Getting Back To Business: How Outsourcing May Provide Relief To Your Business

Clay Rose | September 19th, 2014

As a business owner, you have a lot to think about. Your investors, managers, employees and clients depend on you to deliver top notch products and services while keeping overhead costs low in favor of increased revenue. In fact, your business’s success can probably be attributed to your leadership skills and your knack for being able to see the big picture while bringing together all the other elements to reach a profitable conclusion. So why are you still in charge of handling your business’s accounting and bookkeeping needs when you could be so much more effective guiding your business toward further growth? Outsourcing may provide you and your business with the relief you need to get back on track.

Maybe you think your business is just too small to hire an accountant or bookkeeper or that you’re saving money by doing these jobs yourself. Perhaps you just aren’t aware of what options are available to you and your business. When you consider that the most effective solution is the one that effectively addresses your unique needs and budget, it should be no surprise that an outside accounting firm may be the answer you’ve been looking for.

Know Your Strengths And Weaknesses

The cost of hiring a full-time accountant or bookkeeper is a huge concern for many small business owners. To avoid a large expense, many owners or managers will purchase a copy of QuickBooks and try to work through their accounts themselves. Unfortunately, even if they have basic accounting skills, they may not have the patience, expertise and experience to handle the work. If done incorrectly, accounting flaws can be very costly, and could result in catastrophic consequences for your business.

Proper accounting and bookkeeping is essential to the short- and long-term success of your business. Outsourcing your accounting and bookkeeping work can help ensure accuracy and will free you up to focus on future growth, higher efficiency and increased sales. Below are a few examples of how outsourcing can solve your small business challenges.

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Issue: Your business is relatively small (with a similar budget), and you can’t justify bringing on a full-time accountant.

Solution: Hiring an in-house accountant could turn out to be a hefty expense, especially if the quantity of work is relatively minimal throughout most of the year. Not only do you have to pay the new employee a living wage and benefits, you must be prepared to invest in the software and/or training a new accountant needs. By filtering work to an outsourced controller, you will have access to affordable, ongoing or as needed reporting. As a result, your management team will become more flexible and will have more data – and thus more authority – when making decisions that directly affect the business.

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Issue: You’ve already invested in QuickBooks to manage your business’s finances. It seems to be working well so far, but you haven’t been formally trained on the software.

Solution: While QuickBooks is easy to use, sufficient supervision by someone who is proficient with accounting skills is essential. Without a QuickBooks expert on hand, you will have no clue as to what is going on “behind the numbers.” A trained and certified accountant can tap into the various capabilities of the software, which include the reconciliation process, accounts receivable tracking and accounts payable, etc. When your bottom line is at stake, you owe it to yourself and to your business to minimize problems that may occur. You can avoid any hiccups with the help of a CPA.

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Issue: You don’t need all the capabilities an accounting firm offers and you don’t want to pay for a service you may never use.

Solution: Your CPA will work with you to make sure all of your accounting needs are met and that the services that are provided only address the needs of your business. Services that can be outsourced include full accounting services, oversight work and everything in between. You also have the option of expanding services if and when you need them. Outsourcing options available to you include:

  • Working with an accountant several times throughout the year to clean up your accounting and ensure a smoother year-end tax process.
  • Tasking an accountant with filing certain commercial activities and taxes on time to insure accuracy and to avoid overpaying.
  • Hiring an accountant to provide periodic financial statements to banks.
  • Utilizing an accountant as an extra set of eyes on all manner of documents. This provides you with a great system of control when ensuring the accuracy of your books.

Speak to a Rea & Associates CPA to find out how an accounting firm can address your unique accounting and bookkeeping challenges while allowing you to make the best use of your time. Learn more about the services our business accounting professionals offers.

Article: Clayton W. Rose III, CPA (Dublin office)

 

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How Prepared Is Your Business For A Potential IT Disaster?

Joe Welker | September 9th, 2014

Natural disasters. Hardware meltdowns. New variants of viruses and malware. Unfortunately, we live in a day and age where anything can happen. It’s critical that your business is on its toes, ready to tackle any potential disaster or crisis that may come your way. But is it? If your business’s computer systems crashed tomorrow, how easy (or even possible) would it be for your business to recover? Has your business ever given thought to a disaster recovery (DR) plan? Do you have one of these plans?

