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The Basics of Good Bookkeeping for Your Small Business

By on March 26, 2013 in Cash Flow & Finance, Your Small Business

The Basics of Good Bookkeeping for Your Small Business 300x225 The Basics of Good Bookkeeping for Your Small BusinessThe thing that every small business owner needs to know in order to remain profitable, healthy and sustainable is to stay on top of the financial records. Having a monthly bookkeeping regimen is essential for business success. Bookkeeping focuses on three basic concepts, revenue and expenses, assets and liabilities and debits and credits. Bookkeeping often gets confused with accounting as the two encompass the same principles; however, there is a difference. Accounting is really about financial reporting, analyzing of data and filing of tax returns. An accountant relies on the bookkeeping of a business to be accurate and compliant. Bookkeeping on the other hand is recording, organizing and managing all of the business transactions and receipts. The main goal of bookkeeping is to keep the records up to date and accurate. This is vital, as the books will show how a business is doing on an ongoing basis and they enable the accountant to do the tasks they need to perform without experiencing expensive time delays. Let’s investigate the three financial concepts.

Revenues and Expenses A good bookkeeper needs to organize and record all transactions. It is all about of the ins and outs of the business; the revenue and the expenses. Revenue is the amount of income received for goods and services delivered, and are tracked by invoices. Expenses are the items that a business purchases to operate and earn income and these are tracked through receipts. There are various types of expenses such as advertising, phone, inventory, supplies, wages etc. In tracking revenue and expenses you can see if your business made a profit or incurred a loss.

Assets and Liabilities A business’s assets and liabilities are another important factor in bookkeeping. You have probably seen the formula; assets = liabilities + owners’ equity. This equation is what makes up the balance sheet which shows the financial health of a business at a certain point in time. It is important for any business to know what the company has and owns as well as any debts that are owed. It gives a clear picture of the liquidity of the company at any given point. Being highly liquid means you are able to pay off the company debts quickly, or using your current assets (amongst other things). This is statement of your company’s short term health and efficiency. To learn more about short term health and efficiency, then read this article on Business Checkups.

Debits and Credits Finally, the last concept we are going to talk about is double entry bookkeeping which refers to recording business transactions twice, once as a debit and once as a credit.  Double entry bookkeeping is important because any business transaction usually affects two accounts, a debit and a credit.  For instance, if you are purchasing inventory with cash, the two accounts affected are cash and inventory. The inventory account is debited (occurs when increasing an asset or expense and decreasing a liability) and the cash account is credited (occurs when decreasing an asset and increasing a liability or revenue).

The key to bookkeeping is to be organized and know how to record and learn from these three flag posts. The revenues and expenses will give you a snapshot of the businesses profitability. The assets and liabilities can serve well in forecasting a business’s health and understanding debits and credits can help with staying accurate and organized which is great for sustainability of a business.

Image “Bookkeeping With Calculator” courtesy of adamr/ www.FreeDigitalPhotos.net

Robyn Bolt 295x300 The Basics of Good Bookkeeping for Your Small BusinessAbout the author:  Robyn Bolt is the owner of Sum Bookkeeper, an Oakville, ON bookkeeping company that specializes in tax preparation, reporting and data management for small to medium enterprise.

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Where to Go When the Bank Says No. Finding Alternative Funding for Your Small Business

By on March 21, 2013 in Cash Flow & Finance, Q & A Interview, SmallBizChat

SMALL BIZ CHAT LOGO 20121 300x123 Where to Go When the Bank Says No. Finding Alternative Funding for Your Small BusinessEvery week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wednesday on Twitter from 8-9 pm ET. This is excerpted from my recent interview with @KarleneSinRob.  Karlene Sinclair-Robinson is the Managing Member of KsR Solutions LLC, a business consulting firm focused on strategic business solutions, including financing and diversification. She has been successful in assisting numerous clients in accessing millions of dollars through non-traditional financing, even those with less-than-stellar credit. In addition, she teaches entrepreneurship and alternative financing at local small business development centers and community colleges in Northern Virginia and Maryland. For more info, visit http://www.spankthebanknow.com

SmallBizLady: How do you finance a business in a tough economy?  

Karlene Sinclair-Robinson: Get clear with what is going on with the economy & how it has or will affect your business. Use what you have to finance your business by showing lenders logical ways as to why you need their money. Look at issues affecting your business and implement changes or add solutions that help you gain access to capital. Don’t get stuck on one way of financing your business or on the amount you figure you need. Lenders & investors are looking for logical business ideas to finance; stop worrying about them stealing your ideas.

SmallBizLady:  How do you define the right financing solution for your business? 

Karlene Sinclair-Robinson: Look at your business and industry first. This is a key factor to accessing capital. The right financing solution should be a good fit for you and the lender.  Make it a WIN-WIN situation. Lenders provide ‘Niche’ financing.  If they do not think your business is a good fit, look elsewhere. Financing is a people business. Lenders should want to do business with you. Don’t try to fit a square peg in a round hole. The same goes when seeking a financing solution.

