Cash Flow: Sometimes It Takes an Expert to Advise on It

Cash flow woes can be a major problem for a business as any Rochester accounting firm will note. Without a decent level of cash flow, a business will end up suffering from quite a bit up upheaval. Working with CFO outsourcing services may be able to curtail problems associated with cash flow woes. This is a must because a business does need to have enough cash coming in so as to effectively remain in operation and not suffer from resulting financial limitations. There could also be issues with Rochester taxes that might arise when not enough cash flow is generated to cover them.

Understanding why cash flow is so important begins with defining what exactly cash flow is. First, it is critical to point out that cash flow is NOT the same thing as profits. There may be profits found in monthly cash flow, but the cash flow itself is not solely profitable. Similarly, a business doing $35,000 a month in cash flow could be operating at a major loss. A Rochester CPA could point out numerous examples such as these.

How is this so? Basically, cash flow can be defined as the amount of money that comes into the business through revenues. A commercial gym, for example, may gain its cash flow through memberships combined with the sale of food and beverages along with merchandise. When all of the revenue is added up, the end result would be the figure for cash flow. Cash flow can be broken down into daily, weekly, monthly, quarterly, and annual amounts. Upon doing so, steps must be taken to determine whether or not the cash flow is contributing to profits or losses. A good Rochester accountant will tell you where you stand in this regard.

Obviously, the goal of the examination of the cash flow would be to maximize profits while also trying to cut down on any losses. This might all seem very basic, but there are complexities involved with the process. Many business owners can be good with the product or service they offer, but when it comes to actually managing their finances, they can only do so when they make enough profits to cover their expenses. And even this can actually be done from the wrong perspective.

What that means is the cash flow might be low due to not properly managing the expenses of the business. Money could end up being wasted because it is being overspent on areas that could easily be cut. Outsourcing CFO services could lead to recognizing what areas could benefit from budget reductions. It could also contribute to better tax planning.

And then there may be more complicated steps to take such as increasing funding to a particular area so that it might contribute to boosting revenues and cash flows as a result. An experienced eye may be able to locate such things, make suggestions, and then follow through on any affirmative decisions made from those running the company. Often, management will be quick to agree to what the CFO or a Rochester consulting firm is is suggesting. All they needed was the proper insights to be pointed out to them to make the necessary changes.

Avoid Rookie Mistakes When Selecting CFO Outsourcing Services

The company you choose to handle your CFO outsourcing is going to impact your financial management system. Their goal will be to ensure that your company’s performance improves, while helping to better manage operations and funding. It is with this in mind that you should look to working with a Rochester consulting firm and ensure that they are going to be qualified to help guide you through this entire process. This may take some time, but in the end, it will help you to avoid serious rookie mistakes.

This begins by understanding that good companies will not require you to sign a long term contract with the CFO outsourcing company. While there may be documentation that you sign to utilize the services of this corporation, you shouldn’t be required to commit to a specific amount of time. After all, you may only need the services of the company a few times and a particular CFO might not meet your needs. In the event that you do choose to stick with an individual for a long term, ensure that they are able to commit the time and understand what you will be looking for in their services. That way it will remain mutually beneficial.

It will also be important that any CFO you consider shouldn’t be a part of your company. This individual should be part time at the most and paid through a 1099 form. This allows you to avoid payroll and having to include this individual on your company healthcare. While you are securing the individual that is being recommended, ensure that their standard fees will fit into your budget. Some companies will have an hourly rate for this individual, while others may allot you a maximum of so many hours with the CFO and they receive a flat payment, no matter how many hours are spent with your company.

Above all, the goal is to choose someone who can handle this role and the challenges that come with it. Typically, young adults and those with less than 15 years of experience in an industry don’t tend to be good choices. The reason is that they might not have faced many of the issues you are going through and it will be important that the person you take on is able to deliver fast, effective results. If specific concerns or issues are going to come up, let the Rochester consulting firm that will help you with your CFO outsourcing know in advance. This will reduce the risk of you taking on someone who might not meet your needs and it can help to build a level of mutual trust and understanding about what your needs are, while ensuring that they are being met.

