As a small business owner, the more you can stay organized, improve daily operations, control business expenses, and generally make life as an entrepreneur run a little more smoothly, the more proficient and prolific your business will become. Below are some top-rated apps and programs available to help you manage your business’s financial situation.
Though it’s intended mainly for individual users, this financial tracking app is effective for businesses too. Aside from tracking bills and cash flow, Mint also has Quicken MyBusiness, a tool for small businesses that helps categorize expenses, and gives you up-front information for tax filing.
With the ability to connect to your bank account, PayPal, Square, credit cards, and more, you can use QuickBooks to track sales and expenses, view financial statements, pay employees and vendors, track unpaid invoices, maximize tax deductions, and more. With QuickBooks Online, you can access QuickBooks on both iOS and Android phones and tablets.
For businesses and freelancers alike, cloud-based FreshBooks helps you create personalized invoices, with an option to automatically bill clients for recurring invoices, and generate customizable business reports, such as profit and loss statements. You can also automate tasks like organizing expenses and receipts, tracking your time, and following up with clients.
Created for businesses with nine or fewer employees, Wave is an accounting software platform that has the ability to track sales and expenses; manage invoices, customer payments, and payroll; scan receipts; and generate accounting reports. With Wave’s free apps for iOS and Android, you can send invoices on the go, and get notified when an invoice is viewed, becomes due, or gets paid. Also available through the platform is a free personal finance software to help small-business owners manage their finances in one place.
Once you connect your accounts to the Truebill app, it will generate a report of where your money is going, categorizing and charting subscriptions and expenses. An added bonus with Truebill is a feature that compares your bills and subscriptions to average service levels, and with your initiation, will call providers and negotiate on your behalf.
Intended for small and mid-sized businesses, this accounting app (accessible by both desktop and mobile platforms) can handle payments and expenses, asset management, bank account reconciliation, invoicing and purchase orders, sales tax calculations, and multi-currency accounting.
If you’re looking for a forecasting program to help with strategic planning and analysis, PlanGuru might be a good fit. It’s pricey, with business plans starting at $99 per month, but with an analytics dashboard, Excel add-on, a budget and forecasting platform, and training, it might be worth the cost to keep business spending in check.
This simple expense tracker uses multiple platforms to keep tabs on expenses and mileage by reading and importing expenses from linked bank accounts and credit cards. And with the ability to scan and upload receipts, expenses can easily be submitted to employers.
This bookkeeping service halts the need to invest in big bookkeepers and implements tax services for small businesses. It also helps with forecasting by syncing with bank accounts and credit cards to predict future cash flow determined by current trends and previous expenses.
Before 1997, once a homeowner reached the age of 55, they had the one-time option of excluding up to $125,000 of gain on the sale of their primary residence. Today any homeowner, regardless of age, has the option to exclude up to $250,000 of gain ($500,000 for married couples filing jointly) on the sale of a home.
What Is Capital Gains Tax?
When you sell property for more than you originally paid, it’s called a capital gain. You need to report your gain to the IRS, which will then tax the gain. Home sales can be excluded from this tax as long as the seller meets the criteria.
Who Qualifies for Capital Gains Tax Exemption?
In order to qualify a seller must meet the minimum IRS criteria:
- You’ve owned the home for at least two years.
- You’ve lived in the home as your primary residence for at least two years.
- You haven’t exempted the gains on another home sale in the last two years.
How to Calculate Gains and Losses
By keeping records of the original purchase price, closing costs, and improvements put into the home (you’ll need to present records and receipts when submitting your taxes), you can avoid being taxed on a significant amount of the profit you make when selling your property.
If, for example, you buy your home for $150,000 and put $20,000 into qualifying upgrades, your cost basis would be $170,000. If you sell the home ten years later for $300,000, the ‘gain’ on your house would be $130,000 (sale price – cost basis), which would have no tax implications because you’d have met the required criteria.
What If You Have More than $250k ($500k for married couples) of Gains?
You’ll be taxed for the amount of gains above $250,000 or $500,000 for married couples filing jointly. To help reduce this amount, keep detailed records of any improvements you put into the home as some improvements can be added to your cost basis, and will thus lessen the amount that needs to be reported.
Most small businesses have limited financial resources, so managing funds wisely and intentionally is crucial to the success of the business. Below are ways in which your small business may be throwing away money that could be needed elsewhere.
Having Overheads that Exceed Profit
It might be common sense, but if you’re not making enough profit to cover your expenses, trouble is on the horizon. Even entrepreneurs can be financially-challenged, so it might be worth it to enlist the help of an accounting professional. Additionally, you should identify the most profitable aspects of your business as well as the ones that are draining resources, and make adjustments however needed.
