How to Choose Your Business Structure

It’s an exciting time when you’re starting a new business. Dreams are high, ideas are flowing, and you’re ready to go guns blazing. But are you taking all the necessary legal steps before you launch? Starting a business certainly tests your decision-making skills, and one of the most important decisions you’ll have to make in this process is selecting what kind of business structure is right for you. The structure you choose will not only have legal and tax implications, it will also impact personal liability and the potential to raise funds for your business.

Here’s a breakdown of the different kinds of business structures:

Sole Proprietorship

A sole proprietorship is the the most common type of legal structure. This type is an unincorporated business owned and run by a single individual who operates as the “business.” The sole individual is entitled to all profits and is responsible for all debts, losses, and liabilities. Freelance professionals are categorized as sole proprietors.

  • Pros: easy to establish, complete control over business, easier to prepare taxes
  • Cons: personal liability of business debts and obligations, difficult to raise funds, can be burdensome

Limited Liability Company

A Limited Liability Company, or LLC, offers the limited liability components of a corporation structure and the tax efficiencies of a partnership. The members that make up an LLC are not taxed separately; each member needs to report profits and losses and their own personal tax returns.

  • Pros: limited liability, less paperwork, profit sharing
  • Cons: less business security, self-employment taxes

Cooperative

People tend to form cooperatives to provide a service that benefits all members. Profits are typically shared among the members, also known as user-owners. Other members can become part of the co-op by purchasing shares. The industries that most commonly operate as co-ops are: healthcare, retail, agriculture, arts and restaurants.

  • Pros: fewer taxes, better funding opportunities, never ceases to exist, democratic organization
  • Cons: may have slower cash flow, lack of participation or low membership

Corporation

A corporation, otherwise known as a C corporation, is an independent business entity owned by shareholders. Corporations generally have more complex registration, tax, and legal requirements, and as such, are typically reserved for larger companies that have several employees. Corporations also have the ability to go public with their offering (IPO), which is an attractive point for business owners who are looking to receive large sums of investment capital.

  • Pros: limited liability, easier to raise capital, corporate tax breaks, attracts quality employees
  • Cons: costly, requires complex operations, lots of paperwork

Partnership

A Partnership is a business that’s shared between two or more people. The profits and losses are shared among each partner as well. There are three major types of Partnership businesses:

General Partnerships, Limited Partnerships, and Joint Ventures. Each of these types vary in terms of how profits, liabilities, and management responsibilities are shared and distributed, as well as how long a partner may be involved with the business venture.

  • Pros: less expensive, shared responsibilities, complementary skills
  • Cons: shared liabilities, lots of negotiations and compromises, shared profits

S Corporation

An S Corporation is unique in that it is formed through an IRS tax election. What makes an S-corp different than a regular Corporation is that profits and losses can be passed through to personal tax returns, which means the business itself is not taxed. However, any persons working for the company must pay themselves a reasonable wage, or else the IRS may reclassify any additional earnings as “wages.”

  • Pros: savings on taxes, tax credits, can still operate independently if shareholders leave
  • Cons: requires strict operational recordkeeping, “reasonable” compensation

 

There are a number of different steps and procedure that need to be completed when choosing any of these business structures. Be sure to check the specific regulations and guidelines for getting the right licenses and permits in your particular state, as they tend to vary.

We would be happy to walk you through these different structures. Connect with us today and get your new business off the ground.

Bookkeeping for Freelance Fitness Trainers

The perks that come with freelancing are undeniable – flexible hours, being your own boss, choosing your own clients, and developing your career at your own pace. But, being a freelancer can also come with its fair share of challenges. You have to market your own services, manage client expectations, stay on top of bookkeeping, and file taxes as a self-employed professional. As a freelance fitness trainer, what can you do to make sure you don’t drop the ball on being financially healthy?

  1. Get organized
    Being a freelance professional can be a bit of a juggling act. If you don’t lay down an organized foundation for how you’re doing business, things can get messy, fast. Start with your very first fitness client. Collect important information from them – like name, email, phone number, date of birth – and catalogue the data in a safe and secure place online. Using online tools to keep things accessible and standardized can be very helpful. 
     
