5 Reasons to Open a Franchise Business

Many of us kick around the idea of opening our own business from time to time. It can seem like a great idea on the surface. You get to be your own boss, make your own decisions, and hopefully become very wealthy if everything goes right. However, the next wave of thoughts can bring you back to reality. Starting a business can be very costly, take up all your time, and there is real possibility that it fails.

Opening a franchise business can be a good alternative to going into business all on your own. You’ll follow a plan that has already proven to be successful and have on-going support from the franchisor. In this blog post, we’ll explore five advantages of opening a franchise business:

1. Limited risk

Starting a franchise can be much less risky than pursuing your own business idea. If a franchisor is opening new locations with new franchisees, their company is likely doing well.

Furthermore, the franchisor probably employees smart people who have analyzed and weighed the risk versus benefit of growth. It’s resources like these that franchisees have access to but the typical small business owner does not.

2. A clear vision of the business

You might have a business concept in mind but only a vague idea of how it would operate. You don’t have the same guesswork when you’re preparing to open a franchise business. You’ll be given directions on how to operate, so much of the trial and error new businesses go through will be avoided. You’ll also know what the branding and store design will look like so you’ll always have a clear vision of the look and feel of the business as you prepare to launch.

3. Insight into startup costs

One of the scariest parts of opening a business is paying for all the startup costs while you wait for consistent revenue to start coming in. You can create a business plan and estimate costs but it’s not uncommon for unforeseen issues to arise, especially early on.

Franchisees fortunately are given insight into startup costs. The franchisor must include initial fees and investment costs in the Franchise Disclosure Document (FDD) they present to potential franchisees.

4. Help selecting a location

It’s often said that a business’s success is greatly influenced by its location. However, there is so much to consider when selecting a location for a new business and little you can do if the space you chose doesn’t meet your expectations.

Most franchisors have a plan for growth and future locations mapped out. When you inquire about launching a franchise, they’ll likely help you select an ideal area and store space.

5. Guidance from the franchisor

Once you sign on to become a franchisee, the franchisor is going to do everything they can to help you succeed. They’ll not only tell you the best way to operate, they’ll likely also provide guidance that can help you become a better business owner. That could include training on financial recordkeeping or advising on what technology to use. It’s in the franchisor’s best interest to help all their franchisees thrive.

BookKeeping Express (BKE) provides accounting and bookkeeping services to franchisees and multi-unit business owners in a variety of industries. Visit our industries solutions page to learn more.

 

A Technology Guide for Gyms and Fitness Businesses

Using the right technology in your gym or fitness business can be a difference maker. You can save time, reduce errors, and uncover insights by having helpful software and other solutions at your disposal. But perhaps even more importantly, you can use technology to provide your members with a great experience and encourage new ones to sign up.

In this blog post, we’ll explore the different technology gym and fitness businesses should use. However, before we start, it’s important to note that we recommend businesses take full advantage of cloud technology. Different cloud-based systems are able to sync and share data, automating many back office processes business owners struggle to find time for. With that said, let’s get into our technology guide for gyms and fitness businesses.

Gym management software

You can use the right technology to keep track of all your members. And your members can use it to get the most out of your services. The following tools can help:

  • Membership tracking/billing software – It’s crucial to keep track of all your members and bill each one for the correct plan, on the right day. You need a solution that can store the necessary information for all your members and automatically charge their credit or debit card for the correct billing cycle.

  • Building access cards – People like to exercise when it’s convenient for them. That could be in the middle of the night, at the break of dawn, or other times when your gym isn’t staffed. You can allow your members to enter your gym 24/7 by providing everyone their own building access card.

  • Booking and scheduling software – If you offer group classes or personal training appointments, you can manage signups using scheduling software. A favorable solution will connect with your website so members can view your class schedule and sign up online.

  • Inventory software – If you sell any products, you can manage your stock with inventory software.

Financial management software

Staying on top of finances is a crucial part of running any business. The following technology can help you with all your financial responsibilities so you always have insight into your cashflow:

  • Accounting software – Every business needs to keep a general ledger that has all their transactions accurately organized and recorded. You can use cloud accounting software to keep strong financial records.

  • Merchant processor – You can easily accept credit and debit cards for on-the-spot purchases using a merchant processor.

