or another for years. The problem is that they haven’t aggregated that customer data, and without aggregation, analysis can’t take place.

Big Data Doesn’t Replace In-House Employees and Decision-Makers. It Enhances Them.

Big data is not a substitute for human acumen and ingenuity. It’s simply a tool, and a very powerful one at that. It guides decision-makers with numerous case studies and shows how big companies use statistics to solve problems. It provides answers to questions that were previously impossible to ask.

Part of the fear surrounding big data comes from the same place as the fear of AI. Elon Musk aside, big data doesn’t eliminate the human touch and creativity. It guides your creativity. It’s not simply about reducing the time it takes to go to market. It’s about giving you insight into taking products to market the right way. Big data gives you access to numerous answers, but it’s still your job to ask the right questions. 

How Can Big Data Improve Accounting Procedures?

Robotic Process Automation (RPA)

The most common accounting use of big data is robotic process automation (RPA). RPA features advanced AI software that automates repetitive tasks, such as manual data entry. It can also automate auditing and other accounting tasks. This frees your in-house accountants to focus on larger financial objectives. With the ability to detect outliers in large databases, big data virtually eliminates the tediousness of the job. 

Because of big data and RPA, you gain access to real-time, on-demand analytics. You have access to information when you want it and your team members have the ability to focus on strategic initiatives. You can outsource your accounting department or implement a strategic CFO in your infrastructure.

Real-Time Results 

AI-driven RPA enables near real-time, on-demand delivery and gives decision-makers with the resources they need. Accountants will be able to complete more impactful work as a strategic advisor rather than a numbers cruncher. RPA will help them translate big data into strategies as well as generate insight. 

Risk Analysis

As much as 70% of accountants who implement big data into their decision-making said it improved their decision-making strategy and that deploying big data solutions helped capitalize on financial objectives. The analysis uncovered with big data doesn’t just help with strategy. It also helps analyze the risks of each prospective strategy. Having big data on your side can produce predictive analytics and your accountants will be able to utilize those insights. 

Improved Client Experience

Again, when looking at AI, it’s easy to discount it as the next technological fad that solves some things but creates other problems. However, the most important thing to remember is that AI improves the customer’s experience with your brand. But it’s not as simple as AI implementing pages that automatically increase customer loyalty.

You have to learn how to implement these tools and optimize their performance. If anything, AI simplifies your job and helps you approach strategy with more creativity. Aggregated, industry-wide data analysis helps accountants better quantify and qualify their performance with certain customer demographics to pinpoint where the customer funnel can improve. 

As with the other benefits of AI, accountants have the ability to spend more time advising clients directly. The added insight into these strategies mean accountants can focus on more high-level initiatives, such as providing cutting-edge, data-driven services. 

Practical Steps for Implementing Big Data in Small Businesses

For small businesses, getting started with big data for small business may seem overwhelming, but with the right approach, it becomes manageable and highly beneficial. Here’s how you can begin harnessing the power of big data without breaking the bank:

• Identify Key Business Questions: Start by pinpointing the most pressing questions or challenges your business faces. Do you need to understand your customer behavior better? Are you trying to forecast market trends? Defining your goals will help you narrow down the type of data analytics tools and metrics you need.
• Choose the Right Tools: There are many affordable tools tailored to small businesses that can help track and analyze customer data. Solutions like Google Analytics, Tableau, and Microsoft Power BI allow small businesses to dive into small business data analytics without needing extensive technical expertise or a hefty budget.
• Collect and Aggregate Data: Start gathering customer data from various sources — your website, social media, and sales platforms. Make sure to aggregate this data so you can perform a more comprehensive analysis. Properly aggregated data analytics for small business gives you a clearer picture of your customers and business performance.
• Monitor and Analyze Your Data: Regularly analyzing small business analytics can help you stay ahead of market trends and refine your strategies over time. Look for patterns in customer behavior, track KPIs, and adjust your campaigns accordingly. Whether you’re refining marketing efforts or improving product offerings, using big data effectively is an ongoing process.
• Seek Professional Help If Needed: Hiring a data analytics consultant for small business can help streamline the process. If you’re unsure of how to handle all the data, or how to turn that data into actionable insights, a consultant can help you create tailored strategies and solutions.

Tools and Resources for Small Business Data Analytics

Small businesses often think that big data is only accessible to large corporations, but there are plenty of affordable and scalable tools that make data analytics accessible. Here are some options to help small businesses harness the power of big data:

• Google Analytics: Perfect for tracking website traffic, understanding customer behavior, and analyzing visitor demographics. This free tool allows you to monitor key metrics, such as how long visitors stay on your site, where they’re coming from, and what pages they’re visiting the most.
• Tableau: A robust data visualization platform that enables you to create clear and actionable reports. Tableau is great for businesses looking to identify patterns and trends in their customer data.
• Microsoft Power BI: This user-friendly platform helps you integrate data from different sources and analyze it with powerful visualization tools. It’s an affordable option for small businesses looking for a comprehensive data analytics tool.
• Zoho Analytics: An intuitive tool for business analytics that allows small companies to create custom reports and track customer behavior across different touchpoints. It’s a perfect fit for smaller teams looking to analyze small business data analytics without a steep learning curve.
• Klipfolio: A cloud-based dashboard tool that enables you to combine data from multiple sources (Google Analytics, social media platforms, etc.) and track your KPIs in real-time. Klipfolio helps small businesses monitor market trends and customer metrics in one place, making it easier to adjust strategies.

Big Data Analytics for Small Businesses

The AI trend is everywhere and like all trends, some of its steam will bloff off while others that have real impacts on your business will stick. It doesn’t matter whether you’re a small or large business, you can use AI to your advantage. One of the areas of business where you can utilize big data is in your accounting department. 

At Fully Accountable, we use state-of-the-art technologies and a holistic approach to your finance department. For us, it’s not just about compiling loads of customer data. We care about the quality of data we accumulate and the caliber of financial professionals who analyze that customer data. If you’re interested in how big data can affect your bottom line and long-term financial strategies, contact us today.

The post Why Small Businesses Shouldn’t Fear Big Data appeared first on Fully Accountable.

The days of finance departments succeeding with simple bookkeeping and compliance tasks are gone. In this market, you need professionals who understand how to implement software solutions, automate formerly manual processes, and analyze complex financial data. Moreover, you need professionals who can accurately communicate data and form long-term strategies with your C-suite executives, board members, or potential investors. 

In this blog, we’re discussing why FaaS companies are perfect for startups. These teams are  not only useful because they implement software and data analytics skills. One of the defining features of FaaS teams is the ability they give you to plug and play solutions as you grow as a business. 

At Fully Accountable, we understand how rapidly your business needs to evolve at every stage of growth. That’s why our fractionalized professionals implement the most advanced accounting software and tools for your organization. When you use our services, you benefit from clear communication, state of the art technology, and scalable solutions that lead to sustainable success. 

What Is Finance-as-a-Service and How Can a Startup Benefit from This Service?