It’s National Preparedness Month. A month where government agencies and businesses alike work to educate companies and organizations about the importance of being prepared whatever may come your business’s way. In honor of this month, below are five reasons why your business should create (if you don’t have one) a disaster recovery plan

Top 5 Reasons For A IT Disaster Recovery Plan

A Gartner report estimates that only 35 percent of small- to medium-sized businesses (SMBs) actually have a working and comprehensive DR plan. And from its research, Gartner also found that 40 percent of SMBs that manage their networks and Internet usage in-house will have their networks hacked, and more than 50 percent won’t know they were hacked. Pretty sobering statistics, right? There are many reasons why having a DR plan is a wise business move. In fact, here are the top five reasons why a DR plan is imperative to the success of your business:

  1. You can’t control when a disaster happens – it can happen at any time. Disasters can be natural or man-made – either way, you don’t have control over when it could happen. A DR plan will help you be prepared for anything at any time.
  2. A DR plan can help you save thousands, possibly even millions, of dollars in the event of a disaster. When a disaster strikes, it’s usually not a cheap fix. Depending on its severity, many businesses’ budgets are hit quite hard. And if this is an unexpected expense, it’s that much harder to make a complete recovery.
  3. You can mitigate your losses with a DR plan. Money isn’t the only thing at stake during a disaster. Don’t forget about the trust and confidence of your customers, employees, investors, vendors – the list goes on. A DR plan can help you retain your critical audiences during a disaster.
  4. A DR plan can help you reduce confusion among your staff and audiences. When a disaster hits, imagine the confusion and uncertainty that comes with it. In some cases, it may seem like you have no control over the situation. A DR plan can help you have an organized approach to resolving the disaster.
  5. The government may require businesses within your industry to develop and utilize a DR plan. If your business handles sensitive customer information or other information that could be critical if lost, the government may require you to have a formal DR plan, which should include yearly testing of offsite back-up recovery data.

Does your business have a DR plan? If not, you need to create one. Email Rea & Associates for more information about what to include in your plan. If you already have one in place, first pat yourself on the back, and then review it to ensure that it reflects your business’s current environment. Detailed and tested plans are imperative to the successful recovery and even for the longevity of your business.

Author: Joe Welker, CISA (New Philadelphia office)

 

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College Costs Keeping You Up All Night? Tax Credits Could Offer Relief

Brian Kempf | September 2nd, 2014

As a parent you have spent countless hours preparing your child for adulthood. You have thumbed through your share of board books, mastered the art of singing The ABC Song and Twinkle, Twinkle Little Star on a whim, and have racked up enough mileage driving back and forth from piano lessons, soccer games and summer camps to make a space shuttle cringe. But now it’s here. After nearly 18 years, your son or daughter has become a college student.

Many parents describe this milestone moment as bittersweet; others say they are caught off guard by feelings of anxiety and sadness. And while all parents are proud of their child’s accomplishment, it’s hard not to feel a little buyer’s remorse when you see the statement for the first semester in the mail – especially if you offered to pick up the tab.

College is not cheap, and according to the National Center for Educational Statistics (NCES), it’s only getting more costly. The NCES reported that the prices for an undergraduate to attend college at a public institution rose 40 percent between the 2001-02 and 2011-12 academic years; a student who chose to attend a private nonprofit institution saw a 28 percent increase over the same period. The report found that an average undergraduate student paid $14,300 annually for their tuition, room and board at a public institution while a student attending a private for-profit school paid $23,300 per year. And those numbers don’t include the price of books, meals, transportation, insurance, and extracurricular activities … to name a few.

Consider A Tax Credit

Don’t abandon ship just yet. Here are three tips to help give your bank account a break.

  • Utilize the American Opportunity Tax Credit or the Lifetime Learning Credit. These two tax credits could help take the edge off of your initial statement shock. If you qualify for the American Opportunity Tax Credit, you could save up to $2,500 annually for an eligible student during their first four years of school. Because 40 percent of this credit is refundable, you may be able to get up to $1,000 of the credit as a refund. The Lifetime Learning Credit, on the other hand, gives you the opportunity to claim up to $2,000 on your federal tax return and has no limit on the number of years it can be claimed. If you decide to take a credit, keep in mind that the IRS will only let you claim only one type of education tax credit per student.
  • Claim your qualified education expenses. Be sure to keep track of the expenses you paid toward tuition and student activity fees that were paid to complete enrollment. According to the IRS, you can make a claim if you paid for any of these expenses with cash, check, a credit or debit card or with money secured from a loan. If you will be taking the American Opportunity Tax Credit, expenses for books, supplies and course equipment are also considered a qualified education expense.
  • Don’t forget your 1098-T. This form, in addition to your receipts, is critical to claim a tax credit. Most schools will send this to you in the mail. Don’t be surprised if the amount on your form doesn’t match your numbers. The 1098-T doesn’t include items such as textbooks.

College doesn’t have to break the bank. To learn more about your college saving options, email Rea & Associates. Our team of tax professionals can guide you through the tax credit process and other college savings options.

Author: Brian Kempf, CPA (Millersburg)

 

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Outright Shale Sales Are Another Option For Landowners

Jim Fracker | August 26th, 2014

The work to unearth valuable minerals from the Utica and Marcellus shale deposits in Eastern Ohio continues to move forward at full speed. While many of the area’s landowners entered into mineral land leases years ago, some chose to put off the leasing process for later – it is now 2014. Several years have passed and the landowners who chose to wait are now facing a different set of choices and options concerning their land and the minerals found within.