Inherent Characteristics of A SIMPLE IRA Plan

Tax planning is a long drawn process. However, this does not mean that it has to run throughout the year. In fact, in order to avail most tax benefits, a business needs to ensure that it has everything pertinent in place well in advance. This is exactly what we, as your chosen Rochester CPA, look to do for your business. There are various instruments that we try to use to get you the maximum Rochester taxes benefits. However, which ones fit your business depends entirely on the key nature of your business.



One of the instruments that we recommend for businesses looking for tax planning is the SIMPLE IRA plan. Here are some key characteristics of the SIMPLE IRA plan that should be of use to you.

1. Size of the business matters:

The first thing you need to know about the SIMPLE IRA plan if you are in the midst of tax planning is what any Rochester CPA would tell you. This is that the SIMPLE IRA is only limited to those companies whose employee strength does not exceed 100. This means that you can only avail the SIMPLE IRA plan if your business employs 100 or less than 100 employees.

2. Adopting the SIMPLE IRA plan:

If you know that your business meets the prerequisites then all you need to do is contact a Rochester CPA like us and ask them to set everything up for you.

We would ensure that you get the Rochester taxes benefits by choosing whether a Form 5304-SIMPLE, 5305-SIMPLE or a SIMPLE IRA prototype suits your organization the best. Subsequently, we would help you establish it.

3. Two forms of contributions:

There are two ways through which you can contribute in a SIMPLE IRA plan. You should note, however, that your benefits in terms of Rochester taxes would remain the same, regardless of your choice. Your choices would be between a matching contribution of up to 3 percent of the employee’s salary and a 2 percent contribution for each employee which would be non elective.

4. Mandatory exclusivity:

Establishing a SIMPLE IRA plan means, however, that you cannot partake in any other retirement plan. Effectively, this is something that needs to be assessed. This is also a stage of tax planning where you need our help as your Rochester CPA.

Basically, in our capacity as your Rochester CPA, we would assess whether the Rochester taxes benefits you would get from a SIMPLE IRA plan would be enough for your organization by themselves or not.
If we find during the tax planning procedure that you need more Rochester taxes deductions and exemptions then we would not recommend the SIMPLE IRA for you. In either case, expert guidance from an experienced Rochester CPA is something you should look for.




 

Planning can Reduce Risks for your Business

Any business you own is going to have risks. Limiting the number of risks is the important factor. There is no need to have senseless risks flooding your business. You have probably heard the saying that having more than one pair of eyes is better. It is true in almost everything including running your own business. Your company can definitely benefit from an expert looking from the outside in, while you look at it from the inside. This is where Rochester consulting can be beneficial. A consultant with a Rochester CPA firm can be on hand to help you with financial and tax planning.

CPAs are experts in the financial realm from everything involving taxes to gaining financial assistance for businesses. The right Rochester accountant can offer you financial assistance services in which they help you draft your business plan, fill out the bank applications, and help you choose the best local bank based on their relationships with them as well as what your business needs.

You may have a business plan which you wrote three years ago. Is it on target? Did you reach the goals you specified or perhaps something changed taking you in a new direction? It is a good rule to look at your business plan each year to determine what needs to change. Planning is all about looking at where your company is at and where you want it to go, based on your current situation.

When you analyzed your accounts including retirement and expenses was something costing you money? Perhaps you see a loss where you thought there would be a profit? Your Rochester CPA can help suggest some changes to your business for better profit. They are not experts in all businesses, but they can look at your financial spending to determine where you might be able to modify things, thus lowering your current risks.

Through Rochester consulting your advisor has the ability to examine your business each quarter. They look for the profit and loss you experienced. Perhaps you decided to purchase new equipment thus lowering your savings, which created an issue when your sales lowered due to a seasonal issue such as a slower tourist season in your area. The expense you created might have been better suited towards the end of the quarter or next year. Do not look at this in a negative way or that everything in a business would have a negative effect. It is just an example of why planning can be a help to you. It could go another way in that you made a purchase, which helped increase your business therefore as a positive move it lowered your risk. You can now look at what happened, expected or unexpected, and decide if your current plan can be revised for the rest of the year. Adding in another perspective from a financial advisor such as your Rochester accountant often helps put another opinion on the situation. Playing devil’s advocate can sometimes be the best way to see the whole picture too.