Finance-as-a-Service (FaaS) is a term used to describe companies that offer outsourced accounting services beyond traditional bookkeeping and compliance services. FaaS companies work with you to integrate financial strategies replete with software solutions and procedures that consolidate your entire organization. 

Startups can benefit from these companies because they offer a full range of financial services with one provider. Having all of your core financial functions consolidated into one system can result in significant savings. Not only do you save yourself the stress of hiring in-house employees. You not only have a full-service, scalable accounting team who simplifies bookkeeping and tax compliance. With FaaS, you also have the option to include services, such as strategic CFOs, who handle the more complex financial planning and reporting tasks. 

FaaS Handles More Than Traditional Accounting

FaaS firms don’t limit themselves to traditional accounting techniques. Yes, they ensure your books are in order and you are tax compliant. But with the dawn of eCommerce, financial business intelligence (BI), and advanced analytics and software, the accounting teams of today require different skills altogether. FaaS teams aren’t focused on manual data entry and record-keeping. The accounting teams of today must have more advanced skills. 

The accounting teams of today understand how to leverage technologies that perform bookkeeping and compliance tasks automatically while improving scalability and increasing agility, productivity, and profitability. They analyze cash flow and understand how to secure capital in areas not typically identified. They provide real-time reporting and advisory that pertains to the following areas of your business: 

• Payroll 
• Billing and invoicing 
• Cost management

One of the most important pieces of this evolution is that startups have access to resources that only larger, more established enterprises would have had prior. Today, because of the scalability FaaS teams offer, you can realize the benefits of this approach to outsourced accounting–no matter your business size.

How Can Startups Benefit from FaaS?

Finance-as-a-Service has modernized the role accountants play in organizations. Since the genesis of accounting software, such as Intuit, companies no longer have to use human resources for what a machine can complete. Machines perform these tasks more efficiently and for less than humans. Cloud computing furthered the extent that accounting software can perform these tasks. Now, they can even perform forecasts, handle invoicing and billing, control payroll, and manage expenses. 

You might ask yourself, then, why you even need a FaaS team. If you can automate the majority of your accounting functions, why do you need a team of humans? The answer is, simply enough, that humans can do things that machines can’t. Contrary to what Elon Musk has led you to believe, we still serve a purpose (for now). The benefit of an FaaS team is they decide what functions to automate, how to optimize procedures, and connect your organization under one financial system. In essence, the software collects the data but humans still have to decide what to do with that data.  

Your FaaS team can help decide the following:

• How to improve cash flow, financial forecasting, planning, and management
• Easy access to financial systems from anywhere in the world. 
• Cut expenses using data.
• Recommend scalable operations that maximize your investment. 

FaaS Teams Respond to Your Company’s Needs

There are many reasons why only one out of every three businesses fail within the first decade. Most of them relate back to a company’s profitability. Without financial insights such as business intelligence (BI) and benchmark KPIs, your leaders can’t make informed decisions. Moreover, your leaders might not be finance-minded. If that’s the case, you need finance experts who can relate the data in clearly understandable terms. As you scale, the need for these types of experts will only grow. FaaS teams give you a simple solution to those growing needs. 

Startups also need guidance on what to outsource, which can be challenging. An FaaS team will be able to determine with precision which tasks your startup should outsource. They will also be able to determine the cost savings you should expect from outsourcing. When your business grows, this doesn’t stop. Because FaaS teams are scalable, you’ll see long-term benefits from these services. 

What Accounting Software Does Your Startup Need?

There are a plethora of options to choose from when it comes to the type of software you implement into your infrastructure. Startups also have much different software needs than established businesses. Financial technology choices hinge on the efficiency, cost efficacy, and scalability of the software. That’s why having a fractional accounting team by your side can help you to determine which software best fits your needs. Since startups can grow at a rapid-rate, FaaS teams can also serve as a valuable resource when it comes time to modify the software suite. QuickBooks is a great place to start because it’s a highly scalable software that integrates with most other financial systems and it produces highly-reliable reports. 

Why Do FaaS Companies Make Sense For Companies of All Sizes?

FaaS aims to achieve more with less with any type or size of business. Because FaaS uses scalable solutions, you can benefit from them at any stage of development. As an established enterprise, you can benefit just as much from FaaS services as a startup. Regardless of your size and needs, you need adaptable solutions for your finance department. FaaS companies give you those solutions and simplify transformation. With benchmarking, software, and changing services, FaaS teams fit any size organization needs. 

Bottom Line

Because of the challenges that arise from transforming your organization’s finance department, you might be tentative to implement FaaS solutions in your infrastructure. With the right outsourced accounting company at the helm, this fear is unfounded. 

Reputable FaaS companies, such as Fully Accountable ensure your organization doesn’t skip a beat when implementing accounting software, benchmarking KPIs, and fractionalized finance professionals. With the right team at your disposal, you can scale without worrying whether your strategies are tenable in the long-term. 

Contact us today to learn more about how Fully Accountable’s team of fractionalized finance experts can transform your organization into the streamlined machine you’ve always envisioned. 

The post Should Your Startup Use an FaaS Company? appeared first on Fully Accountable.

At Fully Accountable, we believe small and medium-sized businesses should be able to get the most out of their tax benefits. That’s why our experienced team of digital accountants ensures our clients have strategic tax management that keeps them informed about critical factors, such as the types of claims businesses qualify for and what processes owners can implement to maximize their benefits. 

Don’t leave money on the table in 2022. Continue reading to learn more about how simple, strategic tax plans can set you up for success next year.  

Review Your Business Infrastructure

As your business and income grow, you might have to modify your business infrastructure as well. Part of this process hinges on changing the corporate structure of your business. 

However, before doing so, you should consult with a CPA or certified financial planner to determine the best course of action. Review your business structure at least every few years, but it’s best when you can evaluate your structure on a yearly basis. 

Claim Bonus Depreciation 

As a small business owner, you likely purchase computers, equipment, furniture, and other assets for your business. The tax code often calls for you to depreciate those items over their lives. However, bonus depreciation lets you write off those costs on your 2021 tax return. Thus, if you want to purchase new equipment or upgrade your tech, it’s wise to buy it before the end of the year. 

It should be noted that not all assets qualify for bonus depreciation. For example, buildings and their structural components are not eligible. Your assets must also be “placed in service” in 2021. This means you need to start using the equipment during the year for it to be eligible for depreciation. Therefore, if you order office laptops on December 24th and they don’t get delivered until after the holidays, your purchase won’t be eligible for depreciation. 

Delay Your Income and Accelerate Your Expenses

Most small business owners use cash basis accounting for tax purposes because of its valuable planning opportunities. Using this method, business owners recognize income when received and expenses when paid. 

If you want to maximize your 2021 tax benefits, you might want to see if you can defer some incoming payments until after the first of January, 2022. Many companies might not have the luxury of being able to wait until 2022 to send your client an invoice. However, if you can, you won’t have to claim that money on your tax return. 