What Has Changed?

If you’re looking to cash in on the shale boom, the traditional land/mineral lease alternative is no longer your only option. Today, some landowners are considering the outright sale of their mineral interests to an acquiring entity. While both options have their merits, this discussion is not intended to weigh the economic consequences when comparing land/mineral leasing versus the outright sale of your mineral interest. You should be aware of a few points surrounding the sale of mineral interests that may help govern your decision.

  • Outright sale agreements typically state that the landowner will agree to sell their mineral interests, specific to formation or generic, to an acquiring entity.
  • Per the agreement, the seller typically relinquishes all incidents of mineral ownership – and usually all rights to any future income streams based on the future production from the minerals in question.
  • If you choose to sell your mineral interest outright, your decision to do so may trigger tax planning opportunities, such as the “like-kind exchange” tax treatment for real estate transactions also known as the IRC1031 exchange. In other words, this particular transaction could qualify your gain from the sale of mineral interests to be deferred into the acquired “like-kind” real property. The acquired real estate must be held for trade, business or for other investment purposes.

Proceed With Caution

Before jumping the gun and making a decision based on the possibility of triggering the like-kind exchange, understand that the rules governing IRC1031 are very complex. The sale of mineral interest just adds to the complexity. It’s important that you speak with an advisor concerning a “like-kind exchange” before closing on the mineral interest sale, or the replacement property.

The like-kind exchange opportunity is not for everyone. For those who qualify, however, a mineral sale scenario with the right fact pattern coupled with a properly executed 1031 exchange could result in a significant tax planning opportunity for landowners who are seeking ways to minimize the current tax consequences.

While it’s great to have a range of choices when dealing with matters such as these, the larger selection has a tendency of making it harder to zero in on the information needed to make an informed decision. If you’re considering a land/mineral lease or an outright sale alternative, email Rea & Associates to get more information about these options.

Author: Jim Fracker, CPA (Zanesville office)

 

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Fraud Hotlines Deter Occupational Fraud

Annie Yoder | August 25th, 2014

When it comes to your business or organization, you are passionate about making sure your staff embodies your mission and objectives. You take care to select only the best candidates; and when you find them, you conduct thorough interviews, background checks and offer extensive training and timely performance reviews. Months later, now that you have invested significant resources into finding, training and polishing your new employee, you can finally rest easy knowing that you created a team dedicated to common goals and objectives – right?

Fraud Happens

In its most recent version of The Report to the Nations on Occupational Fraud and Abuse, the Association of Certified Fraud Examiners (ACFE) analyzed 1,483 cases of occupational fraud, which resulted in losses totaling more than $3 billion. Of those cases, the ACFE found that businesses with 100 employees or less are more susceptible to financial losses as a result of the three categories of occupational fraud – corruption, asset misappropriation and financial statement fraud.

Here’s A Tip

Maybe, like so many other business owners, you have already considered these facts and have taken steps to deter fraud in your own offices by establishing and implementing codes of conduct and external audits. While those measures provide a good foundation, you may be surprised to learn that of the nearly 1,500 cases of fraud that were reviewed, auditing only revealed a few instances of fraud. On the other hand, 42 percent of these cases were detected by tips. These tips were frequently reported on fraud hotlines and resulted in a 50 percent quicker response time when it came to detecting and stopping fraud.

The Value of a Fraud Hotline

Be proactive about fraud prevention, instead of reacting when you’re caught in the middle of it. A fraud reporting hotline service, such as Red Flag Reporting, has helped clients stay informed about what’s going on in their businesses. Services like Red Flag provide businesses with an opportunity to focus on building relationships, increasing revenue and improving community outreach instead of chasing down occupational fraud in the workplace.

Fraud hotlines are utilized by small and large businesses alike and can help identify and deter other types of unethical behavior before it grows out of control. Fraud hotlines can result in:

  • Fewer OSHA violations
  • Lower Workers’ Compensation costs
  • A decreased likelihood of employment practices lawsuits
  • Zero-tolerance of discrimination in the workplace

Not all employees are bad and not everybody is looking for an opportunity to financially ruin their employer. In fact, fraud hotlines are great because they prove that you are have a team made up of responsible, honest, hard-working men and women. These professionals are the eyes and ears of your business or organization and you not only depend on them to help identify instances of fraud, you need them to report issues to you before they explode into situations that severely damage your financial well-being, employee morale and reputations. By providing your team with a hotline, they will be even more inclined to provide you with a tip or two without feeling like they are rocking the boat.

Are you concerned about the potential for fraud in your organization? Email Rea & Associates to learn more about how a fraud hotline could work for you.

Author: Annie Yoder, CPA, CFE, CFF (New Philadelphia office)

 

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