  • Point of sale (POS) – You can charge members for specific services/products, and compile detailed sales records, using a POS system.

  • Payroll software – Paying your staff and keeping track of each employee’s hours, benefits, and withholdings can be accomplished using cloud payroll software.

  • Bill payment software – Keep track of all your bills and ensure they’re paid on time using bill payment software.

  • Receipt app – If you incur expenses outside of your gym, you can use a mobile app to snap a photo of the receipt so it’s instantly uploaded to your records.

  • Cloud document storage – Simplify your recordkeeping by storing digital versions of all your documents in the cloud.

Marketing technology

Marketing has drastically changed in a short time. Now small businesses can compete with major brands using the right methods. Here are a few tools you can use to reach a mass of potential members:

  • Website – The majority of potential members will look at your website before they visit in person. That gives you the opportunity to highlight your gym or fitness business’s best features so prospects will feel compelled to become a member.

  • Social media – Many businesses know they should be on social media but struggle to figure out what to share. Gyms and fitness businesses can share photos, videos, and other content that can motivate people to get up and exercise.

  • Email marketing software – Email is a great channel for staying in touch with members and prospects. You can capture email addresses on your website and during the sign-up process and send out special offers and regular email updates.

Interactive fitness equipment

The rapid advancement in technology has even changed the way people exercise. Your members can now set fitness goals and track their progress using the internet, mobile apps, and wearable technology. Additionally, many gyms now have smart TVs with webcams that allow members to order on-demand fitness classes and get feedback on their effort and form. You can explore new products and equipment to add to your gym that give members an interactive experience.

BookKeeping Express (BKE) specializes in accounting and bookkeeping for gym and fitness businesses. We can help you implement and manage cloud accounting software that can guide your business towards its financial goals. Visit our health and wellness page to learn more.

How to Deduct the Cost of a Business Party

Successful businesses are mostly “all work and no play” but every once in awhile there is reason to throw a party. Maybe you want to celebrate the contribution of your employees on a holiday or when a milestone is reached. Or perhaps you want to thank your customers and entice prospects by hosting a gathering at your business.

Fortunately the cost of a business party is tax deductible but there are specific requirements that must be followed. In this blog post, we’ll summarize the rules and provide tips on how you can take full advantage of this deduction.

Staff parties

Everyone of us has likely attended a company holiday party, employee appreciation day, or other staff event at some point in our careers.

The cost of these events is fully deductible as long as it’s hosted primarily for your employees. That means they’re allowed to bring their spouses or significant others but you, the business owner, should not invite your friends, family, or favorite customers. The party needs to be for the enjoyment of your staff and their loved ones.

Customer parties

It’s also common for some businesses to host customer appreciation parties or events aimed at generating more business. In these cases, the meals and entertainment tax rule applies so 50 percent of the cost is deductible.

In order to qualify for this deduction, your event doesn’t need to have a specific business purpose. However, you will need to show that the event was either:

  • directly related to the active conduct of your business, or
  • associated with a directly related discussion that preceded or followed the party.

Basically, the IRS considers the party the same way it does when you take a customer to lunch and discuss business.

What if you have employees and customers at the same party?

Hosting a party that is attended by both your staff and customers can happen. When it does, your party cost deductions are proportional to the attendees – meaning they’re based on the percentage of guests in each employee/spouse or customer/client category.

How to take advantage of the party deduction

To substantiate your deductions, whether they are for an employee party or a business-based celebration, you do what you do for all tax deductions: Document, document, document.

Start by saving all your receipts for party expenses. You might worry the grocery store receipt for your staff 4th of July BBQ is going to be long gone by the time you talk with your tax preparer in the spring. But you can now use mobile apps to snap a photo of the receipt and instantly upload the record to your cloud document storage.   

It’s also a good idea to keep a list of attendees for your company’s events – noting names, addresses and in the case of clients, the business relationship. A guest book can help, as will photos and videos taken during the event. In the unlikely case you get audited, these records will help. But in all likelihood, they’ll only ever be used to look back at the good time.

You’re probably a fun boss and business owner if you host parties and events for your staff and customers. You also want to be sure you get the full tax benefits of being a great host.

So make sure you know and follow these rules and tips. Then have fun!