By reducing your income, you also lower your business income, reducing the amount of income subject to self-employment tax. As a business owner, you pay 15.3 percent in self-employment tax. When you reduce your total income, you reduce your taxable income. 

In the same vein, companies can bolster their tax benefits by paying their expenses before the end of the year. For example, if you were planning on improving your production line in 2022, you can benefit from paying for the new machinery before the year’s end. 

Delaying income and taking care of expenses early is one of the simplest ways to afford your business tax benefits, but it hinges on the health of your cash flow. Using an outsourced accountant can ensure you stay in positive cash flow and help you decide how much income you can delay and how many expenses you can afford to address early. 

Establish a Retirement Plan

The Setting Every Community Up for Retirement Enhancement (SECURE) Act provided smaller companies with incentives to set up workplace retirement accounts. Businesses that sign up for this tax credit can receive up to $5,000 per year to help offset the costs of setting up the plan. These costs include fees to set up and deliver the plan to employees. 

Businesses must also meet specific criteria to qualify for the SECURE Act. They must meet the following requirements: 

• Have 100 or fewer employees who received $5,000 in compensation during the prior year. 
• Have at least one plan participant who isn’t highly-compensated. 
• Have a roster of employees who didn’t participate in a prior retirement plan offered by your business in the past three years.

Additional credits exist to increase employee participation in retirement plans. An example of these credits is the Small Employer Automatic Enrollment Credit that provides $500 per year for three years to small businesses that include auto-enrollment features in their plans. Combined, the two credits can reduce your tax obligation by $5,500 in the first year. 

Find a Charitable Cause 

Charitable contributions aren’t typically deductible for small businesses. They are usually only deductible for C corporations. But small business owners can still access these tax breaks by funneling the contributions through their individual tax returns. 

To achieve this tax benefit, small business owners must itemize their deductions instead of opting for the standard deduction. The exception to this rule requires the use of the Coronavirus Aid and Relief Act (CARES) to deduct up to $300 in charitable donations as an income adjustment. The $300 deduction only applies to cash donations made to specific charitable organizations and if you make non-cash donations, they are not eligible for the deduction. 

For itemizers who make non-cash donations, they can claim non-cash donations under Schedule A. These people must donate by the end of the year, and donations made after December 31st cannot be deducted until the following year. 

Contribute to an HSA

Health savings accounts (HSAs) are accounts that let those with high-deductible health plans save out-of-pocket medical expenses in tax-advantaged accounts. Contributions to an HSA are tax-deductible and the money grows while in the account. Withdrawals are also tax-free as long as you use them to pay for healthcare expenses that meet the requirements.

In 2021, you can contribute up to $3,600 for individual HDHP or up to $7,200 for family coverage. One of the benefits of contributing to an HDHP and HSA is that you can still access the benefits even if you miss the December 31st year-end, you can contribute to an HSA in 2022 and claim it on your 2021 tax return. The deadline to make contributions is April 15th, 2022. 

Claim Employee Retention Credits 

The CARES Act also led to the Employee Retention Credit (ERC). The act gives incentives to businesses that keep employees on the payroll during the pandemic and provides a credit against the employer’s portion of payroll taxes. 

Because the Employee Retention Credit is refundable, you can receive a tax break if the calculated credit is greater than your payroll tax liability. If this is the case, the amount of the tax break would equal the calculated credit amount. 

The ERC expires at the end of 2021 but you have until December 31st to claim it. You can receive up to 70 percent of the first $10,000 of qualified wages per employee each for each quarter you apply. 

The regulations for qualifying are as follows: 

• Your business must have fully or partially suspended operations during the governmental mandate from the pandemic. 
• Your business must have experienced a decline in gross receipts of 50 percent or more compared to the corresponding quarter from the previous year. 
• You must have launched a “recovery startup” business after February 15, 2020 and have annual gross receipts of 1 million dollars or less.

The ERC is a credit against payroll taxes. If you qualify for this credit, you won’t have to wait until filing Form 941 to receive the benefit. You’re also allowed to reduce the employer share of Medicare tax payments while anticipating the credit or you can request an advance using Form 7200.  

Consider Outsourcing Your Accounting to Maximize Your Tax Benefits

We here at Fully Accountable understand the complex nature of dealing with taxes as an emerging business. Our full-service team of digital accountants and fractional CFOs can help determine what tax breaks you qualify for and how to maximize your returns. 

Contact us today to learn more about how you can plan for the year ahead by utilizing our services. 

The post End of Year Tax Planning Tips for Small Businesses appeared first on Fully Accountable.

Keeping in mind that around 50% of millennials are freelancers, the drift is predicted to be even faster in the upcoming years. This shifting work model will impact every field, including outsourced financing and accounting. The emergence of this new working landscape has raised data security concerns and led to collaboration issues for some companies, while for others, it has improved the productivity of workforces and employee satisfaction.

At Fully Accountable, we understand the unique challenges and opportunities afforded by this shift to working from home. In this guide, you’ll learn everything you need to know about work from home. Let’s begin with discussing what work from home is. 

What is Work from Home?

Also known as a flexible workplace, remote working, or teleworking, work from home (WFH) is the process of completing job responsibilities from a remote setting or one’s home as opposed to traveling to and working from an office.

In the professional realm, communication is truly what makes the world go round. Thanks to technologies, such as cloud-based apps, like Slack, Skype, Zoom, Google Hangouts, Facetime, etc., working professionals need not be physically present in the office to complete tasks, work together, and be recognized as productive team members. These tools have made it possible for employees to be just as efficient, if not more while working from home.

However, the work-from-home model hasn’t solely been made possible by the internet or new innovation. The phenomenon dates back to around 50 years. Let’s dig deeper into the history of work from home.

Work from Home History

According to Flexjobs, the work-from-home model was first introduced in the 1970s, when thirty federal government workers were told to work remotely to curb the costs. Considering the high costs associated with fuel and long gas lines, satellite offices were built in various areas to eliminate the need to commute to headquarters.

Similarly, JCPenney hired some home-based employees for its call center in the 1980s. From there, the idea spread to other industries and businesses.

Now that you know what work from home is and how the concept came into being, it’s time to determine how you can succeed while working from home. Keep reading to learn how you can set up a perfect work from home space.

How to Set Up a Productive Work from Home Environment

While having a dedicated home office certainly helps, it’s not necessary to have one. However, you’ll still need to organize a space where you only carry out work. It should be an environment that helps you efficiently perform your work. Follow these tips to set up such a space:

Identify Your Needs

The first step is to identify what you need to perform your work. Work needs vary from one employee to another. Depending on the nature and scope of your work, you may need a large space that accommodates your computer, files, and other physical tools, or only a small space to fit your laptop. Therefore, it’s important to develop a list of items you need. Once you’ve determined your needs, you can start planning for a space to meet those needs.

Select Your Space

While you can always choose to work from your bed or couch, we definitely don’t recommend it. Nor do we advise you to keep switching your working spots. Like we mentioned before, choose a space that keeps you productive while working. Ideally, you should use the area for office work only, and it should help you maintain a healthy work-life balance, too.

