4 09, 2020

Leaping Into the Unknown

2020-09-04T18:38:36+00:00

We have been recently reminded that it is crucial for entrepreneurs to stay up to date on emerging trends. Staying dynamic will allow you to successfully alter your course to fulfill client needs and thrive amid transition and variability. Owning a small business can be uncertain, even in the best of times and 2020 has been no exception. This year could include a major pivot in your business as the current situation has drastically changed the landscape in several different ways. You can either sit back and see your goals get further away or you can lean into the turn and create positive change. Things are changing in a big way and with big change comes big opportunity. If you know where to look for it.

We assure you that there is light at the end of the tunnel. In this article we’ll showcase several business stories where founders have embraced change. These businesses we’ve highlighted have shifted the way they operate and have successfully adapted to the ever changing business landscape.

Two Birds Brewing

This female run brewing not only has delicious craft beers, but has a taste for innovation. When nonessential businesses were forced to close, owners Danielle Allen and Jayne Lewis, set up a drive up bottle shop, offered nationwide free beer delivery, and beefed up their e-commerce by selling online. Not only is their online and delivery services thriving, their brewery is back up and running successfully as quarantine measures were lifted.

Tacoma Shoutouts

Tacoma shoutouts

Photo Credit: @tacoma_shout_outs

A few months ago, we highlighted a clever entrepreneur, Matthew Fleming, who is a laid off chef at a restaurant. This entrepreneur had an idea to bike around neighborhoods yelling happy messages to friends and families of people who paid him a small amount. He found a way to turn his frustration into something constructive. Not only is he getting exercise but he has also teamed up with a charity, 2nd Cycle on Hilltop, to give back the proceeds.

McKay Books

Nashville business, McKay Books, sells books, albums, videos, and other odds and ends. When retail restrictions were taking place, McKay quickly had to pivot in order to stay in business since customers could no longer browse the warehouse. Knowing many people needed to stay entertained throughout sheltering in place, they developed a genius idea of curbside entertainment bags. Customers could fill a bag with entertainments of their choice such as fiction and nonfiction books, kids books, or choose from themed bags. They could order online and then come pick up their goodies curbside at their convenience.

Bauer

Bauer, a notable hockey gear company, switched from making gear only for the ice to creating medical gear. The Minnesota based company shifted to making protective masks for hospitals, first responders, and retail stores. Not only are they still making quality hockey gear but they used their resources to create adaptation and resilience.

Virtual Pasta-Making

Photo credit: AirBnb

This 84 year old Italian entrepreneur not only proves that you can follow your dreams at any age, but is a great example of creating a business that thrives during lockdown. Nonna Nerina usually runs a pasta making class near Rome, Italy but due to country wide isolation measures, she had to cancel her classes and rethink her business strategy. With the help of her granddaughter, she has taken all of her classes online. You can now book her 2 hour pasta-making lessons here. Buon Appetito!

In some cases, the most heroic thing an entrepreneur can do for their business is carry on and “not die.” In order to find out what lies around the next bend of the entrepreneurial journey you need to be agile and make quick corrections when things change. Be honest with yourself when things aren’t working, test new ideas, create short feedback cycles, and keep learning new ways to make your customers happy. Even though sometimes counter intuitive, it’s often a much better plan to try to make a small group of customers love you than a large group like you. We hope these business examples can provide hope and creative inspiration to stay afloat amidst uncertainty.

If you’re struggling (or even thriving) during these times, our private client business coaching is here to help you. Kim Hornsby is a small business expert who has succeeded (and failed) at businesses throughout her life. She will help to create action plans and modeling to stay in business and thrive. Book a free consultation here.

Remember – keep up with the trends, think digital, be creative, stay positive, and don’t be afraid to pivot!

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7 07, 2020

Avoid the Pitfalls of DIY Accounting

2020-07-07T18:03:45+00:00

You are running your business and doing a great job at staying on top of your bookkeeping, not to mention you are saving money by not hiring help. Win, win right? Think again. Since you have been trying to save a buck by going the DIY (do it yourself) route, your books may be all over the place. You could spend several hours, perhaps days navigating PPP loans, running payroll, and filing taxes even if you were organized. As a busy business owner, this is the last thing you want to be spending your precious time doing. You could be doing anything else. Let’s brainstorm some alternatives. Mountain biking? Playing with your kids? Scrolling Instagram? Working on growing your business? Watching paint dry (It’s got to be less painful than bookkeeping, right?) The list is endless and you think to yourself, why didn’t I hire a professional? 

filing your own business taxes may be in your ‘zone of competence’ but it is an accountant’s ‘zone of genius’. Get back to spending time in your ‘zone of genius’ which is running your small business.

Let’s run through some clarity points on how hiring an accountant will save you time and money. 

Unclaimed Business Deductions

It’s time to stop leaving money on the table! There are numerous deductions out there for small businesses and it can be hard to recognize them if your job doesn’t have the job title “CPA” in it. These range from health insurance, IRAs, travel expenses, the way your business is formed, and more. These deduction rules are also constantly changing. For example, as an S-corporation business owner, you can now start an IRA to offset taxes. You can also plan a vacation around a work trip and write off part of your expenses. Who doesn’t want to sip margaritas on the beach knowing a portion of your trip is paid for? Your job is not to stay on top of the constant change in tax deductions, your job is to drink margaritas and run your business. 

Payroll Mistakes

Paying yourself and your employees is complicated especially if you have remote workers working in multiple states. Different states have different rules and once you start attracting talent across state lines, your payroll gets more difficult. There are also other details such as officer payroll recommendations, payroll schedules to stay compliant, and monthly premiums on monthly checks. This leaves a lot of room for error. The tax man thrives on error and running payroll smoothly is important in the case of the dreaded audit. 

Audit Anxiety

Entrepreneur relaxing outside

For some, nightmares may consist of being late for a flight, but for small business owners, that nightmare may be the IRS knocking on your door demanding thousands of dollars in taxes. As tight as you run your ship, mistakes happen and in the case of an audit, you want to be as prepared as possible. There are several details that arise while owning a small business and by hiring a professional you can rest easy that someone has your back on compliance. Turn those nightmares into peace of mind. 

