After your business has closed, you are probably ready to get rid of whatever you do not need and move on to your next endeavor. Unfortunately, not keeping key documents can get you in trouble with the IRS or state treasury department long after the business has closed. However, companies generate a tremendous amount of paperwork every year between tax filings, employment records, benefits information, licensure, property certificates, financial reports, and insurance documents. While it is less common, the Social Security Administration, Equal Employment Opportunity Commission, and Immigration and Naturalization may also ask for business records after your business has ceased operations as well.
So, what should you keep, and for how long?
Small businesses with less than $25M in annual revenue can choose whether they prefer to use cash or accrual accounting. However, you must declare which you are using when filing business tax documents during formation and plan to stick with your choice for the foreseeable future. New businesses are often tripped up by which they should use because they do not truly understand the implications of each type of accounting.
What are the differences?
Are there advantages to using one over the other?
Do bookkeepers and accountants work with both?
The decision about which type of accounting system to use depends on size, payment terms, business goals, available resources, and third-party financial requirements. Management should consider all these factors before deciding and consult with a professional accountant as needed during the process.
Both cash and accrual accounting methods result in the same bottom line when all your accounts receivables are collected. The differences are when that revenue is recognized and what kind of tax obligation is incurred as a result.
Do you need to hire a bookkeeper? If you are asking the question, the answer is yes!
Most commonly bookkeepers are brought in due to lack of time, lack of financial expertise, or growing business complexities. Whether a bookkeeper is freeing up time for an owner to engage in revenue driving activities or providing deeper financial knowledge, this professional role can be a crucial hire at a growing business.
When you are looking to hire a bookkeeper for your small business, will any bookkeeper do? Or do you need a bookkeeper that specifically works with small businesses? And, what can a small business bookkeeper offer that you cannot do yourself with QuickBooks or another accounting software?
It is not a secret that many professionals have side hustles doing what they do for their day job (whether their employers know about it or not). When employees had a reasonable level of job security and still felt fulfilled going into the office every day, these side hustles remained just that – on the side.
However, in the current economic recession, a lot of side hustle jobs are serving as interim primary jobs. They will likely transition toward becoming full-time jobs over the next year. Labor experts say the country is poised for an unprecedented shift in the employment landscape across myriad industries.
While many professionals use some form of free online accounting software to keep track of their side business finances, this type of solution often cannot scale when your side hustle grows. Just using QuickBooks is not enough either. You should hire a bookkeeper any time your business experiences significant growth, is looking for funding, starts hiring, when time is constrained, or if knowledge gaps limit the quality of work you can put into it yourself.
So, you secured a Paycheck Protection Program (PPP) loan from the SBA, now what?
Most businesses do not need help figuring out how to spend this money. However, when it comes to accounting for the loan, plenty of businessowners are confused about how to handle it correctly.
You asked, so we are providing a guide to help you navigate the waters. Follow this PPP bookkeeping how-to guide to keep your books clean after receiving your loan:
The word ‘downsizing’ is often accompanied by a cloud of negative connotations, but it is rarely the result of poor employee performance or leadership mismanagement. Instead, downsizing usually results from other factors like an economic slowdown, overcrowded market, plant closure, or manufacturing outsourcing. Downsizing is simply part of running a business, just like managing rapid growth, which means that leadership must plan, manage, and execute it correctly.
At the most basic level, managing downsizing requires four steps: developing selection criteria, determining how much notice to give, providing outplacement support to employees that have been let go (where applicable), and protecting employee productivity and morale among retained workers. These activities are typically considered part of HR’s purview, but downsizing has implications that trickle down into other areas of the business. There are numerous bookkeeping implications during downsizing as well.
Remote work has always been an attractive proposition to employers because they can maintain productivity while cutting costs. Prior to 2020 having a remote workforce was an optional decision. Despite the benefits, many companies still chose to maintain employees in-house to foster a positive organizational culture and reduce technology needs. However, the recent pandemic has proven that external factors can influence the workforce at any time. This has necessitated organizations to be ready to manage the challenges that accompany virtual work even if they do not plan to have employees working remotely permanently.
Managing a remote workforce creates numerous barriers to “business as usual.” Cultural shifts occur, technology demands increase, security risks arise, performance criteria change, and bookkeeping must keep up as well.
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