BookKeeping Express is the leader in accounting and bookkeeping services for restaurants, home service contractors, service providers, and health and wellness businesses. Visit our features page to learn how we can help your business.

Franchise Disclosure Document (FDD): What to Include

The Franchise Disclosure Document (FDD) is a legal document a franchisor is required to present to a prospective franchisee. It gives a thorough overview of the franchise company’s operations so the franchisee candidate is well-informed before they decide whether or not to pursue the opportunity.

The FDD must contain specific information known as “items.” There are a total of 23 items that provide important information about the franchise company, like it’s history, it’s financial health, the fees required by the franchisee, and more. Here is a list of each item that is included in a FDD:

Item 1: The franchisor and any parents, predecessors, and affiliates

Provide an overview of your company’s history and if it’s connected to any other businesses.

Item 2: Business experience of the owner and executives

Summarize your professional experience and the experience and qualifications of your company’s executives.

Item 3: Prior litigation

Reveal any civil or criminal litigation your company or executives have previously been involved in.

Item 4: Bankruptcy

Reveal any bankruptcy history for your company or executives.

Item 5: Initial fees

Describe the upfront fees a franchisee will need to pay and how the amounts are calculated.

Item 6: Other fees

Describe any ongoing fees a franchisee will need to pay once they’re in business.

Item 7: Initial investment for the franchisee

Provide an in-depth summary of the initial investment the franchisee will need to make.

Item 8: Restrictions on sources of products and services

Outline any restrictions on where raw materials, products, and services can be purchased from.

Item 9: Obligations for the franchisee

Provide an in-depth summary of the ongoing obligations of your franchisees.

Item 10: Financing arrangements

Describe any financing options you offer your franchisees.

Item 11: Obligations for the franchisor

Provide an in-depth summary of your ongoing obligations to your franchisees (training and advertising, for example).

Item 12: Territory

Outline the territory the franchisee will have and if the arrangement can be changed in the future.

Item 13: Trademarks

Provide a list of the different trademarks you own.

Item 14: Patents, copyrights, and proprietary information

Describe how any information you legally own can be used by the franchisee.

Item 15: Obligation to participate in the actual operation of the franchise business

Outline the level the franchisee is required to participate in the operations of the business.

Item 16: Sales restrictions

Summarize any restrictions on what the franchisee can offer for sale.

Item 17: Renewal, termination, transfer, and dispute resolution

Outline when the franchisee can renew, terminate, or transfer the franchise agreement. Also, describe the process for resolving disputes between you and your franchisees.

Item 18: Public figures

List any company spokespersons and their compensation.

Item 19: Financial Performance Representations (not required)

Project the expected revenue for the franchisee. This section is not required but is very helpful to the potential franchisee in deciding if they want to enter into the agreement.

Item 20: Existing franchise locations

List your existing franchise locations.

Item 21: Financial statements

Provide your audited financial statements for at least the past three years.

Item 22: Contracts

List each contract the franchisee will be expected to sign.

Item 23: Acknowledgement of Receipt

The final section requires a signature from the franchisee, acknowledging they received the FDD.

The FDD is an important resource for a potential franchisee. It gives them all the information they need for a diligent review of the franchise opportunity.

BookKeeping Express (BKE) is the leading accounting and bookkeeping provider for franchise concepts. We can help all your franchisees keep accurate books and a consistently formatted chart of accounts. Visit our franchisors page to learn more.

 

Common Expenses for Restaurants

Properly recording and categorizing expenses is an important part of bookkeeping. It gives the business owner insight into how their money is being spent and helps them maintain a healthy cashflow. And when tax time comes, they can maximize their deductions because the necessary records have been kept throughout the year.  

Every industry operates in its own unique way so expenses vary across different types of businesses. In this blog post, we’ll explore the expenses restaurant businesses commonly incur.

Employee benefits

Paid sick leave, vacation pay, and health insurance benefits provided to employees are tax deductible for the restaurant business.

Vehicle mileage

If you or your restaurant’s employees drive to make deliveries, provide catering, or pick up supplies, these costs can be deducted from your taxes. The key is to accurately track the miles driven for business purposes. You can learn more about the mileage deduction in this blog post.