Navigating PPP loans

There’s no denying that businesses with good accounting and tight payroll practices received PPP (payroll payment protection) loans with more ease than businesses that did not have a professional tax and payroll service. The PPP loan application process was a giant headache but with the combination of professional accounting and payroll, small business owners were able to get their applications submitted in time to receive the funds. The application was multiple pages, but the fields were easy to fill in if you had an accounting and payroll service, which leads us to the importance of having a smoother business process. 

Business Processes

Imagine getting a full, detailed vision of what you’re spending and earning every month into your inbox. Clarity! As much as you crunch numbers on your excel spreadsheet, keeping data up to date is a chore and takes up valuable time. Luckily, there are professionals for that. This will give you full transparency on how much your business profits and expenses are. Rest assured that the $30 filet you bought for your lunch meeting is going on your monthly report. But also rest assured that your accountant knows you can only write off 50% of that lunch. 

Dog in Halloween costume

DIY is great for your dog’s Halloween costume, presents for Grandma, and that amazing quarantine banana bread you made but may not be the best approach for your business’s accounting. You could be missing out on thousands of dollars, multiple hours of your time, and peace of mind knowing that a professional is handling the books of one of your most precious assets (your business). Filing your own business taxes may be in your ‘zone of competence’ but it is an accountant’s ‘zone of genius’. Get back to spending time in your ‘zone of genius’ which is running your small business. 

At Singletrack Accounting, we know how valuable your time and hard earned money is. We are here to help you. Reach out for a free consultation. 

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11 06, 2020

Why You Should Hire A Business Coach

2020-06-11T19:14:38+00:00

As a business owner, you are most likely a pro at putting out fires, creating something out of nothing, and motivating yourself to continue through all circumstances. However, gaining a new perspective from an expert will teach you to identify what is important and in return accelerate your success. Enter your future business coach.

When is the right time to hire a coach?

There has never been a better time than now. With COVID-19 affecting pretty much every business, many have been forced to get creative. For example, restaurants have had to shift to takeout, numerous companies have had to support remote work, and the travel industry has been flipped upside down resorting to virtual experiences or promoting safe travel within driving distance.

With all the uncertainty, it’s never too early to seek coaching. Some entrepreneurs wait until they run into problems before hiring a coach. They could be hitting an income wall, feeling stuck or unmotivated, or their business is on a downhill slope – and not the fun skiing downhill slope. While it’s important to get help as soon as possible if you are experiencing any of these scenarios, our advice is to get on track with a coach right away to avoid getting into these scenarios or at least learn ways to handle the situation.

Yes, a business can be unpredictable especially during a world pandemic. The rollercoaster of highs and lows can feel draining at times. Having a business coach by your side riding the moguls with you directing you towards smoother terrain can even out these highs and lows so you can stay laser focused on what matters.

What can a business coach offer me?

Fly fishing

“Give a man a fish and he will eat for a day. Teach a man how to fish and you feed him for a lifetime.”

A business coach is by your side to talk through your real-world problems and most importantly teach you how to come up with solutions. They might discuss topics such as creating a more efficient process, establishing goals, formulating strategy, budgeting, refining your niche, identifying your ideal customer, marketing and networking channels, creating action plans and how to stay healthy and inspired on this crazy entrepreneurial ride.

Business coaches won’t be able to solve all your problems. They will, however, try to get to the root of why these problems are occurring and teach you the proper tools to solve them and find out why it is challenging for you.

For example, you may go to a business coach to find out why your sales have been plateauing despite a strong market. A business coach won’t necessarily give you all the answers, however, they will give frameworks and ask the right questions to surface new insights because no one knows your business better than you. Sometimes it’s ‘hard to see the forest through the trees’. A coach can help you get some elevation on a hard issue so you can see it from a new perspective.. For example, you may be suffering from a bad case of imposter syndrome (we’ve all been there) and be totally unaware of it until you get a coach’s opinion.

How to choose the right business coach

While one business coach might be perfect for the person in your co-working space next to you, it may not be the right person for you. Here are some of our best tips to get you set off in the right direction.

-Choose someone with personal business experience. Hiring a coach who has walked the walk and built a successful business who is going to be a great asset. While a good coach will absolutely add value, a relevant industry coach is even better than a generalist.

-Building trust and a personal connection is important when finding a coach. If you don’t have a connection with the person, the process will be doomed from the beginning. Interview your coach first to make sure their approach and style match yours. If you don’t vibe, cut your losses early.

-Make sure this coach is an expert in their field. Are they working on their personal development? Are they putting out good content on running a business? Is the coach actively engaged in new industry happenings? Pro tip: follow this coach on social media to get a better understanding of the content they are putting out into the universe.

-We live in a world full of free information, which includes public reviews and testimonials. Read those reviews! Even better – reach out to a few former clients and have them give feedback on their experience.

Takeaway

While running your own business can be rewarding, it can also be demanding and stressful. Hiring a business coach means you will have someone in your corner who can assist you through the challenges and serve as a source of experience and business consulting that you can rely on. Coaching is a competitive advantage! It’s never too early to ski the windy entrepreneur slope with a coach by your side. What are you waiting for?

Kim Hornsby, CEO of Singletrack Accounting, knows small businesses. She is an industry expert and has helped businesses of all sizes scale through consulting. After leaving the corporate world over 20 years ago she has started, built, operated, and sold businesses across various industries. Not only is she a business expert, but she has traveled the world and built a lifestyle around mountain living in Steamboat Springs, Colorado. Reach out for a free consultation on how Kim can elevate your business.

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11 02, 2020

Did You Receive A 1099? You’re Probably Overpaying Your Taxes

2020-02-11T15:57:09+00:00

You are your own boss. You do contract work for whomever you choose, whenever you choose. Your customers’ businesses write you phat checks and you are feeling flush all year. All is good in the entrepreneur hood until the tax man comes around in April. Your 1099 arrives in January and that is where the problem begins. The problem is that no one told you that LLCs and Sole Proprietors pay a whopping 15.3% Self Employment tax on the entire amount on your 1099….on top of your regular income tax! Most self-employed people only find out about this nightmare situation after they file tax returns with 1099s and are then hit with the tax bill. YOU are paying the highest % of tax out there. Thankfully there is an easy way to to stop this gross overpayment of taxes — and it’s still available for 2019 if you have not filed your returns yet. For the sake of your bank account, read on. 