  2. Log important business records
    It’s absolutely critical to keep records of your freelance business so you understand exactly how cash is flowing in and out. It will also help tremendously in the case of an audit or if you ever apply for a loan. Document the hours you’ve spent working with each client or completing specific projects for each client – like putting together meal plans or going over baseline body metrics and health scores. Make sure you communicate the cost per hour or per job with each client and record it accordingly. Most importantly, be sure you’re tracking:
    - all of your business expenses – hold onto receipts for them, even for purchases that are less than $75. 
    - all payments you make, including bank transfers and other forms of digital payments
    - all payments you receive from your clients
     
  3. Know what you can deduct from expenses
    As a freelance fitness trainer, there are several expense that can be tax deductible. If you have a training area set up in your home or garage, you can write off a portion of your rent. Other deductible expenses include exercise equipment, health and wellness certification or education costs, certain travel expenses (like traveling to fitness expos, conventions, or seminars). Check with an accountant or bookkeeper to see what other expenses can be offset against taxes. 
     
  4. Keep your tax bill in mind
    On the flip side of being able to write off certain expenses, freelancers must account for the taxes that are not automatically deducted from paychecks as they normally would be when employed by a company. This means that you need to plan ahead for taxes you may owe to the IRS. Be sure you understand which tax bracket you fall into, and what percentage of taxes you should expect to pay from your total income. 

Understanding the value of bookkeeping as a freelancer

Basic bookkeeping is so essential when you’re a freelance professional. You’ll be able to stay on top of any outstanding invoices and make sense of cashflow much easier. Working with a bookkeeper who’s an expert in the health and wellness industry can reveal even deeper insights into how you can grow your freelance business. See how BKE can help.

7 New Year's Resolutions for Small Business

As we flip the calendar to a brand new year, it’s a good time to reflect on how the last year went with your business, and jot down some objectives for the next 12 months. Resolutions tend to have a way of making us feel like we’ve failed if we don’t achieve them. But just because you may not reach some of the targets you set doesn’t mean you can’t be successful in other ways. Commit to daily intentions for growth and improvement, and make this upcoming year a year you can be proud of. 

  1. Set new goals and review your mission statement. 
    Take a look at your accomplishments from last year. How well did you perform? What product or service generated the most sales? In what areas can you pull back on spending, and how can you operate leaner? Dive deep into your financial reports and assess what you could be doing better. If you put a business plan together when you first started your venture, see how close you are to the numbers you initially forecasted, and adjust your goals accordingly. It’s also a good time to reevaluate your mission statement and core business values. Are you and your team staying true to what you’ve set out to achieve? How can you fine-tune your strategy to follow your mission more intently?

  2. Plan ahead.
    Once you review last year’s numbers and set new financial goals, figure out what kinds of marketing programs and social media strategies you can put together in advance. Which holidays or calendar events are the most lucrative for your particular industry? Check to see which social platforms your customers are most active on, and resolve to build a bigger presence for your business there. Don’t forget to take a step back and survey how the market or your particular industry is changing. This may affect your business in the coming year. And as always, stay on top of small business taxes so you don’t fall behind and end up paying avoidable fees. 

  3. Get valuable feedback.
    As a small business owner, your perspective on how things can change or improve may be very different from the perspectives of your staff or your customers. Be sure to gather constructive feedback to learn what you can be doing better. It may be humbling, but you’ll be surprised by the insight you can extract. You can conduct one-on-one meetings with your staff members, send email surveys to customers, or read through online reviews of your business. Whatever medium you gather your feedback through, be sure to really listen to what they have to say. It can give you a fresh outlook on business priorities and operations. 

  4. Learn something new.
    Nothing bad can come from expanding your knowledge and building your expertise. Do you want to become a better leader or decision-maker? There are seminars and courses or professional coaches to help you with that. Perhaps you’ve been wanting to move your business systems to a more robust technology platform, or improve your networking skills. Whatever you’ve been thinking about and putting off, make this the year to do it!

