What Accountants Know About Business Survival and Failure

Business Survival
Business Survival

Eight out of ten entrepreneurs crash and burn within the first 18 months of starting their business according to Bloomberg News. On the other hand, 51% of small businesses are surviving after 5 years.  The federal government’s Small Business Administration says this is the highest rate since 1994. Here’s the difference between business survival and failure according to two long time CPA’s who work with small and medium size businesses.

WHAT YOU’LL LEARN FROM CPA’s MARK REDER & SCOTT WIESNER

WHAT ARE SOME COMMON CHARACTISTICS OF CASH FLOW PROBLEMS?  (2:03 in)

In Scott’s words –   Without sales no cash is going to come in the door. The business owner has to monitor collecting receivables.

In Mark’s words – A lot of businesses don’t do budgets when they get into business. They have to be prepared, some clients won’t pay them.

Tip – Prepare for the lag time between the period to generate the sale, complete the work or produce and deliver the product, invoice, and be paid. Business survival requires that you make sure resources are available to handle the lag time and receivables that you may not collect.

IF A COMPANY USES QUICKBOOKS TO DO ITS BOOKKEEPING, WHEN DOES IT NEED AN ACCOUNTING FIRM? (3:15 in)

In Scott’s words – A business owner needs to determine how much time he is spending doing the work. It doesn’t generate sales.

Tip – Use an accounting firm to teach you QuickBooks and streamline the process so it doesn’t hinder running the business. With access via the cloud, an accountant can collaborate on any journal entries that need adjustment and compiling statements.

WHAT ARE THE ADVANTAGES/DISADVANTAGES OF RECORDING FINANCIAL TRANSACTIONS IN THE CLOUD?  (5:15 in)

In Mark’s words –   Being in the cloud hopefully offers some better backup.  

Tip – Having financials in the cloud allows for easy accessibility while travelling. Assistance from your accountant is faster. If your server or in house backups fail, you have an additional safety net.

WHAT DO WE NEED TO KNOW IN CLASSIFYING SOMEONE AS AN EMPLOYEE VS. AN INDEPENDENT CONTRACTOR?  (10:25 in)

In Scotts’s words –   They (the IRS) is going to look at control, control over the employees.

Tip – Check out the IRS 20 factor list at IRS.gov that defines the appropriate business relationship to have with an independent contractor.

WHAT ARE SOME TRAITS OF SUCCESSFUL BUSINESSES?  (11:54 in)

In Mark’s words –   You have to have goals set out and budgets in place. What you can measure you can manage.

Tip – Monitor the financial picture according to what impact changes in staff, products and prices have on how the business performs. Use your accountant to model business variables like price changes, inventory changes, impact of new hires, etc. Business survival is much more likely implementing these practices.

WHAT SHOULD BUSINESSES NOT IGNORE FOR TAX PURPOSES BEFORE THE END OF THE YEAR?  (14:54 in)

In Scott’s words –   Take the 179 Section tax deduction on equipment purchases. Defer income, accelerate expenses.

Tip – Don’t forget retirement contributions too.

WHAT RED FLAGS WOULD TRIGGER AN AUDIT?  (16:05 in)

In Mark’s words – (The IRS) They have such a large database. They are comparing you to industry norms. Any category that is out of the norm, the more of those you have the more likely you are to be audited.

Trend – Fewer numbers of small businesses are being audited.

Wake Up Small Business – Stop Cyber Thieves!

Cyber ThievesCyber crime is an epidemic. Cyber thieves prey particularly on small business because their computer, network and WiFi security measures are often vulnerable. IBM Chairman Ginni Rometty states – “We believe that data is the phenomenon of our time. It is the world’s new natural resource. It is the new basis of competitive advantage, and it is transforming every profession and industry. If all of this is true – even inevitable – then cyber crime, by definition, is the greatest threat to every profession, every industry, every company in the world.”

Yet computer, network, and WiFi security options are more cost effective than breach recovery. Listen to how you can protect your business from cyber thieves.

WHAT YOU’LL LEARN FROM BENSON WRIGHT, STRATEGIC NETWORKING CONSULTANT AT BRIGHTISYS.

HOW SECURE ARE OFFICES CONNECTED THROUGH WI-FI?  (1:27 in)

In Benson’s words –   These systems are low lying fruit for cyber criminals.

Tip – Determine whether your Wi-Fi network is open, connected to your server, and can be easily accessed by an unwanted outsider.

WHAT SHOULD BUSINESS DO TO MAKE THESE WI-FI NETWORKS MORE SECURE? (2:07 in)

In Benson’s words – Look at a new type of threat management solution that is comprehensive to your entire network, one that includes PCs, laptops and smartphones.

Tip – Look for a system that will do anti-virus scanning and malware scanning and be able to be customized to fit your business activity needs. These systems can protect remote as well as in house traffic.

DO COMPANIES DO ENOUGH TO EDUCATE EMPLOYEES ABOUT POTENTIAL HACKING THREATS FROM CYBER THIEVES? (5:59 in)

In Benson’s words – Most people don’t understand the level of sophistication of these threats.

Tip – Have a policy that requires periodic changing of passwords. Have an IT tech check the employee’s personal devices for anti-virus and malware software. Block certain categories of sites from access to your network.

SHOULD ALL BUSINESS BE MOVING DATA TO THE CLOUD? (9:10 in)

In Benson’s words – Businesses should have a cloud footprint somewhere, somehow at this point.

Tip – Double check that being in the cloud doesn’t compromise privacy regulations.

HOW SHOULD A COMPANY RESPOND TO A DATA BREACH? (10:28 in)

In Benson’s words – Make sure it is documented for HR (human relations) purposes. Then the authorities can be notified if necessary.

Tip – Be able to track logins, IP addresses, capture communication packets and isolate the cyber threat. Compare the cost of purchasing a unified threat management router with protection software to the hours of time and dollars that would have to be spent to restore a compromised network.

WHY DON’T MORE PEOPLE STEP UP TO PROTECT THEMSELVES? (14:53 in)

In Benson’s words – Most of it is the standard old – it’s not going to happen to me. People don’t know what to do.

Tip – Compare the cost of purchasing a unified threat management router with protection software to the hours of time and dollars that would have to be spent to restore a compromised network.