4 Crucial Things to Consider

Friends playing music

Business Formation

If your business is an LLC or Sole Proprietorship, you must pay Self Employment Tax. Why? Since you don’t receive paychecks and don’t pay into Social Security and Medicare, this is how the IRS makes sure that you still do. Self Employment tax is 15.3% on your total net business income. That number is in addition to your regular income taxes. 

EXAMPLE: You receive $100,000 in 1099s, and had $20,000 in expenses. Your net income is $80,000 and you will end up paying $12,240 in SE Tax.  ($80,000 * 15.3% = $12,240). If you fall into the 24% tax bracket for personal income tax, that means you are also going to pay an additional $19,200 ! ($80,000 * 24% = $19,200). That is a ghastly total of $31,440, nearly 40% of your income is now going to taxes. 

Lets say you only receive $20,000 in 1099s, and had $2000 in business expenses. Your $18,000 profit is going to cost you $2,754 in Self Employment taxes. If you are in the 12% tax bracket for personal income tax, that’s going to add $2,160 to your tax bill. That adds up to $4,914, nearly one third of your $18,000 profit is gone.. 

How To Stop Paying Self Employment Tax

First, if your accountant never explained Self Employment Tax to you, you have a problem with your accountant. Now that we’ve not only explained this tax to you, we’re going to tell you exactly how to stop paying it. Turn your business into an S-Corp. Yes, you’ve heard people talk about it but you didn’t really understand and weren’t sure it was right for you. Well chances are, if you are getting those phat 1099s, it’s exactly right for you. Here’s how this goes: when you are an S-Corp owner you’ll be required to pay yourself a portion of your net income through an actual paycheck. Now that you are paying yourself a modest salary based on your accountant’s advice (hopefully not from the bad one) you will also be paying Social Security and Medicare taxes through your paycheck. Now that the IRS is getting their piece of cheese from your paychecks, they no longer subject any of your net income to Self Employment tax!

Example: your S-Corp made $100,000. After expenses you have $80,000. You pay yourself a salary of $45,000 leaving a net income of $35,000. You pay Social Security & Medicare tax on your salary which amounts to $6,885. The $35,000 left as net income is no longer subject to any Self Employment Tax. In the 24% tax bracket, you are still going to pay $19,200 for personal income tax. But now your taxes total $26,085: a $5,355 savings from filing your taxes as an LLC or a sole proprietor. 

NOTE – these example scenarios are very simplistic, but the basic premise is there. The more your income increases, the more you save.

When Should I convert

We recommend that you elect s-corp status at the point that your tax savings more than covers the increase in accounting costs (i.e. the cost of adding payroll). Depending on the business and how expensive your accountant is, this could be as low as $20,000 in 1099-MISC income. There are many additional advantages of being an S-Corporation such as access to pre-tax retirement savings, added deductions for health insurance, a separate set of books providing clear and easily digestible financial information. Also consider this, being on payroll means that you will be “withholding” income taxes each year. Many contractors fall into the trap of not saving any of their money for tax time. With an S-Corp you will be paying yourself a monthly salary with taxes taken out offsetting some of that April tax bill.

Develop a Bulletproof Plan

Now that we’ve talked you into the no-brainer switch to an S-Corporation, it’s time to develop a bulletproof financial plan. ALL of this depends very much on your own personal scenario. This is not a one-size-fits-all situation, many factors are at play, and this is where a pro comes in handy. A professional accountant can ensure S-Corp status is right for you and get you set up on a plan to keep your S-Corp fully compliant with all the IRS rules and regulations. While switching to an s-corp is often the smartest tax move, the “paperwork” is tricky. It is best to hire a professional accountant to take care of the details.  

Takeaway

Man riding bicycle

The great news for you – it’s not too late to take advantage of these tax savings. A tax professional can change your business formation before you file your taxes on April 15, as long as you act quickly and check a few requirement boxes. Remember, your tax savings should keep more money in your pocket and still cover accounting costs.

Singletrack Accounting saved customers well over $100,000 in 2019. We can absolutely make you a part of that statistic! We live and breathe small businesses and nothing makes us more joyful than saving you money while providing expert accounting and excellent service. We are with you every step of the way. 

To learn about more tax saving strategies read 5 Tax Saving Strategies For Small Businesses. 

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7 02, 2020

5 Tax Saving Strategies for Small Businesses

2020-02-07T22:08:01+00:00

We are starting down the third year of the Tax Cuts and Jobs Act and tax savings are all around us. Every year the standard tax brackets increase with inflation. Here’s a breakdown of the 2020 tax brackets. 

2019 Tax Brackets

No matter which bracket you fall in, there are multiple ways to cut down your tax bill and take advantage of savings. Here are 5 tax saving strategies for small businesses. Let’s start planning. 

1099s

If you are one of the unlucky few contractors receiving 1099s, you will end up paying an enormous 15.3% self employment tax on the entire amount of every 1099. Let’s say you made $10,000 on a 1099. You would end up paying $1,530 in taxes. Example: Alley is a digital marketing contractor. She receives $100,000 per year in 1099s. Her tax bill would be ($100,000 * 15.3%) = $15,000. This is in addition to income tax. Luckily for Alley, there’s an easy way to reduce or eliminate this tax. Read #5 to find out how. 

Paddleboard yoga for health

Health

Carrying health insurance is still mandatory under the Affordable Care Act and most small business owners can deduct health insurance related expenses for themselves and their employees on their business tax return. The deduction doesn’t stop with insurance premiums. There are other healthcare related expenses you can deduct such as HSA (Health Savings Accounts). Let’s dive more into this. HSAs are contributions you and your employees make to an account. The monies must be used to pay health related expenses. In addition to paying for medical and dental expenses, some other exciting things you can use this account for include massages and yoga classes (with a doctor’s note), doctor ordered over the counter medicines , eyeglasses, teeth cleanings, health related home improvements, fertility treatment, and your kids’ health expenses even if they are not on your plan. Sounds like a win win to us. 