  5. Don’t do everything yourself. 
    Realize what aspects of your business you excel in and assess what you can delegate to others. Letting go of certain responsibilities can be a good thing. Savvy business owners understand that building a team of people around you can actually lift you up, not weigh you down. Whether it be for marketing, bookkeeping, hiring, or other operational facets of your business, do your due diligence in sourcing valuable partners to lead these processes, so you can spend your time working on what you do best for your business. 

  6. Nurture your staff
    As a small business owner, you’ve probably run into a fair amount of challenges when it comes to staffing. When you gather feedback from employees, ask about their pain points and areas of your business that could use some reworking. Your staff is made up of individuals who are working to help you achieve your dreams. Invest in them. What can you do to help them grow personally and professionally? When you nurture and invest in your staff, you are not only adding value to their lives, you’re adding value to your business. 

  7. Don’t get comfortable
    With how quickly things change these days, getting comfortable can stunt your business’ growth and be a hindrance to your success. Research what’s going on in your industry and what kind of impact technology might be having on the competition. Be sure to set new goals regularly, and keep track of how your business is performing on a monthly basis. 

Connect with us today and see how else you might be able to make this year the best one yet. 

Why 2016 at BKE Was One For the Books

By Keith Mueller, CEO

By Keith Mueller, CEO

Here at BKE, we’ve had a lot of reasons to cheers and high-five each other over the past year. Running hot with the momentum we’ve built from an incredible year in 2015, we set the bar even higher for 2016 in hopes of making it the best year yet.

Looking back on an eventful year at BKE:

  • Managed Over $200 Million of Client Revenues
    BKE is only successful when our clients thrive. In 2016, we managed over $200 Million of combined revenue for our clients. We understand that serving our clients goes beyond the day-to-day tasks of bookkeeping. It’s about listening to what our clients want and need and responding through strategic planning and proactive reporting to ensure our clients meet their own business goals.

  • Saved Our Clients Over 50,000 Hours
    Time is one of the most precious resources we have. To save our clients over 50,000 hours of time that they would’ve otherwise had to spend on bookkeeping tasks meant that we were able to give our clients a meaningful part of their lives back.

  • Saw Unprecedented Growth of Our Client Base
    Our clients have always been the backbone of this company. We are much more than quality bookkeeping services, and have made it our mission to provide the best experience for clients across a multitude of industries. We’re grateful for the relationships we’ve built and partnerships we’ve created, and thank each and every one of our clients for being a part of the journey.

  • Achieved Operational Targets
    We are proud to have a world-class ratio of bookkeeper to client, which means we’re always looking to provide as much value to our clients as possible without increasing costs. We believe that a personalized approach is best for helping our clients grow their businesses, and that’s why we’ve continued to build our team of industry specialists.

  • Doubled New Franchisor/Franchisee Relationships
    The focus we’ve directed at developing solutions for our multi-business, franchisor/franchisee relationships has proven to be as worthwhile for our clients as it has been for us.

  • Developed Technology Solution
    2016 was a huge year for BKE in terms of where we’re headed. Our SF office has been hard at work building out a new technology platform to improve the overall experience and quality of service for our clients. Everything we do, we do with our clients in mind. Stay tuned for more exciting news on BKE’s new features and services!

  • Opened New Denver Office
    Another year, another new office! With the growth we’ve been seeing for BKE, we launched a new office in Denver to focus on executing our  growth strategy. In fact, we’ve hired 20 new team members across the country to expand on our outstanding talent pool in Engineering, Sales, and Marketing.

What a phenomenal year at BKE. We are extremely grateful for every single win we’ve been able to celebrate, and look forward to another terrific year together.

 

Good Bookkeeping and How to Recognize It

Whether you’re looking for a new bookkeeper or reevaluating your existing one, you need to know what characteristics to look for to determine the quality and longevity of the potential partnership. What constitutes good bookkeeping? Is it defined by the number of years of experience, or saying “yes” to everything you ask? Or is it more than that? Knowing how to recognize good bookkeeping allows you to set certain expectations and hold your bookkeeper accountable. It also prepares you to make better decisions when choosing what kind of bookkeeper you want to partner with.