Consider whether your full-time staff is absolutely needed. Could some positions be just as effective in part-time, seasonal, or freelance roles? Too, make sure you’re tapping into your employees’ full potentials. Get to know their interests and individual areas of expertise in order to increase productivity, propel your business forward, and offer new ways to motivate employees to take a vested interest in the success of your business.
Advertising and Marketing Expenses
As a small business owner, you likely don’t have money to waste on untargeted marketing or costly advertising campaigns. Your best bet is probably content marketing, a.k.a. blogging on your website. Brush up on SEO – or tap into the unidentified skills of your employees – to make sure your posts are keyword-optimized and pop up in search engines. Not a writer? Again, tap into the skillset of your employees, or hire a freelance writer. Lastly, think about finding someone to manage your company’s social media accounts and Google ad campaigns.
Trade Shows and Conferences
Though they’re a great way to network while promoting your products or services, they’re often expensive. When funds are tight it’s wise to be choosy about which ones you attend. If one or two specific trade shows or conferences have proven to produce sales and benefit business, just concentrate on having a presence at those venues and forgo the ones that might not be worth the cost.
The Latest Technology
In most instances you really don’t need the latest and greatest that technology has to offer. For example, if you buy a sophisticated software program that requires outsourced labor at a significant cost just to maintain simple records, you might want to rethink whether such a costly program is worth it. Cloud-based services are available to small businesses at low to no cost.
Weak Expense Tracking
If your love as an entrepreneur is building new products, or networking and finding new clients, tracking expenses is likely something that falls on the back burner. Finding a detail-oriented and trustworthy employee to handle this task will benefit your company’s bottom line – and free you up to focus on your strengths. And on your employees’ end, if they know someone is keeping tabs on their spending, they’re likely to be more frugal with company expenses.
Credit Cards and Insurance
Routinely keeping credit card balances in check might seem like a menial housekeeping task, but with interest rates almost always greater than 20 percent, failing to pay your credit cards in full each month is a costly mistake for a small business. Likewise, be sure you’re getting the lowest possible insurance rate for your company to avoid excessive costs. You might also benefit from an independent insurance agent who can go to bat for you when you’re hit with a claim.
“Set it and forget it” is a common approach when it comes to a workplace 401(k), yet it likely will play a substantial role in the financial security of your future. Consistently contributing to your 401(k), and learning how to manage it, will set you on the course to living golden in your retirement years. Below are some tips to help you make the most of your workplace 401(k).
Contribute to the Match
Employers often match contributions up to a certain point, which means you’re getting free money for participating in the program. You should contribute at least up to this point. Beyond this, a typical rule of thumb is to add about 15% to your 401(k) plan each year, including company contributions (i.e. if your company matches 3%, plan to contribute 12%).
Boost Your Investment Savvy
Expense Ratio? Risk Tolerance? Whether you’re going it alone or recruiting the help of a financial professional, you need to have a basic knowledge of investing. Before filing away the information sent to you by your plan, be sure to read through it and look up any terms you don’t understand.
Get Help with Account Management
Of course, having a basic understanding of investment terms will take you only so far. If your investment knowledge is shaky, it might be worth it to recruit the help of a professional. Some 401(k) plans even offer free advice from a professional, or they will provide model portfolios to follow.
Save with a Target Date Fund
The simplest approach to a 401(k) plan is to allocate savings to the target date fund with the date that corresponds to the year closest to the year you reach age 65. With this low maintenance approach, the fund automatically adjusts as you get closer to retirement.
Learn to Rebalance
If you’re not partaking in the target date fund, you will need to perform routine maintenance on your 401(k), which is what “rebalancing” means. Provided you have a mix of stocks and bonds, you will have to buy and sell assets as they move up or down in value. Generally, participants have the option to automatically rebalance through your plan’s website, typically with a quarterly or annual rebalancing.
Though you may be able to take a loan from your 401(k), they usually have to be paid back within five years, with interest. The risks of borrowing from your 401(k) come when you lose your job or change employers, because the loan will be due almost immediately. If you can’t repay the loan, you’ll be taxed and burdened with a 10% penalty for early withdrawal. Not to mention, by taking out a loan on your 401(k), you are shortchanging your retirement savings in a way that could be extremely difficult to catch up.
Mix It Up
Your 401(k) should be only one prong in your retirement plan. Your home and other assets, funds from a side hustle, and other investment accounts like an IRA might be additional prongs that make a complete picture of your financial future. Spreading your assets over multiple income streams will yield better returns, so if you switch jobs at some point, consider whether rolling your 401(k) into your new employer’s plan makes the most sense for your situation, or if you should put those funds into an IRA, which may give your more investment options.
The House of Representatives recently voted to approve the Setting Every Community Up for Retirement Enhancement or SECURE Act, which would expand access to retirement savings programs for part-time workers and people employed by small business owners.