Here’s a list of HSA qualified medical expenses published by Optum Bank https://www.optum.com/content/dam/optum/consumer-activation/A13534/42994-hsa-qualified-expenses.pdf.pdf

IRA

Setting up a qualified IRA account is not only reduces your taxable income (and thus your tax bill) and allows you to keep that money in your pocket for retirement. Example: Alley, a small business owner, contributes $15,000 per year to her SEP IRA retirement account. On her business tax return, she can deduct the entire $15,000. Since she is in the 24% tax bracket, Alley saves $3,600 in income taxes and she also gets to keep that money for retirement; her $15,000 saved just became $18,600 saved! Alley’s smart and will be thankful for the extra retirement money when she’s drinking margaritas in Mexico. Cheers to that!

Digital nomad traveling in van

Travel expenses

Speaking of Mexico, have you ever wondered if you can write off that trip south of the border? While tempting, it’s important that you follow the rules on this deduction. The trip has to be an actual business trip the majority of the time but that doesn’t mean you can’t add in a few extra days at the beginning or end for extra traveling. The rules are different on domestic and international travel. For domestic travel, you must spend over 50% of the time on business and you are able to write off 50%. Any less than 50%, and you can’t write off zip. For international travel, the write off amount depends on how much time you spend doing business. For example, Alley is a social media manager. She has multiple clients she posts content for. She spends 40% of her time taking photos and videos for her clients. Alley can write off 40% of her travels. Keep in mind that you can only deduct your portion of expenses if you bring the family along. If you can follow the rules and record keeping requirements, you’ll get two thumbs up from the IRS. 

Form an S-Corporation

The money your clients pay you is subject to 15.3% self employment tax if it’s reported on a 1099. If your clients pay your s-corp instead, some of that money is required to be paid to you by your s-corp as an Employee and reported on a W-2. Your payroll is another deductible expense which lowers your net taxable income. That remaining net income is not subject to any self-employment tax …meaning you skip the 15.3% tax! The salary portion you paid yourself is of course subject to self-income tax, but not the remaining net income. Example: Alley pays herself a $60,000 salary and still has an additional $40,000 in net income. By switching to an s-corp, Alley saved 15.3% x $40,000…that is $6,120! Money in her pocket that she can spend on other things such as marketing, IRA contributions, or a Mexico vacation – all achieved merely by changing the way her income is reported. If her income had been reported on a 1099, she would be facing a self employment tax bill of $6,120 on April 15. While an s-corp seems like a no brainer, the formation can be tricky. Make sure you have a professional accountant set it up correctly. 

These tips are all great ways to reduce your tax bill. Every business and individual’s taxes are very different and the best advice we can give you is to seek professional help about your individual situation. Singletrack Accounting saved customers over $100,000 in taxes in 2019 and we can absolutely have you be a part of that statistic. Reach out to our team of professionals. 

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4 01, 2020

Be Your Own Boss – Create Your Dream Job and Lifestyle

2020-01-04T21:48:41+00:00

Do you dream of a flexible schedule, living where you vacation, and being your own boss? Starting a business takes risk, hard work, and grit. Living in the resort town of Steamboat Springs, Colorado we have noticed gaps that need to be filled. In this article, we will cover possible business ideas that cater to your town and steps to take to validate your business.

Possible Business Ideas

Pet sitting services

Pet Services

67% of US households own pets. In mountain towns, that number is even higher. These towns typically lack pet sitting services including grooming, daycare, walking, and boarding. In areas with larger populations, there are services such as Rover which is a mobile app where you can arrange pet services with verified people on a whims notice. The same concept can be brought to small towns. No fido left behind.

Mobile Carwash (or mobile anything)!

While making pancakes on a Sunday morning, I looked out at my car covered in dirt from a recent road trip around Colorado. A man knocked on our door asking if we wanted our car washed. Twenty minutes later, both of our cars were spotless. I had one regret – I should have grabbed his contact information for the next time I needed a wash. If only he had a mobile app where I could schedule another car wash. This concept could be applied to numerous services such as massages, ski rentals, cleaning and grocery delivery.

Childcare

In Telluride, Colorado, a company named Telluride Sitters provides babysitting services and rental gear such as strollers, high chairs, and cribs. They even have a mobile app. Is this something your town may be lacking? Ask someone with young kids what they wished was more accessible. They will typically reply with reliable childcare. Even better – childcare in a pinch. Imagine being able to call a childcare service with reputable babysitters the morning of a powder day. Priceless.

Virtual Assistant

You have skills that may be in demand in your town. You can offer virtual assistant services to people who may not have the time or expertise. Even better – you could have a team of virtual assistants and manage them for clients. This could include social media, graphic design, bookkeeping, organizing, and more.

Trades

Small communities typically lack workers with a licensed trade skills such as electricians, irrigation experts, and plumbers. Rather than working for a company, there may be an opportunity to not only practice your trade but be an entrepreneur and start your own business. In small towns, great service travels fast and you should be able to grow on referrals.

Contractors

Residents in resort communities have large investment properties that require constant maintenance. In cities, contractors are much more accessible than small towns and resort communities. In Denver, Colorado, if you run into a house issue, someone could be there in 30 minutes. In small communities it could take days or weeks. Why not apply the big city model to your resort community. Strike up a conversation with a few homeowners or a rental company and assess the demand.

Steps on Validating Your Business

Friends drinking and eating

Ask People

You may have a need in your town that you would like filled, but you may be on an island. Ask around. Ask community members what they are lacking in services. Is your neighbor complaining they cannot find a dog walker or are you and your friends itching to get first tracks on a powder day but cannot find a babysitter? By listening and asking the right idea will come to you to fill the community gap.

Run Small Tests

You have the perfect idea. You are going to start a dog boarding business. You need marketing, a physical space, signage, and more. Before you drop money on all the things, could you run a small test? For example, the holidays are coming up. You could decide to run a test of getting five dogs in your house to see how if the demand is present. Was it easy to line up five dogs? Did you only get two? Do you have a large waitlist?