Here are seven essential qualities to look for in a good bookkeeper:

  1. Excellent communication skills
    Possessing good communication skills doesn’t just mean speaking clearly. It’s about being able to explain complex ideas in easy-to-understand ways, proactively following up on tasks, asking important questions about your business, and really listening to what you have to say. If your bookkeeper regularly uses accounting and bookkeeping jargon, the conversations you have can feel restricted and unproductive. Look for someone who’s willing to communicate key concepts at a pace you’re comfortable with, and don’t be afraid to ask questions!

  2. Adept at accounting software and new technologies
    When bookkeepers utilize the latest business software and technologies, it’s an indication that they’re committed to increasing efficiencies and providing a more robust service. If your bookkeeper knows how to leverage accounting software and other kinds of business software to streamline things like invoicing, payments, and payroll, you’ll know how every aspect of your business ties into the other – operationally and financially.

  3. Organization and teamwork
    Having stellar organization skills is basically a prerequisite to becoming a bookkeeper. But what about organizing a team and building a sense of unity? Do you feel like you and your bookkeeper work independently, or do you consider them a part of your crew? And does your bookkeeper have their own team of experts that work together to provide the best service for your business? These are some critical questions to ask yourself when you’re thinking about how you can get the most out of your bookkeeper.

  4. Experience in your particular industry
    Working with a bookkeeper who has expertise in, let’s say, the health and wellness industry would be very different than working with one who has tons of experience with retail. Good bookkeepers may specialize in a particular field or industry to be able to offer sharper services with a more informed approach. They can also provide reports on how your business is performing month-to-month, and have an idea of what success metrics look like in your industry.

  5. Integrity
    No one likes shady people – especially if you have to work with them. If your bookkeeper isn’t transparent with things like billing and pricing, or if they’re unresponsive, or if you’re constantly questioning what kind of value they’re adding to your business, maybe it’s time to call it quits with them. And if you’re looking for a new bookkeeper, be sure to have a thorough interview process, and ask hard-hitting questions to sniff out any crookedness as early as possible.

  6. Flexibility to adapt to different working styles
    Does your business have unusual operating hours? Or perhaps you only prefer to communicate via email. Maybe you’ve got a CPA but still need a bookkeeper for day-to-day operations. Whatever your situation might be, finding a bookkeeper who’s willing to be flexible with your working and communication style can make for a dynamic business partnership.

  7. Relationship building skills
    Finding a good bookkeeper needn’t be difficult. But when you do find one, you probably want to stick to them. Do they have good people skills that make you want to build a long-term partnership with them? A solid bookkeeper understands the value of every business relationship and will work to deliver high-quality services to ensure that expectations are met, if not exceeded.

Connect with us today and meet someone on our team who might just be the bookkeeper you’ve been looking for.

Top 5 Bookkeeping Mistakes Made By Small Businesses

As a business owner, it’s natural to want to oversee every aspect of your business yourself. But even the savviest business owners make mistakes, especially when it comes to bookkeeping. There’s no question that maintaining accurate financials is a fundamental part of doing good business. Being aware of the most common bookkeeping mistakes can save you from sloppy financials, unnecessary stress, and potential penalties.

Here are the top bookkeeping mistakes made by small businesses:

  1. Trashing “petty cash” receipts
    Small charges add up fast. Although receipts less than $75 worth of expenses might not be required by the IRS, it helps to keep these records for important things like budgeting, claiming tax deductions, and tracking overall cashflow. It’s also good to keep documentation in the case of an audit.
     
  2. Not keeping business and personal finances separate
    Mixing personal and business finances can get a bit messy. Making sure you have different accounts for personal purchases and business expenses keeps things clean and segmented properly. Keeping finances separate can also illuminates true operating costs, so you aren’t kept in the dark about how your business is performing. On top of all that, it makes things significantly easier for when tax time rolls around since you’ll have a clear view of which expenses are deductible.
     