SmallBizLady:  What are some key factors stopping the flow of money to business owners?

Karlene Sinclair-Robinson: Credit issues – fix them ASAP. Seek financing that does not focus on credit if you have this problem. Negative cash flow affects borrowing power. Lenders want to know how you will repay them. Your debt-to-income ratio is a major drawback if you have more debt than income. Industry type and issues affecting it will present its share of access to capital issues. Your commitment to the business will affect your financing opportunities. Not addressing negative internal factors affecting the business, such as employee issues or year-over-year decline.

SmallBizLady:  What can business owners do to help boost their financing success?

Karlene Sinclair-Robinson: Know your financial position and do not just leave it up to your CPA/CFO.  Show you know your business inside out. Be able to verbally demonstrate that knowledge. Make sure you know why you need to borrow ‘Other People’s Money’ (OPM). Be honest and upfront when responding to a lender.  Do not lie. It will derail your financing. Provide all applicable documentation per lender’s request. Be willing to make appropriate changes if this will make the deal work in for you. Present solid financials or projections that were not just be pulled out of ‘thin air’.

SmallBizLady:  What is alternative business financing?

Karlene Sinclair-Robinson: Alternative business financing are solutions outside of traditional (bank) lending sources. These sources are individuals, business owners, investors who prefer to invest their money in this market. Think of them as non-FDIC governed lenders. Remember, banks have more stringent guidelines. Alternative lenders do not rely on a board or committee to make lending/investing decisions. Alternative Business Financing fills the gap that banks cannot finance or will not touch. It is the driving force behind the success of many brand name companies you know today.

SmallBizLady:  Why is alternative financing necessary to today’s business owners?

Karlene Sinclair-Robinson: This type of financing is necessary to bridge the financing gap for business success. With the issues affecting business owners today, many would not make it without the help of these sources. Banks are lending though many cannot qualify, so we end up with a huge amount of business owners in financing limbo. When balance sheets and Profit & Loss statements are not in-line for bank financing, it is critical to have options. High risk, cash & collateral poor business owners need other financing options to deliver their products or services to market.

SmallBizLady: Why is there so much emphasis on a business plan when seeking financing?                      

Karlene Sinclair-Robinson: The business plan tells the past history and/or future story of the business or idea. It gives the lender or investor an understanding of why you need their money.  It tells the lender how much you know about your business, industry & financials. The plan should give the lender a clear picture of how you will make the business work. Lenders want to know how you plan to repay them. This should be in the plan and must be logical – provide exit strategies. Never forget that the business plan is your ‘road map to success’.

SmallBizLady:  Why are so many financial documents needed to access capital?

Karlene Sinclair-Robinson: This may seem redundant to many; however, would you lend your money without any financial data? Your financial records determine your RISK level to any lender. RISK tolerance is a key factor to a lender. These records tell the story of your financial history & your level of responsibility where money is concerned. Financial underwriters will deny a loan request faster if they encounter problems getting these documents. If you drag your feet when submitting financials, it will convey a message that something is wrong. Like buying a house, these documents help to determine the interest rate you’ll pay.

SmallBizLady:  Is credit truly necessary to accessing money for my business?

Karlene Sinclair-Robinson: Credit is the driving factor behind traditional bank financing, while not necessarily so in the alternative market. Your credit is your ‘report card’ for life. Use it wisely. PLEASE, PLEASE don’t hide from it. Our current credit system is the gage to your borrowing power, be sure to understand it. No matter what your score is, stop being afraid of what is on your credit report. Understanding a particular lender’s method of financing will decide if credit is necessary.

SmallBizLady:  Why is it important to diversify my business to meet today’s challenges?            

Karlene Sinclair-Robinson:  Operating any business in today’s market can be a challenge; use those challenges to grow your business. Create ways to build your business by understanding who your clients’ are – consumer, business or government.  Using feedback from your clients and market research, add services or products.  Develop a niche for your business that is in-line with your mission. When adding clients, define who is more likely (guaranteed) to pay you. Lenders look at who your clients are. This will help you with access to capital.

SmallBizLady:  How do your true feelings towards “money” determine your success in life & business?

Karlene Sinclair-Robinson: It is often noted that we go into business for the wrong reasons, making it just about money. Not good. When your money views are not in true alignment, you will not succeed as quickly or be prone to fail. Your “Why” must be based on serving others, filling a need or solving a problem. Your personal money beliefs always come out in everything you do. Take a serious look & be true about it. When you face the true issues affecting you, personal and business, you will start seeing the success you desire.

SmallBizLady:  How do I attain the level of success I’d like to see in my business?                           