Get Involved and Ask For Help

We live in a glorious time where information is free and at your fingertips. It has never been easier to start your own business and be your own boss. Luckily, other entrepreneurs have been in your same shoes and are more than happy to pass along information. Get in touch with fellow peers and learn from them through mentorship. Go to community events, talk with people, and ask for help.

Business Formation

Once you know you’re ready to start your business, the first step is to legally form your company. There are several company structures with pros and cons depending on your goals. It is wise to consult a tax professional beforehand because setting up your business correctly from the start will save you time and money in the long run. At Singletrack Bookkeeping, we know small businesses. Reach out for a free consultation.

Be Your Own Boss – Create Your Dream Job and Lifestyle2020-01-04T21:48:41+00:00
14 12, 2019

What Are 1099s and Do I Need to File Them?

2019-12-17T15:49:36+00:00

Taxpayers dread receiving 1099s and as a business, you might not enjoy sending them out. But why deal with them all together? Because the IRS loves 1099s…and requires them. They report taxpayer income to the IRS. Here’s what you need to know about W-9s and 1099s. 

What are W-9s and 1099s?

What are W-9s? IRS forms that request taxpayer ID numbers and business certification from business service vendors. What the vendor declares on this form will determine whether you must issue a 1099

What are 1099s? IRS forms issued to service vendors each year that document the vendor’s miscellaneous income to the IRS

Rules on sending 1099s: Generally, you are required to send 1099 MISC forms to people and vendors you have paid for business services by cash or check. There is a threshold of $600. You must have paid a vendor for services, $600 or more over the course of the year, in order to fall under this requirement. You do not need to send a 1099 to a vendor that is incorporated. This exemption does not apply to attorney services.

Form 1099-MISC

Do I need to File 1099s? 

You Don’t Think 1099s Apply To You….and You Couldn’t be More Wrong! Why do we care? We’re trying to help you avoid big penalties. The IRS was wise to focus on 1099s for their crack down effort to improve proper reporting of taxable income. You don’t even realize how non compliant you are – perfect! says the IRS. What a great place to grab $500 in penalties.

The #1 thing you got wrong: 1099s are only for contract laborers. Many businesses assume that if they don’t have contract laborers, 1099s simply don’t apply to them. 1099s must be issued to those whom you pay for business rent, to those whom you pay for legal fees, to anyone whom you paid for a business service, not simply contract labor. Those who are incorporated are exempt (except for attorneys), but how do you prove that they are incorporated? You collect their W-9 form.

The #2 thing you got wrong: you can collect W-9 forms in January. You have 20 business days to send 1099s to eligible vendors, make corrections, and file them to the IRS….AND you think you can start asking vendors for W-9s on January 11? It’s simply not feasible with the time limitations. Start to collect W-9s as soon as you pay new service vendors.

What Happens if I don’t File my 1099-MISC?

Even if you don’t receive the 1099-MISC form, you are still responsible for paying the taxes you owe. It is a good idea to reach out to the company. They may have filed the 1099 to the IRS but it may not have reached you. If this happens the IRS will send you a bill saying you owe taxes on the income. You can get a surprise bill years after the fact. If the 1099 form did not come, file it as miscellaneous income. A tax professional can help you with the process.   

Urban Myths Surrounding 1099s

“LLCs are corporations, so I do not need to issue a 1099” This is not true. In fact most LLCs are not corporations. But they can be. How do you know? Request a W-9 from the vendor.

“My contract vendor told me he is incorporated so I don’t need to ask for a W-9” This is not true. In an audit the IRS will request W-9 documentation proof from you as to why you did not issue vendor 1099s

“I asked my vendor for a W-9 and they refused. So I’m covered with the IRS because I asked for one” This is not true. The IRS says it is YOUR responsibility to get a completed W-9 from your vendor. How would you make sure you get one? Request it before you pay the vendor.

“Rent is not something I have to send a 1099 for” This is not true. The IRS even has a special box on their 1099 for business rents.

1099 Example for Small Business Owners

Graphic designer working on filing Form 1099-MISC

Let’s say you are a website developer and you need a logo designed for a client. You hire a graphic designer to come in and help you design the perfect logo for your client. 

The graphic designer works solo, owning a sole-proprietorship business. The contractor designs a beautiful logo that looks fantastic. She bills your company $1000 for the logo. 

It is now up to you to send the contractor a Form 1099-MISC stating the service and the amount you paid her. You will also file the Form 1099-MISC to the IRS before the Form 1099-MISC deadline. 

Ultimately all 1099 compliance is the responsibility of business owners. Your accounting professionals are here to assist you, but you are the key to making the process work. Make sure that you understand both 1099 guidelines and your bookkeeper/ accountant’s procedures to help keep you compliant and avoid issues.

Resources

More on Form W-9 request for Taxpayer ID Number and Certification https://www.irs.gov/pub/irs-pdf/iw9.pdf

More on Form 1099 report of Taxpayer Miscellaneous Income https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

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What Are 1099s and Do I Need to File Them?2019-12-17T15:49:36+00:00
13 12, 2019

The “Lean By Default” Business Mindset

2019-12-13T16:49:35+00:00

Lean By Default

Lean by default is a mindset that you can use as a true north while making business decisions. But how do you go about being “lean?” A lean mindset doesn’t always mean being lean with money. It is also about being smart about your time, resources and decision making process. There are lean steps you can take to make starting a business less risky and financially intensive. These crucial points can be used throughout the entire life cycle of your business. 

Build It Yourself or Buy It 

As a business owner you will be faced with thousands of choices. Many of these business decisions require a build vs buy choice. For example, you need a website. You have a few options. You can build it yourself on a drag and drop platform such as Squarespace or you can hire a website developer. Building a starter website yourself will cost you nothing but your time. Hiring a web developer has an average cost of $10,000-$20,000 for a website. In this case, it may be smarter to build the Squarespace site first, and then graduate to a more robust platform built by a website developer when you start growing and are confident you have a viable business. When deciding whether to build vs buy, lay out the time and money involved in each task to make the best business decision while always keeping a lean mindset.  

