Mar 08

HEADS UP - SMALL BUSINESSES

Posted on March 8, 2021 at 11:07 AM by Regina Roberts

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If you have never hired a tax professional, this is the year you should do so. This is the year you want to be more prepared. Pay attention! There are some tax rule changes that will have an impact on businesses as you file your 2020 tax return. With everything that transpired with business during 2020, some business tax returns will be complicated.

Each taxpayer has his or her own unique situation, therefore, some advice to the small business owners, please speak to a professional that deals with taxes. It’s always important to get organized, so here are some ideas to get started.

1. Organize your records. Make sure all your financial materials related to your business are up to date, organized and filed in one place.
2. Organize the small things.
3. Again, if you took advantage of any of the COVID-19 programs, such as SBA loans, grants and credits that was made available to you through the CARES Act, please discuss them with your tax preparer.
4. Examples:
a. Paycheck Protection Program (PPP) - PPP loans may be forgivable if certain conditions are met.
b. Economic Injury Disaster Loans (EIDL) - Per the Internal Revenue Service (IRS), any forgiven Small Business Administration (SBA) loan should be included in taxable income.
c. Employee Retention Credit - Up to 50% credit, if you have employees that were kept employed during the pandemic.
d. Review all new credits - First Coronavirus Response Act, Small Employer Health Insurance Premium Credit and Work Opportunity Tax Credit.
e. Deferral of employer payroll taxes.
5. Consider all charitable donations.
6. Consider retirement plans and retirement contributions made.
7. Look at your expenses. Separate Capital expenses from Business expenses.
8. See if you qualify for Section 179.
9. Attorney or accounting fees for your business
10. Depreciation
11. Charitable donations
12. Stock deductions
13. Medical reimbursement
14. Health insurance premiums
15. Health savings accounts
16. Healthcare for employees
17. Banked health credit
18. Life insurance
19. Education expense (professional classes)
20. Website design

As you can see this is no way an exhausted list. Consider all deductions that can help you to avoid paying more taxes than you need to, because the more deductions you have, the lower your taxable income. You must also take time to understand the tax rules so you can avoid penalties. If you don’t think you can, then get professional advice as needed.

I believe in you!
Feb 08

CREATING A BUDGET FOR THE YEAR

Posted on February 8, 2021 at 7:03 PM by Regina Roberts

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Are your bills running you down, or are you in control of your money? 

Creating a budget doesn’t need to be complicated, and I believe in keeping it simple and easy.  How to start a budget especially during this time of staying at home and with the “Rona” (Coronavirus) all around us. 

Most people I talk to will create a budget but it’s the staying on track part that gets us in trouble.  Let’s be serious. Most of us don’t like anyone telling us how to run our household.  This article will teach you how to use your own uniqueness to stay on track with your budget.  Remember this is your own budget, not someone else’s.

Keeping it real

Unless you have a boat load of money in the bank, you need to do a budget to know when your money is coming in, and how much of it is going out.  A budget allows you to track your expenditures/expenses.  Choose a month and write down everything you need to pay or review your bank statement.  Your budget depends on if you can do bi-weekly, monthly or yearly.  You only need three items to start your budgeting and they are as follows: (1) Income, (2) Fixed expenses, and (3) Other expenses.

Income means money coming into your household. Expense is money going out of your household.

Plan your monthly finances the month before and make a monthly budget before the next month starts.  Calculate what your monthly income will be and what expenses you are likely to pay. 

On a blank page put on one side Income and the other side Expenses.  This will give you a visual image of your budget.  Remember this is your budget and it can be done bi-weekly or monthly.  Make sure to put your savings or investments as part of your budget (pay yourself first), you pay everyone else so why not yourself.

By creating your budget, you are creating a financial plan, making it easier to make better financial decisions.  If your expenses are higher than your income, you will need to make some changes.  Figure out what expenses are taking more money than they should, i.e. house, or car.  This would allow you to create awareness and knowledge about what your money is doing and where it is going.  This puts you in control of your money so you can make educated decisions.    Once you have full control of your budget, then you are in control of your money. Know where your money is going and always respect your money.

For non-recurring expenses (travel, gifts, vacation, etc.), you can establish a budget for them especially if you know how much they will cost so you can plan for them adequately.  Put your budget down on paper.  PLAN/SET GOALS/ACHIEVE. 

It is important to track all your expenses. 

Basic Budget Rule: Budget on what you bring home and put your bills in order of priority.