Karlene Sinclair-Robinson: STOP making it about you! It’s not all about you, your idea or what you think is important. Being in business is about serving others. Operate your life and business with that in mind.  Listen to the needs of others and line them up with your core values to find the success you seek. Success comes to those who’ve given of themselves without the “What’s in it for me” mentality. Where you are spiritually, mentally and emotionally will either stop or accelerate your success rate.

If you found this interview helpful, join us on Wednesdays 8-9 pm ET; follow @SmallBizChat on Twitter. Here’s how to participate in #SmallBizChat: http://bit.ly/S797e

For more tips on how start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

Melinda F. Emerson, known to many as SmallBizLady is America’s #1 small business expert. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing to fulfill her mission to end small business failure. She writes a weekly column on social media for The New York Times. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also the bestselling author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works and the ebook: How To Become A Social Media Ninja; 101 Ways to Dominate Your Competition Online.

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Which Cellphone Plan is Right for Your Small Business?

By on March 19, 2013 in Cash Flow & Finance

Which Cellphone Plan is Right for Your Small Business 300x199 Which Cellphone Plan is Right for Your Small Business?According to most business experts, cellphones are one of the top tools for small businesses. By signing your business up for a cellphone plan, you are automatically improving productivity. Not only does it benefit your employees, it improves the communication between you and your clients.

It’s all about accessibility. Having your company at your fingertips shows your clients that your business is flexible and that even when you aren’t at your desk, you are within reach.

Choosing a cellphone plan for your business is considerably harder than choosing one for personal use, because you have to take 5-10 other people into consideration. That is why it is so crucial to do the proper research in order to maximize your plan.

What will you be using the phones for? Which employees truly require a company cellphone? You must ask yourself these questions in order to get the most savings from whichever cellular carrier plan you choose.

Whether you’re a fan of AT&T, T-Mobile, Sprint or Verizon Wireless; you need to make sure that you have the right cellphone plan for your small business. There are many factors to consider coverage, data, contract terms, and your smartphone options. Listed below are some key points to consider before choosing a respective cellphone carrier;

Coverage

How much coverage do you need? Check the coverage in your office and in the areas surrounding it. You can use a crowd sourced map like Open Signal Maps to see the strength of signal. If some of your employees travel, consider the places they visit. Companies simply can’t offer coverage everywhere. When you roam, it costs.

If your employees travel out of the country and work, be sure to verify international coverage. If they only travel internationally for a few weeks, consider renting a phone for special trips or adding the package only for a week at a time.

Data

Carriers offer business plans that include unlimited data, but do you need to spend the extra bucks? If your employees only need to access their e-mails and do some general surfing, they don’t need more than 2GB of data per month. This is usually the standard amount for a basic smartphone plan.

Contract

A cellphone provider’s natural initiative is to sell you a bulked up contract. Before you sign, check the costs of going over the data cap or exceeding the talk time. Be sure that you have unlimited talk and text with the other phones on your plan.

When it comes to signing contracts that last 2 years, consider how often you turn over employees in your small business. Early termination can cost you up to $400 per line. If an employee quits or is terminated, it will cost you.

Which Phone?

Will your employees need smartphones or can they do without the data? While the Samsung Galaxy III or iphone 5  might be the best smart phones on the market, your company might not need the luxuries of these phones. If talk and text are the only requirements, don’t waste money on a new phone. Buy refurbished, if you can.

If your company chooses to use smartphones, will you be able to upgrade after a year or two? Phones are constantly changing and improving, much like your small business. If you are a high-tech business, it will pay to keep up with the evolution.

“Mobile Phone Streaming Virtual Business” image courtesy of nokhoog_buchachon / FreeDigitalPhotos.net

Liam Garcia 193x300 Which Cellphone Plan is Right for Your Small Business?About the author:  Liam Garcia is a part time blogger and full time social media manager. He spent his childhood in Chile and moved to Texas to attend the University of Texas when he was 18. When he’s not working on his novel or exploring the confines of the Internet, you will find him at the nearest bookstore.

Melinda F. Emerson, SmallBizLady, is America’s #1 small business expert. She is an author, speaker and small business coach whose areas of expertise include small business start-up, business development and social media marketing. She writes a weekly column for the New York Times, publishes a resource blog, www.succeedasyourownboss.com which is syndicated through the Huffington Post. She also hosts a weekly talk show on Twitter called #Smallbizchat for small business owners. As a brand, she reaches 1.5 million entrepreneurs a week on the internet. As CEO of Quintessence Multimedia, Melinda develops audio, video and written content to fulfill her mission to end small business failure. Forbes Magazine named Melinda Emerson one of the #1 Woman for Entrepreneurs to follow on Twitter. Melinda has been featured on MSNBC, Fox News, NBC Nightly News, and in Fortune, The Washington Post, USA Today, Wall Street Journal and Black Enterprise. She is the bestselling author of “Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works,” and the ebook How to Become a Social Media Ninja; 101 Ways to Dominate Your Competition Online.

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