Accounting and Tax Tips and Information

written by Lauren Bakken, owner of Bakken CPA PC and co-author of the book, One-Income Household

Bakken CPA PC is dedicated to providing timely, professional, personalized service to businesses and individuals.

Tag Archives: small business

Are Your Children Being Educated About Money?

Three out of ten parents don’t talk to their children about money or have had just one major talk with their children on the subject, according to a U.S. survey conducted for the AICPA. Children tend to be over the age of ten by the time their parents first talk to them about money.

Above talking to children about finances, parents are more likely to talk to them about other important topics, such as:

  • The importance of good manners
  • The benefits of good eating habits
  • The importance of getting good grades
  • The dangers of drugs and alcohol
  • The risks of smoking

It is important to teach children the right lessons about financial responsibility and help them to be prepared for a sound financial future.

Some tips for how to get these ideas across to your children:

  • Start Early. Your children learn at a young age to want items, such as toys, clothes, or games, at this time, you should start teaching them about saving. Have them practice saving by putting away some of their birthday or allowance money to purchase the item they want, give them a goal to meet and once it has been met, let them buy the item. This will teach them the basics of delayed gratification and budgeting for a goal.
  • Speak in Their Terms. Your child may have no interest in learning about the compounding interest on their college savings account; they are more likely to care about money to spend with friends or to buy a toy. Take this opportunity to teach about savings by relating it to something they will care enough about now to listen.
  • Repeat Often. The more often you talk to your children about good financial decisions, the more likely it is to stick with them in their future. At meal times, talk about saving for big purchases, like vacations, and how it might affect budgets.
  • Walk the Talk. As they say, actions speak louder than words. By giving in easily to your children if they make a fuss over a toy at store, then you will have a hard time convincing them that delayed gratification and sticking to a budget is effective.

Teaching your children now about the benefits of saving and budgeting is just as important as teaching them to be polite. These are basic skills that your children will need to know to be a well-rounded adult. For more information on what other financial knowledge you should be passing on to your children, contact your accountant today.

Is Your Small Business Ready To Take On Its First Employee?

Whether you just recently started a small business or you have been up and running for a while and working as the entire staff on your own, there may come a time when you decide you need to hire your first employee.  Before you jump into adding new staff to your workforce, be sure you are ready for it, as there are things you need to have set up in order to start off correctly.

If you think you are ready to take that step, here are a few reporting and regulatory issues you should think about:

  1. Determine the General Position: Think about why you are looking to hire a new person. Is this person going to be someone that will manage the store some of the time that you will not be there?  Is he or she going to do administrative tasks to free up some of your time to do billable work? Will the new employee work full or part time? And what are you willing to pay the person for their services? These are few very important questions that you will need to think about before you even begin looking to add a new person to your business.
  2. Obtain an EIN: Before you hire your first employee you must request an Employer Identification Number from the IRS. If your company is a partnership or corporation, you will already have one, but a sole proprietor will most likely need to request one.
  3. Employer Requirements: Check to be sure your soon to be employee can legally work in the United States. Once you’ve hired someone, you must report this to your state employment department. Before you start paying the new hire, get everything ready to easily pay in income tax withholdings to the IRS and state, FICA taxes at the appropriate rates, and unemployment taxes.
  4. Decide on Benefits: Depending on your state and if your new employee is full time or part time, there may be certain requirements on benefits you must offer. Look into rules on benefits, such as sick time and health insurance.
  5. Ask a Professional: Although you can find out a lot about rules on hiring employees online, it does not always cover every detail you may need to know. You should still contact a professional, whether it is an accountant or a payroll service provider, they can guide you to making sure you have all of your bases covered. In the end, it will save you time and help you avoid penalties for non-compliance.

Contact your accountant today to set up an appointment to go over your strategy for your new hire. They know the requirements for the type of business you own as well as for the state your business is in.

Seven Ways to Keep Your Business Healthy and Profitable

The benefits of doing an annual review of your business are holding your company accountable and evaluating current performance to better plan and execute future operations. These are seven things you should look at every year for the health of your company.