Organize Your In-Home Workstation

The next step is to organize your workspace in a way that makes sense for your workflow. Everything you need during the course of a workday should be within arm’s reach, such as your pens, tech tools, art supplies, files, notepad, and so on. This way, your in-home workstation will both be highly productive as well as feel more serene. 

Once you’ve set up your work from home environment, your next big concern should be how you can stay productive with your new work setting. 

How to Stay Productive While Working from Home

Although working from home offers a number of benefits, it has its own distractions. With chores, pets, family, children, and other errands, you can easily lose focus. If you don’t do anything about it, your efficiency and productivity may be affected. To avoid this, follow these work from home tips: 

Dress Professionally 

You can always mark your attendance in your night suit, but to ensure productivity and convince yourself you need to work, you need to change your clothes. Do your best to stick to your regular work routine, and that includes dressing professionally. With work from home, the only thing you’re taking out of the picture is the commutation, which should be replaced by some physical activity, such as some stretching or walking. Then, dress and take your breakfast as you normally do. Sticking to your professional attire will make you feel motivated.

Plan a Work-from-Home Schedule

To maintain a healthy work-life balance, you must separate your working hours and personal time. Once you have a schedule, prioritize your responsibilities each day according to the complexity, impact, and time investment.

Without a defined boundary between work and personal life, and without regular breaks, your work can lead to burn-out. Make sure all your colleagues and your manager are aware of your working schedule. At the end of the day, shut off your laptop or computer and avoid opening any online chat or email once you’ve signed off. Immediately move on to your evening plans, such as an outing with friends or a workout class.

Take Regular Breaks

Regardless of the work setting, when you don’t give your body and brain some time to rest, both productivity and health can suffer. Like other muscles, your brain needs rest too. 

Therefore, no matter how busy you are, take the time to rest your brain, go outside, and do some stretching at pre-scheduled intervals. During this break, you can meditate, take a walk, read a chapter of a book, do a short yoga session, or listen to a podcast. 

Put Your Smartphone Away

That smartphone on your workstation can prove to be the biggest distraction from work. From using social media apps to taking calls from family and friends, it has everything to keep you hooked all day. Ideally, you should have a separate phone for work that you only use for important calls. Put the other smartphone away and use it during breaks or after work. 

Dedicate Some Time for House Chores

Doing chores during office hours can affect your productivity. To eliminate any distractions when you’re working, it’s best to dedicate up to an hour to house chores. Make sure to do everything you need to in this break so you can focus on your job afterward.

Make Sure You Have a Fast Internet

If you have children, their Xbox and FaceTiming habits may hamper your internet connection or slow it down. Slow internet speed, including download speed, can be extremely frustrating, which further hurts work efficiency. To avoid facing internet-related issues, try to set up your in-home workstation as close to the Wi-Fi router as possible.

Alternatively, you can switch to Ethernet. For this, you will require an Ethernet cable that connects your computer to the router. It will ensure a consistent connection, regardless of how far you are from the Wi-Fi router.

Avoid Miscommunication

When working from home, it’s critical to remain accountable and maintain efficient communication with your team. Even if you’re located in a different time zone, be responsive to your colleagues, regardless of when they sent you a message or email. Communication is the key to any corporate relationship.

When communicating from a distance, the chances of miscommunication and misunderstandings tend to be higher. Even with the most sophisticated communication and collaboration tools, you can never achieve the clarity and transparency achieved through face-to-face communication.

One great strategy to avoid miscommunication is to talk on call. If you notice a negative tone creeping in or face the slightest of confusion, use it as a cue to place a phone or video call for clarification. Oftentimes, we end up perceiving neutral written messages or emails as negative, so it’s better to confirm things on call before making assumptions. 

After going through the tips explained above, you should be in a much better position to stay productive when working from home. Now, let’s discuss some tools that facilitate remote work.

Work from Home Tools and Apps 

Work from home is possible due to different technological tools and apps that work to enhance efficiency. Based on our research, here are the best apps you can use:

Meeting Owl 

Meeting Owl is one of the best video conferencing tools out there. It features a 360-degree camera that will immediately focus on the person who is speaking during a video conferencing session. Remote attendants not only get a close-up view of the speakers, but they also get a panoramic view of all the other attendants present at the meeting. 

Slack 

When it comes to real-time team communication, nothing beats Slack. This is a corporate communication platform that comes with various IRC-style features such as chat rooms, direct messaging, and private groups. By sparing email inboxes and reducing the number of CCs and BCCs that need to be managed, Slack fosters more productive communication. You can make teams based on projects, departments, etc. You can send messages to full teams, small groups, or even specific groups.

Besides, you may also integrate Slack with DropBox, Google Docs, etc., allowing for efficient team collaboration. Hence, the app can be tailored to meet different team needs.

Grammarly

When sharing professional documents and emails, your grammar speaks volumes about your business. When sending proposals to potential clients, your grammar can create a positive or negative impression on them. This is where Grammarly comes in handy. It’s a cloud-based app backed by AI technology that helps you rectify any spelling and grammar issues. With this app, you should be much more confident when sending out business proposals or emails.

Trello

If you’re a project management professional, Trello is an ideal app for you. It offers incredible task and organizational task management power. The app revolves around bulletin boards, each of which represents a project, in which teams can create lists that are then populated using cards. These cards include comments and/or attachments and are labeled, given a deadline, and assigned to team members. If there’s any productive project management app in the world, it has to be Trello. 

BENEFITS OF WORKING WITH AN OUTSOURCED ACCOUNT COMPANY

For many businesses, the shift to the work from home model has also revealed the benefits of handling their accounting needs through an outsourced accounting company. Here’s a look at some of the top benefits of working with an outsourced accounting firm:

1. Reducing cost.

While it might seem like hiring an outsourced accounting firm will drive up your expenses, this move can actually reduce your long-term, overall costs. With outsourcing, you can tailor your accounting setup, which means you’ll only receive the services you need. You’ll also save on personnel costs because you won’t need dedicated, in-house accounting employees.

2. Meeting full compliance standards.

Compliance standards and regulations are constantly changing and updating in the accounting industry. By outsourcing your accounting services, you don’t have to worry about keeping track of compliance standards. The professionals at these firms will stay on top of compliance issues for you.             

3. Experience and expertise.

It’s hard to match the experience offered by a full team of professional accountants. Each team member is dedicated to accounting services and knowledgeable in all aspects of the industry. You’ll also benefit from the unique expertise and insight offered by these professionals, which could improve the efficiency of your company overall.

4. Save on time and resources.

By outsourcing your accounting needs, you can shift the focus of your own in-house team to other projects and tasks. This shift will save you on time and resources and allow your employees to focus on their own areas of expertise.

5. Peace of mind.

At the end of the day, we could all use a little more peace of mind—this is exactly what an outsourced accounting firm can give you. By working with a team of accounting professionals, you can rest easy knowing your accounting needs will be met by highly qualified professionals in the field. 