Wearing Too Many Hats 

You need to find the right balance of being lean while saying yes to other opportunities that will save you time and money later on. For example, trying to wear too many hats can deplete you of your time and energy. You may be the marketing person, sales person, and bookkeeper. Learning how to balance your books may not be your best use of time and the margin of error can go up. Outsourcing some of these tasks such as bookkeeping and accounting saves you thousands of dollars and lots of headaches throughout the year and come tax time. Accountants know how to best form your company and write offs and tax breaks to take advantage of. Your time is your most valuable asset when you’re thinking lean. Hiring experts in some areas allows you to focus on the core value of what your business is providing to your customers. 

Just Good Enough For Now

Female business owner painting

Perfectionism is the killer of growth. We see so many entrepreneurs build up barriers in their head and experience “failure to launch” because they couldn’t do “just good enough for now”. You know you want to get to your end goal with the perfect company in mind, but if you keep a continuous improvement mindset you’ll be able to build in intermediate steps to reach that goal.

 

When the founders of Boom Chicka Pop got their first purchase order from Trader Joe’s, they did not have the perfect recipe that would scale. The founders had a tight deadline and limited resources so they went with “just good enough for now”. The first batch of popcorn sent to Trader Joe’s ended up having caking problems but it still flew off the shelves. The purchaser from Trader Joe’s put in a second large order with the expectation that they fix the issue, which they did. If they had not filled that original purchase order because everything was not “perfect” they most likely would not have had another opportunity to get into Trader Joe’s which kickstarted their business.  A handful of years later, they ended up selling their business for 250 million dollars. 

Lean By Default Doesn’t Stop After the Startup Phase

Entrepreneurs having a meeting discussing Lean By Default

Bingo! Customers are paying for your service and your business is growing. Now what? You are looking to grow. This is another critical time to keep a lean mindset because this is typically the time businesses make mistakes by getting too far ahead of their skis on spend.

Since you followed our advice and hired a bookkeeper from the beginning, you will know exactly where your money is going. At this point in the game you may need to hire someone to take over your marketing so you can focus on business strategy. Does it make more sense to hire an hourly contractor or full time employee? Now that you know your industry and customer well, it may also be a good time to go back and build a more robust website.

Don’t be afraid to kill projects that are not working and double down on what is working. Fail. Learn. Iterate. Grow. Repeat. 

The “Lean By Default” Business Mindset2019-12-13T16:49:35+00:00
15 11, 2019

Find Your People – How to Identify Your Ideal Customer

2019-11-21T18:00:26+00:00

At Singletrack Bookkeeping, our ideal customers are “mountain people” (a concept, an attitude – not necessarily a physical location): they are positive people, they love fresh air and the great outdoors, they work hard and then go play harder. They are driven and want to be in control of their own future, and maybe we’re a little weird…and definitely want it all. Lifestyle Entrepreneurs.

It is so important for small business owners to identify customers they want to work with, who they are speaking to, who they are building their product or service for, and what message they are sending to their audience. 

In our last blog post, 5 Marketing Strategies to Kick Start Growth, we touched on customer personas. Customer personas are a way to define your ideal customer. Keep in mind, not every business will have the same criteria when defining their ideal customer. If you provide a service, you may take into account the characteristics of the type of person you are working with. If you are selling a product, it becomes more important to focus on demographics such as age, gender, income level, and spending habits. The key component is that this ideal customer is someone you want to work with and/or sell to. This customer is high spending, loyal, and will refer you to their network. 

Friends drinking wine outside by a jeep

How do you go about collecting this information? Here are a few examples. *Note: this will vary between businesses. 

1- Keyword research

What are customer’s typing in to find your brand? For example, let’s say you have a food product. Are they typing [brand name] organic? This would indicate that this person values organic food over other factors such as price. This would fulfill the ‘motivation’ part of a persona.  

2- Social Media Insights

Social media analytics already have behavior tied into insights. With Facebook ads for example, you can run several tests to see what resonates with different audiences. You can run tests to see which photos, messaging, and landing pages are resonating. In a recent study, we found that a video from the founder of the company produced a 3x conversion rate compared with static images of their products. We realized the audience valued authenticity which filled the ‘influences’ section of the customer persona. 

3- Talk to real people

Start talking to real people who might fit your customer personas. Ask them questions about their pain points, motivations, buying behavior, and who influences them. 

4- Perform small tests

As an entrepreneur you will encounter failure. It is inevitable. One way to minimize risk is to perform small tests and fail fast. Take failure as a learning experience and know that you are that much closer to finding your ideal customer. Learn, grow, and evolve. 

Get into action!

Grab a beverage, drawing paper and something to write with. It’s time to have fun building your customer avatars.  Give them a name, photo, and back story. The more detail you can give this ideal person, the more powerful your decision making will be later.

Customer persona example

Photo Credit: Himangshu Borah

Now that you have built your customer personas, it’s time to get strategic. Here a few examples:

1- Create clever content related to your personas. If you’re ideal customer is an environmentally conscious millennial with kids, remind them that your hotel has a kid-friendly pool, poolside bar, and cocktails with 100% compostable straws. 

2- Market where your customers spend most of their time. By now you have done the research, collected data, and talked to people to understand which marketing channel resonates with them. Focus on THAT.  Iterate quickly and double down on what’s working.

3- Partner with influencers your ideal customer personas value. This doesn’t mean you have to strike a deal with Kilee Jenner tomorrow. There are lots of micro-influencers that are happy to partner with brands for little money or product trades. This is a quick way to build trust with a new segment by attaching yourself to similar interests and values.There are also bigger companies such as 1% for the planet you can partner with by giving away 1% of total sales back to environmental philanthropy causes. If your customer values the environment, this is a way to show them your commitment to their values. 

Don’t forget – Always. Be. Testing. Just because you have made customer personas does not mean they wont change along the life cycle of your business. People evolve, companies evolve. Make sure your message evolves with it. The wrong customer + the wrong business = a lot of time and advertising dollars wasted. This simple exercise is a critical step for a new startup or existing business. It’s a very powerful way to get you closer to your customer. Once you identify your ideal customer you can set a true north for business decisions.