Accelerated depreciation expenses

In the past, certain capital investments could only be depreciated over a number of years. With Section 179, some equipment can be depreciated as a lump sum in the year of the purchase. The break is meant to make it more affordable for small businesses to buy up to $500,000 worth of qualifying equipment — including computers, vehicles, furniture, and kitchen appliances.

Employee meals

Many restaurants allow their employees to order a free meal during their shift or provide a “family meal” for everyone to share together. These meals are deductible at cost for the restaurant and not taxable to the employee.

Donated food  

Many restaurants are unaware there is tax benefit for donating unused food. You can claim an enhanced deduction if the food is donated to an organization that qualifies under section 501 and you meet other requirements set by the IRS.

Holiday parties

It’s common for restaurants to throw a party for their staff during the summer or holiday season. The cost of a holiday party is fully deductible for the restaurant, as long as it’s hosted primarily for the employees. That means you shouldn’t invite your friends or favorite customers. However, your employees are allowed to bring their spouses or significant others.

You should also make sure your party isn’t too lavish. An excessive holiday party deduction can cause the IRS to take a closer look at your company’s entire tax return.

Employee gifts

In addition to hosting a party, many restaurants give their employees gifts during the holidays. Gifts are deductible for the business, provided they don’t exceed $25 per employee per year.

In most cases, a gift is not taxable income for an employee. They’re considered a de minimis fringe benefit, which is Latin for “of minimal value.” The IRS notes on their website that gifts are de minimis as long as they cost less than $100 for each employee. So adhering to the $25 limit will keep both you and your employees in good shape from a tax perspective.

However, one exception is gift cards. Because they have a cash value, gift cards are taxable income for employees, regardless of the amount.

The Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) encourages businesses to employ people who traditionally face challenges finding work. You can receive a tax credit for hiring veterans, people with a criminal record, food stamp recipients, residents of Empowerment Zones, and people referred by vocational rehabilitation services.   

Bookkeeping Express (BKE) specializes in accounting and bookkeeping for quick service restaurants, full service restaurants, coffee shops, and specialty food providers. Visit our restaurants page to learn how BKE can assist your business.

6 Ways Franchisors Can Help Their Franchisees Succeed

Franchisors and their franchisees both share a common goal operate a successful business. And both parties lean on each other to make it happen.

If you’re a franchisor, your franchisees especially depend on you to give their business a boost. They believe your franchise concept is their best opportunity to run a successful business and you can help them in a variety of ways. Here are six examples of how franchisors can help their franchisees achieve success.

1. Give financial guidance

No business can hope to be successful without smart financial management. Revenue needs to be tracked, bills need to be paid on time, and every transaction has to be recorded in the general ledger.

You can help your franchisees with their finances by providing specific guidance on the best way for them to keep their financial records. This allows you to request reports from each franchisee that follow a consistent format and have the metrics you need for each unit.

2. Take the lead on marketing

The key to marketing is to share a consistent message with the audience you hope to reach. You want every customer to have similar expectations when visiting each one of your franchise locations.

That means you as the franchisor should lead the company’s marketing efforts. You can ask your franchisees to participate but all campaigns should be determined by you. That way you promote your entire brand and don’t confuse potential customers with inconsistent messaging or offers.

3. Provide advice on the best technology to use

Cloud technology has become very common in recent years and is now widely used across many businesses. Different cloud-based systems are often able to connect and share data, automating many responsibilities business owners struggle to find the time for.

But cloud technology is so new that many business owners have a hard time deciding which tools are right for them. As the franchisor, you can do the research on behalf of your franchisees and let them know what systems you recommend they use. It may take some trial and error to find the right solutions but in the end each location will operate consistently.

4. Offer training

Your franchisees likely want to learn new skills that can help them grow into better business owners. And it’s in your best interest to help them do it.

If you hold in-person conferences or meetings with your franchisees, setting up training sessions on management, finances, or other topics is a good idea. You can also consider hosting online training if your franchisees are unable to attend live sessions. Either way, professional training is a nice incentive to offer because it’s beneficial to both you and your franchisees.

5. Encourage your franchisees to grow

You likely have some franchisees that have aspirations to expand, while others might be content with their current operation. It can be a good idea to talk with your franchisees so you can get an idea of what their plans are. If they’re eager to grow, you can let them know of future locations that could be a good fit for them (or find out if they have any ideas of their own).