  3. Not backing up files
    Keeping records and backing up files is of utmost importance. Although cloud storage is convenient and secure, be sure to ask your bookkeeper to regularly pull hard records of bank statements, business reports, and other critical documents. This way, you’ll stay on top of audits and have all your information in the case of any compromised technology or online accounts.
     
  4. Not classifying employees properly
    Do you have full-time staff, part-time staff, a team of contract workers, or a combination of all of these? Work with a bookkeeper to understand what the differences between a 1099 and W-2 employee are so your business remains compliant and you can avoid misfiling taxes.
     
  5. Taking it on yourself
    Very few small business owners are self-professed financial experts. In the same vein, thinking that software and technology can compensate for a lack of bookkeeping expertise is a common blunder. Getting started with software and realizing the immense learning curve can set you even further back with managing your own books. Leaving it to an experienced bookkeeper who’s trained in your particular industry can allow you to gain much more clarity on business performance. Be sure to ask the right questions when finding the right bookkeeper for your business as well.

Get in touch with BKE today to get your small business finances in tip-top shape and dodge these mistakes altogether.

​How to Build Loyalty Among Health & Wellness Clients

You work so hard to get new clients – but once you have them, what’s the secret to keeping them? In what ways do you surprise and delight your clients? How do you exceed expectations? It’s been said that there’s a difference between a satisfied client and a loyal one. What can you do to keep them coming back?

As a bookkeeping team with extensive experience in the health and wellness industry, our clients often share great ideas about how they increase retention. So, what are some exercises these clients suggested other gym and studio owners could use to build a real connection with clients?

Image via clubindustry.com.

Image via clubindustry.com.

5 ways to build loyalty among health and wellness clients:

  1. Listen to feedback
    There are so many ways to collect client feedback these days. Are past clients publishing online reviews about your business? What are they saying? Is it good, is it straight-up ugly? Your harshest critics can be the greatest source of learning how to improve specific areas of your business. It’s a humbling practice, but when you listen to what your clients have to say, you’re allowing yourself to address flaws you may not have been aware of. Then, you can start taking steps in the right direction. 
     
  2. Communicate, communicate, communicate
    You can’t really build loyalty unless your clients know who you are. Encourage your employees and staff to try and address people by name whenever they can. This simple gesture makes clients feel valued. Other ways you can communicate with clients are through email newsletters, signage in or around your building, and pamphlets. Inform clients of deals or specials, new services, new equipment, available upgrades, etc. You can even share resources like nutrition tips and wellness articles.
     
  3. Build a community
    Community is so essential to feeling like you’re a part of something bigger. If you own a gym or yoga studio, do you offer group exercises or partnered sessions? If not, you may seriously want to consider doing so. Build camaraderie among your clients and make them feel like they’re in this together. You can even include gamification strategies into your workouts to build friendly competition among the community and keep them entertained as they get healthier. 
     
  4. Highlight client successes
    Get to know your clients and try to remember their names. Congratulate them on health wins and praise them when they achieve their goals. Use social media (with their permission) to publicly feature client success stories and show other clients that you’re there to celebrate everyone’s accomplishments – no matter how big or small. 
     
  5. Create a culture
    What are your values and ideals? How do you stick by them? Promote what you stand for and make sure you and your employees echo those values. Culture is often overlooked, but can seriously impact your bottom line. Additionally, culture provides a deeper sense of connection and oneness among members. How are you different than other gyms, spas, yoga studios, or wellness center? Why should your clients stay? These are the kinds of questions that might be difficult to answer, but once you know how to respond, you’re pretty much holding the keys in your hands. 

As you implement these programs and practices, be sure to go over numbers and figures with your bookkeeper to see what’s working and what’s not. See what improvements you make with retention percentages, and understand whether you can allocate additional resources to build other kinds of loyalty programs.

Connect with a bookkeeper who specializes in health and wellness businesses today.