50% - Fixed Expenses: Your fixed expenses must be lower than what is coming in.  Take care of the fix expenses first. The income coming in must be more than your expenses.  (Needs)

30% - Savings/Debts: This area can be adjusted as you review your budget monthly. (Wants)

20% - Entertainment: This area can be adjusted as you review your budget monthly. (Discretionary)

Develop the habit, be consistent, and persevere to the end.  Your budget should be reviewed each month and you will gain confidence. Remember this is your budget, so keep trying and work through it.  If your expenses are higher than your income, you can reduce your expenses or increase your earnings/income. Also get a side hustle to earn that additional income. 

Types of Budgets:

Examples: 50/20/20/10 ***Zero based***Envelope – Cash only***70/10/10/10

Ten Budget Categories:

  1. Housing 25-35%
  2. Transportation 10-15%
  3. Food 10-15%
  4. Utilities 5-10%
  5. Insurance 10-25%
  6. Medical & healthcare 5-10%
  7. Saving, investing, & debt payment 10-20%
  8. Clothing 5-10%
  9. Entertainment 5-10%
  10. Personal 5-10%

Budget Tips - Two Basic Parts: INCOME AND EXPENSES

  1. Keep track of your paycheck (after taxes, take pay/income)
  2. Analyze where you are spending your $$$ (review fixed expenses first)
    1. Bank statement
    2. Check book
    3. Divvy up your paycheck
      1. You can budget yearly, monthly, bi-weekly
        1. Know where your money is going
        2. Choose realistic amounts for each category
        3. Include an emergency fund
          1. Savings/pay yourself first (include this in your budget)
          2. Resist the temptation to overspend
          3. Use a budget app to track your finances
          4. Monthly expenses, yearly expenses, and occasional expenses (savings will fall into monthly, yearly, and occasional)
          5. Automate your expenses and savings amount. Make paying yourself a part of your monthly expense bill
          6. Learn how to separate wants and needs (don’t impulse shop)

It is important to set goals, and a budget is the way to keep yourself accountable resulting in less stress. 

I believe in you!  Happy budgeting.

Dec 07

YEAR-END ACCOUNTING FOR SMALL BUSINESSES

Posted on December 7, 2020 at 6:07 PM by Regina Roberts

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Most small businesses worry about their financial records when it’s time to prepare their taxes and many would scrabble to find their records to present them to the tax preparer.  This 2020, with everything that is affecting your business from closing your doors, to re-opening with precautions and providing only take out services, many expenses were incurred to keep both your employees and customers safe.

Let’s end 2020 differently this year!  Prepare your records early to be able to claim everything you are entitled to, especially with the possible reduction of your revenues.  If this holiday time is slow for you, spend some time putting your records in order, with a proper filing system.  Please understand that this information may not apply to all businesses, as each is different in their own way and each year is also different from the prior year.  Running a business is no small feat, just know there is assistance at every turn to make your journey a little smoother.  This is our token of appreciation for all you have done for the “City of Beauty and Progress.”  Let’s do this!

Review everything you spent for 2020, it will make the process easier when you meet with your tax preparer. Accounting for all your losses will become important as you are to carry forward those losses to future years.  Keeping proper record will ensure that your business is prepared for IRS scrutiny.  Documentation, documentation, documentation! 

1. Income information (i.e. receipts, bank statements, ledger records, etc.)

2. Inventory – beginning inventory dollar amount, purchases during the year, and ending inventory dollar amount (remember to remove all items used for personal purposes), materials and supplies on December 31, 2020 or the day you close your books and;

3. Expense information – this list will be exhaustive (advertising, traveling, insurance expenses, wages, office supplies, professional fees, rent expense, repair and maintenance costs, interest expense on loans, medical expense, depreciation and other business-related expenses. Also remember to keep any Information about 2020 COVID-19 related grants, economic injury disaster loans (EIDLs), or paycheck protection program (PPP) loans. See CARES Act Tax Information for Small Businesses.

Tax Preparation Checklist for Small Business.

  • Know which tax forms you’ll need to fill out.
  • Meet with your bookkeeper/accountant.
  • Update your mileage log.
  • Gather your financial records.
  • Capture all expenses you have paid for out of pocket.
  • Record all personal expenses paid for from your business accounts.
  • Gather any 1099s you have received.
  • Make sure you have issued 1099s as appropriate.
  • Pull receipts for asset purchases.
  • Ensure your loan balances match your balance sheet.


If you do not have a business plan, consider it a priority for 2021 to sit down with a professional or someone that can help you put a plan together.  December is the best time to reflect on what happened, what worked, and what needs to be re-assessed and get realigned to your business.  This pandemic has caused many small businesses to pivot, so let’s pivot right into a business plan if you don’t have one.  I wish you much success with your businesses.  Our hope is that 2021 be the year of endless prosperity as you continue to serve our community.