Financial Plans for Increased Profitability in 2013

Anyone can run a small business these days with all the internet startups and home based business concepts which exist. The downside is most of us are not accountants. Business tax planning is a lot different than your individual taxes. In your personal life grabbing onto Turbo Tax might be an option, especially if you live a simple life. When you have a simple home business, you still need a Rochester accountant. Tax deductions, liability, and laws change often. You have probably heard about the tax hikes which were being proposed for 2013 and other tax related news. Issues like this are what accountants are paid to keep up with. They know what can and cannot be deducted, which translates into better financial planning for you. To prepare for a better business with more profits it is time to seek Rochester consulting.

With the right Rochester CPA you can start putting money away for your personal retirement, as well as getting your business in a better financial position to grow. There are eight things you can do to ensure you have a proper financial plan. The first is creating a financial plan in terms of the expected revenue you will bring in each month and project what your possible expenses are going to be. Chances are you have been in business for a year or two already, so you should have an idea of what you bring in each month and what the constant expenses are.

Every month you need to review your plan. Did your projections on revenue and expenses meet or exceed your outline? What happened if you lost profits? Lost profits are not something you can recover, so ensuring you do not lose anymore is important. If there are losses it is up to you to make adjustments as soon as possible to reduce the loss for the next month.
A Rochester CPA can help you with this by bringing it to your attention when one month or quarter has not earned as it should have or as per your plan. They may be able to suggest some of the areas you need to improve on. Perhaps you are spending too much on entertainment/dining to try and win new clients. Mileage or fuel expenses can also be high, but something you might be able to reduce. Overhead costs might have increased for some reason, thus you may find ways to reduce them again.

Before you spend any money in your business think about it. Do you need to make this business expense? Is it truly going to help increase your profits? Sometimes you can delay expenses as a means of increasing profits.

For financial planning you cannot be afraid of hiring the help you need like Rochester consulting. A consultant can help direct you towards better expenditures and profits.

Tax Planning Is for Everybody

Not everybody considers taxes as something to be planned for - either you pay it in full, pay it less than what you owe the government, or skip it altogether and face the consequences later. Tax planning then seems like a waste of time and hiring the best Rochester accountant for it seems like a waste of good money.

The reality, however, is significantly different than the above mentioned unplanned payment of taxes. Every taxpayer from individuals to for-profit and non-profit organizations must engage in effective planning for taxation purposes. The reasons are many including:

• Taxes are expenses that lessen the net income earned by individuals and businesses. Planning to minimize the amount of taxes paid will maximize the net income earned; for example, you will defer income declaration for the next year in order to lessen your tax burden in the current year.

• Non-payment of taxes has surcharges and penalties that, more often than not, exceed the amount of taxes that should have been paid in the first place. The possible sanctions also make it necessary - nay, crucial - to engage in effective tax planning to avoid these regulatory penalties.

• Tax credits should be taken advantage of every year. These represent substantial savings since the items are non-taxable. Businesses use tax credits to their advantage such as the case with the Marriott Hotel with its alternative fuel plants and Bank of America with its affordable housing tax credits.

Tax planning is not just a one-time, year-end deal, far from it. The best Rochester accountant will strongly encourage his clients to engage in planning for taxation purposes on a year-round basis. This is to ensure that any new legislation, policy and rules affecting the remittance of taxes can be considered and changes can be made. For example, the so-called Obamacare - a health care reform law under the Obama administration - will increase taxes in the coming years. Your company should take these changes into account in, say, planning your employee benefits program.

Again, it must be emphasized that the main purpose of tax planning is to maximize income and minimize expenses. It must then be an integral part of the overall planning process for your business (i.e., marketing plan, sales plan, and business strategy plan). Taxes, after all, affect every facet of your operation from the sales taxes to the investment taxes.

It must also be noted that tax planning should be undertaken under the guidance of an experienced Rochester accountant. Said professional has the right set of knowledge, skills and aptitude to undertake the complex processes and papers involved. Think of the money paid for his professional fees as money well spent in order to gain greater amounts of tax savings. There is also the fact that there is no one-size-fits-all taxation plan since every business is unique in every way. Hiring an experienced accountant for the job means a tailored taxation plan that will, indeed, answer the goals of tax savings for the entity - yours, for example.

So, don't wait for the tax season before starting on the first steps of tax planning. Do it now! Read more about tax planning click here.