How to Tell If Your (Business) Partner Is Right for You

Valentine’s Day is typically a time when we tell our partner how much they mean to us. But for some people, the person they spend the most time with isn’t their spouse, it’s their business partner. Choosing a business partner is the first thing you do for your business, and one of the most critical.

Here are four ways to tell if your business partner is the one for you:

They have different skills
While it may be fun to sit and brainstorm with someone who has the same thought process as you do, it won’t lead to much innovation. It also doesn’t help if neither person likes doing cold calls, but you both want to design your newest logo. Having too many skills in common will lead to gaps in your business. The more separate areas you and your partner have expertise in, the less you’ll have to outsource while getting started. Not only will it save you money, it will be important down the line when you start hiring. You’ll know the talent you’re looking for in each area and have a higher chance of getting the right fit immediately.

But similar values
While you want separate business skills, you’ll want to look for someone who has the same ethics and values. If you want the company to do everything sustainably, but your partner would rather prioritize lower costs over environmental friendliness, you have a fundamental difference of values. Unless you’re friends with a person before you get into business, it may be hard to know where they stand on certain things. Try going out on regular business “dates” before you commit. Talk about everything and get a full understanding of who they are as a person. If you want to speed things up, book a vacation together. Traveling can give you a crash course on someone’s personality and let you know quickly if the two of you get along.

They’re financially and personally stable
You want someone who’s as committed to the business as you are. If your potential partner has stress and drama in their life, it will make it hard for them to be devoted to the business full time. While it’s easy to give someone a pass when they have something urgent going on, it can make you resentful if it keeps happening. Be sure you’re both in agreement on how much you’re committing to the business, both in time and money, to avoid any hurt feelings moving forward. It’s also a smart idea to get this in writing before any work has been done. Having a written record of what you’ve each agreed to do can help you avoid any he said/she said arguments down the line.

The have the ability to make a decision as a team
You definitely want a decision-maker as a partner, having someone who hems and haws can waste valuable time. However, you don’t want someone who’s willing to make decisions without consulting you. While it’s common to be excited when laying the groundwork for a new business, you need to quickly recognize the difference between excited and impulsive. To help avoid decision making battles, create a plan for how you make your business decisions. Do you both have to agree on everything before you can move forward? Do you each get final say over your individual areas of expertise? If a decision costs more than $X does it require a consensus? How you handle it is up to you, but there will be times when you disagree. Having a plan in advance can save a big fight. When it comes time to pick a structure, set a budget and build a team you’ll be glad you’ve already agreed on how you make decision.

You’ve found the one...now don’t forget to sign a pre-nup
Sometimes, even with the best planning, business partnerships break up. Fights over money and equity can lead to the end of friendships. The best thing you can do to avoid all of that is to get everything about your partnership in writing before it begins, and outline a clear plan if one of you wants to exit the business. While your partnership may be over, your friendship doesn’t have to be.

Why Business Owners Need a Bookkeeper AND a CPA

Fact or fiction: Accountants and bookkeepers do the same thing.

A lot of people think CPAs and bookkeepers perform the same job, but actually, there are quite a few differences between bookkeepers and accountants. The easiest way to differentiate the two professions is to think about it like this: Accountants and CPAs assess the financial data for a business, prepare income tax returns, and provide general business tax planning advice. Bookkeepers, on the other hand, manage the day-to-day functions for businesses – things like categorizing expenses in the general ledger, checking for data accuracy, reconciling bank statements, compiling daily data, and pulling financial statements together. Skilled bookkeepers tend to be specialized in specific industries and can provide additional value by setting you up with an industry-specific general ledger and helping you understand cashflow and cost-per-client as it pertains to your industry.

Now that the differences are understood, here’s why business owners should have both:

  1. CPAs may struggle with transaction bookkeeping
    Not to say CPAs can’t perform transaction bookkeeping by any means – of course they can. It’s that their line of work focuses more on looking at the bigger picture rather than everyday numbers for business activity.

  2. Bookkeepers understand one-to-one tracking
    What this means is that when you make a financial deposit, that same deposit is reflected in your file. In this sense, bookkeepers utilize accounting software the way it was meant to be used so that no data goes missing or misfiled and every transaction is accurately recorded. By doing so, they make sense of the data business owners care about most: cashflow.

  3. Accountants are experts in tax
    CPAs are the pros when it comes to preparing your business tax returns. They understand full tax compliance, important deadlines, and deductions. Accountants are able to look at the complete scope of financial information for a business and help you make better decisions for allocating resources for improving overall performance.

  4. Bookkeepers free up your day
    As a business owner, it’s likely that you’re already struggling to find enough hours in the day to run your business and have time for personal fulfillment. Working with a bookkeeper who not only keeps records of your day-to-day transactions, but also manages your expenses, payroll, bill payments and financial reporting can provide sanity and peace of mind for small business owners.

  5. Building a team of experts is key
    The idea of honing your expertise in a particular field means that you become the authority in that area – whatever it might be. Accountants and bookkeepers each concentrate on specific areas of work. When you build a team of experts that thrive in what they do best, you allow your business to reap greater financial benefits.

Get in touch with BKE today and let us help you build a team from the best of both worlds.

Clients who worked with us in 2016 are done with their Tax Preparation -- what about you?

January is over and it’s official, our clients that worked with us throughout the year don’t have to worry about their taxes anymore. Their books are done and have been sent off to their CPA. Their refunds are being calculated right now while they’re busy thinking about other things. If you’re only now starting to look at your books and think about your tax return, you could be missing out on some serious benefits.