Final Word

By now you should have developed an in-depth idea about what work from home is and how you can improve your productivity in any work environment. This guide should help you plan your modern at-home workplace and not just survive—but thrive. 

Remember one thing: if you’re setting up a home office for your own business, you’ll need to keep your personal and business purchases separate to comply with the tax law. If you want to take the full cost of your business equipment as a write-off, you’ll need to keep them separate from your personal equipment. If this sounds confusing to you, get in touch with Fully Accountable, a full-service outsourced accounting firm, for any of your accounting and taxation needs.  You can also schedule a 30-minute consultation or request a free quote today!

The post Work from Home— What Is It and How Does It Work? appeared first on Fully Accountable.

The technology that we use today is the underlying aspect of almost all businesses, and since technological means are interconnected, it has now become easier to collect data. Easy access to critical information means that enterprises can now observe the profile of the target market, helping them in predicting future behavior.

Initially, businesses did not have such apps and techniques at their disposal, as companies used conventional methods and past experiences to make decisions.

The evolution of big data paved the way for businesses to take a more analytical approach in decision making. The tool provides businesses of today with the power of information, a skill that is instrumental to the success of a business.

How Data Improves Decision Making

The outreach of the digital world today means that there are multiple channels for businesses to explore. In addition to collecting data through conventional means, companies also have access to mobile devices, social media pages, and other active data sources. A business today can collect relevant information from almost any source and then make business decisions based on that data.  

The accessibility of real-time data ensures that companies of today provide better and improved customer engagement. The many channels available make it easier for companies to offer personalized services.

Companies can also use the information to enhance business efficiency. Successful enterprises of today use big data analytics to plan optimized selling strategies that eventually improve their performance.

The availability of critical data ensures that a business does not require extra investment with increased capacity. This not only provides an improvement in decision-making, but better delivery is also made possible.

The essence of making decisions based on data lies in consistency and continual growth. The data enables companies to create new business opportunities to generate more revenue, predict future trends, and optimize current operational efforts.

Now that you are aware of the ways data aids in decision making, here is a brief explanation of what data-driven decision making actually is.

What is Data-Driven Decision Making

Data-driven decision making, as explained above, is a means of working towards business objectives by leveraging available data, rather than just shooting in the dark.

The process of data-driven decision making starts with the collection of data based on measurable goals or KPIs. The sharp mind of an able entrepreneur analyzes the patterns from these insights and uses them to develop strategies that benefit the business. 

Accuracy and relevance are the keys to collecting factual data. Incorrect or irrelevant information can cause you to make decisions that yield little or no results. This is why collection, extracting, and formatting is critical steps that help in obtaining accurate data.

Fortunately for enterprises today, the democratization and the development of business intelligence software empowers users to analyze as well as extract data. This constant need for data and its importance in decision making has led to the creation of a new field by the name of data science. 

The goal of this relatively new field is to sift through massive amounts of raw data to make intelligent data-driven business decisions. The results of data mining come in two distinctive styles, qualitative and quantitative, both critical to making a data-driven decision.

Qualitative data relies on observation rather than measurement, while the opposite holds for quantitative data. However, it is the analysis of the collected data rather than the accumulation that is the end goal of the exercise.     

Data-driven decision making makes or breaks companies at the end of the day. This exemplifies the significance of online data visualization in decision making. Companies that approach decision making collaboratively tend to better than those who use ambiguous methods. 

How Data Analysis Helps in Decision Making

Since it is quite challenging to understand the steps and processes of big data analysis, we have broken down the complete process in the steps below.

1. Goal Identification

The first and most common step of big data analytics is goal identification. Organizations plan and identify their goals while taking related decisions accordingly.

The basic rules of goal-setting revolve around the critical principle of SMART. Experts believe that business objectives should be Specific, Measurable, Attainable, Relevant, and Time based. Even the data analytics techniques used to establish these goals follow the same steps.

2. Creation and Improvisation

Once you have established the goals, the next step is the creation or improvement of performance metrics that are used to reach organizational goals. Doing so can help a company in avoiding all non-related or insignificant data collection and analysis.

The elimination of non-related data makes it easier for a company to focus its goal as per customer requirements. This ensures that better analysis can take place, and goal optimization is performed easily and quickly. 

3. Data Collection

This is one of the significant steps for all big data analytics. As mentioned before, data collection can take place from more than one source, helping the company to structure and un-structure itself accordingly.

 Sufficient data from customers and or other peripheral sources aid a business in anticipating customer behavior.

The key point to data collection is the variable nature of data sources. The connectivity of technological means today prevents even a mouse click from going unnoticed. The variable sources can indicate a different target market altogether, for example, a notification through an Instagram handle or an email through a newspaper advert suggests different age groups.

4. Data Refinement

All collected data don’t need to be of your use. In this case, data cleansing is a must. The cleanup of data is usually in line with the objectives set. Deleting irrelevant data should be your top priority, as the professionals analyzing the results don’t need them.

Deleting irrelevant data is also vital because useless data can create confusion and lead to meaningless results. Categorizing information is also crucial to avoiding meaningless results, as it will help you in reaching your goals.

There are a lot of modern tools and software’s that help in analyzing or categorizing data. However, you need to choose the one that suits the needs of the business the best. Determine the type and requirement for your business and choose the tool accordingly. 

5. Implementation

Once you identify, categorize, and refine the collected data, it becomes essential to choose the appropriate tool to help you in data identification. Various statistical and analytical tools help you in analyzing data; however, all depends on the model and analytical methods you choose.  

Hiring professionals is the best method for tool selecting and choosing business goals. The professionals will ensure that tool selection depends directly on business goals and is suitable for data at hand.

6. Process Execution

The last and the most critical stage of making data-driven decisions is the process execution. This stage is where it all comes to an end with a decision that reflects the data collected and is in line with the analysis of the experts.

The organizational goals are met only and only if the data processing is done correctly. Businesses today follow the steps regularly to enhance their performance and to look for new ideas to satisfy their customers.

Now that you are aware of the necessary steps of ensuring a more data-driven environment, the following tips and takeaways will enhance the data-driven culture in your environment.  

1. Define Clear Objectives

The first step is to define clear objectives for a business. Collecting data before defining clear goals is a mistake that companies often commit. Rather than following the hype or whatever’s in business should set based on its Key Performance Indicators (KPI).

Although there are many indicators that you can choose from, you should avoid over-complicating things by concentrating only on the most important ones in the industry.

2. Don’t be Scared of Revisiting and Reevaluating

Often our brains skip to conclusions and are reluctant to consider the alternatives. Many businesses that fail blame their failure on the inability to revisiting their first assessments.

Verifying data and ensuring that you are tracking the right directions will help you in stepping out of your decision patterns. It is also important to rely on team members for a perspective and share it with them so they can help you see the biases. 

Modern businesses are impatient and usually, don’t have a fallback strategy. This is mainly because most businesses today are afraid of stepping back and rethinking their decisions. It may feel like a temporary loss, but it is a necessary step to take if you wish for success.  