  1. Review Your Business Tax Strategy – As your business grows it is always good to make sure you are using the most appropriate form of business structure, whether it’s sole proprietor, S corporation, LLC or partnership. Also, consider adjusting your taxable earnings for the year, it may be beneficial for you to accelerate expenses or delay income at year-end. This can help reduce the current year tax bill.
  2. Get a Pulse on Your Customers – An annual customer satisfaction survey is a great way to assess performance, obtain insight on potential new products or services, and to let your customers know how much you value their business.
  3. Check the Effectiveness of Your Marketing – Are your current methods and channels working well, or are you simply doing what you’ve always done? Use a system to find out how your clients are hearing about you to see if you need to focus your efforts into certain marketing strategies.
  4. Update Succession Planning for Your Business – Review your succession planning annually. You should have a specific plan for your key leadership positions, including yourself. Be prepared for short term absences or permanent vacancies. An up to date plan can be invaluable in you have an unexpected vacancy.
  5. Review Your Business Banking Relationships – Annually, you should go over your cash balances with your accountant. You should also meet with your banker and ask about new products or services that could help your company. Address any service concerns or problems you might have had throughout the year and look for ways to reduce idle cash, boost interest earned and improve cash flow.
  6. Review Your Business Insurance Coverage – Don’t just automatically write a check to renew your insurance policies when they come due. Instead, you should sit down with your insurance agent every year. Review your business operations, focusing on any changes. Discuss types of risk that could arise and ask about new developments in business insurance. Use your agent’s expertise to identify risk areas and suggest suitable coverage.
  7. Review and Update Your Personal Estate Planning – If you’re a business owner, your company is likely to be a significant part of your estate. A good estate plan is essential if you hope to pass the business on to your heirs. Your company, your personal circumstances and the tax laws are continually changing. You should take time each year to make sure your plans are current.

If you are serious about improving your business, you should consider a yearly assessment of your operations. Contact your accountant today to set up an appointment.

Has Your Business Considered the Benefits of Going Green?

We hear every day that the world is becoming more environmentally conscious and taking steps to “go green”. Small businesses may feel that some of the “greener” options are out of reach for them, but here are a few that a company of any size can do.
• Recycling – Most communities provide recycling centers, therefore it should be fairly easy to provide internal receptacles and to transport or purchase recycling pick-up services. These recycling services will pick up items such as paper, including shredded, newspapers, magazines, and plastic items.
• Installing energy-efficient light bulbs – It is very easy to find energy efficient light bulbs as a greener alternative to regular incandescent bulbs. They often last 20 times longer than standard bulbs and use one tenth of the energy,
• Going “paperless” – Many companies are making vast efforts (including Bakken CPA PC!) to be as paperless as possible. To reduce paper, begin using electronic portals for clients to upload and download files.
• Offering “green” shopping bags – Consider distributing to your customers, clients, and prospects a reusable shopping bag with your business logo. You take a step toward environmental consciousness, while gaining some publicity at the same time.
• Providing favored parking spaces – Offer visitors to your office a little perk for helping the environment. Designate special parking spots for hybrid vehicles and more fuel efficient transportation, as a thank you for going “green”. Also, be sure to have easily accessible bike racks!
These are simply steps a small business can take toward “going green”. The benefit to your business includes energy cost savings and maybe a bit of publicity, plus making a contribution to a healthier environment.

Bakken CPA PC is Now an All in One Service Provider

We, at Bakken CPA PC, consider saving our clients time, effort and money a main priority. If there is something we can do that will make our client’s day a little easier, we try to offer it. In order to fulfill this goal, we have added a new service to our package of options we are able to offer our clients.

We can now not only assist with your accounting and tax needs, but also your payroll needs! We feel that by offering our clients the option of having us complete their payroll processing, we can give you a more complete package of services that will make running your business a little easier.

Consider this; now that we can complete your bookkeeping, while servicing your payroll, we are able to keep your business’s books more accurate year round. Once it comes time for us to complete your yearly tax return, your books will already be accurately complete for the year, which saves us time and saves you money. Not only that, but we will also already have all of the information for your payroll for the entire year, which will save you more time and money! This would be a great position for you to be in during the tax season, which can be stressful for a business owner. Our goal is to help you manage your business more efficiently and effectively by taking over tasks where we have expertise which then allows you to focus on yours.

Our payroll processing service we offer includes a range of options that will not only help you focus on your business, but attract and retain employees.

Some of our benefits include:

  • Full Service Direct Deposit
  • Electronic Employer Access to Payroll Records All Year
  • Electronic Employee Access to Payroll Records All Year
  • Automatic Payments of Taxes and Fees
  • And more!

We strive to give you old fashioned personal service while still being able to offer you the latest in technology. If our new payroll service seems like something that you’d be interested in, give our office a call today. We will be happy to provide more information to you.