Here are four things you’ll get if your books are already done this season:

1. Get more attention from your CPA

When tax season really gets going, a lot of CPAs get busy. That means they don’t have the time or attention to really dig into your books. What does that mean for you? You could be missing a key opportunity to have a conversation with your CPA about the kind of deductions you’re looking for. Do you want to be more aggressive? Do you need help calculating your home office deductions? Or are you concerned you’re using the wrong business structure? When your CPA has time to thoroughly go through your taxes they could find areas where you’re missing key deductions. Like for your office supplies, travel costs when visiting clients or even your business phone or internet usage. With more time to devote to you, your CPA will ensure that your taxes are in order and your deductions are on point.

2. Get your refund sooner

We all know that cash flow is key for any business. Your tax refund can be a great infusion of cash after the holidays when you may need it most. The sooner your taxes are completed and sent off, the sooner you’ll get your money back. Getting a chunk of cash back is perfect if you need to invest in equipment, top up your inventory, or even just to keep your bank account flush. For those that are closed or slow over the holidays, a little extra money in the bank can keep your mind at ease so you can enjoy your time off.

3. Get back to working on your business

Many people will be burning the midnight oil while they search for receipts or try and balance months of unreconciled transactions. Instead of spending time thinking of new growth strategies, coming up with their next marketing plans, or responding to customer inquiries, they’re instead worried about their books. Tax time doesn’t have to take time away from your business. If your bookkeeper has been keeping up on your books, and they’re completely up to date and ready to be sent to your CPA in January, you don’t need to skip a beat in your business. Get right back to the day-to-day of running things rather than stressing about taxes.

4. Address issues as they come up throughout the year rather than in April

Sometimes things happen in a business. If there are any red flags when it comes to your taxes, a good bookkeeper should be able to address them right when they come up. That means no major surprises come April 15th (or April 18th this year). This includes if you end up having to owe money. If you know well in advance, your business doesn’t have to take a major hit when it comes time to pay the government. Understanding where your books stand can help you make key decisions that can change your tax bill, such as knowing when to make big purchases to maximize deductions or if you need to curb your pre-revenue spending to ensure you can claim your money back.

It’s not too late to ensure you’re stress free come April, and every April thereafter. Get a free consultation today and we can tackle your books, no matter what state they’re in. We’ll even file an extension if we need to devote extra time to getting your books in order. That way you can sit back, relax and wait for your refund to come in. Not only that, we’ll keep your books in order all year. That way next year you’ll only notice it’s tax season when you’re cashing your check.

How Gyms Can Capitalize on New Year's Resolutions to Get Fit

"New year, new me" – the mantra that usually defines fitness goals that you, me, and everyone we know resolve to accomplish in the new year. The first few months of the year are when gyms are the busiest. People are on a mission to get healthier, eat right, change bad habits, and work out. Out of the 41% of Americans that make resolutions, 46% of them are related to making better decisions and being more active for physical well-being. As a gym owner, fitness instructor, or health and wellness professional, how can you capitalize on new year’s resolutions to get fit? It’s common that as soon as the new year hits, those who make these kinds of resolutions spring into action with gusto. But more often than not, the enthusiasm dissipates, as life happens.

Here are some ways you can cultivate the early momentum to plan for long-term success:

  1. Offer a 10-pass program.
    Some newcomers to the world of healthy eating and exercise can feel like the gym is a foreign place. It can be helpful to get these folks started at more practical pace. Invite members to commit to a pre-paid 10-pass program for a discounted rate. 10 visits to the gym sounds a lot more feasible than going five times a week for the entire year. And if the program is pre-paid, members will feel more motivated to get up and go. Once they more comfortable with these routine visits, they may be more inclined to sign up for an annual pass. You can incentivize things even further and offer no initiation fee to sign up for an annual pass if they’ve signed up for the 10-pass program. If this kind of program doesn’t suit your business model, think about a similar program that could work for you.
     
  2. Collect contact info for new members.
    Communicating with new members and keeping them engaged is key. But in order to communicate with them, you’re going to need contact info. When new members sign up, be sure to collect email addresses as part of the membership form, and make sure to receive consent to send promotional or informational messages. There are a variety of email communications you can deliver like spotlight features on members at your gym, weekly meal plans, wellness articles, and promotional updates.
     
  3. Run a gym-wide contest.
    What better way to motivate members than to have a friendly contest? Invite members to sign up and promote an incentive to really drive the participation. Whether it be a contest to see who can checks into the gym the most, who can do the most pull-ups by the end of the year, or some other fun challenge, make sure the prize is worth the sacrifice. You can award the winner(s) with a free month of membership, gym swag, or access to exclusive fitness classes.
     
  4. Train your staff.
    There are so many gyms and fitness options people can choose from these days. Why should they choose you? Identify key differentiators for your gym and use them to your advantage. Make sure your team is trained to deliver great customer service in order to keep members happy and coming back. Encourage your staff to interact with members. It’s important to build a community feel at the gym in order to help members feel welcome, motivated, and engaged. There’s a sense of vulnerability that comes with working towards a fitness goal. Developing camaraderie among members and staff and nurturing those positive vibes can get you far. If your staff isn’t aware of your business goals and properly trained, it’s hard to get to where you want to go.

Resolutions can often be cut short and not always carried out for the entire year. But, if you implement some of these practices, you can turn an enthusiastic declaration to get healthy at the start of the year into a lifelong habit for your members. If you haven’t done so already, it’s never too late to start thinking about resolutions for your small business, too!

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.