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7 10, 2019

5 Marketing Strategies to Kick Start Growth

2019-11-21T18:01:11+00:00

You’ve written a business plan, designed a logo, built a website, launched on social media and BAM! Time for sales to roll in. However; if you are like the majority of new businesses you may be hearing crickets. 

You might be sitting on a great business but that means nothing if your customers can’t find you. Have you ever heard the saying, “Build it and they will come?” Well, that’s not usually the case. Don’t worry. We’re here to help you gain some brand exposure to get you off on the right track. Learn 5 marketing strategies to kick start your growth. 

1- Know your customers

Customer profiles, also known as “personas,” are a way to define your customer. Before starting to advertise, perform an exercise to create the ideal customer for your business. By defining your customer, you can notice patterns that will benefit your advertising efforts. Identify attributes such as demographics, product usage, generation, income level, and geography. For example, the brand, LuluLemon’s ideal customer is a single, professional female named Ocean who makes $100,000 per year and drives a Subaru. Ocean is also engaged, owns a condo, travels, is fashionable, and has 30 minutes to work out a day. Pretty specific. 

Pro tip: If you find out your ideal customer is not what you thought, don’t be afraid to pivot your marketing strategy. 

LuluLemon Customer Profile

Photo credit: Medium

2- Understand the importance of SEO

SEO (Search Engine Optimization) is crucial when building a website. When people think of SEO, they generally vision a developer in their basement hacking away on a computer fooling us all with their algorithms. If you envision this – you are probably right. Google is really just a giant algorithm and while SEO gurus might not be hacking away in their basement, they have spent countless hours learning the system. Hire a professional or dedicate some hours teaching yourself the tricks and trades of SEO. If done right, it will pay off over time. 

Pro tip: beware of the web designer who designs a really beautiful site but is not knowledgeable in SEO. You will be left with a masterpiece that no one will see. 

3- Instagram and Facebook Social Media Engagement 

Unless you are Kim Kardashinan, building a social media audience takes hard work and time. Forget the “get rich quick” ads that pop up in your newsfeed to grow your followers. They are using tools that Instagram frowns upon. Instagram knows when you are not being genuine and they will rank you lower in their algorithm preventing your followers from seeing your posts. Growing your accounts takes hands on action. For Facebook and Instagram, follow relevant users, businesses, and groups that would be interested in your business. Start interacting with these users by liking and commenting on their photos. In turn, they will be curious about who you are and if they’re interested they will follow your account. If you’re short on time, reach out to Chair 9 Marketing. They have an entire team of social media professionals who would be happy to give you some manpower. 

Pro tip: strike up conversations with your followers. Facebook and Instagram will rank you higher in their algorithm if you are a real, genuine company who generates questions and interest from your followers. 

4- Build Reviews

We cannot emphasize the importance of reviews. We live in a time where trust is the forefront of consumer buying decisions. Consumers are reading reviews at an increasing rate while the accessibility of reviews is growing. The market can be saturated and when a consumer is debating between your business and a competitors, they are likely to read reviews, especially in the restaurant, hotel, and the travel industry. A couple of ways reviews can help is by increasing brand credibility, improving SEO with mentions on external sites, create brand awareness, and drive traffic to your site. Don’t be afraid to ask for reviews. 

Pro tip: Respond to EVERY review, good and bad. Companies that demonstrate they are present and on top of reviews stand out even if you are politely responding to a bad review. Don’t worry – they happen to everyone. 

Singletrack Bookkeeping Review Example 

5- Google My Business

By creating a Google My Business profile you are setting yourself up for increased traffic, credibility, an easier way for people to contact you, and local foot traffic (if that pertains to you). Google My Business has tons of features such as Google Maps for your business, photos, contact information, reviews, posts, and social media links. Therefore; if a potential or current customer is conducting a search on Google, they can find what they are looking for on the results page without clicking. We are all looking to save time and as a business you should make it easier for customers to get the information they need. No clicks needed. 

Pro tip: Keep your information current such as your hours, contact information, photos, and posts. As you can see below having current  photos, reviews, contact information, posts and social profiles can lead to better search results and help your listing shine!

Google My Business example

6- Do what works for your business and Always Be Testing (ABT)

Are you selling nursing bras to millennial mothers? You might have an entirely different marketing plan than a company selling thai chi to active seniors. What might work for one company will most likely not be the silver bullet for the other company. Don’t be afraid to test out different marketing channels, website layouts, and execution. You might be crushing it on Instagram but Facebook may be dead in the water. Your business may become a smashing success on YouTube, while another business may be getting 11 views. Always be testing. 

Pro tip: Make sure you have tracking in place that measures success such as Google Analytics, social media pixels, and bookkeeping from day one to ensure you have full visibility of your analytics. Out of your wheelhouse? Hire a professional that can help you set it up but make sure you educate yourself with the general knowledge on how all the tracking is reported. Google Analytics and your accounting books will most likely places you visit often. 

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10 09, 2019

Search and Rescue for Businesses

2019-11-21T18:05:35+00:00

We’ve heard it before, think before you jump, fall before you fly. Starting a business takes guts and grit and lots of businesses fail. However; if done correctly your business has the potential to be wildly successful. Like anything in life, when starting a business, there are certain precautions you take to minimize risk. These include scoping out your target market, finding out whether or not there is a market, looking at competition, financial projections, and cash flow run rate to name a few. We break down startup 101 “search and rescue” in terms our readers are likely to relate to. 

Backcountry skiing

Singletrack Bookkeeping has roots in Steamboat Springs, Colorado, which is known for their “champagne powder.” We get an average of 300 inches of snow per year. While this is a mecca for blasty blast powder skiing, the risk of going out of the ski resort and into the backcountry becomes a calculated risk. We prepare by taking avalanche classes, buying rescue gear, picking our ski partners wisely, and checking the avalanche forecast before heading out. The same concept applies to starting a business. Education before execution. Piss poor planning equals piss poor performance.  