If the SECURE Act Passes…
If the bill passes the Senate, which it’s expected to do, it will be placed on President Trump’s desk. If signed into law, the SECURE Act would implement the most significant changes to retirement plans since 2006.
The bill aims to entice non-savers to participate in workplace retirement programs, such as a 401(k), so some of the provisions include:
- Raising the age that American workers must start withdrawing from retirement savings, known as the required minimum distribution age, from 70 ½ to 72. This is to reflect the fact that more Americans are working longer, and in this vein, the bill also stipulates more years for people to contribute to retirement accounts.
- Increasing tax incentives for small business employers to offer retirement plans by increasing the tax credit for new plans from the current cap of $500 to $5,000, or $5,500 for plans that automatically enroll new workers.
- Allowing part-time workers to participate in 401(k) plans. The current minimum requirement for part-time employees is 1,000 hours in a 12-month period, but the SECURE Act would amend this requirement to 500 hours, effective January 2021. However, this isn’t mandatory, so it would be at the discretion of the employer.
The SECURE Act would also permit parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses. Parents could also withdraw up to $10,000 from 529 plans to repay student loans.
What Does the Federal Reserve Say?
According to the Federal Reserve’s annual study, only 36% of Americans feel that their retirement savings are on track, while 25% of Americans have no retirement savings to speak of. Part of this is due to the fact that, because of the cost and complexity of putting retirement savings plans in place, many small businesses don’t offer such plans to their employees. The SECURE Act aims to incentivize small business owners to offer retirement plans by making it easier for small businesses to implement multi-employer retirement plans—where two or more employers join together to offer a plan. This would potentially give small businesses access to lower cost plans with better investment options, thereby possibly giving millions more workers an opportunity to save at work.
In short, this legislation is important because it would remove some barriers that have kept American workers from saving for retirement, specifically through employer-provided plans and incentives. If you have questions or would like to talk about how the information in this article may impact you personally, please reach out to me at email@example.com and we’ll schedule a time to talk.
According to a 2017 study from Career Builder, nearly 78% percent of people live paycheck to paycheck, with little to no money left over after financial obligations are paid. This means that nearly 8 out of 10 workers may not be able to handle even a $500 emergency. Here’s how to break the paycheck-to-paycheck cycle.
Build a Budget
Yes, this tired old budget thing is rearing its head again, but every financial plan needs to start here. You simply must know where your money is going. Start by creating a simple spreadsheet in Google Docs, which can be shared if you have dual contributors to your household income. If you’re ready for something a bit more sophisticated, Mint.com is a great online tool for budgeting. It will even send you notices and alerts, creating a more personal budgeting experience.
In order to know where your money is going, you need to also track your spending. Document every single purchase for two to four weeks. You’ll be surprised at how seemingly insignificant purchases can quickly add up. Typically, this exercise helps consumers to be more mindful of how they’re spending.
Establish and Emergency Fund
If you approach saving by promising to set aside whatever’s leftover after your financial obligations are paid, you’ll never make a dent in creating an emergency fund, let alone heftier savings goals. Funds intended for saving should come before any other spending. Aim to initially save the equivalent of one month’s paycheck.
Quick fix: put saving on autopilot. If your company offers a 401(k) plan, make sure you’re participating in it. You can also set up an automatic transfer on paydays to have some money automatically transferred from your checking account into a savings account.
Pay Down Debt
Nothing perpetuates the paycheck-to-paycheck cycle like having debt looming over your head. Control and monitor your spending by discontinuing the use of credit cards until you’ve paid them off. To streamline this process, you can consolidate your debt by transferring all your credit onto one card. While you’re focused on paying off debt, avoid taking out any kind of loan. If you can chip away at your debt while simultaneously building up an emergency fund, you can use that fund to pay for any unexpected expenses that may crop up instead of relying on credit cards.
Examine Your Lifestyle
Sometimes fixing the paycheck-to-paycheck cycle is as simple as taking a hard look at your lifestyle and making adjustments where necessary. Is your monthly car payment too high? Does your monthly mortgage payment exceed 28% of your monthly gross income? Are you paying for subscriptions or memberships you don’t use? You get the idea. Examine your monthly costs and find ways to scale back.
Stop Treating Raises and Bonuses as Fun Money
If you’re stuck in the paycheck-to-paycheck cycle, upticks in earnings such as raises, bonuses, and tax returns should be stashed away in savings, not spent on wants and splurges. Likewise, you shouldn’t rely on bonuses as part of your budget. These earnings should be used to increase your emergency savings or retirement funds.
If you have questions or would like to talk about how the information in this article may impact you personally, please reach out to me at firstname.lastname@example.org and we’ll schedule a time to talk.