3. Presentation of Data

As much as it sounds like your professor, the presentation of data is actually essential. Digging and gleaning looking for insight is nice, but more important is to convey the discoveries made in a meaningful manner.

An outline presented on a financial dashboard will ensure an at-a-glance overview of the financial performance of a company. The top KPIs such as operating expenses ratio, net profit margin, and earnings before interests and taxes aid in a fast decision-making process.

With the availability of data visualization softwares, you don’t need to be an IT expert in decoding the financial performance of your company.

4. Don’t Over-Rely on Past Experiences

One of the things that can lead to the failure of any business is an over-reliance of past experiences. Looking behind you or focusing too much on the past can cause you to miss what is in front. Environments and markets change all the time, a formula that guarantees success today will become a possible method tomorrow. 

Therefore, in light of the changing environment, managers need to combine past experiences with current data.

5. There is No Such Thing as Gut Feeling in Business

Some managers boast of following their instinct and the positive results it has led them to achieve. However, the thing they don’t mention is that they first trust the gut, and then follow it. 

Following a plan of action, instinctively can turn out to be a recipe of disaster for a business. Business experts claim that the only line of action for business decision making should be research and analysis.

Becoming a data-driven organization is not a simple, walk-through process. Waking up one morning and then deciding to use data for decision making is not the way companies change their attitudes.

Change has to come from the top as it is the responsibility of the business hierarchy to change the company culture. The best way to get the leadership to sit up and take notice is by showing and proving how analytics bring value to an organization. 

A revamp of business trends and styles is possible only through the workforce. A business needs to install the value of data in its workforce. As the employees start applying these insights directly in the business, using them in the decision-making process will embed within the organization.

Revamping the attitudes is also about realigning the culture of the organization while ensuring that each and everyone is aware of the benefits of using data. 

While the business does need a professional for data mining, it does not require a data scientist to analyze it. Following the simple steps mentioned above will help in making your business decisions more data-driven. 

Successful companies such as Google and Walmart are an example of the benefits of being data-driven as their success story is for all to see. 

While we do not suggest blindly following whatever the two do, it is imperative to understand their method of success, which is data-driven decision making.  

The post Data-Driven Decision Making is the Path to Business Success appeared first on Fully Accountable.

Yet, many small businesses tend to take the sales tax for granted. It is also difficult for them in the know of all legislation and bills passed related to their industry, which is why sales tax often goes under the radar. A balancing act may be difficult to carry out.

But this is exactly what separates successful businesses from ones which are destined to fail.  A small business which adapts to changes, and is aware of everything related to the industry is bound to last longer.

While adapting to changes may be a key requirement for all businesses in an industry it holds more significance in the case of small businesses. You see for a large and established firm adjusting to the changes may not be a tough act to follow. These firms have enough resources to hire experienced professionals to design a strategy and to pilot their ship to the coast.

Many entrepreneurs blame the lack of time and energy as a big reason for not giving extra attention to pending sales tax. However, if you as an owner of a small scale business does this, and ignore the significance of the sales tax, you will be left with no other option than scrambling to deal with the next letter your local tax authority sends you.

In this article today, we will discuss the hazards of ignoring sales tax.

Why Be Compliant?

We do understand that at the end of the day the decision to be compliant or not is a judgment call.  However, there are reasons we urge compliance to sales tax regulation, especially for newly established businesses.

Neglecting to pay sales tax can have a cumulative effect at the point of sale for a business

Not being sales tax compliant can cost you money in the long run, especially if you plan on selling your business in the future. A business which collects sales tax from each transaction incurs the cost of collection and remittance which would not be more than a few thousand dollars.

At the point of sale of a business, due diligence is performed on the financial activities by the party purchasing it. This is done because the new owners are now held accountable for all business decisions made in the past. Therefore, during the transferring of all business assets, the buyer also asks for a sales tax clearance certificate.

A sales tax clearance certificate is handed over to a business by the state it functions in. This certificate is a legal indication of the business being clear of all sales tax charges i.e. the business has paid the sales tax on a regular basis and that the owners selling the business are not liable to pay any sales tax.

Potential buyers are concerned about sales tax because they don’t want to incur additional liabilities. This is the reason why they need a guarantee that they won’t have to pay taxes for any period prior to ownership.

If a business has not paid sales tax it won’t be eligible for the sales tax clearance certificate. In this case, the sales tax will be calculated on the basis of all the sales made during the history of the business, the final amount will then be deducted from the initial sale price agreed between the buyer and the seller.

This whole exercise can cost a business a fair chunk of the decided sale price. Therefore, rather than ignoring sales tax it is better to clear all dues in a timely manner.

It becomes impossible to sell through larger distribution channels

All small scale businesses need the support of bigger distribution channels to reach a larger audience if they are to grow. When a business is not sales tax compliant, then it is difficult for them to tap into larger distribution channels such as Walmart or other retailers to sell products.

What Can Possibly Happen If I Do Not Pay My Sales Tax

This is one question that owners of newly formed businesses often wonder about. One reason why small scale businesses carry on ignoring sales tax is that they are not aware of the consequences. The following are the repercussions of ignoring sales tax.

• The tax authorities may force you to pay the whole uncollected tax out of pocket

With state governments realizing the huge potential of revenue they can generate through sales tax, special emphasis has been leveled at imposing sales tax.

Therefore, if you have a sales tax obligation but you are not remitting it to the state, you run the risk of being forced to pay what you owe them with penalties later.

As long as you continue to neglect collection and remittance, you will run the risk of being audited and penalized. With the changing financial landscape and the immense potential that the eCommerce industry holds, the chances of these penalties being levied could soon be true.

• In case of late remission, you could be asked to pay interest fees

If you intend on accumulating sales tax and paying it back at some point down the road, then you need to be wary that for all late payments, interest will be charged on any of the tax due. On average, states charge a 6.4 percent interest penalty on late remission.

Additionally, some states also charge a flat rate of the original tax as a penalty on late sales tax remission. If you are late even by a day in paying your tax, you will be charged a penalty by the state. The average sales tax penalty states levy on sellers is 17.85%

How Not Paying Sales Tax Affects Your Business Operations

So far in this article, we have only discussed the costs of non-compliance, however not paying your sales tax also has an effect on the financial aspect of the business. Ignoring sales tax or accumulating sales tax for later payment can lead to problems in creating the financial structure of the business.

Without a proper understanding of sales tax rules, you may be making decisions which are good for marketing or sales, but bad for business down the road. In such cases, it is important to also be aware of problems that ignoring sales tax can cause your business.

Below we list down segments or activities of your business which can get affected in case of a neglecting attitude towards sales tax.

Record Keeping

Keeping a record of the sales tax helps us in the long run. Rather than making adjustments after making an accumulated payment which includes the penalty and the interest levied for late remission it is better to record timely the proceeds paid for sales tax.