Free soloing 

Alex Honnold, a professional climber, recently free soled El Capitan in Yosemite National Park. No small feat as this was the most dangerous free solo ascent ever. Although free soloing is an individual sport which involves rock climbing without any ropes, he had many smart people around him while climbing and preparing for El Capitan. Before heading out to climb he had carefully scoped his route, talked with many climbers in the industry, and had confidence he had the skills to get himself out of a potentially sticky situation. The same concept goes into starting your business. You scope out your plan (line), talk with other founders (climbers) who have done it before, surround yourself with smart people, and prepare yourself with the skills needed to execute. Talking with founders who have climbed the same line will save you from potential future mistakes they have already made and give you insider knowledge on successes. Most former founders also enjoy giving back and helping out their fellow entrepreneurs.  

Athlete free solo climbing on a rock face

Mountain Biking

There are few things greater than flying down singletrack on a mountain bike, still in control, but right on the edge of losing control. The wind in your hair, the sensation of going fast, the bike controllably shaking until the moment you go ass over tea kettle. If you have been mountain biking long enough, you know what we’re talking about. You’re in control and suddenly you’re on the ground. In running a business, the same concept applies. Growing too quickly can be as problematic as growing too slow. You can get yourself into a dilemma where you lose track of finances, hire the wrong people in order to keep up with demand, overvalue sales, lose customer service points, and more. If you find yourself in this situation touch the brakes, have patience, take it one step at a time, and always keep good track of your finances. 

Whitewater Rafting

Fill your boat with the right people. While whitewater rafting 90% of the time is typically on flat water, the other 10% is on rapids, sometimes mellow class 2 rapids and sometimes intense class 5 rapids. While riding a class 5 rapid, all hands on deck becomes crucial. The guide needs to be steering and paddling at the same time while the rest of the crew needs to be paddling hard to keep the boat pointing downstream to avoid the dreaded “flip” or “dump truck.” Equilibrium has never been so important. If one side is paddling hard while the other side is hardly paddling, the boat will go horizontal and all the team members will be taking a swim. Communication, trust, and everyone contributing gets you through tough business challenges as well as down river. This is where choosing your team wisely becomes important.

Group of people Whitewater rafting down a river

Starting a business involves calculated risk, planning, making key financial decisions, surrounding yourself with smart people and not getting over your skis. You don’t want to travel to the trail, only to realize you forgot your bike.  It is a lot faster and more efficient if you get the steps right. Whether you are in the beginning stages of your business or are well established, Singletrack can help! We offer new business setup, bookkeeping, tax planning, and business tax returns services. We are simple, affordable, and individual.  

At Singletrack Bookkeeping, we take adventure as seriously as we do our accounting. Reach out!

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2 08, 2019

Accounting and Bookkeeping Basics for Chiropractors

2019-11-21T17:27:02+00:00

As a chiropractor, you are an expert in your trade. You are far more busy taking care of your clients than your financials. When it comes to tasks such as accounting and bookkeeping, you may feel a bit lost. Like most business owners, you may wonder if you are doing your books correctly. In this article, we break down some basics of accounting and bookkeeping for chiropractors and suggestions on how to make your life easier. 

Automation 

Doing data entry manually into a spreadsheet is old school and time-consuming. We highly recommend using cloud based software such as Quickbooks Online that syncs up your books in real-time. Not only does this save you a tremendous amount of time but it’s backed up safely in the cloud so you don’t have to worry about losing all your data or accidentally adding an extra zero to your books.  

Regular Financial Checkups

Knowledge is power when it comes to your business’s financial health and making informed business decisions. Performing weekly checkups on your finances is a good way to make sure your cash flow is healthy, expenses are being paid, and money is being put back into the business. This is where automation comes into play. If you have a system in place to keep track of what is going in and out automatically, financial checkups will be a breeze. 

Quarterly Reviews

Quarterly reviews are key to staying on track financially. At the end of each quarter, take a close look at your bookkeeping and accounting records. Look for changes in year over year revenue, late paying clients, expenses, etc… Speak with your accounting pro to discuss how things can be improved, any unforeseen tax expenses, and a plan going forward. They can help you see the big picture and prepare for circumstances in the future such as a new office space, new equipment, hiring, or an economic downturn.

Have a Check-In

Business owner chiropractor working on his computerAfter you have evaluated quarterly reviews, have a check-in on your financial health with an accounting pro. Some questions to consider:

What are my biggest expenses? There are some expenses you cannot avoid such as payroll, supplies, and rent but what about some of those subscriptions you haven’t used in a year or the vendor that keeps increasing their bill? You may want to cancel some unused subscriptions and find a less expensive vendor. 

Cash Flow. It is important to look at the big picture rather than your bank account on a day by day basis. You may be growing and cash may be coming in the door, but are your expenses increasing? Do you have enough cash flow if there is a slow period? 

Accounts Receivable. Unfortunately, most practices are not collecting all the money they earned. Let’s face it, it’s brutal collecting from insurance companies and patients. This is where automation and hiring a tax professional comes in so you don’t leave money on the table.

Are there any gaps? By keeping your book up to date, you will quickly have full visibility to what is going on with your finances. This will avoid any gaps and help prepare for financial circumstances. 

Tax Deadlines

Always be prepared for tax deadlines. You want to make sure you don’t miss any quarterly payments, 1099 deadlines, reporting, etc… Two things can help keep you on track: accounting software and your accountant. You can set up reminders on Quickbooks Online to help you stay on track or your accountant always has your back on deadlines. 

Hire a Pro

You can make more money, but you cannot make more time. What is your time worth to you? Think about all the precious time you would save hiring an accounting pro. Not only would you save time but you can rest easy knowing your books will be done correctly. Come tax time, you can relax and have peace of mind knowing you will not need to spend multiple hours, even days getting your books together. This time can be spent doing the things you love with the people you love. Priceless.

Best Accounting Service for Chiropractors

At Singletrack Bookkeeping, our chiropractor bookkeeping services are designed for business owners like you. We want you to have a successful practice and not have to worry about accounting so you can focus on your trade while we focus on ours. Our solutions will keep your books current and your tax burden low. We offer all-inclusive accounting packages for every size practice. To take the next step, reach out to our expert team online.    

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Accounting and Bookkeeping Basics for Chiropractors2019-11-21T17:27:02+00:00
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