For the franchisees that have no plans to grow, you should ask why. You might find out that they haven’t given it much thought, which means you have the opportunity to share the benefits of running a multi-unit business and can provide guidance on next steps they can take.

6. Share your goals with your franchisees

Your franchisees might have a tough time making strategic plans if they don’t know what you have in mind for the future. Any insight you can provide them into your long-term vision can help them align their goals with yours.

The key is to communicate with your franchisees on a regular basis. It can be a good idea to send regular email updates and also to invite everyone to an annual meeting where you dive deep into your long-term plans. Being transparent about your business goals can empower your franchisees to help you achieve them.

BookKeeping Express (BKE) is the leading provider of accounting and bookkeeping services for franchise concepts. Visit our franchisors page to learn how we can help each one of your franchisees keep accurate and standardized financial records.

A Technology Guide for Salon and Spa Businesses

In this day of age, using the right technology is an important part of running a business. However, technology progresses so quickly that it can be difficult to know exactly what software, apps, and mobile devices to look for. And on top of that, every business has its own unique needs so what works for the restaurant across the street might not work for your salon or spa business.

In this blog post, we’ll list the different types of technology salon and spa businesses should use. Before we start, it’s important to note that we recommend businesses use cloud software. Since it’s hosted online, cloud software is accessible through any internet-connected computer or mobile device. Additionally, different systems are able to connect and share data, automating various responsibilities for business owners. Now let’s get into it.

Salon and spa management software

Your main goal is to get clients to come in so you can in turn provide them with a great experience. You can accomplish this goal with the help of the following technology:

  • Appointment scheduling software – You can easily schedule and track client appointments using scheduling software. It can even connect with your website so clients can view what times are available and book an appointment online.

  • Inventory software – If you sell any products, you can track your stock using inventory software. It can sync with your point of sale system so you always have an accurate count of each item you sell.

Financial software and mobile apps

Keeping accurate and up-to-date financial records is essential to any business. The following technology can help you manage your salon or spa business’s finances:

  • Accounting software – Your business needs to maintain a general ledger that has all your transactions recorded and organized. Cloud accounting software can connect with your online bank account and other financial software so your records are automatically updated.

  • Merchant processor – Make it easy for your clients to pay you using a credit or debit card with a merchant processor.

  • Point of sale (POS) – You can charge clients for specific services/products using a POS system. And all along, you’re keeping detailed sales records that can help you make smart business decisions.

  • Payroll software – If you have any employees, you can use payroll software to track their hours, tips, benefits, and withholdings.

  • Bill payment software – You can keep track of all your bills and make sure they’re paid on time using bill payment software.

  • Receipt app – If incur expenses outside of your business, take a photo of the receipt using a mobile app so the details are instantly sent to your general ledger and other financial software.

  • Cloud document storage – Instead of keeping a disorganized filing cabinet around, store your documents online so they’re out of the way but still easy to get to.

Marketing technology

Marketing helps your business stand out among your competitors. Here is some basic technology you can use to get the word out:

  • Website – Every business should have a website but salon and spa owners in particular can attract clients by showcasing their business on the internet. Be sure your website links with your appointment scheduling software so your clients can book online.

  • Social media – People are on social media and your business should be too. You can share photos, video, and other information that can encourage people to book an appointment.

  • Email software – You can keep clients coming back with a sound email marketing strategy. You can send them special offers and even a monthly newsletter so you stay on their mind.

And a few more

We’ve covered the main technology salon and spa businesses should use but here are few more worth considering:

  • Streaming music – Set a pleasant mood in your studio with the right music

  • Mobile lighting/sound/temperature control – Even lights, speakers, and the thermostat can be controlled on a mobile device or computer.

  • iPads/tablets – They have so many features that can help you run your salon or spa business. Plus, you can always have your tablet handy so you don’t have to wait until you’re back at your computer to take care of anything.

BookKeeping Express (BKE) specializes in accounting and bookkeeping services for salons, spas, and other health and wellness businesses. We can help you manage your finances and advise you on the best technology to use in your business operations. Visit our health and wellness page to learn more.