Record keeping and ensuring that all accounting details are under check are hugely important for newly formed businesses. We have seen a lot of businesses fail because of their inability to make adjustments in their books according to the transactions carried out.

Time

The phrase a stitch in time saves nine holds true for all walks of life. Owners of newly formed businesses will agree that managing a whole business and ensuring that everything goes to plan is a momentous task.  Owners of new business are often not able to take time out for other things

Owners of newly formed businesses prioritize sales, revenue generation, and marketing and in their effort to improve the identity of the business they tend to completely ignore the sales tax. For a business to be sales tax compliant it has to register itself in the state where it carries out its operations.

This can be a pretty boring task especially if you already have something highly important and challenging to deal with. However once done the process of remitting sales tax can be automated making your life simpler.

However, you are in for a long haul if you have not offered to make your business sales tax compliant even after your business has been operating for quite some time now. In this case, lots of agreements and contracts will be signed between you and the state which can be draining and time-consuming.

Therefore making your business sales tax compliant at the earliest opportunity is the way to go forward especially if you plan on avoiding needless hassles and saving time for later.

Assets

Yes, you heard it right, a business can lose its assets in case of inability to pay sales taxes. Once the state finds out that you have not paid taxes for years, it demands you to pay at the earliest. However, there have been cases when a business does not have the ability to pay back.

The state, although designed to protect and safeguard us can be pretty ruthless at times like these. If the business is deemed unfit to pay back the required sales tax, alternate methods are implemented to retrieve the accumulated amount from the business. This usually means taking control of the assets of the business.

Imagine working hard to setup a business and accumulate assets only for them to be taken over by the state. Losing control of assets is a heartbreaking ordeal for any business that too if it happens over taxes and non- payment of nominal remissions which could have easily been avoided.

Costs

Apart from the costs already discussed in this essay, there are other costs too. If the state decides to take legal action against you, things will get extremely tough as you will require an attorney to represent you. Any good attorney will cost a lot; this will obviously have an adverse effect on your business.

Not only does ignoring sales tax affect the financial costs of the business it also has an adverse effect on the owners, remember, it is not easy dealing with tax-related problems. Issues like these can be taxing and stressful not to forget that during the whole ordeal your attention is away from the day to day operations of the business.

Negative Publicity

One issue that is often overlooked, even when a business is under a state’s radar for ignoring sales tax is the loss to the credibility of the business. Negative attention has an adverse effect on the business leading to loss of potential clients and loss of sales.

Once a business loses credibility it is very difficult to regain trust. This case gets worse given the kind of attention. If for instance, the state decides to take you to court for this honest mistake, it will lead to lots of negative murmur about your business with people speculating different things about you.

Yes, we agree that reality and perception are two different things, but it is always perception that shapes an opinion.

Stop Ignoring Sales Tax

As business owners it is your right to make decisions in the best interest of the business. As advisors of many new startups and local online businesses, we are here to guide you on what could affect your business in both favorable and adverse manner. Ignoring sales tax will definitely have adverse effects on your business as explained in this article.

Reading this article we hope that you realize the importance of sales tax and the effect ignoring them has on your business. We also provide solutions to many other problems that newly formed businesses face.

At Fully Accountable we guide our readers on possible finance-related queries because we believe that a well-managed bookkeeping portfolio is a key indicator of the potential of a business and is a true reflection of the success that a business is bound to achieve over the years.

The post Why Ignoring Sales Tax Can Be Hazardous for Your Business appeared first on Fully Accountable.

Filing taxes is a cumbersome process and online sellers will waste several hours trying to deal with compliance. If you’re new to the e-commerce business, let’s take a moment to understand what exactly a sales tax is.

Sales Tax

Sales tax, by definition, is a ‘consumption tax’. It is charged when you buy goods or services. State and local authorities use this tax for things like roads, schools, and public safety. It is controlled at the state level. This means that each individual state can set down its rules and laws about administering sales tax. The only prerequisite is that they fall within the framework defined by the US Constitution.

Sales tax can vary in terms of the list of items that are taxable, the amount of sales tax charged, and the frequency and dates on which online sellers need to file these returns.

Some steps that can guide you through the process are as follows:

1. Determining Sales Tax Nexus

The word nexus means to tie or to bind. Having a sales tax nexus means your business is tied to the state under consideration and your requirement as a business owner is to charge this specific tax to buyers present in these states.

In the US, the following activities can create a sales tax nexus for your business:

• Location: Having an office, store, warehouse, etc., for your business in that state.
• Personnel: Having an employee, salesperson, contractor, or installer who is doing work on behalf of the business in that state.
• Inventory: Some states will consider inventory storage to cause nexus.
• Sales: The amount of revenue you generate in sales also determines the sales tax nexus in some states. The threshold for this is usually 100,000 US dollars annually. It can also be according to the number of transactions recorded, for example, 200.
• Affiliates: If a business affiliate advertises your products and shares in the profit made, this can create a sales tax nexus in some states.
• Shipping Relationship: If a third party ships products to your buyers, a nexus can be created.
• Sales at Trade Shows or Other Events: If you sell products on a temporary basis in a trade show or any other event, then this may create a nexus as well.

2. Verification of Taxable Products

The next step is verifying which products are taxable. Most tangible products are taxable in the US. This can include everything from furniture to toothbrushes and coffee mugs. However, items that are in the category of necessities may not be subject to taxes in all states. This can include:

• Groceries items
• Clothes
• Supplements
• Books, particularly textbooks or religious books
• Digital products (Music, movies, E-books)

Some states may exempt other items as well. For example, Ohio exempts the tax amount on precious metal coins. The price of the item can also determine whether it is taxable or not. In New York, clothing items with a price higher than $110 are not exempt from this tax.

3. Registration for a Sales Tax Permit

After determining how a sales tax nexus works and which products are liable for taxation, the next step is to register for a permit so that you can legally collect sales tax. Sales Tax Registration is managed by a state’s taxing authority. It is usually the State Department of Revenue.

You can register on your own or hire a professional to complete your sales tax permit registration for you. Registration for a sales tax permit will require the following information:

• Personal contact information
• Business contact information
• Federal Employer Identification Number (FEIN or Social security number (SSN)
• The entity of your business (Partnership, Sole proprietorship, LLC, etc.)
• Your NAICS Code

You may get your sales tax permit number instantly (when filing online) or might take at least 10 business days.

Note: Do NOT skip this step. Sales tax collection is considered illegal if you don’t have a valid permit. It may be a mistake in some cases, but some states consider this to be tax fraud and take serious action.

Other aspects of sales tax permit registration include:

• Due Dates: When you receive your sales tax permit, you will also receive a filing frequency as well as due dates for tax filing. The filing frequency can vary from a monthly, quarterly or an annual/semi-annual basis. The filing frequency can depend upon the amount of sales tax collected by the seller in a state. The due dates for tax filing will be different for each state. In most states, the due date falls on the 20th day of any given month.
  • Resale Certificates: Your sales tax permit can also serve as a resale certificate in most states. This means that you can buy retail items and resell them without paying tax.

4. Setting up Sales Tax Collection from Buyers

Now that you’ve understood the various technicalities involved in sales tax collection, we can move to the main task – collecting the money from buyers.

In online retail, the shopping cart and marketplace lets you set up a sales tax collection feature. Some of the aspects involved in setting up sales tax collection include:

• Origin-Based and Destination-Based Sales Tax Collection: You will generally be required to collect sales tax from buyers through:
  • Origin-Based Collection: Depending on the state, this requires you to collect sales tax at your business location. For example, if your business is based in Texas (an origin-based state), then the rate is determined in accordance with your location. Buyers in Texas are then charged that particular sales tax rate. This is a relatively simple form of tax collection.
  • Destination-Based Collection: In this form of tax collection, you charge sales tax according to the location the product is being shipped to. As compared to origin-based tax collection, this is a little complex and requires you to calculate it according to the state, county and city where the buyer is located.
• Shipping taxability: Most online retailers will charge for shipping, and some states consider shipping to be a mandatory part of an online transaction. This is subsequently followed by a sales tax charge on the shipping amount. Other states consider shipping to be a separate charge and do not consider it to be taxable.
• Drop Shipping and Sales Tax: Drop shipping is when your vendor ships an item directly to a customer. This can be a profitable business model, but it can cause complications in sales tax collection. An example of drop shipping is if your website sells phone cases but uses a third-party company for design printing and shipping the product to the customer. If you notice there are several transactions happening here – your customer purchases an item from you, you purchase an item from your vendor, and finally your vendor ships that item to the customer– and if the vendor has a sales tax nexus in your state, they will have to charge you the required amount on the purchase, unless you provide them with a resale certificate. Additionally, if your customer is located in a state where you have sales tax nexus, then you will have to charge sales tax to the customer as well.

5. Sales Tax Reporting

After sales tax collection comes filing on the due date decided. This type of filing can be time-consuming. When filing a return, you don’t just need to determine the amount of sales tax collected from buyers in an entire state. Instead, you will have to calculate the amount collected in each county, city, and any other taxing district. This is important because states use these dollars to make payments for budget items like infrastructure and public safety.

However, they need to know which city or area to allot these funds to, and that’s where the additional breakdown of your transactions comes in. For some states, for example, origin-based states or those that have a single sales tax rate, the breakdown is not very difficult. This is limiting to only a few states, however, and breaking down transactions is extremely time-consuming, especially if you sell items through multiple channels and in high volumes.

6. File your sales tax returns

Most states allow you to file your sales tax online. Some may even make this mandatory. If you want to file manually, you will have to log in to the website of your state’s taxing authority. We recommend that you file your taxes a few days before the due date. This can help avoid problems that may occur with your filing and also give you time to deal with unexpected state idiosyncrasies.

For example, in Florida, the due date is the 20th of a given month after the taxable period. Florida, however, requires a seller to pay via an electronic funds transfer (EFT), and their payment should reach by the due date. Therefore, if you want to file on time, you will need to know the sales tax amount you owe and transfer the money to the Florida Department of Revenue a few days before the given due date. If you fail to file on time, there will be a fine of $50 with interest on the amount of sales tax you owe.

Other states operate under similar mechanisms and require sellers to file with interest if they are late. If you know you will be late in filing your taxes, some states allow a filing extension. However, this is not the case for most and a seller can still be fined in spite of being granted an extension.

If you’re late by accident and receive a penalty, then you can contact the taxing authority of that particular state and request for the penalty to be waived. This works if it’s the first time you’ve been late.

Outsourcing Your Tax Management:

Complying with the various rules and regulations attached to sales tax filing can be a resource-draining activity for any e-commerce business. If you feel like managing this is taking up too much time and energy and are still not sure that your reporting will be error-free, then you can consider outsourcing this activity and reduce the risk of errors and late filing penalties. Outsourcing also reduces the cost that comes with hiring a full-time employee for your accounting and tax filings.

Life after Taxes in an E-Commerce Business

Besides managing your sales tax, there are numerous other benefits of having an outsourced accounting team for your eCommerce business. After all, accounting is no longer just about completing tax returns and balancing the checkbook. The reality is that a growing eCommerce and digital business needs a monthly accounting department. Hiring a full outsourced accounting team with a modern outlook offers you proactive and real-time thinking that will increase the efficiency of your business and give you more time to focus on expanding and improving upon your core operation. With a team of experts working to bring your accounting division up to mark, turnover and disruption will no longer be your issue.

Finally, our services allow for the improvement of your cost structure and can help reduce your customer acquisition costs, costs of goods sold, and labor costs. All of these will ultimately result in greater profitability. You can lower the costs of your finance and accounting operations, gain faster access to reports and useful data, make better decisions, and improve the KPIs for your eCommerce business. Also, get tax advice and planning that will save you thousands of dollars each year.

The post 6 Practical Steps to Managing eCommerce Sales Tax (Updated 2022) appeared first on Fully Accountable.

1. Keeping up on Bookkeeping

This may seem like a task you can kind of just push to the side, but if you do that you will quickly fall behind. Most of the time with small businesses, when something is pushed to the side it is forgotten about and keeps getting pushed further and further back because it’s not as “important” as the current task.

Not having up-to-date books will cause:

• Loss of profits, if unpaid invoices are left unnoticed
• Ruined relationships with suppliers because of unpaid invoices, which leads to bad credit rating
• More work come tax season

2. Relying too Heavily on Technology

The problem with trusting accounting technology, is you think it will do all the work for you. However, you still have to make that software work and know how to properly use it. Also, while one form of technology might work for one company doesn’t mean it will work for you and your company. I recommend doing some research first to figure out what will be the best fit for you and your needs.

3. Doing Tasks Last Minute

Many business owners think of accounting more as a chore and not so much part of their job. Since it’s not a top of mind priority, important deadlines are often missed and forgotten about. When accountants wait until the last minute it causes:

• Missed deadlines – which leads to paying more money
• Mathematical mistakes – which takes time to fix and cost money
• No planning for the future – which leads to (you guessed it) paying more money

4. Poor Organization and Record-keeping

Small business owners often lack the time and skills to manage record-keeping and bookkeeping. This is often not something on their to-do list and on top of that it takes time away from the business. Fortunately, there are dozens of apps out there to help make organizing a lot easier. With a little bit of help, you can have a system that works great for your company in no time!

5. Trying to do it all Yourself

Doing all your accounting in-house is not something you should do unless you’re an accountant yourself. A lot of people do this because in their mind this is the most cost-effective, but in reality, time is money and they don’t have the time. For small business owners in particular, they need all the time they can get because usually, they are lacking manpower. Passing the accounting work on to an expert will allow you to focus on the important components of your business.

Moral of the story: Accounting IS an important task, don’t push it to the side and if you aren’t comfortable doing it yourself (sorry YouTube videos probably won’t work for this one) you should think about outsourcing. Being smart about it, in the beginning, will save you money in the long run!

Learn more about Outsourced Accounting!

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